The common sense deficit hitting the City’s professional services firms

The rise of AI has put significant pressure on professional services firms, as they grapple with hiring and training strategies amidst a knowledge gap. This gap exists as the new workforce, entering the professional services sector in the wake of AI, possesses skills vastly different from those of the previous generation. The traditional 'pyramid' model of professional services firms is under scrutiny, with pressure mounting to reduce graduate roles in the face of AI's impact on hiring and training.

Over the summer, several industry leaders expressed their concerns about the need to restructure training and hiring processes. This discussion arrives at a challenging time for the sector, particularly in consultancy, as AI and economic downturns are causing fees to drop for major players. The industry now faces challenges in updating training programs for junior professionals as Gen-Zers enter the workforce, armed with AI skills but lacking critical thinking and interpersonal skills needed for knowledge-selling roles.

Unlike earlier generations who had to adapt AI mid-career, this new cohort of professionals was born between 2002 and 2005, and experienced the early AI boom when ChatGPT launched in 2022 during their university education. These junior professionals, skilled in new technology and AI, often fall short in foundational skills such as picking up the phone to clients, pitching for business, or making judgments without relying on AI tools.

City law firms have had to implement mandatory communication-skills training for junior lawyers, as these foundational skills are notably absent. The issue extends beyond geographical boundaries, as reported by The Wall Street Journal, highlighting that EY's US unit will invest $100m to recognize staff with skills like judgement and adaptability, aiming to bring these values back into the post-AI world.

The MIT study warns of the problems arising from over-reliance on AI, as constant dependence on bots may impair critical-thinking skills and the ability to discern misinformation. This has become a major reputation issue for some firms, especially the Big Four giants and prominent law firms, as AI-related errors have infiltrated clients' reports and legal documents submitted to courts.

To adapt to this evolving landscape, firms must shift their focus beyond technical expertise, placing greater emphasis on timeless values such as common sense, sound judgement, and human connection to ensure long-term success in the AI era.