Building strategic differentiation with AI: practical guidance for SME law firms

In episode 26 of the Empowering Law Firm Leaders podcast, Uwais discusses with Amy Bruce, marketing director at Osprey Approach, why AI should be viewed as a collaborative enabler for lawyers, how SMEs can outmanoeuvre larger rivals, and what practical steps leaders can take to prioritise use cases, avoid sunk costs, and lay the foundations for long‑term value.

In this conversation, Uwais Iqbal, founder of Simplexico and former senior data scientist at Thomson Reuters and ThoughtRiver, shares how law firms can build strategic differentiation with AI—covering the mindset, methods and investment choices that help firms move beyond the hype to achieve real outcomes.

In this conversation we cover:

• Inspiring use cases of AI use in SME law firms
• How SMEs can leverage AI, even on constrained budgets
• How to prepare before you invest in AI
• Readiness vs maturity
• How to spending your tech budgets wisely
• Future AI trends for the legal sector

Defining AI’s role: collaboration, not competition

Uwais begins by reframing AI as a technique that helps machines replicate aspects of complex human cognition—the kind lawyers deploy daily when reading, analysing, researching and advising. “AI is not competitive to what lawyers are doing, but it’s very complementary,” he stresses, urging firms to fuse domain expertise with the pattern‑matching strengths of GenAI and LLMs. The aim is simple: “How do we help deliver better legal services, better legal advice,  and better legal outcomes?”

That collaborative stance unlocks both efficiency and experience. Uwais highlights opportunities to relieve the drudgery – document trawling, basic analysis, admin – so lawyers spend more time on “the fun part of the law, which is the complex analysis, the complex reasoning, and the strategic interactions with clients.” The result is greater capacity and quality without undermining the value of human judgment.

Most crucially, this mindset turns AI from a threat into a strategic lever. As Uwais asserts: “If we’re able to leverage the technology in the correct way, then potentially this could become… a strategic point of differentiation for us as a firm,” reshaping not only delivery but also the business of law – with new fee models, faster throughput, and higher value client propositions.

Preparing before you invest: educate, map, and prioritise

Readiness begins with education. Uwais advises leaders to build a vendor‑independent understanding of capabilities and limitations so decisions are grounded in reality, not marketing. From there, he proposes categorising use cases into three buckets—the business of law (e.g., HR, sales, finance, marketing), legal operations (matter and spend management, predictive billing / resource estimation), and – thanks to LLMs – the practice of law (real‑world tasks within real estate, commercial, disputes, etc.).

With a firm‑wide view, the next step is prioritisation. “Maybe we’ve identified 20 use cases across five practice areas… we can do this exercise of prioritising them… based on our strategic direction,” Uwais notes. Only then should firms decide whether to buy, build, or partner for each case. They can then formalise a 12–24‑month AI programme that balances incremental efficiency with potential new lines of business.

Crucially, this upfront discipline “prevents costly misfires.” As Uwais explains, “What we’ve seen is that firms are deploying budget, buying expensive technology… but they’ve not really done the groundwork of thinking about where specifically that technology can be applied and where the return on investment is.” The result? “Lots of buyer’s regret and lots of sunk costs happening in larger law firms.” Smaller firms can avoid that by “getting really clear about what the use cases are… and then thinking about whether to buy, build, or partner before going to market.”

Readiness vs maturity: start experimenting, then level‑up

“I don’t think anybody’s ever ready,” Uwais says. Progress, he believes, comes from doing: “Dip your toes in the water… expose yourself to it,” investing in at least one project this quarter to learn, inform the next, and build momentum. That experimentation nurtures internal literacy, especially when firms build or partner rather than simply buy, so teams “get into the weeds” and understand how AI works within their own environment.

Maturity, by contrast, is about the enablers: organised data and robust infrastructure. The more disciplined a firm’s knowledge management, the more value AI can unlock and provide access to secure cloud platforms accelerates development and deployment. “The more organised… your data, the more you’re going to be able to leverage the technology,” Uwais emphasises. These foundations often determine whether pilots can scale into durable advantage.

The pressure to act is rising – from employees who use AI at home and to ask, “What are we doing with AI?” from clients advancing their own programmes and expecting suppliers to follow suit, and from competitors moving quickly.

Data as the differentiator

Data quality is the driver of AI performance. Uwais points out that leading model providers have already “scrap[ed] all publicly available data” and are striking deals for proprietary content – proof that good data is the scarce resource. Law firms, he says, sit on “very, very high‑quality, pristine data,” yet often undervalue knowledge management because it feels less exciting than fee‑earning.

The goal, Uwais says, is clear: “How do we capture the insights and expertise which sit in the heads of the lawyers… and embed that within an intelligent system so we can scale legal expertise?”

Done well, this creates what Uwais calls a “hive mind of expertise and knowledge and skills within the form of intelligence.” That means firms “no longer have to worry about what happens when someone leaves… you can create something that preserves and scales your know-how.” He adds that this approach could even lead to “productising that expertise and serving it to clients in new ways,” opening up additional revenue streams.

Looking ahead at AI trends for SME law firms

Looking ahead, Uwais expects a maturing ecosystem with general‑purpose platforms alongside practice‑specific tools and custom firm solutions. Conveyancing, commercial litigation, medical negligence and other practices will see targeted AI products that support lawyers to deliver better outcomes, rather than replace them. Adoption, he cautions, will be a long journey: we’re still early in understanding use cases and building robust solutions at scale.

Two trends will accelerate opportunity. First, LLMs are getting better at writing software, making development easier and cheaper; second, that shifts the question from “Can we build?” to “What expertise should we package through software?” For SMEs, this opens the door to productised services, new lines of business, and distinctive client offerings – provided they start now and learn quickly. “Small and medium‑sized law firms… have the biggest return to make on the technology if they approach it in the right way,” Uwais concludes.

Building your AI roadmap

Success with AI isn’t about chasing trends – it’s about creating a structured, strategic plan that aligns with your firm’s priorities. Start by investing in education so your team understands both the capabilities and limitations of AI. From there, map out specific use cases across the business of law, legal operations, and the practice of law, and prioritise those that deliver the greatest impact.

Once you have clarity, decide whether to build, buy, or partner for each solution, and allocate resources – not just budget, but time and people – to support experimentation and adoption. Treat AI as an extension of your talent strategy, not just a technology expense, and ensure your data and infrastructure are ready to enable scale.

Watch the full interview with Uwais Iqbal now to discover more advice and guidance on building strategic differentiation with AI. You’ll also hear Uwais’s exclusive advice on why SMEs can benefit more than large law in AI and the lessons learnt from large law that’ll help SMEs improve ROI.