In-House Counsel Predict Gen AI Will Decrease Dependence on Law Firms

Now that the honeymoon period surrounding the adoption of generative artificial intelligence (Gen AI) tools has begun to fade, the reality of this breakthrough technology has come under the microscope.

And while many legal professionals are still trying to get their arms around how Gen AI can be reliably deployed in their workflows, one thing that has begun to emerge is that corporate counsel see an opportunity to bring more work in-house.

ACC Survey Reveals Growing Impact of Gen AI on In-House Legal Teams

A recent Association of Corporate Counsel (ACC) survey of 475 in-house legal professionals across the U.S. found that 58% of them expect a “reduced reliance on outside providers for routine tasks” due to the use of Gen AI technologies in their organizations.

This finding is more than double the number reported by in-house counsel in a 2023 survey, when 25% of respondents said they would cut the number of law firms they work with in the next year to slash costs, according to Law360® Pulse.

“More corporate legal teams are embracing AI tools despite ongoing fears about data privacy, output quality and company restrictions due to the promise of increased efficiency, improved client service and potential cost savings,” reported Law360®.

In fact, one in four in-house counsel already report cost savings on operational expenditures from using Gen AI, according to the ACC report.

The survey also found that:

• One-third of chief legal officers are using Gen AI daily;
• Nearly 8 in 10 use Gen AI at least once a week; and
• One-half expect reduced operational costs from AI, up from just 12% in 2022 and 33% in 2023.

“The rapid pace of Gen AI’s integration into corporate legal departments and the significant impact it is making is remarkable,” said Veta T. Richardson, ACC’s president and CEO. “The snapshot this comprehensive survey provides of Gen AI’s use in legal departments helps illustrate the magnitude of its effect on budgets, operations and staff.”

Top Six Ways Gen AI Enhances In-House Legal Capabilities

The survey identified the top six specific areas in which in-house counsel believe that the use of Gen AI tools will enhance their capabilities and positively impact legal work:

1. 82% predict streamlining and accelerating standard processes, such as document review and management
2. 58% predict reduced reliance on outside providers for routine legal tasks
3. 49% predict reduced overall operational costs
4. 46% predict reduced costs for outside providers, such as outside counsel or managed service providers
5. 33% predict expanded nature and scope of legal work performed in-house
6. 32% predict improved legal decision-making

“With Gen AI’s potential to significantly increase efficiency, improve client service and cut costs, it’s no wonder legal leaders are embracing this technology as they are continuously asked to do more with less,” said ACC’s Richardson.

Legal industry observers reacted to the news as an inevitable sign that Gen AI is here to stay, with Legaltech News noting its “potential to boost legal department efficiency and effectiveness,” in spite of findings in the ACC survey that also indicate the technology has a long way to go to deliver on that potential.

“More complex and risky work will clearly be sent out to law firms, as it always has been,” reported Artificial Lawyer. “This is because one can see in-house teams as in part operating … risk distribution functions. The wider environment creates legal risks for a business, the business funnels that risk to the in-house team, and they in turn distribute it out to the best entities externally to defuse the risk.”

The news site notes that whether or not a drop in work going out to law firms materializes remains to be seen, but “clearly enough in-house lawyers believe it will happen to make it necessary for law firms and (legal service providers) to take note. Gen AI just keeps on promising to shake things up in the legal world.”

Integrating Gen AI: LexisNexis Tools Empower In-House Legal Teams

“Those (legal leaders) that can effectively integrate Gen AI into their department’s operations, while providing the necessary balance of safeguards and training, clearly have a lot to gain,” concluded Richardson, in the ACC’s press release.

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