74% of in-house lawyers say AI will have a “transformational” or “high” impact on the legal profession

566 Views

74% of heads of in-house legal departments (general counsel) expect AI and generative AI to have a “transformational” or “high” impact on the legal industry over the next five years, reveals new research by Thomson Reuters*. According to the study, 2024 State of the Corporate Law Department, only 5% of senior in-house lawyers think AI will have “little to no impact” on the legal profession, a sign of how the technology has become a growing priority for legal departments.

The Thomson Reuters research also shows that the use of AI technology is increasingly influencing the selection of external law firms. 72% of law departments now include the “use of appropriate technologies” as a factor when selecting external law firms.

14% of in-house legal departments say that law firms’ “transparency in AI use” is now a mandatory requirement before they will hire them.

Gap widens between firms’ AI investment and clients’ expectations

Despite the expectation that AI will transform the legal profession, 90% of in-house legal departments are experiencing “slow to moderate progress” in adopting AI technologies internally, perhaps due to budgetary constraints. Just 32% of in-house legal teams have reported an increase in their legal technology budget even though 76% of in-house teams see it as helping them to achieve greater efficiency.

“An increasing percentage of large corporates state that they will assess the law firms they use, based on their approach to AI and other legal technologies,” says Jas Sandhu Dade, head of Corporates Europe for Thomson Reuters. “AI and generative AI are increasingly shaping all aspects of the business and the practice of law, and there is a clear competitive advantage in being an early adopter.”

“We’re seeing high levels of interest in the potential of AI technologies across law departments; however, this enthusiasm has not yet translated into equal rates of adoption.”

Legal teams predict AI to bring widespread benefits

According to the Thomson Reuters ongoing research into the Future of Professionals, the vast majority (91%) of in-house legal professionals expect basic AI training will be mandatory within five years — and 26% expect it to be required by the end of 2024.**

The areas where corporate general counsel predict AI will have the biggest impact are in employee engagement and wellbeing; training and development; and recruitment. In addition, 72% see the use of AI to streamline workflow processes as a high priority.

Sandhu Dade says: “There is a broadening range of areas where AI can improve the operations of law departments through streamlined processes and data analytics capabilities. As the legal profession navigates the complexities of emerging technology, in-house legal teams must consider the right tools to carefully integrate AI into their workflow in order to establish trust in these new processes and maximise their benefits for their teams and the businesses that they support. In a competitive market, AI use and adoption in legal departments could give an organisation the competitive edge that they need.”

C-suite sees broader potential for change beyond AI

Similar sentiment towards AI is reflected in the C-suite. 81% of C-suite leaders are already using AI, or plan to use it in the next 18 months to increase interdepartmental efficiencies, and 73% plan to use AI to develop new products and services. Just 7% of C-suite executives expect the emergence of AI to have “little or no impact” on the legal profession.

Download the full report for more insights on the state of corporate law departments.

 

* Thomson Reuters Institute – 2024 State of the Corporate Law Department, April 2024

** Thomson Reuters Institute – The Future of Professionals Report, August 2023