Key takeaways:

• • • Demand slowdown reverses LFFI gains 鈥� The LFFI鈥檚 Q4 2025 dip reflects a modest demand slowdown, marking a shift from rapid post鈥憄andemic rebound to a more stable, steady market.

    • Transactional practices plateaued while counter-cyclical regain momentum 鈥� Transactional practices leveled off while demand in the litigation, bankruptcy, and labor & employment practice areas accelerated, driven by rising disputes, regulatory pressure, and workforce complexities.

    • Clear opportunity for strategic realignment 鈥� Law firms may be able to shift their staffing toward growing counter鈥慶yclical areas, strengthening their pricing discipline and refining their recruiting processes.

After two consecutive quarters of improvements in the 成人VR视频庐 Institute鈥檚 Law Firm Financial Index (LFFI) score, the fourth quarter of 2025 marked a modest reversal in which it fell, albeit slightly to 61. The key driver behind this decline was a deceleration in demand that was meaningful enough to pull the overall score down and may signal that the market is moving into a more normalized rhythm 鈥� less snapback growth and more steady performance.

To understand what this means in practical terms, it helps to look beneath the headline numbers and examine not just what happened in Q4 2025, but also over the last two years. Then, a clear narrative emerges: Transactional work 鈥� M&A, corporate general, real estate, and tax 鈥� was powering the market in Q4 鈥�24 but largely plateaued in Q4 2025. Meanwhile counter-cyclical practices 鈥� litigation, bankruptcy, and labor & employment 鈥� regained momentum during the same timeframe.

Put differently, the practices that powered growth in the last year are fading as measured against their own baselines, while those practices that performed less strongly then are now starting to take the lead for the legal industry.

Practice level demand dynamics

By applying a magnifying glass to each transactional practice鈥檚 behavior over the past three quarters, one can identify a few important contrasts. The practice that stands out for its lowest growth in Q4 2025 is tax 鈥� and, in fact, across the final quarters of the last three years (even when it had a good performance in early 2025), that momentum didn鈥檛 translate to the end of the year. This indicates that tax has constantly posted the weakest demand growth, bottoming out at -0.9% in Q4 2023, when it was again the practice with the lowest growth. Even in the Q4 2024 鈥� a stronger year for most practices 鈥� tax grew only 1.5%, well below both its transactional and counter-cyclical peers.

This persistent underperformance may reflect several factors, such as increased internalization of routine tax work by corporate tax departments, pricing pressure in highly standardized matter types, and slower deal flow in M&A reducing ancillary tax activity. Whatever the cause, tax鈥檚 muted trajectory has had a dampening effect on overall transactional momentum and has acted as a drag on top-level demand growth.

On the other side of the room, counter-cyclical practices strengthened in Q4 2025 after a softer Q4 2024, nearly reaching the same growth that they presented in Q4 2023. Collectively, these practices rose to around 3.2% in Q4 2025, compared to about 1.5% growth in Q4 2024. This represents a true rebound after an unusually strong 2023, which was likely caused by lingering pandemic-related effects and the period鈥檚 surge in inflation.

Litigation leads the pack

Litigation provides the clearest example of this resurgence. During the Q4 2025, litigation led with roughly 4.3% growth, compared to 2.4% in Q4 2024. Indeed, the practice closed 2025 with renewed momentum, making it the standout in performance among major practices.

Litigation鈥檚 acceleration in late-2025 suggests that court systems have fully normalized, backlogs have largely cleared (in relative terms), and organizations are encountering a more contested operating environment. Regulatory scrutiny, geopolitical risk, supply chain disputes, and workforce-related conflicts all contribute to a litigation profile that is less dependent on economic cycles and more tied to the complexity of today鈥檚 business environments.

By contrast, after bankruptcy demand growth surged to 6.4% growth at the height of the pandemic recovery in 2023, the practice area experienced a dramatic cooldown the following year, falling to 0.4% just 12 months later. However, bankruptcy recovered modestly to 2.8% in Q4 2025, although still far below the extraordinary levels seen during its previous spike.

Taken together, these patterns suggest that corporate clients may be contending with a broader set of pressures 鈥� regulatory instability, workforce management complexity, and the downstream effects of post-pandemic backlogs 鈥� that could continue to generate steady legal demand.

Counter-cyclical trends reflect opportunity, not just reactive demand

The upswing in demand growth for counter-cyclical practices is not necessarily a sign of economic turbulence, however. Indeed, it shows the market can be stable and still produce more litigation, it can be cautious and still require restructuring advice, and it can be steady and still demand intensive employment support. The fact that transactional demand continues at a solid, albeit slowing pace, shows that this is not necessarily the recession-boosted practices that are driving law firm performance.

In fact, in a market in which transactional demand has stabilized and disputes and compliance work is rising, many law firms can use the moment to better align their operating model with the practice areas in which momentum is building and by aligning with actual demand.

For example, as litigation, bankruptcy, and labor & employment areas see higher demand growth, a firm may benefit from adding capacity in those areas, improving staffing leverage, and preventing partner bottlenecks. Meanwhile, steady but flattened transactional demand could call for disciplined, pipeline鈥慴ased hiring.

The practices that powered growth in the last year are fading as measured against their own baselines, while those practices that performed less strongly then are now starting to take the lead for the legal industry.

In addition, lower demand for transactional practices can represent an opportunity for law firms to refine their recruitment processes, as recruiters can take the time to seek those candidates whose skill sets offer added value. Prioritizing the hiring of candidates who bring fresh ideas and technological capabilities to support the tech-driven evolution of legal services may be the push some law firms need to meet the expectations of clients that are increasingly demanding greater value for their dollars.

This does not mean transactional work should be deprioritized, however. Instead, firms should adopt a dual鈥憈rack strategy: Optimize and streamline transactional capacity for efficiency, while strategically expanding counter鈥慶yclical teams in the areas in which demand is accelerating.

Making the strategic choice

On the face of it, it seems that many law firms face a strategic choice between doubling down on counter鈥慶yclical practices or continuing to prioritize transactional work. Current demand performance suggests counter鈥慶yclical areas offer the clearer near鈥憈erm opportunity 鈥� they are growing, resilient, and driven by structural forces such as regulatory scrutiny, workforce disputes, geopolitical risk, and more complex compliance environments.

Further, this environment elevates the importance of pricing discipline. As demand normalizes, clients become more price鈥憇ensitive and will expect efficiency and transparent staffing. Litigation and labor & employment may have more pricing power today, but disciplined pricing across all practices is critical for margin stability.

Indeed, the widening gap between transactional and counter鈥慶yclical practices signals a market in transition. The opportunity for firms lies in balancing these dynamics and aligning staffing, pricing, and operations to navigate uneven growth and capture value in a more complex legal environment.

You can download the听成人VR视频 Institute鈥檚 Q4 2025 Law Firm Financial Index听here

Key takeaways:

• • • Build due diligence into the process 鈥� Make human-rights due diligence routine from the decision to build or buy through deployment by mapping uses to standards, assess severity and likelihood, and close control gaps to prevent costly pullbacks and reputational damage.

    • Identify risks early on 鈥� Use practical methods to identify risks early by engaging end users and running responsible foresight and bad headlines

    • Use due diligence to build trust 鈥� Treat due diligence as an asset and not a compliance box to tick by using it to de鈥憆isk launches, uncover user needs, and build durable trust that accelerates growth and differentiates the product with safety-by-design features that matter to buyers, regulators, and end users.

AI is reshaping how we work, govern, and care for one another. Indeed, individuals are turning to cutting-edge large language models (LLMs) to ask for emotional help and support in grieving and coping during difficult times. 鈥淯sers are turning to chatbots for therapy, crisis support, and reassurance, and this exposes design choices that now touch the right to information, privacy, and life itself,鈥� says , co-Founder & Principal at , a management consulting firm that specializes in human rights and responsible technology use.

These unexpected uses of AI are reframing risk because in these instances, safeguards cannot be an afterthought. Analyzing who might misuse AI alongside determining who will benefit from its use must be built into the design process.

To put this requirement into practice, a human rights lens must be applied across the entire AI lifecycle from the decision to build or buy to deployment and use, to help companies anticipate harms, prioritize safeguards, and earn durable trust without hampering innovation.

Understanding human rights risks in the AI lifecycle

Human rights risks can surface at every phase of the AI lifecycle. In fact, they have emerged in efforts to train these frontier LLMs in content moderation functions and now, are showing up elsewhere. For example, data enrichment workers who refine training data, and data center staff, who power these systems, are most likely to face labor risks. Often located in lower鈥慽ncome markets with weaker protections, they face low wages, unsafe conditions, and limits on other freedoms.

During the development phase, biased training sets and the probabilistic nature of models can generate misinformation or hallucinations, and these can further undermine rights to health and political participation. Likewise, design choices often can translate into discriminatory outcomes.

Unfortunately, the use of AI-enabled tools also can compound these harms. Powerful models can be misused for fraud or human trafficking. In addition, deeper integration with sensitive data can heighten privacy and security risks.

A surprising field pattern exacerbates the risk when people increasingly use AI for therapy鈥憀ike support and disclose issues related to emotional crises and self鈥慼arm. In particular, this intimacy widens product and policy obligations, which include age鈥慳ware safeguards and clear limits on overriding protections.

Why human rights due diligence is urgent

That鈥檚 why human rights due diligence must start with people, not the enterprise. By embedding human rights due diligence into the lifecycle of AI, development teams can begin to understand the technology and its intended uses, then map those uses to international standards. Next, a cross functional team gathers to weigh benefits alongside harms and to consider unintended uses. Primarily, they need to answer the question, 鈥淲hat happens if this technology gets in the hands of a bad actor?”

From there, the process demands an analysis of severity 鈥� which assesses scale, scope, and remediation, and the likelihood of each use. The final step involves evaluating current controls across supply chains, model design, deployment, and use-phases to identify gaps.

The biggest barrier in layering in a human rights lens into to AI is the need for speed to market. The races to put out minimally viable products accompanied by competitive pressure can eclipse robust governance, yet early due diligence may prevent costly pullbacks and bad headlines. Article One鈥檚 Poynton notes that no one wants to see their product on the front page for enabling stalking or spreading disinformation. Building safeguards early “ensures that when it does launch, it has the trust of its users,” she adds.

How to embed safeguards without slowing teams

The most efficient path in translating human rights into the AI product lifecycle is to turn policy principles, goals, and ambitions into actionable steps for the engineers and the product teams. This requires the 鈥渆ngineers to analyze how they do their work differently to ensure these principles live and breathe in AI-enabled products,鈥� Poynton explains. More specifically, this includes:

Identifying unexpected harms 鈥� One of the most critical, yet difficult components of the human rights impact assessment is brainstorming potential harms. Poynton recommends two ways to make this happen: First, engage with end users to help identify potential harms by asking, 鈥淲hat are some issues that we may not be considering from the perspectives of accessibility, trust, safety and privacy?鈥� Second, run responsible foresight workshops at which individuals play the parts of bad actors to better identify harms and uncover mitigation strategies quickly. Pair that with a bad headlines exercise that can be used to anticipate front鈥憄age failures. Then, ship with these protections in place, pre鈥憀aunch.

Implementing concrete controls 鈥� Embedding safety-by-design should cover both content and contact, a lesson from gaming in which grooming risks require more than just filters. Build age鈥慳ware and self鈥慼arm protocols, including parental controls and principled policies on overrides. Govern sales and access with customer vetting, usage restrictions, and clear abuse鈥憆esponse pathways. In the supply chain, set supplier standards for enrichment and data center work that include fair wages, safe conditions, freedom of association, and grievance channels.

Treating due diligence as value-creating, not box-checking 鈥� Crucially, frame due diligence as an asset rather than a liability. 鈥淢ake your product better and ensure that when it does launch, it has the trust of its users,” Poynton adds.

Additional considerations

Addressing equity must be front and center. Responsible strategies include diversifying training sets without exploiting communities and giving buyers clear provenance statements on data scope and limits.

Bridging the digital divide is equally urgent. Bandwidth and device gaps risk amplifying inequality if design and deployment assume privileged contexts. In the workplace, Poynton stresses that these impacts will be compounded, from entry-level to expert roles.

Finally, remember that AI鈥檚 environmental footprint is a human rights issue. “There is a human right to a clean and healthy environment,” Poynton notes, adding that energy and water demands must be measured, reduced, and sited with respect for local communities, even as AI helps accelerate the clean energy transition. This is a proactive mandate.

You can find out more about the ethical issues facing AI use and adoption here

Key findings:

• • • • Strategic blind spots remain 鈥� Despite widespread awareness, many tax firms have yet to fully assess the operational or financial impact of the reform, highlighting the need for more proactive planning as changes approach.

      • Technology investment leads the way 鈥� Firms are prioritizing technology and now are beginning to complement these efforts with increased attention to staff training and client support, aiming for a more balanced and complete transition.

      • Client guidance is gaining momentum 鈥� While clients will be among the most affected, professionals are recognizing the urgency of providing clearer communication and tailored support to help clients navigate the reform more confidently.

Brazil鈥檚 tax, audit & accounting sector is on the verge of a historic transformation. The country鈥檚 new tax reform, approved by the National Congress, will gradually unify several existing taxes into a dual value-added tax (VAT) system. The reform aims to simplify compliance, promote transparency, and help citizens better understand how public resources are allocated.

Jump to 鈫�

Brazil Tax Reform for Tax Firm Professionals 2025

So how prepared are Brazil鈥檚 tax & accounting professionals for this upcoming shift? A new report from the 成人VR视频 Institute reveals a gap between awareness and action. While most professionals understand the reform and its implications, only a minority have moved into active preparation. Only a small group of firms have established internal teams or concrete plans; however, many others are now beginning to shift from passive monitoring to more decisive steps.

Definitions: Incipient: I am aware of the Tax Reform, but I am not keeping up with the changes. Beginner: I am following updates through the press and reports to evaluate information that fits the firm鈥檚 and customers鈥� profile. Preparatory: I have an internal working group and/or a developing plan. Advanced: I have allocated resources and a transition project in progress. Leader: I have the structure prepared for the transition and I am working with my team and external providers to anticipate our adaptation.

The reform is expected to impact core areas of tax, audit & accounting work 鈥� including tax calculation, pricing strategies, and advisory services. Professionals widely acknowledge these areas will be disrupted and are starting to take steps to assess and prepare for the changes. Technology investment is accelerating, with many firms upgrading systems and digital infrastructure to meet new requirements. At the same time, there is growing recognition that staff training and client education must advance in parallel to ensure a successful transition.

Many professionals have expressed a need for more resources and structured plans to help them guide clients through the reform, especially as they face changes in tax burdens, pricing structures, and compliance requirements. Encouragingly, firms are beginning to respond 鈥� developing communication strategies and training programs to better support both their teams and their clients.

You can download a full copy of the 成人VR视频 Institute’s “Brazil Tax Reform for Tax Firm Professionals 2025” in Portuguese here

One major area still evolving is the financial planning around the reform. Despite the potential for significant operational changes, most organizations have yet to estimate the cost of adaptation. As new requirements take effect, understanding and preparing for these costs will be essential to avoiding unexpected disruptions.

Opinions on the reform鈥檚 complexity remain divided. Some professionals expect simplification, while others anticipate greater difficulty in tax and accounting practices. This uncertainty only reinforces the importance of ongoing monitoring and the development of flexible strategies.

While technology remains a central focus, the sector is now beginning to align its efforts 鈥� recognizing that human capabilities and client engagement are equally essential. The transition is no longer just about systems and infrastructure, but also about empowering their professionals and building trust. Firms are taking steps to ensure that their teams are prepared and their clients are supported, thereby laying the groundwork for a more complete and resilient transformation.

You can download

a full copy of the English-language version of the 成人VR视频 Institute’s “Brazil Tax Reform for Tax Firm Professionals 2025” by filling out the form below:

Now, in addition to acting as an accredited museum docent at the Philadelphia Museum of Art (where he also serves on several curatorial committees and acts as guide coordinator for major exhibitions), Pagliaro is a frequent invited guest speaker and lecturer on art history at several universities in the Philadelphia area and southwest Florida, where he resides in winter.

Not surprisingly given his past position, he has strong opinions on how lawyer succession should be handled, and how clients should be brought into the situation.

鈥淭he great mistake most firms make is not maintaining a firm culture that institutionalizes client relationships and not making institutionalizing clients a core value of the partnership,鈥� Pagliaro says, adding that in most law firms, partners with clients benefit from referring to clients as my client and using ownership language and practices to insure they control the relationship, which is all the better to drive compensation their way and to resist pressure to retire when the appropriate time comes.

鈥淭hat is often not in the interests of the client or the firm,鈥� Pagliaro explains. 鈥淢any firms are content to let the primary relationship go on largely unsupervised, as long as the client relationship partner generates income.鈥�

A culture of institutionalizing client relationships

One way to instill a true culture of institutionalizing client relationships, he says, is for the firm to create a new role 鈥� Managing Partner for Client Relations (MPCR) 鈥� and ensure the professional in that role also sits on the firm鈥檚 compensation committee. The person in this new role should be charged with meeting with clients, eliciting honest feedback independently, and then exploring the full scope of each client鈥檚 needs. The MPCR should have as their main charge the job of supervising the cross-selling of the client to a broad spectrum of partners within the firm and creating client service teams, while acting as the team coach.

Importantly, it would also be their job to inspire all partners to understand that it is in every partners鈥� interest to expand client relationships as much as possible 鈥� even if there is a lead partner in the relationship.

鈥淭hat process needs to be transparent and supported in the compensation process,鈥� Pagliaro explains, adding that once an MPCR enters the mix, it opens the door for that individual to i) seek client feedback; ii) gather input from the client on succession; and iii) effectuate the transition of work and relationships.

Indeed, it is a culture that most firms say they want but struggle to achieve. That may be largely because firms lack discipline and follow through, and refuse to invest resources in creating infrastructure, empowering personnel, and providing support to drive true institutionalization of firm clients. Most critically, firms that are serious about creating such a culture need to back that up with a firm compensation process that reinforces the right outcomes.

Best practice for firm leaders is not to wait too long to address partner succession. A clear policy on when partners should begin to start planning for succession, which is fairly applied and religiously followed is crucial and should have the MPCR meeting with partners in the retirement zone at least three years before actual retirement. That way, this time can be used to manage the relationship, solicit input from the client, and introduce the client to more talent.

Too often, Pagliaro adds, partners don鈥檛 want to focus on this. 鈥淕ood succession planning is when you allow others on the team to succeed.鈥�

Planning for succession is critical

If a lawyer plans ahead properly, they can envision their best post-law firm life, says Pagliaro, adding that partners should ask themselves: i) how do I transition at a pace that makes sense; and ii) what is my objective for my post-law firm encore career?

That dream encore career can come in any form, and provide something that fills your life not just your time. Clearly, lawyers are used to being busy, engaged, and challenged 鈥� so they must recognize that they need to ensure their encore career presents opportunities for engagement, without the stresses of law practice.

Finally, know that there is no guarantee as to how long you will live or how many healthy years you have ahead, Pagliaro notes. 鈥淣ever assume you are invincible,鈥� he says. 鈥淣ever say 鈥業 don鈥檛 know what I would do if I didn鈥檛 go to work.鈥� There is a world of activities, opportunities, and needs out there 鈥� places in which people and organizations are desperately seeking intelligent, organized, and articulate folks to help, add value, lead, and instruct. It is actually fun to find your new niche.鈥�

This is the second part of a two-part blog series on the view of succession planning from the client side. In our last installment, we discussed the importance of keeping clients informed of changes in firms鈥� key partners.

Clients do not like to be told about any changes to the relationship team at the last minute, which is not surprising. Instead, involving clients up front is often a very smart decision on the part of the firm.

It鈥檚 also helpful to remember that succession can mean a number of things, especially to a client. It can mean a partner is planning to move on to post-law firm interests, an associate who may not be continuing on with the firm, or partners lateraling out to other firms. However, it may be the scenario involving a relationship lawyer and supporting legal team that is most crucial to firms.

No surprises please

In speaking of a relationship partner who had retired from an outside law firm, one Fortune 50 general counsel with whom I spoke, said: 鈥淚 felt like I just walked down the hall, and the office was empty, and the lights were off. Clearly the firm thought I鈥檇 be upset about losing him as part of the team so decided to just let me know he left and gave me the name of the person who would be replacing him 鈥� this was quite upsetting, and I almost fired the firm over it.鈥�

Clients do not like to be told about any changes to the relationship team at the last minute, which is not surprising.

Fortunately, after a few conversations, the firm was able to dissuade the client from letting the firm go, and firm leadership then involved the client in the decision about whom he wanted on the team to replace the partner who had left.

Daniel H. Weintraub, the Chief Administrative and Legal Officer of Audax Group, a leading private equity firm, says no surprises should be the rule. 鈥淪uccession planning should start at the beginning of the relationship 鈥� it should never be a surprise,鈥� Weintraub says. 鈥淵ou should build a client relationship that has succession built into it. No doubt, I would be fired if I didn鈥檛 have this redundancy put in place in our own organization.鈥�

Weintraub explains that most of the time, clients hear about succession planning when someone calls up and says I鈥檓 retiring in a week. 鈥淭his puts you in a bad position too, right? No one has focused on this but it鈥檚 critical,鈥� he says. 鈥淚f you need to ask who your person at the law firm is, then you have a problem. If my relationship is with one person, then that鈥檚 a problem from a succession planning perspective and also for me. It means I鈥檓 completely wedded into one person, so what happens if that person is gone? If I were a managing partner of a law firm, I鈥檇 make sure that succession planning was done from the top down. Avoid the surprises.鈥�

Taking the cue from the company

Indeed, Weintraub鈥檚 comment about redundancy should resonate with firms. Companies in general do a much better job developing succession planning for their executives and key sales leaders who oversee important clients and customer relationships. That is to say, clients are very savvy and aware when it comes to service teams, and their important client and customer relationships, and they expect the same from their outside service providers.

The ongoing success of any firm鈥檚 client relationships is dependent on a few important details, and critically among them is trust and loyalty.

鈥淚 don鈥檛 want to learn about your succession planning through an out-of-office reply,鈥� Weintraub says. 鈥淭he relationships should be with multiple people on multiple levels 鈥� this is strategic account management.鈥� Too often, he adds, outside law firms often tell clients who the new person is going to be without consulting with them beforehand. 鈥淭here is an arrogance to that [on the part of the firm] 鈥� I get to decide who the relationship partner is going to be, rather than being told.鈥�

The ongoing success of any firm鈥檚 client relationships is dependent on a few important details, and critically among them is trust and loyalty. However, this goes both ways. Involving clients in succession planning way in advance 鈥� three to five years at the very least 鈥� will build stronger, more loyal and more trusting relationships with important clients.

Unfortunately, most clients report that they are seldom involved in this process, which many view as an insult to them and a huge opportunity lost for a firm to differentiate itself from others. Clients value their outside counsel and see them as part of their team and involving them in important decisions will go a long way to retaining their revenue and building long-lasting relationships.

This is the first part of a two-part blog series on from the client side. In our next installment, we speak with one lawyer about their succession experience leaving their firm.

Yet, there is an optimistic side to the current wave of AI technologies, because AI, like any technology, is neither inherently good nor bad. It’s up to us to use AI technologies to transform our lives positively and find ways to use their practical benefits. Sure, this technology can be used for bad things, but it can also benefit our lives and be used to protect us.

From enhanced efficiencies to giving voice to the voiceless

For example, one of the most significant impacts of AI is in healthcare. AI algorithms can analyze medical data at an unprecedented speed and with stunning accuracy, leading to early disease detection and personalized treatment plans. For instance, IBM’s Watson AI is by analyzing vast amounts of medical literature and patient data to provide oncologists with evidence-based treatment options. This not only saves time but also increases the chances for successful outcomes.

There is an optimistic side to the current wave of AI technologies, because AI, like any technology, is neither inherently good nor bad.

And AI is helping individuals overcome health challenges in other ways. Rep. Jennifer Wexton (D-Va.) has been a member of the U.S. House of Representatives since 2019. Unfortunately, last year, Rep. Wexton was diagnosed with progressive supranuclear palsy, which impacted the congresswoman’s ability to speak. Now, however, she has her voice back because of AI鈥檚 ability to use audio from some of her speeches. With that audio data, a software company of Rep. Wexton’s voice, which she now uses to communicate.

Rep. Wexton said that she feels using AI to restore her speech was an important way to show that just because her speech may not be what it used to be doesn’t mean her words are any less hers or less important for others to hear.

This has been part of the evolution of AI. At first, AI technologies could only imitate our writing style, then it was our voices, and now it is possible to create a video doppelganger of yourself.

So-called deepfake videos have a bad reputation as something unethical that spreads disinformation or propaganda. However, many of these early Ai-produced deepfakes were easily spotted as fakes because of how the person in the video moved, tending to be stiff or unnatural. However, today鈥檚 AI technology has advanced to the point in which these videos are much . While maybe not ready for the entertainment industry, these videos could be used for training, corporate reports, presentations, or online videos (like YouTube or TikTok). And their widespread use will make the creation of online videos faster and easier to get done more quickly.

AI鈥檚 impact on industry

Not surprisingly, AI is changing how many industries approach their operations, especially law firms. Already, lawyers have begun working with business-friendly and legal-specific AI technologies. And by using these generative AI (GenAI) tools, law firms will be able to streamline administrative tasks, reducing the need for non-fee-earning staff and optimizing labor costs. And in its most advanced use, AI could provide predictive analytics for case outcomes based on historical data, helping law firms more quickly strategize with clients and advise them on making more informed decisions.

As AI technologies continue to tackle even more complex tasks, legal services will become even more strategic for a client. Enabling an outside law firm with AI could likely result in a complete overhaul of how services are performed and delivered. The future law firm will likely look a lot different in a few years than it does today.

Of course, as more industries find use for AI technologies, those same technologies are now being leveraged by scammers and illicit agents to break into networks and computers or, as in the above example, to create highly effective phishing scams using deep-fake conversations to steal money.

Not surprisingly, AI is changing how many industries approach their operations, especially law firms. Already, lawyers have begun working with business-friendly and legal-specific AI technologies.

An AI-enabled cybersecurity attack is capable of being much faster and much more sophisticated than anything done in the past. For example, if your network is breached, the AI attacker could observe and then be able to mimic network traffic, allowing it to so effectively hide that you would never know your system had even been breached in the first place. The , however, is that AI-enabled technologies are not just in the hands of those who wish to attack us. AI-enabled technologies are now also being leveraged to better defend business and personal data and systems. Fortunately, AI also is able to deal with these problems faster and more efficiently.

AI can help manage the business

The adoption of AI tools in project management can help move the focus from mere task execution to strategic planning and innovation, thereby . Such tools can automate routine content tasks 鈥� such as creating meeting notes, project progress reports, metrics reporting, or budget analysis 鈥� which in turn can allow project managers to concentrate more on the core task of executing the project on time and on budget. Further, AI can prioritize key metrics and process improvements, allowing project managers to focus on what truly matters.

Looking ahead, the future of AI is incredibly promising. As AI continues to evolve, it will not replace human workers but rather augment their capabilities, changing the way that work. Collaborative AI, in which humans and AI work together, will become the norm, and this partnership will lead to unprecedented levels of innovation and efficiency across all sectors.

Moreover, AI will lower the bar for access to information and services. With AI-driven tools, small businesses will have access to advanced analytics and automation previously available only to large corporations, further leveling the playing field and fostering innovation.

Conclusion

Even if today’s AI-enabled technologies aren’t perfect, they are getting better quickly as many industries get more experience in what works and what doesn’t. From almost any perspective, AI development appears to be moving at breakneck speed.

Yet, we are at the beginning of this new age of artificial intelligence. While there are many real benefits to using AI, we should not be na茂ve enough to believe there aren’t some very real potential dangers, too. We need to be educated about these technologies because they are coming fast, and we cannot ignore them. It is not a question of whether the technology we use will be more intelligent, but rather a question of how fast we can adapt to it.

You can find here.

In order for these managers to develop an effective strategy to address these challenges, they must first understand their department鈥檚 status as a business unit, and in doing so there must be certain measurable data points in which productivity and basic standards of success are measured within the department.

The use of is essential for any corporate department or function, as such metrics provide a measurable framework to evaluate the unit鈥檚 performance, efficiency, and effectiveness. Corporate tax departments are no exception in that KPIs are necessary to determine how work gets done, by who, and using what methods and tools.

In the Indirect Tax & Compliance report, a plurality of respondents said their biggest impediments to achieving their goals were technology & automation, with 40% citing this as a top challenge, and resource constraints (39%). However, it is also worth noting that when asked how many KPIs were used to measure success within the department, respondents said that on average, their departments were using six, with the top three metrics being measured being the accuracy of tax filing (90%), timeliness of tax preparation (84%), and minimizing cost (64%).

It is important that tax departments have these measurements, of course; but by increasing the number of items measured, departments could more easily identify the areas in which efficiency can be gained. For example, a tax department might be able to successfully accomplish those three KPIs, however upon closer inspection, how they are getting it done could come at a greater cost 鈥� think employee burnout due to long working hours, other projects not getting done, and the list goes on.

The need for KPIs

To set themselves up for better success, tax departments should consider a few things around what they measure and why. First, does the tax department fully understand the overall business鈥� strategic goals? Is it clear how the tax function supports the company鈥檚 financial health and compliance objectives? After it has been determined with the best clarity what the tax function鈥檚 role is within the organization, KPIs can then be set to help track how the department is doing in relation to those strategic priorities.

Next, the heads of tax departments need to make sure that each team member understands their own role within the group and how their actions can help the group meet its own priorities. Can each employee easily identify their metrics and how it feeds into the overall department鈥檚 performance? To ensure success, department leaders should continuously monitor performance against pre-established objectives beyond just getting taxes done right and on time. When this process is done correctly, it can also provide transparency and accountability among the team and lead to better decision-making. Just as importantly, this process allows for the ability to pivot and make a different or even better decision if something isn鈥檛 working as expected.

Basing decisions on data

Using data to measure how work is done is one of the best paths toward making better decisions about how to manage a business. And KPIs can help identify inefficiencies within the department, especially around the ways in which employees work and the areas in which resources can be better deployed. They can also help determine where an increase in automation may help and what other technologies can be used to support the tax function as a efficient and effective business unit.

Going beyond tax work and regulatory compliance, tax departments can leverage this data to better provide strategy advisory services to the larger business. Having KPIs that measure the department鈥檚 performance beyond tax preparation allows department leaders to think strategically about how the department can provide additional financial insights into such as critical decision as which business activities can yield more profits or savings.

Finally, cost-saving KPIs can play a pivotal role in helping tax departments secure additional budget resources. By tracking and demonstrating efficiency through these KPIs, tax departments can provide concrete evidence of their ability to optimize resources and reduce expenses.

By highlighting successful cost-saving initiatives 鈥� such as reducing compliance costs or minimizing tax liabilities through effective planning 鈥� tax leaders can showcase their departments鈥� achievements and make a compelling case for more funding. These KPIs also can identify additional opportunities for cost reduction, supporting the need for investments in new technologies, training, or process automation that promise long-term savings.

Further, aligning these KPIs with the organization鈥檚 broader financial goals can demonstrate the tax department鈥檚 contribution to overall cost management and profitability. And by regularly reporting on these metrics, departments can foster trust and accountability, making it easier to justify budget increases. In this way, tax departments can present a strong, data-driven argument for the additional resources they need to enhance their efficiency and effectiveness.

Conclusion

The implementation and continuous monitoring of KPIs are necessities for the success of corporate tax departments. These metrics provide a measurable framework to evaluate performance, efficiency, and effectiveness, allowing tax departments to align their operations with the broader strategic goals of the organization.

By understanding their role within the company and setting relevant KPIs, tax departments can ensure that each team member is aware of their contributions towards meeting departmental and organizational objectives. This not only fosters accountability and transparency but also aids in identifying inefficiencies and areas in which resources can be better utilized. Moreover, KPIs can highlight the need for technological investments and automation, further enhancing the department’s efficiency.

Beyond just meeting tax filings and compliance requirements, corporate tax departments can offer strategic advisory services that contribute to their companies鈥� overall financial health. In essence, KPIs are a critical tool that empowers tax departments to make informed, data-driven decisions, ultimately driving their success and value within the organization.

Just as they tend avoid planning for lawyer retirement, many law firm partners and leaders resist conducting cohesive succession planning. W. Scott Schulten, of , explains that just about every firm sees the succession planning process as 鈥渉ard and fraught with potential conflicts.鈥� And Roger Burton, Managing Partner of , concurs, stating many firms avoid the subject 鈥渂ecause of the difficult dynamic in addressing the transfer of client relationships and concerns around how it will play out.鈥�

Indeed, John E. Harrity of is more blunt, saying: 鈥淨uite frankly, I would say that most firms are living in the now and not thinking about the future.鈥�

No matter the reasons or excuses that many law firms offer, they must create a viable succession planning process. However, what does this process involve and how can firms ensure its acceptance and success?

Plain and simple, a succession plan identifies which attorneys will assume responsibility for which client relationships once a more senior attorney decides to retire. Once the potential replacements have been identified, these attorneys then are groomed in their new roles in order to better transition in managing the relationship without disruption, especially to the client. This grooming should include client meetings, case or matter discussions, education around understanding the client鈥檚 goals 鈥� essentially. everything related to managing the relationship.

Planning for an attorney鈥檚 departure is critical for ensuring the stability and continued working relationship with the client. Failure to plan for this change can result in client turmoil and power struggles among other firm attorneys. Succession requires managing and finessing human relationships, a task that 鈥� even with the best of intentions 鈥� is never easy. Indeed, successfully transitioning a client relationship can take years.

Overcoming obstacles

Many law firms avoid the succession issue due to a variety of real or perceived fears about hurt feelings with attorneys who may resist conversations that involve thinking about the end of their professional careers. Understandably, this is a very stressful decision, and it often takes time for clients to feel comfortable with a new relationship.

To put together a client succession plan, however, firms first need to answer these questions:

• • • Which attorneys are currently serving specific clients? If a client is seen as under-served, which firm attorney can be introduced to the relationship?
    • What types of training and mentoring will these attorneys need for any new roles? How long will that take?
    • What are the clients鈥� concerns about the potential loss of a retiring attorneys鈥� knowledge or skills? Do clients have successor preferences?
    • Are any of the firm鈥檚 key clients going through their own transition process? Does the firm have a relationship with the client鈥檚 next generation of leadership?
    • How will the named successor be introduced to clients, both socially and in a working relationship?

Starting the conversation also is in the best interest of the firm because under the American Bar Association鈥檚 Model Rules, Rule 1.3, the duty of diligence may require a lawyer to develop a succession plan. This empowers every law firm to pressure its attorneys to start the process.

Identifying the successor

To ensure that the best candidates are selected, the appropriate parties must be engaged in the process of succession planning. These include the client, the department chair, practice group chairs, and possibly the managing partner. Bringing all interested parties into the process at the outset will improve the results.

It is important to determine the kind of attorney needed for a successful succession. Law firm leaders need to look at, among other factors, the prospective replacement attorney鈥檚 character, background, experience, and shared vision of the candidate. Once someone is identified, the successor needs to be developed and coached so they can maintain and continue to grow the client relationship. For smaller law firms this can be daunting as there may only be one or two viable options.

From recent conversations I鈥檝e had with managing partners, there is sometimes no one at the firm to fill the role in the immediate future, meaning within the next two years. To prevent this problem, firms should start the succession process early so associates can be developed up to five to seven years beforehand. 鈥淚t facilitates the succession of younger partners and keeps them from becoming discouraged and leaving,鈥� says Ida Abbott, author of the book .

The goal is to find the right partner who will mesh with the client, ensuring a smooth transition. Karen Borofsky, director of administration at , explains that her firm has a two-year succession planning process that allows for 鈥渆nough time to foster relationships among [the firm鈥檚] clients and the succession partners.鈥� Clearly, firms should start now to identify and groom their next generation of client relationship attorneys and not wait until an attorney announces their plan to retire.

The 鈥渙ther鈥� succession plan

Smaller law firms that have founders or senior attorneys as managing partners are now realizing that in addition to a succession plan for individual clients, they also need a succession plan for the firm鈥檚 overall leadership. When firms are small, there may not be pool of potential managing partners to groom. And as the Baby Boomers reach retirement age in greater numbers, there will be many small firms with managing partners wanting to retire in the next two-to-five years but there鈥檚 no one to step into the role. And this often isn鈥檛 an easy role to fill quickly 鈥� managing a law firm requires business acumen, leadership, and communication skills, as well as a large dose of self-confidence. 鈥淯nfortunately, many lawyers bury their heads in the proverbial sand,鈥� says Erin Rhinehart of , adding that if firms 鈥渓eave succession planning to chance, things will, inevitably, work themselves out 鈥� just not necessarily in the most productive, efficient way.鈥�

For many law firms, especially though which may not have made this process a priority, the time is now to start such a leadership succession plan for the managing partner and all the other crucial leadership roles that exist within the firm on both the legal and administrative sides.

To better aid this process, Andrew Polott, Shareholder and General Counsel at , created a customized process for his successor, explaining that the successor started, 鈥渇irst by shadowing me, then by co-managing and taking on increased responsibilities as manager 鈥� and for the last quarter of my term [as managing partner], I acted as my successor鈥檚 shadow/coach.鈥�

Not surprisingly, leadership succession planning has been around since people started living in groups. It鈥檚 not hard, it just takes effort 鈥� and once the candidates are identified, they should be given adequate training in the topics below:

• • • Leadership skills to enhance their ability to lead the firm effectively and strategically
    • Business development skills, taught at a higher level so they understand how and why attracting new clients in order to grow the firm鈥檚 revenue and reputation is critical
    • Law firm management training that covers topics such as creating a business plan, setting a budget, overseeing operations, implementing policies and procedures, and ensuring compliance and quality standards
    • Establishing and maintaining partner relations so new leaders recognize the value of communicating clearly and frequently, soliciting feedback, resolving conflicts, fostering collaboration and trust, and recognizing contributions and achievements
    • Succession planning so they can start identifying potential successors for themselves and others in the firm, preparing them for their new roles, and facilitating a smooth transition when the time comes.

Retirement and succession planning are essential for the sustainability and growth of small law firms, as well as for the well-being and satisfaction of their senior attorneys. However, many lawyers face emotional and practical barriers to retiring and passing on their roles and responsibilities. Firms should provide guidance, support, and incentives to better help their senior attorneys overcome these challenges and embrace retirement as a positive and rewarding transition. In this way, the firm will also benefit by ensuring a smooth transfer of knowledge, clients, and leadership to its next generation of lawyers.

鈥淟awyers who have something to look forward to in retirement and realize they have many options ahead, readily plan for it, says Ida Abbott, the author of the book . 鈥淏ut some lawyers have worked so long, so hard, and so successfully, that their work has become their primary source of purpose, value, and identity.鈥�

Teresa Rider Bult, Administrative Partner and General Counsel at Constangy, Brooks, Smith & Prophete, concurs, adding that for many lawyers, it may be 鈥渄aunting to move from practicing 60 to 80 hours a week to doing nothing.鈥�

There are four main reasons why lawyers avoid retirement, which typically emerge as they get closer to retirement age.

1. 1. 1. Loss of identity 鈥� Lawyers grapple with the question of who they are beyond their legal roles.
      2. Resistance to exit 鈥� The thought of not showing up at the office becomes unimaginable.
      3. Fears about transitioning 鈥� The uncertainty of moving away from a familiar routine looms large.
      4. Failure to succession plan 鈥� Many attorneys lack a clear roadmap for the next phase of their lives.

To guide attorneys toward retirement, it is essential for their law firms to help them grapple with possibilities beyond their legal practice. Michelle Shultz, Managing Partner at Schulz Trade Law, agrees that the thought of retirement may be difficult for lawyers. 鈥淎ging and retirement are a challenge for anyone regardless of their profession,鈥� she explains. 鈥淸For] lawyers, it could be even more difficult because their identities are very much tied to their profession and it鈥檚 hard for them to let go.鈥�

What are the options?

Many attorneys derive intellectual stimulation from their active law practice, and they often worry that retirement would entail losing this mental engagement. The key lies in having something to retire to rather than merely a desire to retire from their legal practice, as astutely observed by Timothy J. Ramsey, a principal at Bodker, Ramsey, Andrews, Winograd & Wildstein. Visualizing a fulfilling retirement 鈥� whether it involves penning mystery novels or spending hours on the tennis court 鈥� can make the transition smoother, he adds.

Firms can play a pivotal role in supporting attorneys during this phase by introducing novel and intriguing activities for their post-practice life. Firm leaders should consider the following possibilities for their retiring attorneys:

• • • Exploring new careers 鈥� Some attorneys may choose to leave their law practice for an entirely different career path
    • Part-time fun jobs 鈥� Working part-time in an enjoyable role can provide a balance between leisure and productivity
    • Lifelong learning 鈥� Returning to school to acquire new skills or simply for the joy of learning is an enriching option
    • Financial optimization 鈥� Reducing living expenses to sustain retirement through social security, investments, or savings
    • Wanderlust 鈥� Traveling to explore new horizons
    • Volunteering 鈥� Contributing expertise to mentoring organizations like or other business-focused agencies
    • Relocating 鈥� Moving to areas or countries with a lower cost of living
    • Family time 鈥� Spending quality moments with family, especially grandchildren

As attorneys approach retirement age, their law firms should encourage them to step back from regular practice and explore alternative ways to leverage their experience. 鈥淭he practice of law provides great flexibility,鈥� says Michael Downey of Downey Law Group. 鈥淟awyers often appreciate having some way to use their experience, or to continue to earn some money.鈥� He recommends that retiring attorneys consider more pro bono, arbitration, or mediation work.

David Ernst, who retired after 30 years of practice and became a consultant focusing on law firm succession planning, says that he decided to 鈥渟tart consulting in this area after finishing my own succession journey because I wanted to help normalize discussions around succession planning in law firms.鈥� And Jim Pagliaro from Morgan Lewis decided in his 50s to take art history courses, then years later embraced retirement by becoming an art museum docent, passionately sharing his love for art.

Law firm support

Firms can provide valuable support by designating a key leader, external consultant, or coach to engage with senior attorneys as they approach their 60s. These professionals initiate discussions to assess several critical aspects, including:

Envisioning retirement 鈥� Senior attorneys are encouraged to describe their vision for the first week of retirement and reflect on their emotions associated with this transition.

Spousal perspectives 鈥� For those who are married or have significant others, understanding their partner鈥檚 feelings about retirement becomes essential.

Residence considerations 鈥� The choice between staying in their current home or relocating to a warmer or colder climate merits thoughtful consideration.

Health assessment 鈥� An honest evaluation of their current health status also informs retirement planning.

Legacy or financial priorities 鈥� Attorneys must weigh whether they wish to leave a lasting legacy or prioritize financial security.

Navigating retirement can indeed be daunting, and candidates benefit greatly from robust support as they embark on this significant life transition. 鈥淗aving a fair, transparent and effective retirement planning process is in the firm鈥檚 interest,鈥� says the author Abbott, adding that proactively managing the firm鈥檚 partner retirements 鈥渋ncreases the firm鈥檚 chances of retaining those partners鈥� clients,鈥� which can be key to ensuring a firm鈥檚 future.

There are, of course, necessary synergies between retirement and succession planning. Planning for retirement almost always requires a succession plan as well. However, there are certain aspects of succession planning that don’t rely on retirement. While closely related, there are sufficient unique considerations for succession planning that merit discussion of their own.

In the second part in this 鈥淧ractice Innovations鈥� series, we will look at how firms can more adequately provide for succession planning.

To shed more light on this, we spoke with Aaron Boersma, who currently serves as the Strategic Projects Lead in Global Affairs Finance at Google. In this role, Boersma is responsible for the development and execution of Google鈥檚 spend management strategy for its Legal, Regulatory, and Government Affairs teams.

Practice Innovations: Clearly, certain types of work seem more amenable to alternative pricing. What are some examples of matter types or types of work that you think can more easily be considered ripe for alternative pricing?

Aaron Boersma: Alternative pricing has always been a challenge between law firms and their clients. As someone who has spent their entire career in the legal pricing and spend management space, I have seen first-hand the discomfort that exists on all sides when it comes to new, innovative pricing structures. We are, as an industry, slow to change, and adoption of AFAs extends beyond a variance from standard practice.

AFAs, from their inception, were widely considered to be a tool for law firms to drive realization and profitability, as opposed to a way to more efficiently package legal services. Most articles and publications after the 2008 Financial Crisis touted AFAs as a way for law firms to claw back to profitability. It would naturally make sense for a legal services buyer to think twice about AFAs to make sure that these sort of arrangements are not just an attempt on the part of their outside law firms to boost profits, but that the AFAs represent a more effective packaging of services that drive better outcomes and partnerships.

I also think it’s important to level-set that AFAs do require a more hands-on management approach than you would normally see under a typical hourly arrangement in order for them to be successful. Instead of looking at the total WIP [work-in-process] spend, a law firm partner has to pay much more attention to the substance of the legal work for an AFA. They must consistently make sure that the current workload across their teams is in line with the underlying statement of work. Doing this well takes work 鈥� hours that aren鈥檛 necessarily going to be billed 鈥� but this work has the potential to pay dividends with deep long-lasting partnerships.

Practice Innovations: What would be the best way for a firm that may be unfamiliar with using AFAs with their clients to begin the process?

Aaron Boersma: For law firms wanting to get started with AFAs, I would begin focusing on areas within your practice that represent the least amount of volatility. They are relatively simple for in-house counsel to review. And only your own imagination limits the structure of these arrangements.

Practically, I have seen companies of all shapes and sizes start with straightforward litigation matters for AFAs. Instances where facts, evidence, and timelines are straightforward are ripe for AFA opportunities. Really, any situation in which law firms can provide predictability in fees is a fantastic place to start.

Practice Innovations: For these types of work, some law firms have begun to offer bulk or subscription pricing models. Can you explain how such a model would work in the context of the legal market?

Aaron Boersma: Subscription models for law firms are typically monthly or annual flat fee arrangements that allow a corporate legal department to access expertise from outside counsel in a particular subject area. This access is typically free-flowing between outside counsel and their clients within the defined scope and, once they get started, it is intended to create more of a boots on the ground partnership between a legal department and their law firms.

These arrangements could apply to any subject area, so long as the scope of what outside counsel will provide is clear. As with any AFA, the possibilities are only limited by our own creativity.

Practice Innovations: What are the potential advantages and disadvantages of moving to a subscription model?

Aaron Boersma: Subscription models are very advantageous for in-house legal teams. They remove a number of barriers to accessing outside counsel talent. Instead of opening a matter and going through an outside counsel selection process (via an RFP), outside counsel can get started on projects quickly, so long as they are within scope. This could, depending on the project, cut weeks off the time it would take to get the right partner in place. Add in predictability in fees, and there is a lot of untapped value around subscription models.

In light of the positives, these sorts of arrangements do require a lot of work. Law firms and legal departments alike will have to invest time and resources to make sure that these arrangements stay within the intended scope, and that the subscription is not over- or under-utilized. Indeed, without a tight, diligently managed scope, it would be easy for these arrangements to be over- or under-utilized. Outside counsel and corporate legal departments are partners in these arrangements, and it is the responsibility of both to make sure the arrangement is successful on both sides.

Practice Innovations: How amenable are clients to suggestions of pricing models like subscription pricing for legal work? How should a law firm go about pitching this to a client?

Aaron Boersma: Any client would be amenable to subscription pricing models; however, because they require a good bit of time and resources to manage from both sides, law firms should focus their efforts on current existing relationships that are viewed as strategic from both sides. These are not arrangements that can take a small relationship to a large one, but they have the potential to take things from strategically important to indispensable.