A&O Shearman invests $1.1bn in AI for legal future

A&O Shearman is set to invest $1.1 billion over the next five years in its artificial intelligence strategy, signaling a significant move in the competitive legal technology landscape. This substantial investment will involve partners dedicating at least 3% of their billable time across all practice areas to the development of AI tools tailored for legal applications.

This initiative represents a strategic re-imagining of legal services rather than a simple adoption of new AI models. The firm emphasizes leveraging existing legal expertise into specialized AI systems, with AI usage now incorporated as a performance metric for associates and partners since summer 2026. This includes rewarding contributions to personal productivity and the creation of resources for wider team use.

As an early adopter, A&O Shearman was the first client of legal AI startup Harvey in 2022. The firm has since developed and commercialized AI tools, such as ContractMatrix, a contract drafting and negotiation platform. This product has generated tens of millions in US dollar revenue, experiencing a ninefold increase year-over-year, and recently secured a significant mandate from a global financial institution.

While fixed-fee income has risen 15% over the past two years, partly due to AI integration, the billable hour remains the predominant billing method. The firm's AI strategy focuses on creating robust, specialized tools that enhance efficiency, generate revenue, and safeguard against market disruption.