Hyperion Research

State of Play in Adoption of Generative AI in Corporate Legal Departments

Written by Hyperion Research | Oct 16, 2024 5:47:11 PM

Experimenters are always interested in what others discover through their own explorations in the same realm. To address the curiosity among in-house legal executives about how Generative AI is being approached in other law departments, we have been diving into the stream of survey data, hosting peer knowledge-sharing roundtables and advising clients on implementing AI in legal operations. Stemming from all of this, we also have some advice for riding the GenAI wave. 

The data shows that there’s a big gap between interest in and adoption of GenAI. While 85% of legal industry respondents believe GenAI can be used for legal work, according to the recent Generative AI in Professional Services Report from the Thomson Reuters Institute, only 25% of corporate legal department respondents have used GenAI tools such as ChatGPT. Roundtables among legal operations leaders representing 45 large companies have revealed interesting dynamics and some instructive themes.

Riding the AI Wave

We have noticed that legal teams in tech-centric companies are experiencing pressure to adopt GenAI in Legal, whereas those in heavily regulated industries – typically also hosting sensitive customer data – are approaching its adoption much more cautiously. In both groups, many are seizing the opportunity to drive investment in established, legal-specific AI tools, even if GenAI is not yet incorporated in the tools.   

The use cases discussed in the Epiq roundtables and client meetings are consistent with Thomson Reuter’s findings shown below. 

What’s noteworthy is that the tools being selected for in-house contract drafting, review and data analytics typically are themselves riding the GenAI wave, not born-yesterday GenAI tools. Reflecting the growing maturity of the legal ops function, many legal departments are agnostic about how the AI or GenAI models “under the hood” work – as long as they get the intended results (improved efficiency without sacrificing quality or adding risk). 

Taking A Measured Approach

AI (in its broadest sense) appears extensively across low/no code workflow automation solutions. Under this umbrella, more common capabilities include:   

  • Advising the business – many are focusing first on developing the knowledge, policies and engagement opportunities to ensure that GenAI is being used responsibly across the company.
  • Making the case – for many, this can be especially difficult because projected time savings are not as compelling as cost savings; and because the pricing models for most GenAI tools are not yet clear. 
  • Preparing and experimenting – this stage involves not only policy development, but also forming task forces, identifying potential use cases, collecting exemplary documents / contracts to experiment with, and conducting pilots – with or without external service providers.
  • Proselytizing – ironically, after all that preparation, many soon shift from focusing on governance to encouraging use of the available tools as initial curiosity and enthusiasm give way to inertia.

Developing good wave-riding form

In our fifteen-year history of assisting corporate legal departments, never have we seen such extensive experimentation with such a fast-evolving set of technologies. This is a time to lean into intrapreneurial skills – helping the organization innovate without developing change fatigue. The following tips may be helpful to those wishing to ride the AI wave toward more efficient legal services. 

  • Choose pilot use cases carefully. Engage stakeholders in generating ideas about pain points to address with AI / GenAI, then sift down to one or two use cases that are the best candidates for a pilot (not necessarily targeting the highest priority need). Consider the humans in the loop, the availability of ample and exemplary content to work with, short enough cycle times to see results, and ability to compare to established practices. 
  • Pick a good team. Sustained attention, patience with iteration, and willingness to take a collaborative approach and provide thoughtful feedback are critical ingredients. So is expertise, because AI/GenAI tools are powerful in the hands of subject matter experts – they are not substitutes for nuanced human judgment. You’ll want these attributes not only in your internal ‘guinea pigs,’ but also if you exercise the option to partner with tech vendors or legal services providers – plus, you’ll want passion for both learning (about your specific scenarios) and teaching (both your team and the tools). 
  • Pick the right tool for each chore. Considering that in most legal departments most of the work gets done in M365, using Copilot is a relatively accessible way to make myriad and meaningful improvements in productivity – and getting the hang of it now will prepare team members to apply it to more sophisticated use cases over time. Remember also that having several tools in the box helps. GenAI technology options are taking a variety of shapes. It can be very useful to partner with IT departments or legal service providers that can help select the right LLM models for specific use cases or develop hybrid tools.
  • Don’t overlook workflow. In the excitement about applying AI in legal, some are selecting AI-based point solutions that lack workflow capabilities and administrative features that help ensure only the right people get access to certain information. So, building on the aforementioned advice to pick the right tool, don’t overlook established AI-driven contracting and low / no code workflow automation solutions that have useful controls to manage the work, provide security, and generate useful data and reporting. 
  • Apply the change management playbook. The amount of explaining and training needed must not be underestimated. Legal department leaders who are successfully fostering the use of GenAI are continuously helping users understand how to define personas, prompt effectively, and iterate to get the desired results. Additionally, they are taking a tailored approach with colleagues or practice groups, providing examples and analogies, and quickly revising the composition of their task forces and the use cases being pursued as experience mounts. 

While the gap between interest and actual implementation varies greatly depending on the industry, the insights gathered from surveys, roundtables, and client engagements highlight a clear path forward for corporate legal departments. By carefully selecting pilot use cases, assembling well-suited teams, choosing the right tools, and applying robust change management practices, legal departments can close the gap between interest in and adoption of AI / GenAI.