The argument is that labor depending on LLM’s is dangerous but it makes speculative assumptions that the big AI labs will win.
> Consider large law firms, aka Big Law. Currently certain legal-AI startups license LLMs from Big AI and repackage them for Big Law at high prices. These startups claim to add other special sauce. OK, sure. Where’s the economic equilibrium? If legal-AI startups prove that money can be made selling AI to Big Law—won’t Big AI just sell to Big Law directly, and cut out the startups? Or if legal-AI startups prove that AI can effectively provide legal services—won’t legal-AI startups just sell to clients directly, and cut out Big Law? Won’t members of Big Law that adopt AI have to lay off a lot of equity partners, because adoption of AI will shrink profit margins?
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> Along these lines, I expect that to succeed financially, Big AI will likely need to demolish a significant number of existing tech companies and grab their revenue for itself.
Nobody knows how this will play out. Maybe the legal-AI startups win because they know their market better? They can switch to cheaper providers.
It's an absurd scenario because Big AI is simply not in the Big AI Law business. They are also not in the Big AI Accounting business, the Big AI Pharmaceutical business, or the Big AI Web App business. It is absurd because the CapEx and OpEx to subsume every industry is unjustifiable.
On legal-AI startups undercutting Big Law to the point where Big Law has to adopt AI... Well, yes, that will happen. But as the article's intro belabors the point, there is a natural resistance to changing entrenchment. And it is practically impossible to overcome. So, good luck to the Big Law C-suite laying everyone off with AI when they can't even replace WordPerfect with a modern word processor.
> Consider large law firms, aka Big Law. Currently certain legal-AI startups license LLMs from Big AI and repackage them for Big Law at high prices. These startups claim to add other special sauce. OK, sure. Where’s the economic equilibrium? If legal-AI startups prove that money can be made selling AI to Big Law—won’t Big AI just sell to Big Law directly, and cut out the startups? Or if legal-AI startups prove that AI can effectively provide legal services—won’t legal-AI startups just sell to clients directly, and cut out Big Law? Won’t members of Big Law that adopt AI have to lay off a lot of equity partners, because adoption of AI will shrink profit margins?
…
> Along these lines, I expect that to succeed financially, Big AI will likely need to demolish a significant number of existing tech companies and grab their revenue for itself.
Nobody knows how this will play out. Maybe the legal-AI startups win because they know their market better? They can switch to cheaper providers.