Collapse of the Pyramid
The Reshaping of the Professional Firm
ESSAY
Thinking
Dewald Pieterse 10 November 2026
Collapse of the Pyramid: The Reshaping of the Professional Firm
For more than a century, most professional firms have been organised as pyramids, with a few partners at the top, a larger body of managers beneath them and a broad base of juniors at the bottom. The arrangement, naturally, was no accident, because for as long as cognitive work required human minds, it was the most economical way to produce that work, as it allowed the professional judgement of a few seniors to be leveraged over the cognitive labour of many juniors.
AI fundamentally removes the premise on which that structure rests. My argument in this essay is that the pyramid of old will first narrow into something closer to a diamond, that the diamond will then collapse into something closer to a ladder, and that this will happen faster in the professions than in almost any other part of the economy.
The argument rests on two premises. The first is that AI now performs the very work that justified the broad base of the pyramid. The second is that competition will force every firm to act on that fact, and to act quickly. Three consequences follow. The first is that the pyramid will narrow into a diamond, as firms stop hiring juniors for work that machines can do. The second is that the diamond cannot last, because a firm’s middle is drawn from its own base, and nothing will replenish it while other forces press on it from the sides. The third is that the few juniors who remain must be trained in a manner unlike anything the professions have known, because the groundwork through which juniors once learnt is gone. Taken together, these propositions lead to my conclusion that professional services, as we understand them today, will in short order be altered beyond recognition.
Why Firms Are Pyramids
By ‘leverage’ in this essay, I mean the ratio of junior professionals to partners in a firm, which determines how far each partner’s judgement can be extended across the firm’s work.
The pyramid is often explained as an apprenticeship of sorts, in which the young learn the ins and outs of the profession from the old. Apprenticeship explains why a firm has juniors at all, because every firm must train the people who will one day take its partners’ places. It does not, however, explain why a firm typically has many juniors for every partner. Obviously, a firm that hired juniors only to train its successors would need few more of them than it has partners to replace. Yet most of the juniors a firm hires will never become partners, and the firm does not expect them to. They are hired for their labour, and the number hired is a matter of leverage, which follows from the nature of professional work.
Much of the day-to-day work of a professional firm is a kind of drudgery. Before a partner can advise a client, someone must research the authorities, read the documents, assemble the figures and produce the memoranda, schedules, drafts, working papers and other artefacts in which the advice is ultimately delivered. The bulk of this work has always been too low in value to justify a partner’s expensive time, and so partners have overseen and steered it while juniors performed it, with leverage further increased by interposing middle management. The partner’s judgement was the scarcest and most expensive resource in the firm, and the most economical way to deploy it was to spread it over the labour of managers and many juniors, each billed to clients at far more than they cost. It is, in effect, a form of labour arbitrage, in which the firm buys junior time at the price of a salary and sells it at the price of professional advice.
The arrangement had a further advantage, which is that the juniors’ billable work essentially paid for their training. Juniors learnt the profession by doing the groundwork for which clients paid, so that a firm’s investment in its future partners was largely a by-product of its present revenue.
Leverage is highest where professional work is procedural, as in audit fieldwork, document review and compliance, and lowest in bespoke advisory work, which has always depended on a few experienced practitioners. The argument that follows applies with most force to the former, but in some measure to all. Anyone who supposes, however, that bespoke advisory work lies beyond the reach of AI is much mistaken, for current models, given the proper context, can already perform much of it at a very high level.
The Disappearing Base
The research, reading, assembly and drafting that fill a junior’s working day are precisely the kinds of work that AI now does faster, more cheaply and, in many cases, better than any human. Most of it is codified work, the application of knowledge that can be taught, written down and verified, and codified work is what AI does best. A model can now research a point of law, assemble a set of working papers or produce the first draft of a memorandum in a small fraction of the time a junior would need, and at an even smaller fraction of the cost.
Once the machine reliably performs that work, nothing remains to justify the headcount at the base. A firm employs juniors for their labour only for as long as their labour is the cheapest way of producing that groundwork, and that is no longer the case.
The labour market appears to have begun to register the change. In ‘Canaries in the Coal Mine?’, researchers at the Stanford Digital Economy Lab use payroll data covering millions of American workers to show that employment of 22- to 25-year-olds in the occupations most exposed to AI now stands 19% below where it would have been had it kept pace with that of their peers in less exposed occupations. The shortfall thus far has arisen primarily through reduced hiring rather than through outright dismissals, a distinction that becomes important when we turn to the middle of the pyramid below.
The savings that AI brings will not remain with the firms. As I argued in ‘Survival of the Fittest’, competition compels each firm to pass them on to its clients, on pain of being undercut by a rival that does. The clients themselves, who can now perform much of this research and drafting in-house with the same tools, will not pay much more than it would cost them to do so. Ultimately, fees will fall towards the cost of compute, and of the human judgement, that a given matter still requires.
False Comforts
I anticipate the objection that cheaper work will call forth more demand for it. On this view, as AI lowers the price of professional services, clients will want to buy more of them, including those new clients who could not previously afford them, and the additional work will sustain the base of the pyramid even as each piece of work requires less human time.
Demand may well expand. It is my personal view that it will. But the new demand that a fall in price unlocks is, by its nature, demand for low-price work. It comes from clients who could not afford professional advice at its former price, or concerns work that was never worth doing at that price. A firm can serve that demand only at the new, lower price, and it can meet that price profitably only by having machines do the research, analysis and drafting, since expensive human hours cannot be sold at a price set by the cost of computing.
A boom in such demand creates work for machines and for the few people who direct them. To the extent that any human base survives on this work, it will form a separate labour market of people who operate AI systems on low-price matters, and not the first rung of a career that leads to partnership. The belief that rising demand will preserve the pyramid is, by and large, a false comfort, and not a defensible view.
Why Competition Makes Change Swift
If AI merely made the base unnecessary, firms might still take their time in dismantling it. Competition removes that option. As I argued in ‘Survival of the Fittest’, a market economy is a competitive environment in which only the firms best adapted to its conditions survive, and AI has changed those conditions fundamentally.
The mechanism is rather simple. A firm whose base has been replaced by machines while partners still assure quality can offer the same work at a fraction of the price. Its competitors must then match that price or lose the client, and they can match it only by doing the same. The result is a race to the bottom on price, in which each firm is compelled to extract the greatest possible leverage from AI, and that means replacing whatever a machine can do for next to nothing. No firm can choose to keep its pyramid once its competitors have dismantled theirs. Clients accelerate the race. A general counsel or finance director who uses AI in their own work can see what a piece of work should now cost, and will not pay for hours that a machine has made unnecessary.
The economist Enrique Ide has shown, in a formal model, that firms competing in this way will automate more early-career work than is good for the economy as a whole, because the cost falls on the skills of future workers rather than on the firm that automates. No single firm can afford to correct for this, since a firm that keeps paying juniors for work a machine can do will be undercut by those that do not.
There are, of course, forces that slow the change. Certain work is reserved by law for admitted or registered professionals, and many deliverables require the signature of a qualified person. Professional liability makes firms cautious, and partners near the end of their careers may prefer to harvest the old model rather than rebuild it. These forces are real, but each protects the partner, not the pyramid. The law requires a qualified person to sign the opinion or the audit report and answer for it, but it says nothing about how many juniors must prepare it. A partner close to retirement may succeed in postponing change inside the firm, but cannot postpone it in the market. Clients will take their matters to competitors that never built a pyramid and charge a fraction of the fee, and the partners who remain will inherit a firm that can no longer compete.
The Diamond
For a time, as the base of the pyramid collapses, the professional firm will look more like a diamond, with a narrow base beneath a broad middle of experienced people who direct and review what machines produce. This middle is not the routing layer of management which, as I argued in ‘The Roads of Reinvention’, largely falls away once information no longer needs to be carried up and down a hierarchy. It consists of practitioners whose role has moved from producing analysis and drafts to directing and reviewing the machine’s output.
The middle persists for a time for three reasons. The first is responsibility. The machine cannot answer for its work, and someone with the standing to do so must. The second is tacit knowledge. AI substitutes most readily for the codified knowledge that juniors bring from their studies, but it complements the tacit knowledge that practitioners acquire through years of practice, and the Stanford researchers find faster employment growth among experienced workers in occupations that rely heavily on such knowledge. The third is that the review of machine work still requires an experienced eye, at least until much of that review is itself automated.
There is also a less flattering reason. Part of the middle is broad only because its members were hired before the base narrowed. The diamond is, to that extent, what remains of the pyramid that preceded it, and it is a transitional structure that may well prove short-lived.
From Diamond to Ladder
Three interlinking phenomena will, to my mind, collapse the diamond into a ladder.
The first is the (lack of) pipeline. A firm cannot promote to manager the people it never hired, and the middle of every firm is drawn from its own base of a few years earlier. Nor can the problem be solved by hiring experienced people from other firms, which works for any one firm but not for a profession in which every firm will reduce its intake. The effects are only starting to emerge, and the latest models have barely begun to be deployed in professional services, but such a reduction is all but inevitable. Notably, this hypothesis does not depend on any further improvement in AI. Even if the models stopped advancing today, their deployment alone would reduce the intake of juniors, and that reduced intake would work its way up through every firm as each cohort aged.
The second is pressure from the ‘sides’ of the diamond, as it were. As fees fall, the middle tier of a professional career becomes less lucrative, and fewer partnerships remain to compete for. Many in the middle will leave for other pursuits, and others will be forced out as machine capabilities advance even further. Some of the most capable will leave to found practices of their own, because, with AI performing the groundwork, they no longer need the expensive juniors that such a practice once required. The middle therefore narrows not only because of the effluxion of time due to the reduced pipeline, but also because of active departures.
The third is a falling demand for seniors. Many now ask how firms will find senior practitioners in future if they do not hire juniors today. The question assumes that tomorrow’s senior will do today’s senior’s work. As the models improve, the logic that removes the junior applies to much of what the senior now does as well, so that firms will need far fewer seniors, and those they need will be the people who direct the machine’s work and answer for it.
What remains is something closer to a ladder, with few people at each level and each senior followed by a successor rather than by a cohort. The leverage that juniors once supplied is supplied instead by machines, and, as I suggested in ‘Transcending the Loop’, it comes to be measured in the judgement calls a firm’s people can make rather than in the number of people each partner supervises. How quickly this happens, no one can say with confidence, but if I were a betting man, my money would be on ‘a few years at most’.
A New Academy
To the extent that firms continue to exist, juniors will still have a place in them, though in far smaller numbers, and will be valued for future judgement rather than present labour. In that sense, the professions will return to the apprenticeship model on which they were founded, but in a wholly new form.
The traditional apprenticeship model worked by slow absorption of skills. A junior spent years doing groundwork under supervision and acquired judgement incidentally, through the accumulation of countless small tasks and corrections. That model depended on the groundwork, but now the groundwork is going. Nor can universities fill the gap. They teach codified knowledge, which is the very knowledge that AI now supplies most readily, and they do not provide the practical experience that has become scarce and valuable. Something must stand between the university (to the extent that university education in the professional industries survives in the first place, which is highly doubtful) and the new working environment, and that is what I will call the practical academy.
The practical academy must overcome a difficulty first identified in industrial automation. In ‘Ironies of Automation’, published in 1983, the cognitive psychologist Lisanne Bainbridge observed that automating most of a task leaves its operators without the practice that their ongoing work once supplied, so that, far from needing less training, they need more. A junior who has only ever reviewed machine work may lack the eye to tell when it is wrong.
AI itself partially supplies the answer, for the same machine that deprives juniors of the groundwork through which they once learnt can supply them with practice instead. It can generate realistic matters without limit, plant errors of known kinds for the trainee to find, mark each attempt at once and set each exercise at the edge of the trainee’s competence. A firm’s method, once made explicit for its AI systems, also becomes the practical academy’s curriculum. Training can combine the oversight of AI on live matters, in which a senior reviews the junior’s review, with short and deliberate practice by hand and with simulated matters, much as pilots rehearse in simulators the emergencies they may never meet in the air. What once took years of low-involvement learning must now be compressed into months of intense practice. A junior who cannot achieve that leap in competence in so short a time will have nothing to offer that the machine does not already provide. This will select for highly motivated, highly competent and highly intelligent individuals.
With so few places available in the ladder, the tournament for partnership, once played out over many years inside the firm, now takes place at the gate, and in a sense before it, among students competing for places that most of them will never be offered. Firms should select for exceptional general intelligence, unusual industry and a command of the field deep enough to recognise when the machine is wrong. Mid-tier ability will not suffice in the slightest.
The practical academy must also be paid for. In the pyramid, juniors paid for their own training through the billable groundwork they produced. As Luis Garicano and Luis Rayo put it, ‘Apprenticeships let juniors pay for training by doing menial work. AI now performs an increasing share of that work, putting the bargain at risk.’Because firms will train only a few apprentices, the total cost of training them is limited. That cost now falls on the firm itself, however, paid in the time of its most expensive people instead of being recovered from clients, and a firm will bear it only if it deliberately chooses to invest in its future partners.
A Word to Those Entering the Professions
On these premises, and barring some black swan event, only a small minority of those currently starting their training to become lawyers, accountants, analysts and consultants (in my estimation, no more than one in twenty), will find gainful employment in these professions at all by the time they complete their studies and apprenticeships. That is a prediction, not a certainty, but in my opinion it would be dishonest for those of us who hold this view to suggest otherwise, or to paper over our concerns with platitudes. Anyone who aspires to one of these places, which will soon be fiercely contested, should ask themselves candidly whether they have an unusual devotion to their field and ability of the first rank, because, as I have argued above, those are the qualities that selection at the gate will require. The naked facts will not bend to anyone’s hopes, and those who confront them early will be best placed to act on them.
Rapid Change
The professions are likely to be among the first and most heavily affected by AI, for reasons that compound. The first is that their product is cognitive work, which is the medium in which AI itself operates, so that there is no factory to retool and no physical constraint to slow adoption. The second is that the groundwork at the base of the pyramid is the most codified work in the firm, and codified work is what AI does best. The third is that labour is the largest cost of a professional firm, so that the savings are large and immediately visible. The fourth is that clients are sophisticated buyers who use AI themselves and can reasonably estimate what a given matter should cost. The fifth is that a competitor needs little capital to enter the market, so that a firm which keeps its pyramid will face rivals that never built one to begin with. And the forces that slow the change protect the partner, not the pyramid.
Each of these reasons would be enough on its own to unsettle the professions. Together, they make it likely that the pyramid will give way far sooner, and far more completely, than most of those who lead professional firms currently expect.
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