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Ready or not: artificial intelligence and corporate legal departments

Lawyers have long been characterized as technology Luddites who are slow to change and wary of innovation. For corporate counsel, though, this stereotype may be fading. According to the results of a new Thomson Reuters report, "Ready or Not: Artificial Intelligence and Corporate Legal Departments", corporate counsel believe they are tech savvy but acknowledge that their comfort level and confidence with technology have limitations, specifically around artificial intelligence (AI).

The applications and impact of AI are growing, and AI tools will undoubtedly affect how the legal profession practices over the next decade. Consider how dramatically technology inventions have already changed the practice of law: From typewriters to computers and from fax machines to email, each advance has been transformative in the law. Lawyers have accepted and adopted each of these evolutions. AI is the next frontier.

To better understand corporate counsel’s knowledge of and comfort with the use of artificial intelligence in the profession, Thomson Reuters conducted a survey of 207 in-house attorneys to measure current perceptions regarding the use of AI in corporate legal departments and the perceived benefits of AI once adopted.

Of the respondents, 51% came from legal departments with fewer than six attorneys; 14% worked in departments with six to 10 attorneys; and 35% worked in departments with more than 11 attorneys. Respondents’ roles in their departments broke down as follows: 26% as assistant or associate general counsel, 23% as general counsel, 22% as counsel, 12% as attorneys, 5% as deputy general counsel, and 12% as “other” roles.

 

Chapter One

Executive summary

Some lawyers dismiss artificial intelligence as the latest buzzword, while on the other end of the spectrum are concerns that robots powered by AI will replace lawyers. Regardless of these perceptions, the use of AI in legal practices is already occurring and is poised for even greater adoption. AI is not a threat. Rather, like other technological advances before it, it’s about evolving the practice of law and improving how in-house teams work and process information.

AI can help legal departments streamline and automate tasks and processes, and in turn reduce costs and increase productivity. To realize the full potential of AI, in-house attorneys must start by keeping current on technology and embracing new ways of working; this may be easier said than done in a profession with a reputation of being resistant to change. Many corporate counsel aren’t yet familiar with what AI means, much less how it could strengthen their legal department practices. Among those who are aware of AI technologies, there’s skepticism about reliability — particularly when it comes to confidentiality and ethical considerations — as well as concerns over cost. Despite these doubts, many corporate counsel recognize that AI could be a useful tool in helping legal departments reduce costs, develop stronger business strategies, minimize contract risks and better deliver legal services. 

AI and cognitive computing or machine learning are generally interchangeable terms that all refer to how computers learn from data and adapt with experience to perform tasks. In-house attorneys’ anxiety over AI often stems from concerns that it will replace them or the work they do. Where the evolution of AI can play a significant role in the legal industry is by augmenting lawyers’ work and help increase their productivity – not replace them.

AI has the potential to genuinely transform how lawyers in legal departments work. Already, machine learning – a type of AI – is used for legal research and for pilot programs attempting to predict litigation outcomes. AI is helping lawyers automate repetitive types of tasks – like drafting lower-exposure or lower-liability agreements like NDAs. AI is also empowering in-house counsel in areas such as predictive coding, by saving attorneys time by using samples of data to identify relevant documents in connection with e-discovery requests. AI software also is automating processes and tasks, such as finding and collecting clauses for review during transactional due diligence.

As technology advances and companies develop better metrics and more sophisticated analytics tools, AI will enable legal departments to streamline their workflows and deliver legal services faster and cheaper. Providing legal departments with more tools to increase their productivity is key to AI’s value for corporate counsel.

Six key terms in artificial intelligence

Developing a better understanding of AI starts with getting to know the language. This brief primer can help corporate counsel become more familiar with the basics of this technology.

Algorithm: A formula or set of rules for performing a task; AI software uses algorithms to make predictions from the data sets it analyzes.

Artificial intelligence: An area of computer science focused on developing software that can make decisions and problem solve.

Bots: Technology that simulates human conversation; also known as “chatbots.”

Deep learning: A type of AI that attempts to mimic the activity of neurons in the human brain in order to recognize complex patterns in data sets.

Machine learning: The capability of algorithms and software to learn from data and adapt with experience.

Natural language processing: The capability of algorithms and software to structure, interpret, understand, and generate human languages, focusing mostly on written text.

Chapter Three

Current perceptions of AI: general use and adoption

Corporate counsel’s perceptions around AI range from positive to skeptical to unaware, with most in the latter categories. The survey initially asked about comfort levels with mainstream technologies within legal departments.

Roughly two-thirds (67%) of all survey respondents stated they are confident and ready to try new technology. Only 2% reported not feeling confident when it comes to trying new technology.

 

Not surprisingly, larger departments were the most receptive to adopting AI tools. Only 26% of respondents in departments with more than 11 attorneys believed their departments were not interested in AI. Larger legal departments tend to be more technologically advanced and have the resources to commit to drive adoptions of new tools.

Compare large legal departments’ responses to their smaller counterparts: 67% of respondents who work in legal departments with six to 10 attorneys reported their departments are not interested in AI technologies, while 62% of respondents in legal departments with fewer than six attorneys indicated their departments aren’t ready.  

 

The survey inquired about other perceptions surrounding the use of AI in legal departments. For instance, is the technology so sophisticated that it should only be used by large departments? Some respondents believed that AI will most likely be implemented by larger departments, with one respondent saying: “For larger companies, a significant role; for smaller companies less so.”

Overall, small and midsize departments’ relative lack of interest may be related to a lack of awareness; almost half (45%) of those in departments with fewer than six attorneys indicated they are not familiar with the use of AI in corporate legal departments. Similarly, 27% of attorneys in both departments with fewer than six attorneys and those with six to 10 attorneys simply didn’t have an opinion about the use of AI in corporate legal departments.

Many respondents were too unfamiliar with AI software to have an opinion. Numerous respondents characterized their current perceptions along these lines: “I don’t really have any. I have not thought about this subject at all.” 

Given corporate counsel’s professed — or perceived — lack of awareness of AI, they may be surprised to discover they’re already using it outside of the legal arena. Consider Amazon’s Alexa and Siri® from Apple®, everyday technologies that use natural language processing, a type of AI that enables computers to “understand” spoken and written words. Within the profession, natural language processing has long been used in legal research too; for more than a decade, Westlaw® has applied natural language processing to improve legal research.

This may have, unknowingly, been many attorneys’ introduction to AI, but as KM World explained, “Many legal AI products are based on technologies that are well established in knowledge management, including text analytics and business process automation. What pushes them into the AI category is the degree to which they incorporate intelligence into their functionality, including the ability to learn and to process natural language inquiries.”

 

AI may best be applied toward helping legal departments better use their own data — especially activities and processes involving large pools of data. Generally, legal departments — particularly larger ones — are improving how they develop big pools of data. These pools of data may take form in vast repositories of contracts or billing data, for example. For departments of all sizes, data is useless unless it’s used to make decisions; AI can help in-house teams start to make these natural connections and use their own data to inform their work.

For example, almost two-thirds of survey respondents indicated their legal departments have access to data regarding outside counsel costs and legal costs, yet less than half (49%) feel they are effectively using this data. Similarly, only 29% of respondents indicated their legal departments are effectively using data extracted from contracts to develop business strategy or minimize contract risks. 

Less than 15% of survey respondents believed their legal departments are effectively using big data to deliver legal services. This intersection — where large pools of data exist but are not being analyzed to find ways to reduce costs, develop business strategy, minimize contract risks or better deliver legal services — is where AI can make a significant impact on legal departments. For example, respondents noted the potential of using AI to “[a]utomate invoice review [and] complete contracts,” with one attorney specifying, “Hopefully, AI will be able to take over recordkeeping roles like entity and document management. I could see some significant AI document preparation as well.”  

 

Survey respondents identified multiple use case scenarios, including everything from “analyzing trends and managing costs” and “pattern recognition features and data analysis deep dives” to “predicting future budgets, future number of issues, and explaining reason for data.” Several respondents highlighted the benefits of streamlining workflows and eliminating tasks, noting AI could help “offload simple decision making and laborious number crunching.” One said AI would mean “taking some of the menial work that I have to farm out to law firms and automating it in-house.”

 

Respondents cited reducing costs and saving time as the top two benefits AI-enabled tools could provide corporate legal departments: “I believe that reducing costs will become the most important benefit, but in order to reduce costs, the AI solution must have the ability to improve overall handling time for legal tasks and generate more reliable results.” Others believed the top benefits would be “[m]aking work be more efficient and help identify corporate/legal risks. Perhaps even help support mitigation efforts for those risks” and “[a]nalysis of risk and means to control and allocate it. Secondarily, help to analyze effectiveness of lawyers, in particular settings.”

One respondent shared, “I believe AI can help improve efficiency within legal departments. I think many legal departments/firms will be reluctant to adapt to AI tools, but this will not necessarily replace jobs (although it could in certain roles) but it can serve as a method to reduce the time needed for certain legal tasks.”

Others believed AI would make a positive impact but were uncertain as to exactly how. One respondent noted, “There is significant potential, but much must be done to demonstrate the value of this technology.” Another respondent predicted AI “will grow in importance and will become a standard legal department tool in many industries.” 

 

Chapter Five

The long arc of adoption

So long as corporate counsel retain current perceptions of AI and fail to appreciate how it will be embedded in current technologies – rather than function as a stand-alone robot – the longer the adoption arc.

In terms of predicting when AI will make its full impact, respondents believed that AI is not on the fast track to adoption. Only 21% indicated AI will be mainstream in corporate legal departments within five years, while 39% predicted it will be within 10 years, and 37% believed it will take more than 10 years. 

One respondent believed AI’s role will be “an increasing one, so long as the attendant cost savings can be demonstrated. But very few legal departments will be early adopters.” Respondents identified three main hurdles to corporate counsel embracing AI tools.

 

Respondents’ top cited concern with adopting AI came down to cost. Several attorneys described budget constraints, including “Limited expense budgets in smaller corporate law departments may not allow for the purchase of AI technologies”; “Value proposition will be a tough sell in all but the largest legal departments”; and “My company is not likely to be able to use something like this due to restricted budgeting.”

Others expressed concerns over the expenditures needed to support AI: “I believe it will likely be how much these will cost legal departments, for both law firms and corporations. Because depending on what the innovation requires, it may necessitate additional expenditures in software, hardware, servers adequate to back up the data, etc.” One lawyer noted, “I assume the cost will be significant, so the benefits need to be clear, tangible and capable of replication across entities and platforms.”

Reliability was the other major concern, especially as it relates to confidentiality and ethical considerations. One attorney said, “There are ethical considerations that I don’t believe AI is equipped to handle.” Several others doubted its trustworthiness: “Relying too heavily/trusting AI (and it missing something) and the converse — not trusting AI and doing the work again anyway. Also, the possibility that AI is incorrect and can’t predict how case law could change.” 

Doubts also included, “Lots of unknowns. Is this just another one of the countless tools that are pitched or can this be seamlessly introduced and provide a real benefit[?]” 

Other in-house attorneys worried about what AI may overlook: “One major concern would be that the solution would have a ‘glitch’ and could miss something very important.” One attorney considered the “lack of human ownership and accountability. When humans make mistakes or predict something, they can be questioned and can provide explanation, whereas AI cannot.” 

 

Only 4% of respondents indicated their departments are seriously considering purchasing technology tools with AI. This data point, along with respondent comments like “people with an ‘old school’ mentality are going to be hesitant to use such a software,” emphasized the third hurdle: lawyers’ tendencies to be suspicious of new technologies. 

“People, especially lawyers, fear change. The hardest part will be getting buy-in from the top of each organization,” one respondent noted. Another explained, “The legal sector as a whole is typically slow to adopt new technology. If we embrace all of the AI capabilities, though, the industry can really benefit from this technology.” 

For some corporate counsel, their reluctance to change is tied to concerns over technological expertise: “Finding attorneys who have the background and experience to fully understand the technology, or bringing current attorneys up to speed.” One respondent noted, “Lack of understanding about the underlying technology and methods will make people nervous.”

One attorney believed lawyers’ wariness of change is tied to controlling risk: “New technology is always unproven, so being a first mover requires careful consideration and review over what you will permit the technology to do, and confirm appropriate checks and balances are in place before a document is circulated outside of the company. Small technological oversights can become a major issue, especially for public companies.”

Chapter Six

Conclusion: it's already here

Legal departments aren’t the only ones wrestling with the impact and implications of AI. Technology companies at the forefront of AI are reassuring workers across all industries that it’s intended to augment employees’ capabilities, not replace them. IBM CEO Ginni Rometty and Microsoft CEO Satya Nadella were among the technology executives who participated in a World Economic Forum panel on artificial intelligence in Davos, Switzerland, earlier this year. They emphasized how AI can enhance human ingenuity and create even greater opportunities, according to Computerworld’s coverage of the panel.

A caveat is that workers need to keep current on technologies and be trained to use them. Fortunately, corporate counsel are comfortable with technology and accustomed to incorporating new technologies into their practices. Moreover, corporate counsel have already been using AI tools in some of their mainstream workflows, such as legal research, for years. 

In-house attorneys must ensure that the potential hurdles — from cost and reliability to lawyers’ hesitancy to be early adopters — don’t keep them from realizing the potential of AI to transform legal departments by enabling them to reduce costs, develop business strategy, minimize contract risks, and deliver better legal services. Corporate counsel will eventually need to accept and adopt AI tools because, ready or not, they’re already here. 

Legal Department 2025

The forces shaping the legal department of the future are ones that corporate counsel have never had to face before. The pure magnitude of the changes can and will catch many legal departments off guard, costing them money, personnel, and credibility within their businesses.

The Legal Department 2025 series will address the major changes within the legal department’s people, processes, and technology in the coming decade that must be proactively considered and planned for.