How AI is changing client relationships

Artificial intelligence (AI) could be the biggest disruptor to professional services work in the current era. Firms adopting the technology need to understand the unique ways it will impact their relationships with clients.

Artificial intelligence, or AI, has become the headline conversation in many professional services firms. Most firms have rapidly embraced its ability to streamline simple processes and automate basic tasks. 

 

However, while firms have been using machine learning and early-stage AI for many years, it is only recently that the technology is becoming democratised and ubiquitous through publicly accessible platforms like ChatGPT. With clients more empowered than ever to discover answers on their own, they increasingly expect their advisors to be also supplementing rote human work with AI. 

 

This article discusses how AI is transforming the role of professional advisors and changing their relationships with clients. 

Revolutionising productivity with automation

For over two decades, data from Beaton Research + Consulting has shown client expectations of their advisors are continually rising. Clients want more for less, or at least a materially similar price. In fact, clients of law firms perceive prices have been falling (relatively speaking) while value they receive has been trending upwards since 2011.

 

In such a highly competitive market, in which clients are willing to “shop around” for value, AI can help to reduce costs and increase efficiencies to the firm. Tools that can sift through and organise data automatically can speed up the time consultants take to do tasks, reducing costs to the client, and reducing the possibility for human error. 

 

“Our clients expect that lawyers are going to deliver faster, cheaper, better services,” says Genevieve Collins, Chief Executive Partner of Lander and Rogers law firm. 

 

“They expect that we're going to use the latest technology and data-driven insights. And they expect lawyers to be proactive and creative and collaborative and to offer strategic advice and solutions.”

 

Beaton calculates AI risk by looking at the proportion of a firm’s work that is considered by clients to be “routine” and where those clients are not prepared to pay any more for it. The chart below shows a breakdown of sectors by profession, illustrating how accounting and consulting firms face the most risk of being displaced by AI compared to law firms or built and natural environment consulting firms.

 

 

The upshot of these findings is that firms who do not arm themselves with information, skills and education to embrace AI risk being left behind. It is why Lander and Rogers launched a first-of-its-kind AI lab in February 2024 to investigate, integrate and develop AI tools that can complement legal services, and assist the work of human lawyers.

 

“We're a law firm that said to our people, we want you to skill up in AI and we want to educate you, we want to work together to discover what's achievable,” says Collins.

 

“I see this as an exciting time of possibilities. AI is going to free lawyers up to do more interesting work.”

 

George Beaton, Executive Chairman at Beaton, observes that one of the most important AI skills for professionals to learn is knowing the limitations of AI and what it can’t do. “Anyone who has played around with AI knows how easy it is for large language models to make things up. This is known as ‘hallucination’.”

 

“Knowing where its use is most appropriate, learning what prompts to use to minimise and check for incorrect responses and understanding biases in source data are all critical AI skills,” he adds.

Changing prices and expectations

Research published by Thomson Reuters in April 2024 confirms clients expect their advisors to be using AI to complement services, increase efficiencies and reduce costs. The report 2024 Generative AI in Professional Services found more than half of respondents from corporate legal (58 per cent) and corporate tax (56 per cent) departments said the outside firms they work with should be using generative AI.

 

Collins adds that this expectation extends to pricing services differently – but not necessarily cheaper.

“There will be a shift in the way we deliver our work and therefore the way we price our services,” she says.

 

“There will inevitably be a move away from hourly rates towards fixed fees and value-based pricing because the kind of judgment and expense in installing tech applications that are built and safeguarded to deliver secure AI-based assistance is significant.”

 

Paul Goessler, National Head of Professional and Business Services at Westpac, agrees. He emphasises that “clients really do want value now”.

 

“Clients want to see their advisors being cost-conscious – communicating how their fees are being spent, and keeping costs low where possible so they don’t end up with bill shock. That may include using AI to make some processes more efficient, faster or cheaper,” he says.

Job enhancement, not displacement

Shifting towards value-based pricing and letting go of the billable unit for certain projects has benefits for professionals’ wellbeing. Firms like Lander and Rogers are using AI to complete previously time-consuming tasks and teaching junior lawyers to focus on quality over quantity of hours worked.

 

This has major ramifications for client relationships, too. As technology takes over more low-value tasks, there will be higher value placed on problem-solving and human interactions that require emotional intelligence. Communicating with clients, and building long-term client relationships through empathy, will be the most crucial skills for professionals to develop.

 

“Regardless of new technologies, the same competencies and personality traits of care and trust that were valuable 20 years ago will continue to be so, 20 years from now. EQ is going to become one of the most valuable skills for humans,” Goessler says.

 

“You can be the smartest lawyer in any field, but if no one wants to deal with you, you’re going to be a very poor, smart lawyer.”

 

This human-to-human interaction will be the fundamental difference-maker for firms in a future of work augmented by AI. Excellent communication skills will be especially crucial in industries like law which require human understanding during what may be an incredibly stressful time for the client.

 

“The human nature, the human lawyer, the empathy, the judgment – all of those things have not been replicated by AI,” Collins says.

 

“Clients want a human being, and a trust-based relationship. This element of what we do is something that clients really value - this personal connection and being able to listen and understand client problems, and articulate a legal and commercial solution". 

Ethical considerations, trust and human oversight

In this evolving world the trust that builds client relationships will need to extend to AI tools their advisors are using. Clients expect their professional services firms to not only use AI, but to do so ethically, with applications that are private and secure.

 

Firms will need to ensure they are complying with professional integrity and regulatory standards – which take on an added layer of complexity when technology is involved. Data security will become crucial, and clients will look to professionals as leaders in that space. Cloud-based AI solutions will not be useful for most firms as it puts their clients’ data in a position vulnerable to data theft. Firms will need to be transparent with clients about what type of AI they are using and what happens to clients’ data through that process.

 

“The application of Generative AI must be managed ethically and responsibly, while protecting client privacy and data. This requires strong data governance,” says Collins.

 

“Our clients look to lawyers for responsible AI use policies, around things like privacy, data governance and protection. They want to know how we're implementing AI, as well as how our use of Generative AI will assist them.”