Wall Street banks such as Goldman Sachs (GS.US) and MS.US (MS.US) pressured law firms to cut fees and share AI efficiency dividends

The Zhitong Finance App learned that Goldman Sachs (GS.US), Morgan Stanley (MS.US), and Citigroup (C.US) told law firms that since artificial intelligence (AI) technology has made routine work more efficient, the fees charged by law firms should also be reduced.

According to reports, Goldman Sachs has asked law firms how much money AI has actually saved them, and hopes to share with law firms the benefits brought about by these efficiency improvements. Morgan Stanley's general counsel Eric Grossman said the law firm's current pay model is “extremely unstable.”

Adam Meshel, head of global legal affairs at Citigroup, told the media that if lawyers can handle a matter in less time with the help of AI, then Citi's expectation is that “the cost of each transaction will drop drastically.” Citi has begun requiring law firms to bid on related businesses and explain how much they have saved using AI. Adam Meshel said “a different work model” formed based on this approach could be established within a year.

It is worth mentioning that in addition to law firms, consulting firms, auditors, and other professional service practitioners who are also affected by AI, are also under pressure to transfer cost savings to clients. According to previous reports, top management consulting firms such as McKinsey are facing a change in the charging model driven by AI. Customers are increasingly demanding that consulting fees be linked to quantifiable results such as reducing costs, increasing profits, or increasing market share, rather than being billed by consultant hours. The immediate background of this transformation is the widespread application of AI. Consultants themselves have made extensive use of AI to complete tasks such as data analysis and diagnosis, making the significance of “billable working hours” as a pricing benchmark increasingly weakening.