Jaap Bosman - Why AI Breaks the Law Firm Business Model

AI breaks the law firm business model that partner compensation was built on.

Jaap Bosman is founder and CEO of TGO Consulting and author of Law Firm Partner Compensation, written with Jaime Fernández Madero. He advises law firms across Europe, the Americas and Asia.

His starting point is the creation production divide. Clients pay for the moment a partner sees the solution. Firms bill for the hours of production that follow, and those hours quietly pay for the creation. So who pays for the creation when machines shrink the production?

Bosman explains why AI is the great equaliser once every firm uses Harvey, and why only a handful of firms build their own AI, like Kirkland & Ellis with Palantir and Latham & Watkins with NVIDIA. He shares his research into what clients praise in their best lawyers, and what partner compensation says about the ambition of a firm. Later in the conversation he explains how his clients move away from the billable hour step by step, without panic.

You'll learn

• why partner compensation is about culture and ambition in the end
• how production hours have paid for creation, and what happens when AI shrinks them
• why AI is the great equaliser once every firm uses the same tools
• what the seven core dimensions are that set top ranked lawyers apart
• why fixed fees only pay off when partners learn to budget time
• how a firm leaves the billable hour without a six month panic

Chapters

(00:00) Introduction

(02:59) From C&A to NautaDutilh: an unusual career path

(11:41) Partner compensation defines what a law firm is

(13:17) The champion and the twin sister in the audience

(16:09) Why the law firm business model is starting to unravel

(19:46) The creation production divide

(24:07) The Picasso story: who pays for creation?

(26:02) Pricing, the value matrix and the hourly assumption

(29:57) Kirkland, Latham and proprietary AI

(31:17) 83% of client praise is about human skills

(36:23) The seven core dimensions of top lawyers

(45:35) A law firm business model built on human skills

(47:31) Freshfields and the AI bifurcation in Big Law

(50:18) Zeno's question: AI for smaller law firms

(54:22) Delegation and the rubbish question problem

(56:45) The billable hour in the age of AI

(1:02:07) Value-based billing and plain vanilla work

(1:06:34) A historic opportunity for mid-tier firms

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