A&O Shearman Plans $1.1bn AI Investment, Requiring Lawyers to Devote at Least 3% of Billable Hours to Building Proprietary Tools
A&O Shearman has announced a $1.1 billion (£800 million) investment in artificial intelligence over the next five years, representing more than 5% of the firm's annual revenue. The plan requires lawyers across every practice group to set aside at least 3% of their billable time to assist in developing specialist AI tools, placing legal professionals at the centre of the firm's technology build rather than relying on off-the-shelf products. Global managing partner Hervé Ekué framed the move as a decade-defining strategic bet: the firm intends to combine exceptional legal judgment with the speed and scale AI enables, delivered consistently across its global offices. The approach builds on several years of experimentation, including an early partnership with Harvey, an AI platform for legal work, which A&O Shearman began testing in 2022 and went on to become one of its earliest major law firm customers. The announcement heightens competition across Magic Circle and elite US firms. Freshfields earlier this year partnered with Anthropic to give nearly 6,000 staff access to the Claude AI models. A&O Shearman's latest move shifts the terms of that race: the question is no longer simply which firm has the best AI access, but which is willing to commit the most lawyer time and capital to building proprietary capability. The commitment to directing billable hours into internal tool development is commercially significant. It signals that A&O Shearman views AI development as a core business activity rather than a back-office function, and suggests the firm expects purpose-built, practice-specific tools to deliver a durable competitive advantage over firms relying on generic platforms.
Why this matters
A commitment of this scale, over $1 billion directed at AI development over five years, is unprecedented in the UK legal market and sets a new benchmark for how Magic Circle firms are expected to compete. By requiring lawyers to contribute billable time to tool development, the firm is effectively treating AI capability as a chargeable legal service rather than an IT overhead. The competitive dynamic with Freshfields and other elite firms is sharpening: firms that lead on proprietary AI tools may be able to deliver higher-quality, faster outputs at scale, fundamentally changing client expectations on price and turnaround. The move also raises questions about trainee and junior associate development, since tasks currently handled by junior lawyers may increasingly be handled by tools built, in part, by those same lawyers.
On the Ground
The announcement generates work across technology and commercial law practices: firms advising on AI tool development need technology licensing, data processing agreements, and intellectual property ownership structures. Client-facing AI deployment raises data privacy questions requiring specialist regulatory advice. For trainees at A&O Shearman and rival firms, this story is immediately practical: trainees may be asked to assist in reviewing technology licence agreements, marking up data processing agreement drafts, or preparing AI governance policy documents as part of internal build programmes. Trainee roles in AI-adjacent matters are likely to include vendor due diligence questionnaires and regulatory impact assessment memos as the firm navigates its own compliance obligations in rolling out AI tools to clients.
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“A&O Shearman is requiring lawyers to spend billable time building AI tools rather than billing clients. What are the commercial risks and benefits of that model, and how does it compare to Freshfields' approach of partnering with Anthropic?”
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