While the descriptor has become ubiquitous, it's also slippery: its description in the market can run the gamut, from traditional firms that arm their attorneys with AI software to those specifically designed around AI and charging flat fees for services.
Ford Motor Co.'s director of legal ops, Whitney Stefko, told Law360 Pulse that her team has met with a lot of companies that call themselves AI native, but that they've largely just been humans using AI.
"We're seeing a lot of fancy marketing without true value," Stefko said. "A lot of times, it's just humans enabled with tech. It's not that different from what we're seeing with our current firms," she said.
Most flat-fee pricing — one of the hallmark promises of the AI-powered firm — is still based on an hourly billing model, she said. Most corporate legal departments can already secure that type of project-based pricing from their regular firms.
A new website, the AI Firm Index, takes a shot at identifying which firms are actually AI native, rather than merely, in its parlance, AI augmented. The directory's creator, Matt Pollins, co-founder of the legal tech company Lupl Inc., told Law360 Pulse that he started making the list after receiving a slew of press releases from firms branding themselves that way.
He's already rejected a number of applications from firms hoping to be included on the site because he can't make the case for them being actually AI native, he said. By his measure, 50 firms, including 26 in the U.S., currently make the cut.
"Right now, it carries a very positive perception in the market to be considered AI native," Pollins said. "There are echoes of the dot-com era," he continued, recalling when companies could add a "dot-com" after their name and boost their value multiple times over.
It's not that firms are trying to be misleading; the definition of AI native is still evolving, Pollins said. By his measure, the definition has already matured away from firms that are simply using AI tools, such as document review software, to those designed around AI more holistically. Truly native firms tend to offer subscription or flat-fee pricing and automated intake, features focused on making the client experience quicker and less costly, he said; they are genuinely different and have the potential to deliver a radically different business model.
"Does it look like a firm that would be built in 2026, or a firm built in 1986 with AI bolted on?" he said. "The question is whether they're offering a client native experience."
Unsurprisingly, many of the firms on Pollins' list — including Lexsy PC, Vector Legal and Founders Law LLC — serve startups, a space where AI firms have planted a strong stake.
Matt Wheatley, chief commercial officer of outside counsel management company Priori Legal Inc., told Law360 Pulse that he's noticed the AI native term popping up more in the past three to six months, especially with headline-making investments in the firms. Crosby.ai, a firm that made Pollins' list and is focused on startups and contracts, raised $60 million in Series B funding this year.
But few of the large companies he works with are biting, Wheatley said. He pointed to reactions at a meeting Priori recently held with more than a dozen legal operations leaders from top companies.
"Right now, we're not seeing a lot of adoption of AI native firms within the Fortune 500," he said. "Lawyers are very risk-averse. These AI native firms don't yet have that credibility built up. They don't have the brand name."
Casey Flaherty, who does market research on legal spending decisions as head of LexFusion Intelligence, told Law360 Pulse he thinks the AI native term is "wildly overused."
"Overall, I believe there's a 'there' there on AI native firms," Flaherty said. "But, thus far, most of them are nowhere near delivering on the associated hype."
The in-house teams he consults with regularly believe there's an opportunity for AI native firms "to capture a meaningful portion of the corporate legal wallet," he said. "But they are also quite frustrated because it is only becoming harder to extract signal from the noise. Like any other flood, they're tired of drowning."
Given that the search and switch costs for legal services are already high, having a new provider type in AI native firms complicates the situation, driving those costs up, he said.
When a company is making a buying decision regarding how work should be done, including whether it should be done internally or externally, the value proposition of an AI native firm should be compelling, in the abstract.
"I'm convinced the underlying inflection point will have a profound long-term impact on the profession," he said. "In the short to medium term, however, we're in for many hype-fueled mistakes, cycles of fatigue and more status quo bias than might seem rational to the outside observer."
Stefko echoed this sense of "an AI fatigue among corporate legal teams."
"We've been sold AI for decades and not a lot of it worked until recently," she said, noting that Ford has been building out its own in-house tech for years.
"Personally, it's a little disappointing that we're starting to call these things AI native when in reality most of them are not," she said. "There's no standard definition. We're calling everything AI native, and that's diluting what it actually means."
She said she worries that if Am Law 100 firms start calling themselves AI native, less sophisticated buyers could be disappointed with the product and then conclude it's not possible to shift the architecture of their business with AI.
"Just as rising tides lift all ships, dilution and confusion have the opposite effect, as well," she said.
--Editing by Brian Baresch and Dave Trumbore.
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