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Things you might learn about AI adoption from your local plaintiff attorney

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Who knows something important and misunderstood about AI adoption? This guy:

I don’t mean cartoon Ben & Marc here of course; I mean the people you usually associate with this kind of ad: plaintiff attorneys. And I don’t say that because they’re adopting AI tools, or because their work is going to change in some way. I actually mean the opposite. I think their business is already in the future, and has been for some time.

Personal Injury succeeded as a business category by finding an economical way of making a value-aligned results-based appeal to lots of people. It took a thing previously out of scope for most people (legal services), and with clever marketing, it discovered unit economics that made that possible at scale. To me, this sounds a lot like how AI has been positioned, as an accelerator or enabler of new consumer business models!

Here are a few non-obvious (but actually kind of obvious, in hindsight) things I found interesting about Personal Injury that seem applicable here:

The business model of leadgen plus underwriting.

When you see all of those highway billboards for personal injury lawyers with extremely catchy names, one minute’s reflection will tell you, this is obviously a leadgen business. This business was born on Cable TV, reinvented itself around Google Adwords, and will have no trouble reinventing itself here.

Our personal injury lawyer intuitively understands this business model, and he’ll figure out how to juice it to the gills with AI that’s really good at sourcing & handicapping. He understands how to cast wide nets of possibility, pick promising leads, and size his bets.

When people say “everyone with AI is a product manager / portfolio manager”, these skills are what people mean. It means “are you good at bet sizing, and can you apply it to your task at hand?” AI can trivially get you an avalanche of information as an input to any problem; it can trivially carry out (some) tasks if given instruction. This makes you, the user, the underwriter, and you have to learn a kind of pragmatism and relative ruthlessness to succeed here.

There are so many industries that rely on this business model, one way or another. Insurance (of course), loans, legal services, para-health care, and auto sales & financing are all examples where the hardest and most lucrative part of the job is getting qualified leads. There are also endless personal niches like home rooftop solar installation (to give one example) where, once you have someone interested, anyone can really do the job, and it’s a valuable job, so you’re gonna shop it. There’s no doubt in my mind that AI accelerates this business model.

CAC is about recall, not merit. If you think about the stereotypical personal injury lawyer billboard, it’s all about personalities and being memorable, and it’s about recall at critical moments. (“Hurt in a car? Call William Mattar!”) The entire game is, are you the first jingle that comes to mind? This feels suspiciously relevant for a world where coding agents or harnesses could be choosing which tool to call or approach to take based on a version of “who does the LLM recall first?”

Acquiring customers for these kinds of services may end up less about comparative merit or feature advantages, and much more about “who comes to mind for the LLM first?” than most people would like to admit.

There’s some poetic justice here, in the sense that recall has always been one of the most important factors guiding our decision-making. It’s just that we pretend it isn’t. Everyone believes themselves to be a rational, informed decision-maker (when in reality, we often subconsciously choose our favorite, and rationalize it in conscious thought later.) Now with LLMs, there may be a bit of mystery in the black box (why did it call this tool, as opposed to that one?) and I suspect that “who does it recall in a time of immediate need” is the right mental model for marketers here.

There are actually a lot of businesses that fall into this category: e.g. plumbers and locksmiths, appliance repair, emergency health care or veterinary services, towing, funeral homes (a grim one), pest control, short term moving and storage, and many more. The theme here is obvious: in these critical moments, you’re going to be just distracted (and probably embarrassed) enough that, when you Google search for some options, the subconscious “trust” you have in a name is going to beat price or value comparison shopping, 9 times out of 10.

Contingency fees are the “aligned business model”. The average Silicon Valley tech person pays for AI on some combination of subscription and pay-for-tokens, and those are both fine business models, but they don’t cover everything. For most consumers out there, I suspect that contingency fees - “pay if we successfully get the job done” - are the right model for a lot of tasks, especially zero-sum ones where you either win or lose.

Beyond personal injury law and insurance, there’s a wide world of “helping transactions happen” where we can look for inspiration. Realtors, while not “pure” contingency, are an obvious one. There’s also a whole industry of tax refund recovery firms (helping you identify missed or non-necessarily-guaranteed credits), ranging into esoteric but profitable niches. (In Canada, for example, there’s this lovely cottage industry of “SR&ED consultants”, helping startups claim government benefits, that are mostly paid on this basis.) And finally, up in the elite tiers of the economy, isn’t this what a lot of investment banking is?

A lot of business model choices are downstream of this choice - for example, how much volume of business any given service provider (e.g. any given personal injury lawyer!) can take on. And that matters because, the other thing we think AI will unlock in a lot of places is:

There’s no upper limit on consumption. This kind of law (e.g. personal injury suits) is maximally Jevons Paradox-compatible. Businesses services that are “win a fight with a perceived adversary” are the kind of product offerings where, the cheaper you can make it, the more of it people are going to consume. If legal costs come down, they will almost certainly get consumed more by the general population.

Today, it only makes sense to take on a case whose expected payout will be above some threshold - the fixed costs of bringing a case to trial won’t net out if the case is too trivial. But we could find a new equilibrium where far, far more cases get taken up for consideration.

Brazil is an instructive example of what this looks like. For a variety of reasons, Brazil has evolved a set of legal institutions and social norms where consumers sue companies for a variety of everyday things - like your food delivery order being late. These disputes are taken up in a special small claims court, the Juizado Especial Cível (JEC), where complaints can be brought for a small fee and without necessarily requiring a lawyer. And there’s a thriving secondary market for buying and selling the rights to consumer claims: the claims backlog is able to clear, in large part, because the secondary market helps it clear (by consolidating claims, getting them settled out of court in bulk, or even ‘bought back’ by the company accused in the dispute.) The point here is, we don’t have to imagine a world where Jevons Paradox has made certain kinds of legal complaints 10x more prevalent; we can go to where the future has already materialized, and observe how institutions and market mechanisms react.

Finally, maybe the most important point I want to make here:

The “everyman” user isn’t always a hopeful-builder type. Most of the “regular people using AI” user stories we hear in Silicon Valley are “trades guy learns to build new kinds of stuff” feel-good positive sum stories, and to be sure, those are great. But there are going to be some people out in the world who aren’t naturally inclined to go out and build stuff; but they are naturally inclined to get things, or win zero-sum fights, and these people will also use AI. They are a less romantic version of the “empowered individual” but there are a lot of them out there.

(Imagine your average person out there who’s like, “AI seems cool, but I don’t really have any ideas of stuff to build.” That’s actually a lot of people! You know what’s a lot less hard for them to understand? “Use AI to get $500 out of your airline for cancelling your flight.” This is a large user category.)

In some ways, these ‘uncouth’ customers are better signals (or, at the very least, complementary signals) for builders and investors than the hopeful, romantic types. Their motives are naked and pure: they’re in a fight, and they want to win the fight! When AI really penetrates a lot of consumer experiences - for example, submitting an insurance claim - we’ll see an escalating arms race on both sides of the dispute: the AI-equipped David consumer, versus the AI-equipped Goliath claims adjuster. (Insurance companies literally use a back end system called “Colossus”, if that helps paint the picture.) Serving these customers is a bs-proof frontier for any technology: it either works, or not.

These kinds of user journeys, in some sense, are actually pretty pure examples of “the empowerment of the individual.” If we imagine AI as empowering both motivated individuals and entrenched systems in their everyday interactions (which it likely will), these are your prototype customers. Plaintiff attorneys may get flak as being “ambulance chasers” or some other dismissive label, but fundamentally they do represent the individual, and now the individual has ChatGPT.

Post-script: Get out of your comfort zone

If you want a head start on the future - for investing, for career advice, for anything - find people who are already living there, and study them. Those people are not always who you expect. Silicon Valley has a tendency to herd around a few specific archetypes of people that are “the AI user of the future” (e.g. the romantic tradesman that vibe codes himself a better CRM, or something). And one way to escape the groupthink is to identify other kinds of user stories, specifically those that are less beloved or romantic.

I think it’s important for everybody to spend some time reading, meeting, and thinking about the kinds of people that are not the “classic paragon of virtue” in your milieu. Odds are, if you’re reading this, that the people around you are in fact not representative of middle America, the global consumer class, or of your median small business entrepreneur. This is why it’s a good idea for everyone to have a bit of experience in sales, for instance. Not only do you meet people at their level and learn what they really want, but you also learn from other people who understand something fundamental about how to sell to people - like our friend the plaintiff attorney, who may just have some timeless people wisdom.

Thanks to David Haber for inspiring this post.

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