A third of in-house legal teams will turn to AI to reduce costs: ACC and Everlaw survey

Legal departments are seeing an increase in budgetary constraints, leading them to prioritize cost containment through various strategies.

A new report by the Association of Corporate Counsel, in partnership with cloud-native litigation platform Everlaw, reveals that US legal departments are bringing more matters in-house, shifting work to smaller firms, and leaning more on technology – including AI – to help reduce costs.

Key findings from the report entitled The State of Collaboration in Corporate Legal Departments include:

• 66% of legal teams will bring work in-house to reduce costs, compared to 59% in 2022 
• 39% say they will shift work from big firms to smaller firms
• 33% look to AI to control costs – up from 12% last year – which nearly tripled 

The report also indicates that in-house teams are looking to do more with less regarding their outside counsel:

• Outside counsel need to raise their game around costs, with only 42% of in-house legal professionals saying they’re happy with cost transparency and just 38% with cost predictability. 
• One in four say they’ll cut the number of law firms they work with in the next year, with the top reason overwhelmingly being (79%) to increase cost effectiveness.
• While only 41% say they’ve always felt comfortable requiring their law firms to use modern technology for better efficiency, 68% say they’ve at least sometimes felt comfortable doing so. 

“In-house legal teams have made great strides to improve internal and external collaboration in their organizations, but there is clearly a long way to go,” said Blake Garcia, senior director of business intelligence at ACC. “Legal teams continue to be seen as roadblocks on projects and nearly half reported they are consulted too late in strategic corporate decisions. With legal teams’ responsibilities increasing, yet continually being asked to do more with less, technology adoption is likely the most efficient way teams can improve communications with every corner of the organization."

The desire to collaborate within the corporation exists but legal teams face obstacles:

• 70% say the top goal is to be better aligned with other business departments across the company
• Nearly half (47%) say they get engaged after strategic decisions have been made, limiting their ability to provide strategic advice. 
• While 33% say they need new technology to centralize data and collaborate more efficiently, 71% cite a lack of bandwidth for process improvements as the main obstacle to stronger collaboration within their organization. 
• Only 20% said that they work closely with IT but 32% said that they want to closely align with IT.  

“In-house counsel want to collaborate with other business departments but they feel hamstrung by a lack of automation,” said Chuck Kellner, strategic discovery advisor at Everlaw. “A true digital transformation of the legal department will get them through this last mile for greater parity with other departments. GenAI may become the killer app to drive the needed cost savings and create the efficiency improvements.”

The report was unveiled at the ACC 2023 Annual Meeting. Survey respondents included more than 370 chief legal officers, general counsel, other in-house counsel and legal operations professionals from US corporate law departments.