According to a survey from the ACC & Everlaw, 58% of legal departments expect genAI to reduce reliance on outside counsel.

The Association of Corporate Counsel (ACC), in partnership with Everlaw, the cloud-native litigation and investigation platform, published a new report today highlighting GenAI’s transformative impact in corporate legal departments. The report, “Gen AI and Future Corporate Legal Work: How Ready Are In-house Teams?,” details the numerous ways GenAI is driving the rapid evolution of in-house legal departments, including economic and cost-cutting impacts, rapid adoption of the technology, and its career implications.

Top findings on economic impact of GenAI: rapid shift over three years

• Nearly half (49%) of those surveyed expect reduced operational costs from AI. Year over year, 33% of respondents in the 2023 survey looked to technology/AI to control costs, leaping from 12% in the 2022 survey – a 4x increase in three years.
• 25% of respondents already report cost savings on operational expenditures from using GenAI.
• 58% of legal departments expect genAI to reduce reliance on outside counsel. This has more than doubled since the 2023 survey where 25% of respondents said they would cut the number of law firms they work with in the next year, with the top reason cited by (79%) being to increase cost effectiveness.

“The expectation for in-house teams to cut costs with AI is becoming a reality, with over a quarter now reporting savings,” said Gloria Lee, CLO of Everlaw. “In just three years, AI technology’s accelerating impact on corporate counsel has begun to reshape in-house legal functions, spurring a sea change across the legal industry.”

Additional stats of note:

• A third of CLOs are using GenAI daily; 79% of CLOs use GenAI once a week.
• 23% of legal professionals have proactively integrated GenAI into their daily routines; and more than two-thirds (70%) of in-house professionals use GenAI at least once a week. Notably, only 10 percent say that they are neither using nor planning to use GenAI.
• Despite the rapid adoption, less than a quarter believe their legal department is prepared for the talent implications of this transformative technology. 64% of departments with 100 or more legal staff have appointed a GenAI subject matter expert, compared to 42% of mid-size departments with 10 to 24 staff, and 25% of small departments with 2 to 5 staff members.

“As GenAI adoption takes off in-house, CLOs must lead the way in upskilling employees and reimagining roles, making clear how GenAI proficiency is expected and rewarded. Operational efficiencies can’t be achieved if departmental trust in using the technology is concentrated with a few subject matter experts,” Lee said.

The 43-page report was unveiled at the ACC 2024 Annual Meeting, which started yesterday, and is available for download here. Respondents included more than 475 chief legal officers (CLOs), general counsel, other in-house counsel, and legal operations professionals from U.S. corporate law departments. The new report includes the ACC’s career guide in using AI.

So, what do you think? Are you surprised that more than half of legal departments expect genAI to reduce reliance on outside counsel? Please share any comments you might have or if you’d like to know more about a particular topic.

Disclaimer: The views represented herein are exclusively the views of the authors and speakers themselves, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.