In-house lawyers foresee huge AI impact, adoption lagging

A significant majority of in-house lawyers believe artificial intelligence (AI) will have a profound impact on the legal profession, according to a new study by Thomson Reuters.

The research, outlined in the 2024 State of the Corporate Law Department report, reveals that 74% of general counsel anticipate AI, including generative AI, will bring a "transformational" or "high" impact over the next five years. Only a small fraction, 5%, foresee negligible effects from the technology.

The study indicates that the use of AI is becoming a critical factor in the selection of external law firms, with 72% of law departments requiring the "use of appropriate technologies" when choosing their legal partners. Notably, 14% of in-house legal teams now demand transparency regarding a firm's AI use as a prerequisite for engagement.

Despite high expectations for AI's impact, the adoption rate within legal departments is lagging. The report states that 90% of in-house legal teams are experiencing "slow to moderate progress" in implementing AI technologies internally, predominantly due to budgetary constraints. This slow adoption persists even though 76% believe AI can enhance 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," commented Jas Sandhu Dade, head of Corporates Europe for Thomson Reuters. According to Dade, being an early adopter of AI offers a competitive edge in the legal field.

The research also highlights the anticipated benefits of AI within legal departments. A majority, 91%, of in-house legal professionals expect basic AI training to become mandatory within five years, with 26% predicting it will be required by the end of 2024. Key areas identified for AI's impact include employee engagement, training and development, and recruitment. Moreover, 72% of legal professionals prioritise using AI to streamline workflow processes.

"There is a broadening range of areas where AI can improve the operations of law departments through streamlined processes and data analytics capabilities," said Sandhu Dade. She emphasised the importance of carefully integrating AI into workflows to establish trust and maximise its benefits for legal teams and their organisations.

The report also suggests a similar enthusiasm for AI among senior business executives. It finds that 81% of C-suite leaders are either already using AI, or plan to implement it in the next 18 months to enhance interdepartmental efficiencies. Additionally, 73% of executives intend to leverage AI for developing new products and services. Only 7% of C-suite executives believe AI will have "little or no impact" on the legal profession.

This data underscores a growing recognition across both legal and corporate sectors of AI's potential to revolutionise operations. However, the challenge remains in bridging the gap between the high expectations and the current pace of AI adoption within legal departments.