On The Merits

AI is changing the way the legal profession operates and everyone — lawyers, law firms, and especially clients — needs to look past the institution that is the billable hour, according to Baker McKenzie global chair Sunny Mann.

“We all need to collectively move on in our thinking to get alternative fee arrangements working in the right way," he said on Bloomberg Law's On The Merits podcast.

Mann spoke to Bloomberg Law reporter Roy Strom about how his firm is using AI to change its relationship with its clients, the role AI played in its recent layoffs of professional staff, and what it's like for him to lead a global law firm during a time when globalization may be on the wane.

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Sidley Austin LLP crossed $3.74 billion in revenue last year and has its sights set on $4 billion — but according to its top leader, the number is a byproduct, not the goal. The real question is whether the firm is built for what comes next.

Today on On the Merits: Yvette Ostolaza, chair of Sidley's management committee, sits down with Bloomberg Law reporter Meghan Tribe to discuss strategic lateral hiring, formal integration plans, and a willingness to pull back from practices and geographies that aren't growing.

"There are no sacred cows," Ostolaza said. "We need to continue to evaluate how the industry is changing."

She also weighed in on how Sidley is treating AI: not as a pilot project, but as core leadership infrastructure deployed across the firm with dedicated governance, training, and practice-group liaisons.

"It doesn't replace judgment, it sharpens it," Ostolaza said.

When it comes to winning the legal industry talent wars, the best defense is a good offense, according to K&L Gates' global managing partner, Stacy Ackermann.

Her firm is "going out into the market" rather than "being in a reactionary mode of 'Let's see what comes to us and what the headhunters bring to us,'" Ackermann said.

She spoke to Bloomberg Law editor Chris Opfer on our podcast, On The Merits, about how competitive the market for legal talent has gotten, even in secondary markets like her home base of Charlotte, N.C. She also talked about why K&L Gates is continuing to push its attorneys to use AI, even after some of its attorneys got reprimanded last year for using hallucinated citations in a court case.

"I remember not so long ago that clients would say to me 'Please tell me you're not using AI,'" Ackermann said. "And now they're saying to me 'Please tell me you are using AI.'"

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For a long time, the top dozen or so law schools in US News & World Report's annual rankings stayed remarkably consistent, with Yale for example holding the top spot every year since the rankings debuted in 1990. But not this year.

Yale is now no longer at the very top of the highly influential rankings, which were unveiled earlier this week, having slid down to number two. While this may seem insignificant, Bloomberg Law columnist David Lat said even dropping one spot can tangibly affect a law school's brand.

Lat spoke about this with Bloomberg Law editor Jessie Kokrda Kamens for our podcast, On The Merits. He said recent changes in the methodology for compiling these rankings means we should expect more movement in and out of the top spots in years to come. Lat also talks about why the rankings matter for Big Law talent recruitment and beyond.

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Law firms bringing in outside investors is one of the hottest topics in the legal industry right now. John Quinn, founder and chairman of Quinn Emanuel Urquhart & Sullivan, says firms that want to take the cash need to figure out how to avoid alienating their younger attorneys.

Non-lawyer investment isn't common yet in the US, but some firms are experimenting with different ownership models—especially as they consider the price tags on AI tools. Bringing in outside investment can help raise capital. It can also dilute the pool of profits that associates and younger partners were hoping they'd one day get to enjoy, Quinn said on our podcast, On The Merits.

"They have to be persuaded that that's in the long-term interest of the firm," he told Bloomberg Law reporter Roy Strom. "But these are some awkward conversations. And it's a generational conversation."

Do you have feedback on this episode of On The Merits? Give us a call and leave a voicemail at 703-341-3690.