The law firm will allocate $1.1 billion toward AI, requiring practice groups to dedicate 3% of billable time to developing legal AI tools.
A&O Shearman has announced an investment of $1.1 billion in its artificial intelligence strategy over the next five years. The firm, which was formed by the 2024 combination of Allen & Overy and Shearman & Sterling, stated that partners committed to this investment this autumn.
According to the firm, the majority of the investment will come from each practice spending at least 3 per cent of billable time on building AI tools for its specific area of law, in addition to funds for the technology. Practice heads may choose to meet this 3 per cent target by assigning staff to work on it full time or by spreading the work across associates and partners. The firm stated it will monitor practice hours to ensure the commitment is met.
David Wakeling, global head of AI at A&O Shearman, said the strategy is not about telling everyone to "use AI more" but "redesigning the service completely". "We think it is a mistake to chase the latest AI model constantly or to get a thousand AI models . . . it’s all about leveraging teams of lawyers’ expertise into specific AI systems that team uses," Wakeling said.
The firm introduced AI usage as a bonus and performance metric for associates, partners, and business functions this summer. Wakeling noted that different weighting is applied to tasks ranging from personal productivity to the creation of contract precedents and prompts for wider team use.
Regarding the firm's ContractMatrix tool, which was developed with Harvey and Microsoft, Wakeling said revenues were in the "tens of millions of US dollars" and had increased ninefold in the past year compared with the previous 12 months. The firm stated that ContractMatrix recently won a multiyear mandate for a global financial institution in a blind evaluation process, outperforming the client's internal data science team, specialist legal AI systems, and foundation model providers.
A&O Shearman reported that fixed-fee income has increased 15 per cent in the last two years, which it attributed partly to AI. However, the firm noted that the majority of fees continue to be based on the billable hour.
As law firms seek to create efficiencies and protect against disruption, A&O Shearman's large-scale investment reflects a broader industry trend of integrating AI into core legal services and shifting toward value-based pricing models.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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