powered law firms draw lawyers from big firms

By Sara Merken

Oct 14 (Reuters) - Lawyers banking on artificial intelligence transforming the legal industry are continuing to leave traditional law firms for new startup firms that bill themselves as "AI-native."

In the latest move, Goodwin Procter private equity and growth equity partner Leon Johnson said on Wednesday that he'll lead a new US law firm called OmniLex Partners associated with Zurich-founded technology company Omnilex AI.

Johnson, who was previously a partner at Kirkland & Ellis, told Reuters he spent the last two years thinking about AI’s impact on the practice of law and how the technology could allow a shift from the traditional Big Law business model.

As AI capabilities improve, “that model of starting with junior attorneys and having iterative review and modifications until it gets all the way up to the senior attorney doesn’t really make as much sense,” he said.

Johnson, who is based in San Francisco, said he envisions a law firm model based on projects, outcomes and fixed fees rather than the billable hour, and one in which the work of senior lawyers is facilitated by AI.

Other lawyers with traditional corporate law firm backgrounds have made similar moves over the past two years. Mike Schmidtberger, the former executive committee chair of Sidley Austin, in January joined AI-native law firm Norm Law, which has also hired other partners from prominent firms. Schmidtberger is Norm Law’s chairman and head of its private funds and regulatory group.

Christopher Kercher, who founded Quinn Emanuel Urquhart & Sullivan’s AI and data analytics group, launched a firm in August that he told Reuters will lean into using AI for litigation. A former Cooley associate founded Soxton AI, and former Holland & Hart lawyers launched Landfall IP last year.

Burford Capital vice chair David Perla and Sanjay Kamlani, who has advised big firms on innovation, last month unveiled an AI firm focused on employment negotiations and disputes called FairPlay Law.

Associates and top law firm partners are both curious about AI-native firms, said Sean Burke, founding partner of legal recruiting firm Whistler Partners, which has recruited lawyers for AI-native firms including Norm. “Everyone returns the phone call" when he's talking about such firms, he said.

An online directory of AI-native firms now lists at least 60 such firms, ⁠though ​not all describe themselves that way.

Like many AI law firms, Johnson said OmniLex will use a management services organization structure, which will allow the company to raise money from investors. MSOs can ​be backed by outside capital, unlike law firms that are largely prohibited from being owned by ‌investors.

The US law firm will initially handle venture capital and startup work and routine, high-volume litigation matters, he said. The firm is launching in California with plans to open an office in New York, and has additional lawyer hires in the pipeline, Johnson said.

A Goodwin spokesperson did not immediately comment on his departure.