The third annual report, conducted this summer by the Association of Corporate Counsel and e-discovery platform Everlaw, examined generative AI adoption within corporate legal departments and its impact on the relationship between in-house teams and outside counsel. The report, titled "Generative AI's Growing Strategic Value for Corporate Law Departments," included responses from 657 in-house legal professionals across 30 countries.
Compared to 2024's results, corporate legal teams have rapidly moved to active implementation of generative AI compared to just considering its usage, the report stated. The portion of in-house legal professionals using generative AI in their legal work jumped to 52% compared to 23% last year, according to the report.
Additionally, the report found that the "planning to use, but still researching" category dropped from 22% to 17%, and the "passively planning to use" category dropped to 14% from 30%. The nonadopter group also sharply dropped from 10% to 2%, which shows a strong trend of accelerating adoption of generative AI within the legal profession, according to the report.
Veta T. Richardson, ACC president and CEO, told Law360 Pulse in a Tuesday statement that generative AI's value proposition is shifting from hype to strategy.
"Most survey respondents expressed confidence in using the technology and their work products, signaling a major shift in perception — from viewing AI as a potential risk to recognizing it as a powerful tool for saving time and improving performance," Richardson said. "Sixty-four percent of respondents stated their in-house teams expect to rely less on law firms and bring more work in-house. These gains are prompting legal teams to restructure operations and reclaim work traditionally outsourced."
In addition to the expected decreased reliance on outside counsel, 50% of respondents, compared to 46% in 2024, expect reduced outside counsel costs, the report found.
Survey respondents shared that they see an opportunity to reshape their operations by insourcing drafting (78%), contract management (71%) and research (62%), the report stated. Respondents said they also see the opportunity to bring parts of more strategic work, like mergers and acquisitions (29%) and litigation (29%), back in-house.
Most in-house legal departments have yet to see tangible savings from their outside counsel's use of generative AI, with 59% of respondents reporting that they haven't seen noticeable savings yet, according to the report.
Those who have seen savings most commonly see them related to efficiency rather than as direct cost reductions, the report said. Twenty percent of respondents cited "more efficient turnaround times on legal work" while 13% saw a reduction in billable hours for specific tasks like document review or drafting, according to the report.
Only 7% of respondents reported lower total costs, and 6% mentioned alternative pricing models tied to generative AI-enabled workflows, the report said.
Although they aren't seeing savings from outside counsels' use of generative AI, 61% of in-house professionals are very likely or somewhat likely to push for a change in how legal services are priced in the future, the report stated.
Additionally, there's a widespread lack of awareness among in-house legal professionals about their outside counsels' use of generative AI, with 59% of respondents saying they weren't aware if their law firms were using the technology on their legal matters, the report found.
In-house legal departments are not actively pushing for their outside counsel to adopt generative AI, with 80% of respondents stating that their department isn't encouraging nor requiring law firms to use it, the report stated. This presents an opportunity for law firms to take initiative on the technology and may give firms a competitive advantage, according to the report.
"One thing every general counsel says about their outside counsel is they want greater value," Gloria Lee, Everlaw's chief legal officer, said in the statement. "Generative AI — used responsibly and always with a human in the loop — will allow law firms to deliver services faster, smarter and within clients' ever-tighter budgets."
--Editing by Emma Brauer.
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