Certainly, on technical legal matters, clients already expect greater efficiency given the capacity to utilise such technologies.

However, the shifting sands of lawyer-client relationships must be viewed more holistically: with certain work set to be retained in-house, there may, of course, be some firms that have to work harder to remain on legal services panels – particularly if those firms fail to pivot to offering broader, more strategic guidance to clients.

As GCs in various sectors have told Lawyers Weekly, there exist real opportunities for lawyers and clients to build and maintain relationships that are both deeper and smarter, as compared to when AI was not in mainstream use.

What forward-thinking in-house teams are doing

Across the legal landscape, fractional GC Anna Lozynski said, in-house legal teams and law firms are still navigating the true capabilities of AI and its potential role as a legal tool. That said, she noted, “law firms are already leading the way”, appointing AI leads globally and recognising the immense opportunities the technology brings.

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Against this backdrop, Lozynski submitted, “forward-thinking in-house teams and law firms are incorporating GenAI and AI agent pilots and prompt engineering training as part of their daily operations, while others may feel too pressed for time or concerned about the risks involved. A significant portion of the profession, however, probably remains somewhere in between.”

“Is AI a standard consideration in law firm tender documents and discussions? Not yet. Are lawyers reflecting on what it means to represent an AI? Likely not yet,” she said.

“But I anticipate these will quickly become essential topics of conversation as legal teams and firms evolve – just as we saw with the rise of cyber security and legal tech operations, but perhaps quicker.”

Time & Place GC and company secretary Luana Melis pointed out that her legal team is navigating a “30 per cent increase in project volume across the portfolio”, without a corresponding increase in headcount or budget.

“This is driving a necessary shift in focus: now more than ever, we need to prioritise work that delivers the greatest strategic value for the business and find solutions that enable our lawyers to operate more efficiently,” she said.

“This includes reassessing how we better engage external counsel, how we leverage innovation, and how we reduce time spent on lower-value workflows and administrative tasks – an issue particularly acute in-house due to leaner support structures compared to private practice.”

Changing nature of work given to providers

Sydney Fish Market GC Michael Guilday and Royal Melbourne Hospital chief legal officer and company secretary Fleur Katsmartin supported the view that the provision of work to external counsel will necessarily change, if not be reduced.

“Lawyers are uniquely well positioned to leverage the enormous potential of AI tools in the context of their day-to-day work. For example, many in-house lawyers seem to be increasingly using mainstream AI applications to retain work in-house, and some are even leveraging more advanced tools to help drive efficiency and cost control,” Guilday said.

Katsmartin was more forthcoming: “In-house legal teams can already handle more routine, data-heavy tasks themselves using technology to save money and driving efficiency, where this was previously outsourced to external legal.”

“If we can use the AI, so can they, so why would we engage (and pay) them to do it?”

Such shifts, Guilday noted, might challenge some external providers, who now must demonstrate added value beyond more traditional legal services to remain on panels.

Evolving relationships

HMC Capital group GC and company secretary Andrew Selim came at it from a different angle, noting that even though AI is bringing efficiencies, it doesn’t necessarily mean that more work will remain in-house.

“Even though AI can streamline basic routine tasks, when it comes to high stakes legal matters such as strategic transactions or complex disputes, internal legal teams still need to draw on the expertise, judgement, sector-specific experience and, ultimately wisdom, of leading lawyers who have refined their skill over many years,” he said.

“Can an algorithm really replicate that? I don’t think so.”

Selim reflected that he struggles to see how “nuance and seasoned judgement” can be generated by machines.

“And, if something goes horribly wrong, does an internal legal team really want to say that AI advised them?

“In-house lawyers need someone (not a chatbot) to call to pressure-test ideas and to hear, for example, ‘If you do that, it won’t end well’,” he said.

All this means, Selim surmised, is that relationships between in-house lawyers and preferred external counsel will become even more important and deepen in this age of AI.

Both Guilday and Katsmartin supported this, with the former noting that “deeper, more strategic” partnerships will be required.

“Firms positioning themselves as holistic advisers – offering deep industry expertise, risk management insight, and integrated capabilities – will likely thrive. Even though the amount of work outsourced may decrease, relationships with trusted firms could become more collaborative and embedded, aligning external expertise more closely with internal priorities,” he said.

Katsmartin said that firms will “have to prove they offer more in terms of their value proposition by offering smart, tailored advice, working closely with clients on innovation, and supporting them in broader ‘more strategic’ ways – as trusted partners”.

“AI isn’t replacing external firms – it’s changing the way they work with clients, moving towards deeper, more advisory relationships. Firms that take time to understand their client better as well as help build AI-powered solutions will have the real advantage,” she said.

Same work volume, closer relationships

For Melis, deliberate and targeted use of AI and other platforms – “not just AI for AI’s sake” – presents opportunities to reshape not just the operation of in-house legal teams but also the nature and work delegated externally, and thus what those relationships look like.

“As has always been the case, greater alignment between internal and external legal teams leads to stronger, more effective outcomes – and engaging external counsel early in our AI solutions, whether through co-developing use cases, sharing tools or streamlining routine workflows, means external counsel can further shift from transactional service providers to strategic and trusted advisers, and potentially a rethink on how firms charge services,” she said.

“Firms that embrace AI and partner with in-house teams won’t just do less work; they will do smarter work and build closer relationships with all levels of the business.”