The parallels between today's AI adoption and the internet revolution of the late 1990s are impossible to ignore.
And the lessons are critical for professional service and law firm leaders who want to build a lasting business, not just the quick productivity wins.
This Isn't Social Media. It's the Internet Revolution 2.0.
It's 1997. You just got your first email address.
The Today Show hosts are talking about this weird "dot com" thing their marketing team told them to hype
And Jeff Bezos is already way ahead of us all, planting the seeds of a business empire.
In the meantime, the pundits are speculating on "death."
The death of print media, the fax machine, the 40 hour work week...
But here's what might be dead without some serious consideration:
Your personal sanity if not your wealth.
The Wake-Up Call: AI That Works Too Well
It all started when I met with the co-founder of one particular software that's been built AI-up.
With a lawyer/developer team at the helm, they're saving attorneys 40% or more of the time to prep for and lead depositions, without the risk of hallucination and the usual "are-you-kidding-me" frustration of trying to get AI to do something where critical thinking is required.
This isn't isolated to just legal services. Accounting firms are seeing similar time savings with AI-powered document review and tax preparation software. Marketing agencies are using AI for content creation and campaign optimization. Consulting firms are leveraging AI for data analysis and client presentations.
The software is fantastic. But that's not the point.
Why This Time Is Different
While so many are enjoying the language model of ChatGPT and the ability to mimic their voice and person, it often gets likened to the advent of social media in the business world.
An opportunity to do more with less in growing your business.
Seeing this software in action I realized though... this isn't social media. This is the same as email and the internet entering the business world.
Heralded as a revolution of productivity only matched by the Industrial Revolution 150 years prior, the Internet Age brought us information at our fingertips and - thanks to the Blackberry (RIP) and iPhone - 24/7 business models.
The Hidden Cost of the Last Revolution
When Productivity Gains Become Productivity Traps
The economic markers over the last 30 years show growth by leaps and bounds, even accounting for the dot com bubble burst, the financial crisis, and the pandemic.
But please ask yourself this... are you more wealthy, more happy, more healthy in a 24/7 business world?
Are your colleagues?
Are your clients?
The macros may look great over the last 30 years, but often, the individual statistics say otherwise.
Don't get me wrong. I don't want to go backward.
But economic measures like productivity, GDP and wage growth track at the aggregate level, not how individuals are faring.
Those high level measures show amazing growth while other statistics tell a different story...
Higher economic and wage disparity; concerning rates of burnout, depression, alcoholism, and suicide; and a lack of affordability in housing, childcare and education.
Professional service firms experienced this firsthand.
Law firms that once closed at 5 PM became 24/7 operations. Accounting practices extended tax season year-round. Consulting engagements expanded scope without proportional fee increases.
The promise of "working smarter" became "working harder" for the same margins.
The Slippery Slope of Time Savings
Not a week after seeing that software, a lawyer was telling me about how they're passing back their AI time savings to clients, a few hours here and there, which they felt good about.
Except what if they'd saved 40% of their time, not just 5-10%?
Now we start eating into profit and increasing the pressure.
(The same pressure for more that drives macro economic statistics positively but eats away at our individual prosperity and peace of mind.)
This is actually the reason that marketing has embraced AI so fully. When you reduce your cost to acquire a lead, you increase your profitability.
That's not the case though when you significantly reduce the time you spend on tasks you might otherwise charge back to a client.
And while you've seen marginal adjustments in the past in your industry (e.g. e-discovery), when the time savings are 40%-50% end to end, it's time for some hard truths.
Three Strategic Paths Forward
The legal industry is growing at 2% a year. Accounting services grow at 1.5-3% annually, management consulting at 3-5%, and marketing services at 4-6%.
None of these growth rates can absorb a 40%-50% productivity increase without strategic adjustments.
To make up the time gap, and avoid that race to the bottom I hear too many professionals just assuming they'll go down, you'll need to take one of the following paths forward:
Path 1: Expand Your Market Share
More clients, or more work from the same clients, to bill out the same or more hours
You might be overlooking this if you're already working under your capacity.
But this means you have to take market share, not just grow with it.
If you don't love business development already, you better start to embrace it with a vengeance.
This approach requires significant investment in marketing, sales systems, and client acquisition. Many professional service providers underestimate the time and cost involved in developing these capabilities. So consider whether you have the effective sales systems to support 40% more clients while maintaining quality or start doing something to change that.
Path 2: Command Premium Pricing
Bill at a higher rate per hour.
Viable especially as you're now working, theoretically, at a higher value than you were before.
Another law firm I spoke with recently found that, having embraced AI from the get-go, they had cut their hours needed per engagement by 50%. So what did they do?
They doubled their hourly rates.
But as more competitors start doing this, pricing signals may get muddied even more than they are now...
And between our internal monologues about how much we charge, your less scrupulous colleagues raising their prices just because, and the resistance everyone has to inflation...
How will people know how to trust in your services any better than they do now?
That they're getting you for that price and not a machine.
Premium pricing requires clear value differentiation.
For the firm who doubled their hourly rates, their clients went along with it because they'd built the trust over time and showed how the increased efficiency still brought effective results. And, to note my opinion here, they were working with a less price sensitive client base than you might be dealing with (corporate vs consumer, for example).
Clients need to understand why your AI-enhanced services command higher fees and be willing to value the deliverable, not just a low price.
This means developing compelling value propositions including case studies and communication strategies that highlight how your firm's expertise is enhanced by AI, not replaced by it.
Path 3: Transform Your Business Model
You can start working toward an alternative pricing model.
This is perhaps my personal favorite for profit and time freedom but going against the grain can be daunting to say the least.
Subscriptions, flat rates, value pricing, points based pricing.... there are plenty of options but lots of resistance.
Trust me... I feel it too.
Alternative pricing models work best when supported by robust business systems and clear process documentation. This foundation allows you to package services predictably and scale profitably.
But if you start thinking about the data you need now, to prevent choosing between scope creep issues and profit margin encroachment later...
You can find your way to freedom, affordability and profit, not against-all-odds busyness and business development.
Your Strategic Planning Window Is Now
The 1997 Moment for AI Strategy
You don't need to decide today. We are, after all, living in the 1997 version of the AI world right now.
But you should start considering: What's your 10 year plan?
Will you let it ride out?
Enjoy the novelty of AI now only to find yourself trapped with a Blackberry and no personal boundaries in 10 years, on the cusp of a financial downturn?
Or will you figure out this "AI thing" and turn it to your advantage?
Just remember... the firms that thrived during the internet revolution weren't necessarily the first adopters; they were the strategic adopters.
They understood that technology is a tool for competitive advantage, not just operational efficiency. They often took the long view and invested in organizational design and team development alongside technology.
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Take Action Before the Window Closes
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We can start with an assessment of your business as it is today, identify the quick wins and areas for immediate profit improvement, and start building a plan for the future that's not only proactive, but fits all of your goals.
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