Law firm AI use cases and in-house legal’s needs don’t match

In a recent survey of 150 general counsels compiled by Legal Business and Thomson Reuters, 9% more are using legal tech, particularly generative AI, than this time last year.

Of those surveyed, 86% expect to maintain or increase their spend on AI-related tech this year – a 6% increase from 2024. However, only 11% have successfully implemented generative AI into their working practices to date, while 37% are still either piloting or rolling out tools. 35% have not yet taken the leap.

‘Doing more with less’ is a mantra that has proliferated across sectors for years, but in an increasingly challenging economic environment the emergence of AI tools has sharpened organisations’ focus on achieving operational efficiencies – including in their legal teams. In tandem with this, the promise of AI-driven efficiencies and potential innovation has spurred other business functions – from HR and finance to procurement and marketing – to explore AI solutions.

Together, these factors are making in-house legal teams increasingly anxious to get up to speed on AI. In this context, it is not surprising that law firms having been seeking to position themselves to help.

Law firms as organisations are themselves under pressure to show how they are using AI, to keep pace with or stay ahead of competitors. Understandably, the clients that engage law firms expect them to use AI to shortcut tasks for which they might be billed. In this regard, law firms have turned to AI for help on a wide range of tasks, from undertaking contract review exercises, developing standard templates and drafting reports to expediting e-discovery when dealing with large volumes of information.

Many law firms have been quick to shout about this, citing their own use cases in marketing materials. More often than not, however, law firms have failed to articulate to in-house lawyers or meaningfully evidence the benefits of using AI and how any efficiency savings can be passed on to or shared with their clients.

On the face of it, in-house legal teams are presented with impressive credentials and an impression that there are experienced advisers able to assist them in getting started on their own AI journeys. The reality, however, is there is often a disconnect between the AI use cases in which law firms have meaningful expertise and those which meet in-house legal’s needs. There is crossover, and lessons can be learned, but the use cases, the tools and the benefits are not always analogous.

In contrast to law firms, in-house teams rarely need to carry out large document review exercises. Instead, in-house teams are looking at small volumes or even single documents, but because these needs often arise only periodically for corporates, it is rarely economical for them to maintain that capability themselves.

While in-house teams know they need to adopt AI, often they don’t quite know what AI products are available on the market and how they might be applied to their bespoke processes. Law firms presenting in-house teams with examples of how they have used AI in litigation and pattern matching, or in large-scale contract remediation, are therefore missing the mark.

By contrast, there may be considerable merit in in-house teams using AI even for individual contracts, help with document mark-up, or on individual insights. Automation and agents to accelerate mundane but time-consuming tasks could save time for in-house teams.

Arguably, most law firms’ current approach is only adding confusion to what is a complex technological environment to get a handle on, making it more difficult for in-house lawyers to understand how they might usefully adopt AI in practice. In this context, it has become all too easy from the outset for in-house lawyers to disregard AI as a vital tool that could bring tangible benefits to their own teams.

A useful starting point for in-house teams might be support with familiarising themselves with AI tools available on the market. Most will be familiar with generative AI tools like ChatGPT and Copilot. Many may already use them for research purposes, but there is a wide array of other AI products that might help streamline administrative tasks and free in-house teams up to provide much more valuable support to their business.

In-house teams are also likely to benefit from a review of their processes, to best understand where efficiencies can be made. External advisers can offer a fresh perspective on this and offer an informed view on potential solutions. While AI tools may play a role, it may be that a combination of people and process change could deliver the gains in-house teams are seeking, with technology more of an enabler than a ‘silver bullet’.

As effective ‘gatekeepers’ for an organisation, navigating legal risk is part and parcel of any legal department. Having an understanding of how AI is already being used and how it might be adopted internally by other functions within the business will be imperative to helping in-house lawyers ward off potential challenges early on.

Training can build in-house teams’ understanding of the risks in this regard, such as the potential, in the absence of appropriate safeguards, for confidential information, intellectual property and know-how, personal data, or other commercially sensitive information to be fed into AI models and inadvertently disclosed to the AI developer or other users of those models, or for harm or legal risk to arise from reliance on AI ‘hallucinations’.

Even closed AI systems used within organisations are not without risk. Hackers are increasingly looking to exploit vulnerabilities in business’ supply chains, including the systems provided by third parties that form part of their technology stack. None of these are reasons for in-house legal teams to delay adopting AI into their working practices. Rather, being alive to these challenges – and what external support might be required to help navigate them – will help them optimise productivity gains and realise return on their investment

This makes it even more paramount for legal teams to have oversight over which AI tools are being used by other departments within their organisations and how these tools are being used. Suitable training might help the legal team and other departments recognise the challenges and potential risks of adopting AI, and when and in what circumstances it may not be appropriate to use the technology. 

In-house teams might also benefit from law firms’ support in developing departmental and business-wide policies and best practices on AI use, so that the organisation can take advantage of the opportunities AI presents in a safe and ethical way.

At Pinsent Masons, we know that, for the legal function of large organisations, AI presents an opportunity to expand capability, to focus precious human resource on difficult, high-value problems and to realise previously hidden commercial opportunities. We also know it raises big questions about culture, ethics, intellectual property rights, the systematisation of human bias and what the legal and moral limits of automation should be.

In-house teams cannot afford to let the opportunities of AI bypass them. Nor can organisations shape their approach to AI adoption – and address the issues that raises – without the help of a well-informed legal function.

The onus is on in-house lawyers to build AI understanding and to upskill. Law firms can help them, but only if they too know where to start.