Why AI Might Actually Create More Work for Lawyers

Bloomberg interviews Gary Wingens (Lowenstein Sandler) arguing AI could ultimately increase overall legal activity: as automation and lower costs reduce friction, lawsuits, deals, and litigation may rise via a “Jevon's paradox.” The piece also discusses firms’ AI adoption and how the traditional billable-hours model may be complemented while training junior lawyers.

Analysis

AI is more likely to reprice legal labor than destroy legal demand. The public-market winners sit in the proprietary-data and workflow layer: vendors with trusted content, citation graphs, matter management, and auditability should gain pricing power as firms need machine output they can defend in court and to clients. That favors names like TRI, RELX, WKL, INTA, and possibly LAW more than pure human-capital leverage.

The second-order effect is expansion of the legal TAM, not just margin compression. If routine drafting, search, and review get cheaper, smaller companies and lower-value disputes become economic to pursue, which can lift volume in contracts, compliance, discovery, and litigation support over 1-3 years. The risk is that large corporates internalize more work and push outside counsel into fixed-fee contracts, which would pressure realization rates before volume benefits show up.

Contrarian view: the market may be overestimating near-term headcount disruption and underestimating institutional friction. Courts, privilege, sign-off, and malpractice risk keep humans in the loop, so the first-order hit is likely to associate leverage and billable-hour pricing, not a collapse in legal spend. What would falsify the bullish read is 2-3 quarters of weaker outside-counsel budgets, explicit AI-discounted fee schedules, or evidence that legal tech adoption is reducing, rather than expanding, matter throughput.

Key Decisions for Investors

• Long TRI / RELX on a 6-18 month horizon: best risk/reward if AI raises demand for verified legal content and workflow rails; use weakness to build, since downside is cushioned by diversified recurring revenue.
• Long INTA or LAW into the next 1-3 earnings cycles: higher-beta way to express legal AI adoption; best if management shows AI-driven seat expansion or module attach rates, but size modestly because valuation can outrun fundamentals.
• Do not short the big law-firm theme directly; there is no clean public proxy and the more likely equity winners are enablers, not the labor-intensive service layer.
• Set a watch item on TRI/RELX/INTA guidance for realization rates and AI monetization metrics; if AI features fail to lift ARPU or outside-counsel spend slows for two consecutive quarters, cut the thesis.