Majority of in-house counsel adopting AI despite challenges
Despite a number of challenges around adopting legal tech and AI, more than 60 per cent of in-house counsel are implementing generative AI in their legal departments, new research has revealed.
Thomson Reuters has released new research on technology trends shaping the legal sector, including the use of, and attitudes towards, generative AI, in the form of a new report Tech & the Law 2023.
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According to the report, around two in five legal professionals across in-house and private practices (39 per cent and 40 per cent, respectively) are experimenting with generative AI. Forty-nine per cent of in-house counsel surveyed are training their organisation on the risks associated with using generative AI.
The report spotlit corporate counsel, unveiling valuable insights into the priorities and challenges faced by legal departments.
According to the report, standardising operations and workflows are pivotal in streamlining processes and freeing up resources to enable more strategic business guidance. Amid a landscape full of cyber threats, mitigating data compliance risks takes precedence to safeguard sensitive information.
Legal technology has also continued to revolutionise the industry, with document automation, research, and drafting solutions emerging as top priorities for corporate counsel.
The positive impact of these solutions and automation tools cannot be understated, Carl Olson, vice-president of proposition at Thomson Reuters said, as they enable legal departments to deliver strategic insights with greater efficiency.
“Generative AI is not a threat but a catalyst for transformation, and it is set to revolutionise the sector as we know it,” he said.
“Legal professionals are cautiously optimistic towards large language models – they are assessing the many risks and opportunities the technology offers the future of their sector.”
The Tech & the Law 2023 survey was conducted on behalf of Thomson Reuters by Agile Market Intelligence and received a total usable sample of 1,542 responses, with 1,342 responses from Australia between 15 May and 30 June 2023 and 200 responses from New Zealand between 29 June to 19 July. The survey collected 1,080 fully completed submissions, including 771 private practice respondents and 309 in-house professional respondents.
Of the respondents, 55 per cent were from a small legal department (one to 10), 33 per cent were from a mid-sized legal department (11–50), and 12 per cent worked in a large legal department (51 and above).
According to the report, legal departments’ investments in technology will continue to rise over the next 12 months – 60 per cent of respondents said their legal departments will increase investment in technology either moderately or significantly.
Sixty-six per cent said improving legal operations and workflows is a key priority, but around one in three in-house counsel (32 per cent) said they have experienced failed technology implementation in their legal department.
Standardising workflow and operations are also key priorities for in-house counsel, according to the report.
“Legal departments innovate with technology to improve workflow and operations. They recognise the importance of becoming more efficient as a department, particularly in terms of day-to-day operations,” the report noted.
“Managing data security and compliance risks are an increasing priority for legal departments. This issue as a priority is up by 12 per cent compared to the Tech & the Law 2022 report.”
Most in-house counsel are also aware of the prevalence of cyber security threats and are concerned with the risks for their organisation – and are actively prioritising these risks by protecting and managing data.
Ninety-eight per cent of in-house counsel said their legal team has some level of concern regarding risks of data breaches and cyber attacks and nearly one in three in-house counsel professionals (30 per cent) were extremely concerned about the risks associated with data breaches and cyber attacks.
“In-house counsel also recognise the need to protect their organisation’s data. Legal considerations include responding to cyber attacks in a compliant manner and having robust data breach incident responses readily available. The technologies they use to protect and manage data must be trustworthy and easy to use,” the report stated.
In terms of the technology in-house teams want to implement, 36 per cent want document automation solutions, 38 per cent want document drafting solutions, and 21 per cent are pushing for the adoption of generative AI tools.
More than one in five in-house legal counsel professionals (21 per cent) said legal research tools have the greatest positive impact on their ability to succeed, with 17 per cent confirming that document automation solutions have the greatest positive impact on their ability to succeed.
However, 60 per cent of in-house counsel said the lack of integration and cohesion between technologies was a major challenge, with 53 per cent citing overcomplicated systems and processes as one of their biggest tech challenges and 60 per cent confirming that cyber security or data compliance risks were a top tech challenge for their organisation.
“The greatest challenges for in-house counsel are a lack of cohesion within their technology stack and the burden of overcomplicated systems and processes, severely hindering their efficiency. Within their department, corporate counsel acknowledge the need for enhanced integration and efficiency, but are also mindful of cyber security and data compliance risks,” the report stated.
“When carried out expertly, the implementation of new technology can yield successful results – the challenge is in ensuring the chosen technology solution is fit for purpose. A technology that does not serve its purpose is the leading contributor to failed implementation within legal departments.”
And while more than three in five legal departments (61 per cent) had adopted generative AI in some capacity, 39 per cent had no plans to adopt generative AI yet. Nearly two in five in-house counsel (37 per cent) said their legal department does not educate their organisation about generative AI-related risks and 49 per cent said they were training their organisation on the risks associated with using generative AI.
“There is a growing attitude among legal departments in educating their organisations on the risks associated with using generative AI,” the report stated.
“Along with efficiencies it can bring to research and mundane tasks, there comes risks to data security and increased complex litigation. In-house counsel have started to educate their organisations to find the best way forward in regards to generative AI.”