Dive Brief:
- Nearly half (49%) of in-house legal counsel expect Generative AI tools to yield cost savings for their legal departments and a quarter of companies are already seeing cost benefits, according to a survey of 475 in-house professionals. However, only a quarter feel their organization is adequately prepared for the talent implications that GenAI will bring.
- General counsels from organizations of all sizes are working through the legal tech industry’s numerous GenAI offerings, trying to identify which are useful to their workflows. About a quarter (23%) of legal teams are using AI tools; 22% are still researching vendors and evaluating products, and 30% are “passively” exploring the technology, according to the polling by the Association of Corporate Counsel and Everlaw, which released the findings Monday as the ACC annual meeting got underway. Fifteen percent of respondents are using beta products or testing and 10% have no plans to use AI.
- In these early days, GenAI can be most helpful in four areas, according to a panel of experts at the ACC event: Legal research, drafting and reviewing non-disclosure agreements, summarizing court decisions and preparing charts and tables.
Dive Insight:
“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,” said Gloria Lee, Everlaw’s chief legal officer.
Most in-house lawyers say that increased efficiency is the most tangible benefit to them of GenAI use in legal work, cited by 86%. The next area, cited by 38%, was enhanced communications and elevated client service—enabling updates to be made in real time, for example.
Still, GenAI will also introduce “negative outcomes,” with nearly three-quarters of in-house (73%) counsel expecting that non-lawyers will rely on AI for legal advice.
A separate survey by Clio, focused on law firms, found that AI tools have begun changing how firms bill. Firms said that they’re charging 34% more of their work on a flat-fee basis compared to 2016, according to Clio’s periodic Legal Trends Report released Monday.
“As AI reduces the time required for many administrative tasks, billing by the hour becomes less practical,” the company said in a press release. “Flat fees, on the other hand, enable law firms to capture the value of their services without being limited by time-based billing constraints.
Clients — including GCs — are driving the shift toward flat fees, with 71% choosing this arrangement for an entire case and 51% preferring a flat fee for individual tasks, Clio said.
The Clio survey, conducted in June, involved 1,028 legal professionals.
GCs should always ask whether their outside firm used AI in preparing any work as it could help facilitate cost savings, Nishat Ruiter, general counsel at TED Conferences LLC, said on a panel offering lawyers tips for how to leverage AI.
“Always ask them ‘Did you use AI and it came up in 30 seconds or did you spend three hours developing this analysis?’” she said. “Always, always ask. It may save you some money.”
