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An AI-powered start-up law firm has used its internal AI system to win a tax proceeding in Queensland, which not only demonstrates the capacity of smaller firms to compete with the big end of town, but also speaks to the evolving role and business model of law firms.
Queensland-based law firm, ezylegal Law, supported by its AI tool, “Rachel”, has won a case over the Queensland Revenue Office in a land-tax dispute.
Comprising a team of three, led by principal lawyer Michael Drummond, alongside a senior associate and paralegal, ezylegal Law combines the power of AI with experienced lawyers to provide efficient, effective and empathetic legal solutions. This, the firm said, was on show during a recent case in which its AI system, Rachel, played the major role in winning a lengthy dispute for one of its clients.
A client demolished their Queensland home in 2020 to rebuild it, and lived elsewhere while construction continued.
Although the property had historically served as their principal residence – making it exempt from land tax – they were assessed for over $350,000 in land duties in 2024.
According to the long-held view of the Queensland Revenue Office, this exemption was capped at a 12-month duration since property owners were required to have physically resided on the site within the given tax year.
Rachel identified a different interpretation of the legislation: “using” land as one's principal place of residence doesn't necessarily require physically living there, which the Queensland Civil and Administrative Tribunal did in fact accept Rachel’s argument.
Whilst Drummond hired a barrister to present the case, he noted that the AI drafted everything, doing all the logistics prior to the day of the hearing.
AI becoming a significant case-building tool
The land tax case demonstrated a concrete example of how AI can be utilised beyond routine legal administration.
Despite having zero experience in land tax, Drummond said that Rachel helped him comprehend the matter, organise evidence and develop an argument and foundations of the strategy going into the case.
“What Rachel did for me was she prepared a whole strategy, including an argument, an outline of argument, that was the backbone of the case, which we then started the case by lodging the appeal,” Drummond said.
“We did bring a barrister in at the end to refine the argument and prepare and do the advocacy work.
“We started that case with just me not knowing anything about land tax and the AI putting the whole case together.”
Whilst the AI generated the majority of the initial case, Drummond stressed that the process still relied on human judgement.
“What I did and what it helped me do was I up-skilled very quickly and became quite knowledgeable about this particular area of land tax.
“I was able to validate and fact-check and cross-reference what the AI was telling me.
“The argument was AI-generated and then it was validated and refined by a human.”
Can AI help small law firms compete with BigLaw?
Drummond highlighted that AI could fundamentally change the competitive landscape of the legal profession, allowing smaller firms and individual lawyers to access knowledge and capabilities that were previously limited by experience, resources and specialist expertise.
“I think it means that everyone can compete from a knowledge-based point of view, but what’s more important is that it actually, partly through the cost, theoretically the cost reduction, but also the efficiency process and level on the playing field and making the market more competitive,” Drummond said.
Drummond argued that greater efficiency could also give lawyers more opportunities to gain practical experience, particularly in litigation and advocacy, and further indicated that the biggest disruption may be felt by firms whose business models rely heavily on perceived expertise as their point of difference
“AI allows more lawyers to run more cases more efficiently and re-skill. And you can’t beat, it’s kind of the equivalent of practising to play a rugby league game and never actually playing in a game,” Drummond said.
“The biggest part of the profession that’s gonna have trouble or struggle with what AI is doing to the profession is the mid-tiers and those boutique firms who pretty much, using whatever billable model they use, tie it intrinsically to a perception of expertise and competence.
“AI is just taking that unique selling proposition away from them.”
How AI is transforming the role and business model of lawyers
Drummond said that the impact of AI isn’t simply about automating tasks, but more so believes it could challenge the traditional business model that has shaped the legal profession for decades, particularly the reliance on billable hours.
“Public enemy number one is not lawyers, it’s not the legal profession, it’s actually the business model of a law firm,” Drummond said.
“[Talking to lawyers], they all hate the billable hour.
“Everyone hates it, everyone hates it; but for law firms, it’s like heroin.
“They hate it, but they’re addicted to it.
“I still have a view that our goal is to change the whole profession, how the whole profession, from a business point of view, operates.
“I think we do wanna attract converts one way or another and grow the influence of Rachel by growing our community.”
Citation: Dempsey v The Commissioner of State Revenue [2026] QCAT 424
