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Corporate law departments and their outside law firms share a common belief: generative AI, along with public-facing platforms like ChatGPT, has the potential to revolutionize legal work. Both parties recognize the value and applicability of generative AI in the legal field. According to a recent survey conducted by the Thomson Reuters Institute, over 80% of corporate law departments and law firms agreed that generative AI could be effectively applied in legal work, with more than half of the respondents advocating for its use.
However, corporate legal departments hold mixed opinions when it comes to implementing generative AI by outside law firms. The survey revealed that 44% of law departments supported the utilization of generative AI by their external firms, while 23% were against it, and 33% remained undecided. Those opposed to law firms using generative AI expressed concerns over accuracy, privacy, and confidentiality. Nevertheless, the prevailing sentiment among corporate respondents who opposed the use of generative AI by law firms was centered on the concept of value. They questioned the need to pay external firms for a technology that in-house lawyers could easily employ.
A corporate legal respondent emphasized the importance of professional competence and responsibility, stating, “When instructing outside law firms, we have a reasonable expectation of the professional competence of the lawyers we have engaged. Both individual lawyers and firms must remain responsible for their work output and advice. Should AI be used for chargeable work, the cost to clients would need to be significantly reduced.”
Another respondent echoed similar concerns about accuracy and cost, highlighting the potential risk of relying on generative AI without proper verification or confirmation, potentially compromising the quality of advice provided to clients.
These perspectives align with what corporate clients prioritize when selecting law firms. Thomson Reuters Market Insights revealed that value and pricing ranked as the top factors influencing corporate attorneys’ recommendations, followed by service and expertise.
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Interestingly, despite the acknowledgement of generative AI’s disruptive potential in both internal tasks and external work product, discussions surrounding rates and the use of generative AI have yet to gain significant traction between corporate legal departments and law firms. The survey found that a large majority (83%) of corporate law respondents were unaware of whether their law firms employed generative AI. Only 6% confirmed their firms’ usage, while the remaining 11% affirmed that their firms did not utilize the technology.
This lack of clarity persists despite law firms exploring various use cases for generative AI, including knowledge management, back-office functions, and drafting of briefs and memos. Similarly, corporate respondents who acknowledged their firms’ adoption of generative AI mentioned its application in legal research, contract drafting and review, back-office functions, and question-answering services.
The survey also highlighted the absence of enterprise-wide generative AI policies among many law firms, which would seemingly serve as a prerequisite for discussing the technology’s usage with corporate clients. However, given the diverse range of potential use cases identified by law firms, clients may not be willing to wait for formal policies to be established, particularly as they possess strong opinions regarding the ethical boundaries and appropriate use of generative AI tools.
An emphatic respondent asserted, “All legal advice should be from a human and not AI. It is possible that you could use AI in some way, but writing legal briefs, pleadings, etc., should be generated by a human lawyer who has gone to school, passed the bar, upholds the oath we took, and who is bound by ethical duties.”
Another highlighted the need for legal work to be conducted by human minds, particularly in litigation, where briefing must align with trial strategy.
In this uncertainty surrounding generative AI tools, forward-thinking law firms and attorneys have an opportunity to seize. While some corporate attorneys advocate for the immediate integration of generative AI within their external firms, others adopt a wait-and-see approach. By initiating conversations about generative AI with their clients now, law firms can proactively establish policies that comply with client requests and position themselves favorably for the future. Given the rapid advancement of generative AI technology, such proactive measures can be instrumental in transitioning from a “nice-to-have” to a “must-have” solution.
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