As advancements in generative artificial intelligence (Gen AI) continue to reshape the legal industry, there is a notable shift happening within in-house legal departments. A recent survey conducted by the Association of Corporate Counsel in conjunction with Everlaw reveals that a significant number of legal chiefs are anticipating a reduced dependency on outside law firms. Specifically, 58% of legal departments report an expectation of relying less on external service providers due to the integration of Gen AI tools and solutions.
This sentiment marks a substantial increase from last year’s survey, which indicated that only 25% of in-house departments were planning to decrease their utilization of law firms. The primary driver for this shift is cost savings—a priority that aligns with the evolving capabilities of AI in improving efficiency and reducing operational costs within legal teams. While the integration of Gen AI is not yet widespread among all legal departments, there is a growing consensus that AI-powered solutions are becoming an essential component of cost-cutting and streamlining legal operations.
At the crux of this transformation is the deployment of AI-enhanced legal analytics and workflow tools, which offer in-house teams advanced capabilities to manage work traditionally outsourced to external law firms. As these technologies continue to advance, the landscape of corporate legal services is poised to experience a significant shift, potentially impacting the partnerships between corporations and traditional law firms.
The findings of the survey reflect a broader trend across industries toward leveraging AI for operational efficiencies. As legal departments continue to adopt AI solutions, it remains to be seen how traditional law firms will adapt to maintain competitive relevance in this AI-driven era.