How Generative AI is Revolutionizing Corporate Legal Departments: Deloitte's Insights

Generative AI is rapidly becoming a priority for business leaders across various industries. Deloitte's recent survey of CEOs reveals that 79% anticipate Generative AI will transform their organizations within three years. This transformation isn't limited to general business operations but extends deeply into corporate legal departments. These departments are expected not only to adopt Generative AI in delivering legal services but also to enable their broader organizations to embrace this technology safely and ethically.

Historically, legal technology solutions have provided only incremental improvements, leaving the core nature of legal work relatively unchanged. However, Deloitte Legal believes that Generative AI has the potential to bring about more profound and sustainable changes. To explore this potential, Deloitte surveyed senior legal leaders from 43 major clients, seeking their perspectives on the benefits, barriers, and future impact of Generative AI on the legal ecosystem. Here’s a summary of the key findings.

Generative AI: A Game Changer in Productivity

The survey indicates that 79% of respondents believe Generative AI will have a moderate to significant impact on how legal work is performed. This optimism is remarkable, given that Generative AI has been commercially available for less than two years. Nearly half of the respondents predict that some legal tasks will become entirely obsolete, with areas such as contract management, legal operations, M&A, and regulatory compliance being most affected.

Unveiling the Benefits: Efficiency, Experience, and Capability

Generative AI is expected to provide multifaceted benefits to corporate legal departments:

• Efficiency Gains: A significant majority of respondents foresee substantial efficiency and productivity improvements. Deloitte’s own experience shows potential efficiency gains of 25-50% across various legal tasks.
• Enhanced Experience: About two-thirds of respondents expect Generative AI to improve the experience for both the business clients of legal teams and in-house legal professionals. This improvement allows legal professionals to engage in more strategic, impactful work.
• New Capabilities: Generative AI offers opportunities to enhance the quality of legal services and to introduce new services and insights. Better access to legal and business data will enable more informed decision-making and proactive risk management.

Reshaping the Legal Ecosystem

Generative AI is poised to drive significant changes in the structure and functioning of corporate legal departments:

• Increased Automation: Enhanced self-service capabilities and automation will allow legal teams to handle more work without expanding headcount.
• Strategic Deployment: In-house lawyers will be deployed more strategically, reducing the reliance on external counsel and associated costs.
• Skill Evolution: New skills in technology and change management will become essential. Legal professionals will need to adapt to working with AI, and new roles such as data scientists and AI architects will emerge.

These changes are expected to create a dynamic and exciting future for corporate legal teams, empowering them to focus on strategic tasks and providing data-driven insights that drive business growth.

Overcoming Adoption Barriers

Despite the promising potential, financial and resource limitations pose significant barriers to Generative AI adoption. However, corporate legal teams are in a unique position to advocate for AI investment, both within their own budgets and through enterprise-wide AI initiatives. By emphasizing the high impact and opportunities offered by Generative AI, legal departments can secure the necessary funding and support.

Impact on External Providers: A New Competitive Landscape

Generative AI will also transform relationships with external law firms. Currently, only 6% of corporate legal departments report direct benefits from their law firms' use of Generative AI. Clients expect significant cost reductions and faster turnaround times from law firms adopting this technology. To remain competitive, law firms must demonstrate tangible benefits such as reduced time and cost, or increased value and quality.

ALSPs (Alternative Legal Service Providers) are particularly well-positioned to adopt Generative AI due to the scalable and repeatable nature of their work. Clients expect external partners to play a crucial role in Generative AI adoption, with many planning to partner with external firms for AI proofs of concept.

Strategic Steps for Legal Departments

To achieve widespread adoption of Generative AI within the next 2-3 years, legal departments should take the following proactive steps:

1. Establish Governance: Implement frameworks to ensure the safe and ethical use of AI.
2. Encourage Experimentation: Provide access to Generative AI tools for legal teams to experiment and learn.
3. Prioritize Use Cases: Identify and prioritize high-impact use cases, and develop a comprehensive digital roadmap.
4. Enhance Data Management: Focus on data hygiene to ensure clean, accessible data for AI applications.
5. Plan Strategically: Consider the long-term implications of Generative AI on the business, the legal team, and external partnerships.

Generative AI offers a unique opportunity for legal departments to enhance their efficiency, improve service delivery, and drive business growth. By embracing this technology, corporate legal teams can lead the way in transforming the legal industry.

This summary is based on insights from Deloitte's report "State of Generative AI in the Enterprise 2024."