"AI has crashed!" ... my thoughts on preparation
"AI has crashed!" That's the headline you know it's going to happen.
The AI bubble will not "pop" in a way that makes useful AI disappear. But the aggressive borrowing, circular financing within the infrastructure of providers, and the enormous infrastructure commitments will likely cause some providers to stumble or financially fail.
I expect larger, better-funded companies to acquire their GPU capacity, existing infrastructure, and customer relationships. The underlying computing capability will remain valuable, even when its current owner cannot make the financial arrangements work. Sharks will smell the blood and acquire the companies at risk.
We've seen this movie plot before: When Washington Mutual failed in 2008, JPMorgan Chase took over its banking operations, and customers retained access to their deposits. Before that it was the RTC bailout of savings and loan institutions - but that's dating me. In these cases, the broader crisis was painful, but that episode illustrates how a provider can disappear while the service people depend on continues under new ownership. The lesson is the same: institutions can fail while an organized resolution preserves essential services.
For law firms using AI in their operations, I expect much of that turmoil to arrive as temporary interruptions, degraded performance, or an unexpected migration. A day or three of disruption strikes me as a plausible planning scenario, although neither an acquisition nor a quick recovery is guaranteed.
We have already seen how AWS or Cloudflare outages can interrupt services far beyond the original failure. Financial distress has different causes and recovery mechanics, but the immediate experience at your desk may feel familiar: the service you depend on is unavailable and your deadline keeps approaching.
For a law firm, that could mean a stalled document review, an unfinished client deliverable, or research that still needs verification. A provider's difficulty does not move the firm's commitments or court filing deadlines.
For law firm leadership looking at operations: Schedule AI-assisted production well ahead of delivery. Save usable work outside the live session, leave time for review and retries, and have a fallback for commitments that cannot wait.
Treat a one-to-three-day interruption as a scenario worth preparing for, not a guaranteed maximum. Have the work ready before the deadline becomes dependent on a service you do not control.
Rex C. Anderson
I advise law firm leaders on how AI is changing the operations, economics, risk, professional responsibilties, competitive position and leadership of their law firm.
Forwarded to you?
Subscribe for direct delivery of future articles.