Kroll chief Jacob Silverman: AI won’t kill ‘mission critical’ advisory work
Jacob Silverman arrives at Kroll’s vast City office for our interview fresh off a delayed flight from Atlanta, but you’d never know unless the bright-eyed New Yorker hadn’t mentioned it.
Between sips of diet coke, the firm’s global chief executive offers CityAM an upbeat assessment of AI’s influence on the consultancy sector that seems at odds with widespread fears about how the technology is reshaping the industry’s bedrock services and business model.
“AI will not replace the fundamental value of what we are providing to our clients, which is an informed, intellectually-driven opinion about fair value, or an informed, intellectually-driven body of work around protecting your most valuable assets,” Silverman explains.
Kroll, a private-equity backed consultancy and advisory firm specialising in – amongst other things – valuation services, financial and restructuring advice, and risk management for companies, is embedding the technology into workflows and how it supports clients.
Silverman insists, however, that AI will not replace what clients want: the invaluable human element, which technology can’t offer.
“We might use AI to support some of the building blocks of that informed view, but if you’re a chief security officer tasked with protecting your CEO, you’re going to listen to a person about how to protect your perimeter, not some automated output.”
“And if you are a founder of a private equity firm who is reliant on an opinion to value and support your fundamental franchise, you’re going to rely on a person to provide that opinion. That’s just the nature of our work. It’s mission critical,” he adds.
He tells CityAM he is comfortable handing over the more administrative, routine-heavy tasks and baseline research to AI tools, but draws the line at intellectually-driven decisions where people play a critical role.
“AI will be built into some of those workflows, for sure, and enhance some of the outputs and outcomes, but not replace it,” he says.
Talk of AI killing the billable hour is ‘overblown’
It’s no secret that AI is wreaking havoc across professional services, but particularly in changing the meaning of the billable hour – which typically based the price of a task on the time it took to complete – as clients assume the technology is used by firms to automate much of the most time-consuming tasks.
However, Silverman explained this has been blown out of proportion. “There’s a lot of discussion around the depth of the hourly rate, but I think that’s probably a little bit overblown.”
Instead, he pointed out “there will be more focus on outcome-based pricing”, which Kroll is focused on across a lot of its business.
Silverman believes that AI will actually split how fees are calculated across professional services, in particular with law firms.
He stressed that high-stakes litigation support such as that offered by the Magic Circle, or firms specialising in complex mergers and acquisitions, will become scarcer as AI can be used for much of the more routine legal work, and therefore raise prices for the “premium” services.
“There’s going to be a separation of commoditised legal services and premium services, and I think we’re going to see real compression on the former and continued appreciation, potentially, on the latter,” says Silverman.
“No matter what happens with the evolution of AI, for the most mission-critical decisions around high-stakes M&A or high-stakes litigation, you’re going to hire a person to provide advice, and that advice will become more expensive, become scarcer, and you’ll pay a premium for it.”
He believes that the industry “reckoning” which AI is causing is actually going to preempt a huge hike in pricing for services even though clients may be assuming the opposite as work is handed over to bots which can complete tasks in a fraction of the time a human can.
This, he says, is due to the costly burden of computing and power consumption which AI relies on and firms are investing in, not to mention the eye watering price tags for the state-of-the-art tools from the big tech giants.
“I do believe there is now a reckoning with the fact that AI-powered activities that rely on a consumption model can be very costly,” Silverman says.
‘Small firm culture’ is more important than ever
Since joining the firm in 2004 as a chief financial officer, the chirpy New Yorker, who began his career in investment banking in the 1990s in Manhattan, has played an integral role in growing the consultancy firm through acquisitions, but also through organic growth.
Kroll began as a specialised investigative New York-based boutique in 1972 and has since grown heavily through mergers, now employing 6,500 people across over 30 countries.
Despite its size today, the chief executive emphasises that maintaining a flat, collaborative, “small firm” culture where colleagues have each other’s back is an integral part of the company’s values.
“No matter how large we grow, I want the firm to feel small,” he says.
Silverman has a jam-packed travel schedule visiting Kroll’s teams, clients, and the media across the globe.
This reflects a core belief of his – that being present matters, which he says is “an effort to keep the firm bound together.”
Kroll is investing meaningfully in new hires
Many professional services firms have been cutting headcount, especially junior roles, amid the uptick in AI automating much of the grunt work which younger employees typically take on.
Silverman says, however, this isn’t the case for Kroll, which focuses heavily on career development and progression in the hiring process.
“We’re thoughtful about how many people we bring in, making sure that those that we do bring in are able to thrive here,” he says, adding that the firm is “investing meaningfully” in their learning and development programme, Kroll University.
“I want people to join Kroll to build their career, build their wealth – economically, and emotionally – and never want to leave.”