Continuing with our series focusing on Firm AI, a new category of AI that we believe will drive business success for professional and financial services going forward, today we share Principle 2: the business of the firm is the bigger AI opportunity. We demonstrate how applying the power of AI to the business side of professional services firms will reap much more powerful benefits than just applying it to the practice side.
Principle 2: The business of the firm is the bigger AI opportunity
A firm is two things at once. There is the work product itself: the contract, the audit, the brief, the deal model, the craft of the most capable and entrepreneurial people in the economy. And there is the firm itself: the structure that makes its people more than a roomful of sole practitioners. The firm is the platform. It gives a hundred individual experts one name, one standard, and a reach, scale, and breadth of offering no one of them could build alone.
Running that platform is the “business of the firm”: how the firm develops business, originates deals, prices new work, staffs the right people, and collects the time it is owed. In a law or accounting firm, the work product is the obvious center, and the business of the firm surrounds it. In private capital, the deal professionals spend much of their day sourcing, screening, and diligence — the pre-work that gets a recommendation in front of the partners. Different shapes, same structure.
Practice AI accelerates the work. Firm AI is built for the business of the firm.
This is the half that increasingly decides who wins. Two firms can have equally brilliant professionals and equally good work product. What separates them is which one runs the business of the firm better: which one draws on its collective relationships, finds the better deals first, holds its margin under pressure, puts the right team on the right matter, and clears conflicts in hours instead of days. Growth, profitability, and reputation are won or lost here.
So why have AI companies ignored it? Because it is the hard half. Practice AI helps a professional review or produce work product: a contract, a spreadsheet, a memo. The business of the firm is not work product. It is the firm’s whole operating fabric, and serving it means orchestrating processes across all of it. That is far harder than a better assistant, which is why the industry took the easy half and left this one alone.
And the business of the firm is expensive. Firms run on people, and so they scale linearly: more revenue, more operational headcount, flat or compressing margins. In a large firm, 15 to 20 percent of revenue is absorbed by business services headcount. The COOs in the room are no longer subtle about it. “We need a better operating model. We scale too linearly today.” “My MP yells at me every week to reduce heads.” “Practice AI is a race to the bottom. The business is where we can drive value.” The managing partners have stopped asking nicely.
And even with the high costs, there are never enough hands to serve everyone well, so support flows to the rainmakers and the squeaky wheels and everyone else waits. High cost and uneven service: the worst of both worlds.
The firm that builds for the business of the firm wins.
Firm AI is built to solve this. It does not replace Practice AI. It is complementary, built to augment and amplify the specialists running the business of the firm, not replace them. You cannot hire a seasoned conflicts analyst from a tech company, because the job does not exist there. Firm AI gives every professional the support once reserved for rainmakers, and it takes back the tax of belonging to a firm: the timesheets, the conflicts forms, the intake and compliance steps — none of it client or deal work, but all of it required. Firm AI takes it off their plate and hands back the hours.
The result is a firm that scales without growing its headcount, and serves its people better.
For leaders in professional and financial services firms who have long sought to improve the efficiency and accuracy of business processes and accelerate business success, this concept of AI built for the business of the firm should resonate. This is exactly why we built Intapp Celeste.
Next up
Next week we’ll talk about Principle 3: Firm AI is built for the people running the firm.
In the meantime, the full argument is in the blueprint: Mind your business. Not just your practice.