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Key Points:

• • • Reactive services are becoming obsolete — The conventional model that relies on addressing client issues only after they occur has reached its limits. With proactive, AI-powered monitoring, entirely new categories of legal value are being established.

    • Consolidation is approaching — Within the next five years, the legal profession is likely to split into two factions: those firms that fully embrace agentic AI transformation and those that continue to cling to traditional business models.

    • Early adopters are raising the bar — legal firms that seamlessly integrate AI agents as embedded legal monitoring tools will set new standards that traditionalists struggle to match.

Welcome back to The AI Law Professor. Last month, I discussed the importance of asking the question “What if AGI?” as a crucial part of strategic planning for lawyers. This month, I’m delving into a transformation that’s already underway: how AI-powered legal risk management systems can prevent issues rather than just resolve them, and what implications this has for the relationship between lawyers and clients.

As businesses begin to view every decision as an opportunity for instantaneous legal insight, the overall market for legal services will expand dramatically. The acceleration provided by AI, particularly agentic AI, is aimed at making this transformation happen at an extraordinary pace. This shift is not about displacing lawyers but reimagining the lawyer-client relationship. It transitions lawyers from reactive problem-solvers to embedded strategic partners focused on preempting legal issues before they arise.

The End of Reactive Lawyering

Imagine a senior partner in a highly respected law firm back in 1995, busy dictating memos while junior associates pored over hefty legal tomes in the library. Fast forward to today: that same partner now sends emails with a computer at their fingertips, while large libraries have turned into comprehensive digital databases, and junior associates find themselves more versed in search algorithms than traditional mentorship. Yet, despite these advancements, the core operational model has not evolved significantly. Lawyers continue to react to issues only after they emerge, frequently billing by the hour and approaching technology as a means to improve efficiency rather than as a collaboration tool.

Now, we stand at the precipice of something fundamentally transformative. Agentic AI’s emergence is not merely about accelerating existing processes or making them more affordable; it’s about redefining law firms as proactive partners, seamlessly integrated within the real-time operations of their clients.

Current implementations of agentic AI typically follow a predictable pattern. Many firms utilize it for high-volume, low-risk tasks such as sorting documents, conducting initial contract reviews, and performing basic due diligence. However, confining agentic AI to mundane tasks is akin to utilizing a Ferrari for pizza delivery—it fails to capitalize on the true potential of this transformative technology.

The traditional model remains unchanged. Lawyers still respond to issues after they occur, charge by the hour, and regard technology as a mere tool rather than a collaborative partner.

The real game-changer emerges when we reframe the lawyer-client dynamic entirely. Instead of awaiting the next emergency call, envision law firms that have AI agents constantly scrutinizing client operations, analyzing contracts in real-time, and alerting stakeholders to potential issues before they escalate into significant disputes.

This move from reactive legal service delivery to proactive engagement marks a classic pattern of disruption. It does not simply enhance existing services but fosters entirely new types of value.

The Proactive Revolution

I foresee a controversial prediction: within five years, we will observe significant consolidation within the legal sector. However, this won’t follow the familiar pattern of larger firms merging with smaller practices. Instead, we will witness a clear division between those firms leveraging agentic transformation and those clinging to outdated business frameworks.

The flourishing firms will look radically different from today’s conventional partnerships. They will employ machine learning experts side by side with attorneys, offering managed services that fully incorporate AI agents into client operations, billing clients based on delivered value rather than time consumed. Think of these firms not merely as law firms but as legal tech companies employing legal expertise.

Conversely, firms that see AI as just another rudimentary tool and continue to charge clients by the hour while hastening their processes will find themselves trapped in a downward spiral. They will miss the pivotal moment when incremental improvements make way for groundbreaking transformations.

The most thrilling prospects lie not in small-scale enhancements but in the generation of entirely novel categories of legal value. Envision a legal firm that *never waits* for contracts to turn sour but consistently monitors them, promptly notifying clients of evolving conditions that might necessitate renegotiation. Imagine legal departments capable of simulating the regulatory consequences of business decisions prior to execution, processing thousands of scenarios through AI agents trained on pertinent legal precedents.

The most exciting prospects lie not in gradual improvements but in the creation of entirely new categories of legal value.

This proactive legal model changes the role of lawyers from reactive responders to strategic partners. It dramatically amplifies the overall addressable market for legal services. Every business decision morphs into an opportunity for immediate legal insights, and each operational shift receives a real-time evaluation. A law firm could feasibly provide legal monitoring as a service, with AI agents functioning as clients’ always-on legal watchdogs.

Once firms embark on this journey, retracing their steps will likely prove challenging. Early adopters will establish fresh client expectations that those lagging behind cannot match. The competitive advantages will compound over time, as firms gather extensive data, refine their models, and deepen their integration with clients.

The Stark but Clear Choice

Having spent decades developing AI tools for legal practice, I can discern between fleeting hype cycles and genuine paradigm shifts. Agentic AI clearly represents the latter. This evolution isn’t merely about executing the same tasks at greater speed or lower cost; it’s about fundamentally reevaluating the essence of legal services.

The firms gearing up for success in this new era are already testing, learning rapidly, and seeing returns much quicker. They are crafting products that automate routine tasks while innovating service models that were once unimaginable. These firms approach technology not as a threat but as a means to amplify human skill and knowledge.

What lies in front of today’s legal professionals is a clear-cut choice: embrace the transformative potential of agentic AI to redefine legal practices, or resist change and risk becoming obsolete in a rapidly evolving landscape. The traditional apprenticeship system prevalent in legal circles is fading away, giving way to an age of collaboration between humans and AI.

Those who recognize this pivotal shift, commit to understanding and systematically implementing agentic AI, and reimagine their practice models will not only endure this transformation but will flourish within it.

In fact, they will thrive in ways that may seem like the stuff of science fiction to that senior partner dictating memos in 1995.

The future of law isn’t about replacing attorneys with machines; it’s about enabling lawyers and technology to collaborate in delivering unmatched value that neither could achieve in isolation. This synergistic future is already upon us.

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Well, that brings us to the end of 2025! I wish you and yours a very happy holiday season, and I’m eager to witness what 2026 holds for us. The future shines brightly!

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