Episode 146: Why Elite Firms Are Ditching Time-Based Fees ft. Stephen Embry

What if we told you that for years, professional service firms have been asking the wrong question about AI:

“Will this replace us?”

The question to ask is “What happens if we don’t adapt fast enough?”

Because as Stephen Embry, legal technology strategist and former Chair of the ABA’s Law Practice Division, points out in the latest episode of The Wealthy Entrepreneur, the real threat isn’t the technology, but rather the belief that you can slow it down.

Here are key insights from his and host Robert Gauvreau’s conversation. 

The Hidden Constraint No One Talks About

Most firms think their biggest challenge is adopting new tools, even though the real constraint is the business model those tools are entering into.

Stephen’s favourite example is the billable hour. In the world of law, the billable hour has shaped everything - how professionals are valued, how they’re compensated and how firms scale.

But it creates a fundamental contradiction - technology makes you faster and the business model rewards being slower. 

Stephen dubs this the ‘inefficiency trap”. When efficiency reduces revenue, innovation becomes a threat instead of an advantage. And that’s exactly why so many firms resist change.

Why Law Resists Technology 

It’s easy to assume resistance comes from fear or lack of understanding.

But Stephen highlights three deeper forces:

• Skepticism is trained behavior: Professionals are paid to identify risk. Naturally, they question new tools
• Independence is built into the structure: Unlike corporations, firms don’t enforce adoption easily. Everyone operates with autonomy
• Perfection is non-negotiable: In fields like law or finance, being wrong isn’t inconvenient. It’s catastrophic

Add to this mix a business model that penalizes efficiency and resistance becomes rational.

AI Isn’t the Advantage Anymore - You Are 

Stephen highlights another uncomfortable truth that lawyers must reckon with: 

AI is quickly becoming commoditized; everyone has access to it and everyone can use it.

So the question must shift from “Do you use AI?” to “How well do you use it?” and more importantly “What do you bring that AI can’t?”

According to Stephen, the answer is clear:

• Judgment
• Empathy
• Context
• Relationship

Clients don’t just hire competence. They hire professionals who understand their situation, ask the right questions and guide them through uncertainty. And, that’s just not something AI can replicate (for the foreseeable future). 

The Real Skill Gap is Asking Better Questions

One of the most overlooked insights in the AI conversation is this:

AI is only as good as the questions you ask it.

Stephen reveals that experienced professionals consistently outperform juniors with the same tools, not because they’re better at tech, but because they:

• Know what good looks like
• Recognize when something is wrong
• Frame better prompts

In other words, experience amplifies AI effectiveness.

Be An Entrepreneur - Not Just a Lawyer 

The most powerful takeaway from Stephen’s career isn’t about technology at all.

It’s about possessing an entrepreneurial mindset. As he reveals - he didn’t wait for permission from firms to evolve his practice. Instead, he treated his career as a business long before he left traditional practice.

That shift changes everything because instead of optimizing for hours, you start optimizing for outcomes; instead of waiting for structure, you start designing it. And that’s the mindset modern firms need.

The Future 

The future of professional services won’t be defined by who adopts AI first. It will be defined by those who: 

• Rebuild their pricing models
• Redesign their workflows
• Reinvent their value proposition

The Bottom Line

Stephen’s point is simple - if you’re still asking whether AI is a threat, you’re already behind.

The ones who lead in the future are the ones willing to rethink how their business actually works. 

🎧 Listen to the full episode here:

Spotify: 

Apple: 

YouTube: 

If you’d like to be a part of The Wealthy Entrepreneur conversation, let us know here: https://www.wealthyentrepreneur.co/the-wealthy-entrepreneur-podcast-guest-submission. We’d love to have you on the podcast!