Abir sees AI reshaping law firms as industry consolidation accelerates

The plaintiffs' bar is headed toward significant consolidation, with a relatively small number of large firms increasingly competing for lawyers and clients and smaller practices facing pressure to merge, change direction or disappear, according to attorney Danny Abir.

Artificial intelligence will be an important part of that transformation, Abir said, because firms facing a shortage of attorneys will increasingly need technology to get more work from the people they can hire.

Abir, co-founder and managing partner of ACTS Law, spoke to the Daily Journal following the "Artificial Intelligence for Use in Your Practice" panel at the Consumer Attorneys Association of Los Angeles annual convention in Las Vegas.

"I wholeheartedly believe that our industry is consolidating," Abir said. "Not just on the defense side."

ACTS Law is a California plaintiffs' firm with more than 40 attorneys and roughly 200 employees, according to Abir. The firm has more than doubled and nearly tripled in size over the past five years -- growth he views as increasingly important as the economics of the plaintiffs' bar change.

The pressures driving consolidation are relatively straightforward, he said: There is a finite supply of lawyers, cases and clients, while some of the largest plaintiffs' firms are willing to spend enormous amounts to compete for both clients and employees.

Some firms are spending $5 million, $6 million or $7 million a month on advertising, he said. At the same time, large firms can offer salaries that smaller competitors cannot match.

"What does that do to the smaller firms?" Abir said. "The smaller firm will either get absorbed, go out of business slowly, or have to go into a different line of business where they don't have the competition."

Technology becomes especially important under those conditions, he said, because a firm that cannot hire all the people it needs has to find a way to get more from the people it has.

"In a market, in an economy that is that way, reliance on efficiencies, reliance on technology becomes paramount because you will not be able to survive if you need 10 people and you only have five," Abir said.

Recruiting lawyers has become one of ACTS Law's biggest challenges. The firm has advertised positions on Indeed, in Advocate magazine and through social media, but attorneys have proved particularly difficult to find.

Abir even incorporated the firm's hiring difficulties into his CAALA presentation, knowing about 700 attorneys would be in the audience.

"I figured there's going to be 700 people in there," he said. "Maybe there's somebody in there who is looking or is unhappy being on their own or whatever it is, and they'll take a shot."

It did not happen.

"I didn't get one person to come and say, 'Hey Danny, what kind of lawyer are you looking for?'" Abir said. "No one."

AI has helped him approach the problem differently. While driving from Encino to downtown Los Angeles, Abir said he discussed the firm's hiring difficulties with an AI application. After learning the size of the firm, the AI suggested ACTS Law hire an in-house recruiter who could proactively identify candidates through LinkedIn and employment sites.

The system then drafted an advertisement for the position and revised it after Abir asked for a more professional tone.

"That app or that AI agent helped me like a second brain," Abir said.

But technology has not eliminated the underlying shortage, which Abir believes feeds directly into consolidation.

He compared what he expects to happen in law to the transformation of the accounting industry, where a much larger collection of major accounting firms eventually became the Big Four.

Abir predicts a similar dynamic will become increasingly visible in the plaintiffs' bar, with a relatively small group of large firms building national footprints while smaller practices consolidate, change direction or disappear.

He pointed to Morgan & Morgan and Sweet James as examples of plaintiffs' firms already operating at significant scale and said he expects perhaps another 10 or 12 firms to emerge as dominant players.

Abir said larger firms will increasingly have an advantage in attracting attorneys as they gain market share, "dominating the marketing" as well as the competition for manpower.

He does not attribute the trend primarily to private equity, despite growing discussion about outside investment and alternative business structures in the legal profession.

"Some people think it's a factor of private equity money coming into our industry," Abir said. "I respectfully disagree with that."

Private equity may accelerate the trend, he said, but consolidation began before private equity began seriously looking at structures for investing in law firms.

Abir's concerns go back years. He recalled opposing proposals approximately six years ago for a State Bar regulatory "sandbox" that could have opened the door to new models for delivering legal services.

He said he fought the idea "tooth and nail" because he believed it would be harmful to the profession.

But he also came to another conclusion: Change was inevitable.

"Once it happens, it's going to be like a snowball," Abir said. "You're not going to be able to stop it."

Instead of relying on stopping the trend, Abir decided to prepare ACTS Law to survive it.

"Our firm has more than doubled, almost tripled, in the past five years because of that," he said.

His thinking was straightforward: Build enough scale that the firm could withstand a changing market.

"I'm going to grow a firm so that either somebody would have to buy it or I won't get squished out because we are a player in the market," he said.

AI is one piece of that strategy, but Abir does not believe attorneys are uniformly ready for it. He sees younger lawyers as generally more willing to embrace the technology and older attorneys as more apprehensive.

Abir himself initially found AI overwhelming before spending time experimenting with it.

"I don't think AI will replace us, but it sure as hell is going to change us," he said.

For law firms, Abir believes the immediate questions are not futuristic. They concern how firms recruit, compete, manage employees and serve clients in an industry changing much faster than many attorneys realize.

That speed has also changed the time horizon for predicting what comes next.

"You can't think in decades anymore," Abir said. "Maybe five years, maybe three years, but definitely not 10 years, because predicting what we're going to be in 10 years is just going to be wild."

"It will be fun to watch."