General counsels (GCs) are increasingly turning to artificial intelligence (AI) to enhance efficiency and manage escalating workloads. However, many are implementing these technologies with limited budgetary support, highlighting a significant challenge within corporate legal departments.
According to a 2025 survey by FTI Consulting and Relativity, over two-thirds of GCs expressed interest in integrating generative AI into their legal operations. Despite this enthusiasm, approximately 65% of legal departments plan to invest in new technology in the coming year, with only 30% specifically allocating funds for generative AI initiatives. This indicates a gap between the desire to adopt AI and the financial resources available to support such implementations.
Budget constraints are a recurring theme. A 2024 study revealed that 96% of GCs faced budget cuts, with 54% experiencing reductions exceeding 10%. Concurrently, standard law firm rates were projected to rise by 6% to 8%, further straining financial resources. This financial squeeze compels legal departments to seek cost-effective solutions, often turning to AI as a means to enhance productivity without significantly increasing expenditures.
Despite these financial challenges, the adoption of AI within legal departments is on the rise. A 2025 benchmarking report found that 38% of surveyed teams were already utilizing AI tools, with an additional 50% actively exploring implementation. Contract-related tasks, such as drafting, review, and analysis, emerged as the primary areas where AI is being applied. However, the report also highlighted significant barriers to AI adoption, including trust issues, data privacy concerns, and challenges in measuring return on investment.
To navigate these challenges, legal departments are exploring various strategies. Some are bringing more work in-house to reduce costs, while others are shifting tasks to smaller firms or leveraging technology to scale operations. Notably, 33% of in-house teams are looking to AI to control costs, a significant increase from 12% the previous year. This trend underscores the growing recognition of AI’s potential to deliver efficiencies and cost savings, even in the face of budgetary limitations.
In summary, while GCs are keen to harness the benefits of AI, they are often doing so within the constraints of limited budgets. This necessitates a strategic approach to technology adoption, ensuring that investments are targeted, cost-effective, and aligned with the department’s broader objectives.