The rapid development of generative AI and its potential for integration into the legal industry has caught the attention of many, for its ability to streamline operations and drive innovation. Bloomberg Law outlines the fundamental attributes of large language models: their impressive proficiencies in language abilities and the capacity for more instinctual human-machine interactions.
The deployment of AI could transform a significant share of the corporate legal budget, in an industry worth approximately $450 billion in the US. This impact is expected to resound throughout the entire legal supply chain, transformationally affecting various levels of service provision and distinct types of legal work.
A primary aspect of this transformation will be the revision and optimization of service delivery in the highest spending ‘core’ segment of the legal field. Work conducted under this heading involves routine business operations such as contract management and commercial litigation, and represents about $360 billion of the total legal budget. Given the current and projected capabilities of large language models, over $300 billion of that budget could be reshaped.
The rise of generative AI brings a shift in the traditional roles of legal teams. They are now poised to function as virtual teammates that can read, research, operate, and draft, extending the capacity of senior lawyers, thus creating ‘bionic teams’. These legal teams, enriched by AI, can bypass previous solution approaches that demanded high upfront investment and instead, offer relieving technology-enabled solutions centred around client needs to legal organizations.
In conjunction with human-machine collaboration, generative AI also presents innovative opportunities for embedding legal expertise in business operations. This reshaping is projected to reallocate budget from traditional outside counsel to technology spending, giving rise to a truly client-centric era.
The generative AI offers potential benefits for both generalists and specialists. For some teams, generative AI may provide support and intermediary roles around specialists, leading to a rebalancing of in-house headcount away from generalists. In other cases, it may allow generalist lawyers to access and apply centralized expertise and knowledge more intuitively and consistently.
Fully realizing this generative AI revolution in the legal industry requires self-awareness and foresight from legal teams, to understand the contours of their specific destination and traverse it with speed and confidence. As the field transitions towards a redesigned client-centric model, the rise of Generative AI provides the legal world with the potential to fundamentally transform its operations.
This article does not necessarily reflect the opinion of the original publisher, Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.