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GenAI helping law departments cut costs, research says
New findings highlight the “transformative impact” that generative AI has on the spending habits of in-house legal teams – including expenditure on external providers.
Jerome Doraisamy
The Association of Corporate Counsel (ACC) and cloud-native litigation and investigation platform Everlaw have published their Gen AI and Future Corporate Legal Work: How Ready Are In-house Teams? report, which unpacks the myriad ways that generative AI has evolved the operations of law departments.
The report showcased responses from over 475 chief legal officers (CLOs), general counsel, other in-house counsel, and legal operations professionals from US-based corporate law departments. Its findings were unveiled at the ACC 2024 Annual Meeting, held in recent days.
It found, among other things, that one in four (25 per cent) of law departments are already experiencing cost savings on operational expenditures from using GenAI, and one in two (49 per cent) expect reduced operational costs from AI use.
Moreover, three in five (58 per cent) of law departments expect a reduced reliance on outside legal service providers, specifically due to GenAI – a figure that has more than doubled from the 2023 version of this report, where 25 per cent of those surveyed said they would cut the number of law firms they work with at some point in the next year.
In that survey, the top reason cited for a reduction in external providers utilised was the need to increase cost-effectiveness (79 per cent).
Speaking about the findings, ACC president and chief executive Veta T. Richardson said: “The rapid pace of GenAI’s integration into corporate legal departments and the significant impact it is making is remarkable.”
“The snapshot this comprehensive survey provides of GenAI’s use in legal departments helps illustrate the magnitude of its effect on budgets, operations, and staff.”
Everlaw chief legal officer Gloria Lee said: “The expectation for in-house teams to cut costs with AI is becoming a reality, with over a quarter now reporting savings.”
“In just three years, AI technology’s accelerating impact on corporate counsel has begun to reshape in-house legal functions, spurring a sea change across the legal industry.”
While the financial benefits of GenAI are starting to become clear, law department leaders surveyed also noted that their teams would benefit from broader reskilling.
Less than one-quarter of those surveyed, the report detailed, believe their legal department is prepared for the talent implications of this transformative technology.
Two-thirds of departments with 100 or more legal staff have appointed a GenAI subject matter expert, compared to two in five mid-size departments with 10-24 staff and one-quarter of small departments with 2-5 staff members.
“With GenAI’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 Richardson.
“Those that can effectively integrate GenAI into their department’s operations, while providing the necessary balance of safeguards and training, clearly have a lot to gain.”
Lee said: “As GenAI adoption takes off in-house, CLOs must lead the way in upskilling employees and reimagining roles, making clear how GenAI proficiency is expected and rewarded.”
“Operational efficiencies can’t be achieved if departmental trust in using the technology is concentrated with a few subject matter experts.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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