A&O Shearman invests $1.1bn in AI

A&O Shearman told the FT it will invest $1.1bn in AI over five years, a commitment partners made this autumn. Most of the money comes from each practice spending at least 3% of billable time building AI tools for its area of law, plus funds for technology; practice heads decide whether that is full-time staff or spread across associates and partners, and the firm monitors the hours. AI usage became a bonus and performance metric this summer for associates, partners and business functions. David Wakeling, global head of AI, says the aim is 'redesigning the service completely', not chasing the latest model: 'it's all about leveraging teams of lawyers' expertise into specific AI systems that team uses'. The firm was Harvey's first customer in 2022 (Harvey is now valued at $15.5bn) and built ContractMatrix with Harvey and Microsoft, which it sells to clients; revenue is 'tens of millions of US dollars', up ninefold year on year, and ContractMatrix won a multiyear mandate for a global financial institution in a blind evaluation that beat the client's internal data-science team, specialist legal AI and foundation-model providers. Fixed-fee income is up 15% in two years, partly due to AI, though the majority of fees are still on the billable hour. The firm was formed from Allen & Overy and Shearman & Sterling in 2024. Caveats: the breakdown of the $1.1bn (software vs time vs vendors) is not given beyond 'majority' from billable time; Wakeling declined detailed ContractMatrix financials; peer spend comparisons are only general; and the information comes from the firm itself.