In-house teams urged to lean on law firms as AI reshapes legal costs

Speaking about the evolving relationship between in-house teams and external counsel, Courtenay said organisations should be making greater use of the expertise and investment already sitting within their law firm panels.

“Always” was the answer Courtenay offered when Enright asked whether in-house teams should be using their negotiating leverage with external providers, noting that the issue was not necessarily tied to AI.

“Any in-house practice is constantly under pressure to find new ways to manage costs,” he said.

For Courtenay, that has meant greater discipline around legal panels and seeking greater scale from key providers, alongside established arrangements such as value accounts, free hours and secondees.

“We’re a lot more disciplined about who we use and trying to get scale from our big providers,” he said.

“That’s got nothing to do with rollout of AI – trying to get more from them [has long been necessary].”

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However, AI is increasingly becoming part of those conversations, with law firms that have invested heavily in emerging legal technology now able to provide another source of expertise to their corporate clients.

Courtenay said in-house teams that are relatively new to AI adoption should “lean on the law firms” they work with, particularly where those firms have been experimenting with tools such as Harvey for several years.

“If you have relationships with law firms who’ve maybe been using Harvey or other tools for a couple of years, get them to talk to you,” he said.

“They’ll be super happy to do it.”

Courtenay said his organisation had been holding demonstrations with external providers for several years, but the conversations were now extending beyond simple demonstrations of technology.

Law firms were increasingly developing specialist capabilities, including engineering and prompt engineering skills, which could be shared with in-house clients.

“We’ve had a whole bunch of prompt engineering training from our law firms,” he said, describing the sessions as “super insightful”.

The opportunity, he said, was not simply to use AI as a more sophisticated search engine, but to rethink how legal work could be performed.

“A lot of this is about changing your imagination,” Courtenay said.

“How good is your imagination about moving beyond just a sort of a Google – let’s ask it a question, come back. How good are you at really reimagining how you’re challenging these tools and extracting value from these tools?”

At the same time, the increasing adoption of AI is creating fresh expectations around pricing and efficiency.

Courtenay said his organisation had already moved away from a heavy reliance on hourly billing, with greater discipline around fixed-fee arrangements.

“We’re very focused on output at the moment,” he said. “If firms can do it more efficiently, great.”

That focus on outcomes could increasingly influence how firms compete for external legal work, with Courtenay revealing that his team was also beginning to use auction tools to encourage firms to bid for business.

“We’re getting more firms to bid for our business and playing them off against each other,” he said.

While AI questions were not yet formally embedded into every bidding process, Courtenay said his team has been looking to obtain greater disclosure from firms on how they plan to deploy technology, as those firms attempt to win work.

For external providers, the message is increasingly clear: AI investment alone is unlikely to be enough. As in-house teams face sustained pressure to control legal spend, law firms will need to demonstrate how technology translates into better, faster, and more cost-effective outcomes for clients.