More transparency, less hype needed to bridge legal sector AI trust gap

The advent of artificial intelligence (AI) has created a dizzying array of possibilities for businesses. As the potential productivity gains from AI continue to grow, billions are being ring-fenced globally to invest in these technologies, whilst the eye-boggling valuations and modest proven gains in most sectors are prompting fears of a looming bubble.

In the legal sector, the proliferation of new product launches, market entrants, investments and extraordinary valuations has precipitated an unprecedented level of AI hype. In turn, this has generated a growing level of exhaustion and scepticism among lawyers grappling to keep pace with the latest developments and demonstrate their AI prowess.

A recent LexisNexis survey revealed that 49% of UK legal professionals are struggling to keep pace with AI technology. Meanwhile in-house teams are left feeling anxious, bombarded by a cacophony of tools, platforms and solutions, and are under pressure to make immediate gains with minimal time, capacity or spend.

There is a clear disconnect between the overwhelming noise created by AI and the impact this nascent industry is having right now on legal practice.

We have been here before, of course. In the past two decades, the much-lauded evolution of legal process outsourcing (LPOs), the arrival of the Big Four, automation and others were all tipped to have a transformative impact on different ways of working across the profession – perhaps even heralding “the end of lawyers”. While they certainly have streamlined workflows, boosted productivity and provoked beneficial responses in many law firms, it’s still a stretch to say they have materially transformed how law firms or legal departments operate today.

There are even loftier expectations for AI’s prospects in the sector given its surging capacity for language and ability to process unstructured information. Law firms, consultancies and tech vendors are strong proponents of the capabilities of the technology, but there is still more to do in demonstrating the actual gains in cost and efficiency savings for clients.

As it happens, our view is that AI actually is the “thing” that will finally tip the balance, and demand transformation in both law firms and in-house functions that are increasingly under pressure to eliminate vast volumes of traditional work. The potential is abundantly clear, even if, currently, it is only being realised in moderation. The pace of advancement means it simply cannot be ignored.

Gains are already starting to become measurable and will accelerate, but AI tools are not “plug and play” except for the most modest returns. Instead, there must be better articulation of today’s capabilities – and, more importantly, tomorrow’s potential.

Putting aside the hype, the long-term benefits of AI extend well beyond efficiency, productivity and reduced external legal spend. Standardisation in commercial contracting – which is already widely adopted in the construction and commercial property sectors – is bound to accelerate with the use of AI. AI could fundamentally transform negotiation and drafting processes, diligence programmes and much more besides – but at this stage AI is mainly just substituting for effort, whilst the ambitious amongst us should have our eyes on much more. Firms must be honest with clients about what it takes to make AI productive and work together to develop solutions that reflect market reality.

For businesses that have already invested heavily in AI, there’s growing internal pressure on their in-house legal teams to accelerate AI adoption. The potential gains for these teams are perhaps even greater than for traditional law firms. Indeed, AI stands to offer businesses an opportunity to democratise access to legal advice that could further disintermediate law firms.

At the same time, the ecosystem needs to better explain that AI will not simply replace lawyers or other technology platforms without preparation and investment, if at all. To the contrary, AI feeds on good quality documents, clarity of thought from its users, clear taxonomies, and high calibre data regarding processes both upstream – including contracting – and downstream – such as supplier management and disputes. Thoughtful approaches to connecting data sources across the enterprise will start to take these gains outside the legal function, as will understanding the information that decision-makers need, and how they want to consume it.

In-house teams must be mindful that the biggest potential gains require a concerted effort and real costs to establish. Law firms need access to documents and permission to “feed” them into AI tools.  Financial or cost benefits may be modest – or even absent – in the short term. As law firms, there is a need for us to think more about demonstrating return on investment.

Undoubtedly AI offers great potential for in-house legal teams to handle more work internally and reduce their reliance on external counsel. This, in turn, places a growing onus on law firms to prove our enduring worth. Having more open, honest conversations with clients, both about our own capabilities in this space and how they see the sector leveraging AI, will help safeguard our position as trusted advisers.

Of the 700 lawyers surveyed by LexisNexis, 71% said they either would or already feel more confident using AI when it is grounded in trusted legal advice. For those using legal AI, this confidence rose to 88%. As businesses already investing heavily in AI increase the pressure on their own in-house legal teams to accelerate its adoption, it’s clear that trusted legal advice will continue to play a vital role in bridging the AI trust gap across the sector.

As AI continues to evolve, immediate financial gains for law firms or in-house teams may not be just around the corner. However, developing better collaboration, transparency and a shared understanding of respective expectations and pressures will better position both sides to benefit from AI and its impact in the long term.