As the 2024 Investing in Legal Innovation Survey LexisNexis well demonstrates, focusing on the incorporation of generative AI in leading law firms and corporations, law firms are in the midst of a transformation in the face of the onslaught of artificial intelligence.
The inclusion of generative AI in the legal sector signifies a fundamental shift in the way legal services are delivered and consumed. According to LexisNexis research, there is a notable disparity between law firms and corporate legal departments when it comes to the adoption of generative AI.
Specifically, 47% of law firms are exploring new lines of business or billing opportunities through generative AI, compared to 62% of Fortune 1000 legal departments. This indicates a more aggressive pursuit of innovation by corporate entities, likely driven by the direct impact of cost efficiency and operational agility on their bottom line.
Investment in technology, especially in generative AI, is a clear indicator of commitment to innovation. The survey reveals that 31% of legal executives have earmarked a specific budget for generative AI in 2024. Breaking this down further, a higher percentage of the 200 largest U.S. law firms (43%) have allocated funds specifically for generative AI compared to Fortune 1000 firms (32%). This difference could reflect law firms' recognition of the need to remain competitive and responsive to client demands for technology-based solutions.
Expected impact and use cases
The potential for generative AI to revolutionize the legal sector is enormous, from reducing operational costs to improving the quality of legal research. Approximately 70% of law firm leaders believe that generative AI will enable lawyers to perform new value-added work for clients, indicating strong optimism about its capabilities to transform service delivery. Conversely, firms are more focused on efficiency gains, with 76% expecting cost reductions in their legal departments thanks to generative AI.
Despite the enthusiasm, obstacles remain. Reliance on the reliability of the technology stands out as a significant concern, with 86% of respondents citing the reliability of current solutions as a barrier to adoption. This skepticism is more pronounced in law firms than in corporations, possibly due to the repercussions of misguided legal advice.
In addition, the survey highlights a crucial area of divergence in relation to the planned reduction in billable hours. While nearly 43% of law firm executives anticipate a decrease from generative AI, 76% of firms believe that this technology will improve the productivity of their legal teams; pointing to different perspectives on the impact of technology on the traditional billing model.
This LexisNexis report highlights a critical juncture in the legal industry's journey toward technology integration. Firms appear to be slightly ahead in the adoption of generative AI, driven by a clear vision of its potential to improve efficiency and reduce costs. Meanwhile, law firms, while equally interested in leveraging these technologies, face the dual challenges of adapting to new tools and recalibrating client expectations regarding billing practices.
In conclusion, the legal industry is at the beginning of a new era marked by innovation, efficiency and perhaps a redefinition of the lawyer-client relationship. As generative AI continues to evolve, its adoption in law firms and corporate legal departments will shape the landscape of lawyering, combining tradition and technology in pursuit of better service delivery.
