The majority of legal department AI budgets have increased over the past year as in-house teams move from pilots to wider deployment, according to a Deloitte survey.
The report – The AI imperative: Reshaping of the legal industry – shows that 79% of in-house teams globally reported an increase to their AI budgets over the past year, with those budgets growing by 67% on average. At the same time, most in-house teams have advanced beyond pilot projects, with 61% in the deployment stage and 10% with AI fully embedded. Only 2% of in-house teams said they had not adopted AI, compared to 76% back in 2024, highlighting the rapid pace of change.
Writing in the report, Deloitte said: “This signals that the business case for AI in legal has been made. A growing body of pilot data, proven industry experience and enterprise-wide AI mandates has strengthened the case for investment. The industry has shifted from ‘should we invest?’ to ‘how and where do we invest?’.”
Despite this increased investment and deployment, 58% of respondents believe their legal teams will remain roughly the same size, though they will change in composition, seniority and skillsets, with more non-legal and technology professionals being brought in. However, 20% believe teams will shrink, double the number who thought that in 2024.
In a world of increased AI use, 96% of respondents said technology and AI literacy will be the most important skillset over the next two to three years, noting it is a core expectation rather than a discretionary skill. Learning and adaptability ranked second with 89%, followed by strategic business thinking (74%) and judgement and critical thinking (73%).
With AI taking on more document-heavy work that was traditionally handled by junior lawyers to learn their craft, 66% of respondents believe continuous education and role rotations will be key to their future training approach, followed by simulations and scenario training (63%) and competency progression rather than PQE-based progression (60%).
In-house legal professionals also expect their external legal providers to be using AI, with 78% saying the most important benefit of their AI use would be cost reductions, followed by improved legal service quality (57%). Some general counsel are targeting 20-40% cost reductions over the next two to three years amid expectations of those lower costs.
Another 85% of respondents believe AI will change how law firms bill for work to a moderate, large or very large extent, with the proportion of work billed at hourly rates expected to fall to 44% over the next two to three years compared to 72% today.
Even though legal departments expect outside counsel to be using AI, 58% of GCs said their external providers rarely or never proactively discuss AI benefits.
The report was based on a survey of more than 100 legal department leaders at companies in the the Americas, APAC, EMEA and the UK and Ireland.
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