How to know when your AI plan needs to be revisited

*A response from someone who watched these fault lines converge from the inside.*

By Heather Morse

While I read Gina Rubel‘s recent piece, Warning Signs Mid-Market Firms Ignore at Their Peril Before a Forced ‘Combination’ or Collapse, I couldn’t help but see myself and my recent lived experience. Until just a few months ago, I was the chief marketing and business development officer of a mid-sized law firm before it wound down its operations. It happened fast. I don’t think any one of us could point to one cause. Rubel accurately identifies the risks confronting mid-sized law firms and makes the case for taking action now.

In my experience, there is one emerging force that is amplifying every item on that list. A pattern I recognized from Rubel’s article is one I’m sure we’re all familiar with:

• Many mid-sized firms, ours included, compete for some of the same clients as the Am Law 100 and 200. Those clients want to pay mid-sized firms substantially less per hour for comparable work, effectively pricing substantive legal work at commodity rates.
• Competing at that level meant investing in things like technology and talent well beyond what our margins could support.
• The competition for all legal and business talent, especially lateral partners, is more intense than ever. Mid-sized firms struggle to afford the lateral partners, especially those who can elevate their established practices (and rates). Lateral associates are negotiating for the same salaries their peers are earning at more competitive firms, leaving the firm’s associates vulnerable to headhunters.
• Oftentimes, the profits per equity partner (PPEP) and the firm’s point value metrics weigh too heavily in a firm’s strategic or business planning and operations.

And finally, the numbers work for a long time. Right up until they don’t.

That’s the dynamic Rubel describes. And when that dynamic intersects with a force unlike anything the profession has faced before, the implications become even more significant.

The variable that must get added to the list

AI, generative and agentic, is not merely one more item to add to the risk list. It’s already compressing the billable work – drafting, research, first-pass review, etc. – that used to fund the hiring and infrastructure firms needed to compete. At the same time, it’s raising what clients expect on efficiency, price, and turnaround. Two problems that used to arrive one at a time are now arriving together. Same clock.

On top of that, the client does not want to pay for the investment in AI, or the efficiency it creates. Yet the law firm business model is still built on the billable hour. Most firms aren’t prepared to shift to alternative fee models like value-based or project billing.

Part of why the profession is slow to respond is baked into how lawyers are trained. Good lawyering means reasoning from precedent, and there isn’t one for this. The instinct that makes someone excellent at practicing law is the same instinct that slows a firm down when there’s no comparable case to cite.

Over the course of my career, I have watched this instinct play out even in small decisions. Committees spend weeks building a business case for a new lateral hire, a familiar exercise with familiar comparables, only to see the candidate accept an offer elsewhere when the interview process bleeds into months. A proposal to restructure how the firm conducts new client intake, or closes files when a matter concludes, gets caught in an endless cycle of edits, each one nudging the new process a little closer to the old one.

In both cases, it was the reach for something familiar, a comparable deal, a familiar process, that cost the firm. The same muscle memory that makes lawyers excellent advocates becomes a liability in strategy. Wait for the precedent, and by the time one exists, someone else has already set it.

The timing is worse than it looks – and the problem is hiding in plain sight

Thomson Reuters’ 2026 Report on the State of the US Legal Market shows mid-market firms outgrowing the Am Law 100 this year. That should be good news. It also means less internal pressure to change anything, which is exactly the wrong instinct right now.

Good current numbers are becoming cover for exposure that debt, receivables, and concentration metrics were never built to measure. That’s exactly why planning still matters, just not the five-year, vision-and-mission kind. Nothing holds still long enough for that anymore. Instead, shorter term scenario planning is what is needed.

What I would push for

Treat AI exposure as something you check continuously, not something you write into a plan once a year and revisit at the next retreat.

We already know the risks. The challenge is creating a disciplined way to assess where a firm is exposed and whether leadership is prepared to act before those vulnerabilities become crises. Most firms aren’t short on intelligence about what’s coming. They’re short on willingness to give something up, whether that’s headcount, short-term income, or a piece of their identity.

It also means being willing to rethink a strategic plan that’s six months old and start over. Don’t let sunk costs talk you out of funding the plan that’s actually right. In fact, an outdated plan in a market moving this fast doesn’t just fail to help. It gives leadership, and everyone else, a false sense that the problem is being considered and handled.

How do you know if your AI plan needs to be revisited?

To know if your AI plan needs to be revisited, ask three questions:

1. Does the plan address how AI is already reshaping the practice of law, not just the business of it?
2. Does the plan commit real dollars and real training, or does it just check the box with a pilot program that got mentioned once and shelved?
3. Is leadership genuinely willing to act on what the plan reveals, even if it means changing course?

A plan missing any one of those isn’t strategic anymore. It’s a document that used to be true. It’s like litigating a point using evidence already proven ineffective or inadmissible.

The threats a firm can’t see coming are the ones it has no precedent to recognize. The firms that make it through this won’t be the ones with nothing to worry about. They’ll be the ones who went looking for the problem before the market found it for them.

—

* Heather Morse is the founder of Heather Morse Advisory, which helps law firm leadership assess their exposure to AI-driven disruption and build the willingness to act on what they find.*

“Reprinted with permission from the July 31, 2026, edition of the Law.com © 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.”