Key Takeaways

  • Aaron Binstock of Cooley highlights that AI is shifting junior associate work away from rote document review and into higher-order analytical tasks, demanding more from lawyers with “world-class education.”
  • The traditional hourly billing model for M&A legal services faces an “economic problem” as AI dramatically reduces the time required for previously labor-intensive tasks like diligence, per Binstock.
  • Expect a push towards alternative fee arrangements—like fixed-fee or project-based billing—as efficiency gains from AI make hourly rates less defensible for specific legal services.
  • AI cannot replicate essential human elements in legal practice, such as judgment, strategic advisory, and soft skills like building client trust or conducting complex board negotiations.

The End of Mundane Diligence

For years, the entry-level experience in M&A legal work involved sifting through reams of documents, a rite of passage often described as a necessary evil. But this is rapidly changing. Aaron Binstock from Cooley points out that AI is fundamentally altering what junior associates actually do. “None of us went to law school thinking we like want to sit there and do, you know, like read through documents,” Binstock says, acknowledging the less glamorous aspects of early legal careers. Now, AI takes on much of that grunt work, freeing up associates to focus on more complex, productive analytical tasks. It’s less about replacing jobs and more about redefining skill sets, allowing smart lawyers to apply their “world-class education to use their brain in a way that’s a little bit more productive.” This shift isn't just about speed; it's about pushing the baseline of human contribution higher.

The Economic Problem with Hourly Billing

The efficiency unleashed by AI creates direct tension with the prevailing hourly billing model in legal services. Binstock is direct: “the value that clients are paying for…is changing.” When AI can complete tasks in a fraction of the time human labor once required, the math for hourly rates simply doesn't add up. He explains, “if you look at the time it takes to do something and the fact that law firms bill by the hour, you know, you can kind of put two and two together and see that that that has some problems in terms of an economic model.” This suggests a growing inevitability towards alternative fee arrangements, such as fixed-fee or project-based billing, particularly for standardized diligence and contract review segments of M&A work.

The Irreplaceable Human Element

Despite AI's capabilities, Binstock draws a firm line: it cannot replace the uniquely human aspects of legal practice. AI excels at efficiency, “but it’s not replacing the the the judgment in that sort of like um trusted relationship that you build with with counsel over time.” The critical value proposition for senior attorneys remains their strategic judgment, nuanced advice, and crucial soft skills. Binstock emphasizes, “there’s a lot of soft stuff too, right? That like where this is this doesn’t touch it.” He highlights the ability to conduct high-stakes calls with boards of directors or engage opposing counsel on difficult points—elements he calls "the art" that AI cannot replicate. These human capabilities are what build trust and drive successful legal outcomes, particularly in complex M&A scenarios.

Why It Matters

This redefinition of legal labor and billing signals a structural shift for private equity deal flow. Faster, AI-assisted diligence could accelerate deal velocity and lower the cost basis for certain aspects of transaction execution. For portfolio companies, this might translate to more predictable and potentially reduced legal spend on routine matters. However, it also re-concentrates value, making the strategic judgment, negotiation prowess, and client relationship skills of senior M&A counsel an even more critical, and likely more expensive, component of deal success. Smart players are already anticipating deflationary pressure on commoditized legal tasks and a corresponding premium on the truly strategic human element.