Artificial intelligence, which has fuelled a four-year, AI-powered boom in legaltech, will change in-house legal operations and strategy, said Raashi Rastogi, research director in Gartner’s legal and compliance practice.
Unless in-house lawyers respond to the rise of AI and other trends − including regulatory uncertainty and changes in the legal recruitment market − they will be “slapped in the face”, Rastogi said in an interview with Global Legal Post.
She added that, where possible, in-house teams need to make a business case for legal department transformation, or at the very least, be willing to invest in updating or rethinking talent strategy, data strategy, workflow processes and how legal is providing value to the business.
Legal departments see AI as “their number one priority”, partly because as their budgets and headcounts remain flat or are being cut, they hope the technology will help to improve their performance, said Rastogi.
Companies will double their legal technology budgets by 2028 as they attempt to build on early gains in productivity and efficiency from AI-powered legal software, Gartner also predicted recently.
“To some degree, legal is being led into and forced to prioritise AI and technology,” Rastogi said.
Some company legal departments have begun to develop their own AI.
One company legal department Rastogi spoke with built its own contract lifecycle management software system. “That ended up being actually quite sophisticated, and I think exceeded the value and functionality for this organisation, as compared to some of the products on the market,” she said.
Other legal departments are developing their own AI chatbots to handle legal queries from the business, she said.
However, experimentation with AI – if not carefully supervised – comes with risks. Rastogi says there are persistent concerns related to AI governance, privacy and data management and an ongoing focus on how to reduce AI hallucinations.
Legal departments will also need to work out how to give lawyers time to experiment with AI without it detracting from their client responsibilities, she said.
Another challenge will be “be identifying a [in-house AI] solution that’s effective and figuring out how to scale it quickly”.
Law firms and company legal departments are facing their biggest change since at least the late 1990s, when email and other software helped digitise the sector, Rastogi said.
“The legal market itself is being upturned,” she said. “Technology is disrupting legal practice as a whole. I think we’re also seeing a rising importance of not just legal technology developers, but also… alternative legal service providers,” adding that a broader range of service providers may unseat the dominance of top tier law firms.
If the rise of AI in the legal sector continues, in-house lawyers will work alongside legaltech experts, data engineers and process improvement experts, she said.
“I don’t think that [company legal departments]... appreciate yet how much roles will need to change; how much hiring strategies will need to change,” she said. “That feels very new and challenging for legal to think about.”
Gartner recently published its predictions for how company legal departments will change by 2030. In addition to AI, key trends include the impact of geopolitical and regulatory uncertainty and a reduction in the hiring of junior lawyers.
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