Law firms adopting AI has not changed the value of face-to-face relationship-building with clients, according to a new white paper by MD Communications.
The report – Human in the Loop: The lawyer as trusted adviser in the age of AI – highlights the increasing value of human insight and relationship-building as AI continues to automate tasks traditionally done by junior lawyers. It was launched at the IBA annual conference in Copenhagen, Denmark.
Some 93% of respondents said relationship-building is becoming more critical, while 52% think AI is changing how trust is built with clients.
Melissa Davis, founder and CEO of MD Communications, said the survey suggested the advent of AI has “delighted and disconcerted legal services in equal measure”.
While the profession races to embrace the efficiency and cost-saving benefits of new technologies, it has struggled to reconcile them with adverse impacts on business development, particularly for junior lawyers.
AI is not the only disruptor of traditional business development routes; the pandemic and remote working have also posed significant hurdles to relationship-building for newcomers, creating a gap between technical excellence and face-to-face business development.
Indeed, 66% of respondents named a lack of confidence as the biggest challenge facing young lawyers in developing relationship skills as they rise through the ranks, with 59% citing reduced in-person exposure due to hybrid working as another key driver of this trend.
Firms are addressing this chasm head-on: more than half (61%) of respondents said their firms plan to increase business development spending in the next five years, while 57% expect to increase total headcount in the next 18 months, compared with only 7% expecting a decrease.
Looking ahead, 83.5% of respondents said they see business development and relationship-building skills becoming more important to career progression in law. But the key to tangible success likely lies in bridging technical excellence with intrapersonal skills – moving with the times while acknowledging that law is still a relational business, as opposed to a transactional one.
Christine Braamskamp, London managing partner at Jenner & Block, said: “I think younger lawyers build relationships differently, and tech has something to do with that. Rather than fighting the differences, we need to empower them, put our faith in them and give them deliberate opportunities to practice [...] Those intrapersonal skills are a muscle. You develop them through practice.”
Meanwhile, firms are turning their attention to how reputational scrutiny is evolving and impacting their relationships with clients amid an increasingly polarised geopolitical backdrop. Some 79% of respondents said clients now scrutinise who advises them, ethically and reputationally, more than they did five years ago.
This extends to issues outside clear-cut professional boundaries for law firms, such as acting for fossil fuel companies, opening offices in countries with oppressive laws towards women or LGBTQ+ people, or taking a stance on Middle Eastern conflicts.
While firms cannot take a stance on every issue, clients value consistency in commitments and progressive practices, the report found. AI has a supporting role in navigating these moving parts, with 37% of respondents believing AI helps navigate complexity while humans handle trust. Some 46% said these issues further highlight the crucial role of sound human judgement in reputational matters, rather than AI.
Anne Macdonald, partner and head of business development at Harper Macleod, said: “A firm’s reputation has always mattered, but I think it now travels further and faster than ever before. Clients, colleagues and wider stakeholders increasingly pay attention to the clients’ firms act for, where firms operate, how firms respond to major geopolitical events and the approach to sanctions, ESG and the rule of law.”
The report suggests firms can address these reputational concerns by focusing on building and retaining client loyalty, with 55% of respondents finding that client loyalty has decreased somewhat over the past five years.
Braamskamp suggests this could be because clients are willing to move with an individual rather than between firms. “Firms lose clients when they become complacent – when they stop behaving as though they are still earning the relationship they worked so hard to win,” she said.
The fruits of face-to-face relationship-building show up in client retention, where genuine interest in the people behind the instruction pays off, Lesley O’Leary, chief operating officer at Charles Russell Speechlys, noted.
“Ultimately, loyalty comes when clients know you understand their definition of value and that you are consistently trying to deliver it,” O’Leary said. “The relationships that endure are the ones where the client feels genuinely understood, not simply serviced.”
Anna Dąbrowska, M&A partner at Wolf Theiss, authored the paper’s foreword, saying: “AI should make our lives easier, not more difficult, but we do need to invest time and effort to understand how we can use it to provide the best possible service to our clients."
The report draws on a global survey of 1056 individuals across 50 legal services businesses, supplemented by interviews with senior lawyers, law firm leaders and legal sector professionals. It follows the Global Legal Post launching the third edition of its comparative guide to artificial intelligence law at the start of this month, responding to AI's rapid development.
The Global Legal Post is a media partner of the IBA and will publish its conference newsletter, IBA Daily News, in Copenhagen, Denmark.
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