Corporate legal departments in some of the largest global companies are looking to bring artificial intelligence (AI) in-house. The market for AI tools is heating up with no end in sight, and some former general counsel are moving into AI tech startups, confident that the technology is what the industry needs.

So AI is already changing legal, right? Not entirely. For many, it hasn’t even yet fully arrived. According to Thomson Reuters’ “Ready or Not: Artificial Intelligence and Corporate Legal Departments” survey of  general counsel, attorneys, and other legal professionals across 207 legal departments, most corporate legal teams are not ready to adopt AI in the near future, nor do many understand its application.

The survey found that while 67 percent of all respondents were open to try all technology in their legal departments, 50 percent were not interested in purchasing AI or AI-based tools. The lack of interest was highest in legal departments that had between six and 10 employees, at 67 percent of respondents uninterested, while only 26 percent of those at larger legal departments with over 11 attorneys said the same.

Mark Haddad, head of the corporate segment for Thomson Reuters, explained that large legal departments were most receptive to AI because “they generally spend more and adopt technology faster and to a greater extent” than others. 

But there was an overall lack of interest in AI, he said, because many legal departments were yet ready for the technology. “They are still wrestling with things like analytics, and while analytics is different than AI, you want to see robust analytics adoption before you see a wide adoption of AI.”

Haddad added that the lack of interest can also be attributed to a “mixture of fear and lack of clarity on AI’s benefit. There is a lot of hype and discussion around AI, but it’s not clear to the average lawyer how it contributes to the return on investment.”

Indeed, only a minority of respondents were able to talk about the perceived benefits of AI, with 17 percent saying the technology could improve efficiency and save time, 13 percent saying it could reduce costs, and 7 percent saying it could help predict outcomes or aid in document review. In addition, slightly over one-third of all respondents said they were not familiar with AI’s use in corporate legal services.

“I think a lot of the market is thinking about AI the wrong way,” Haddad said. “AI is about facilitation and enabling the law department’s functions, and it’s not about replacement.” But enabling legal services “is not the first thing most participants think when they hear AI,” he added. “They hear substitution; they hear replacement.”

A majority respondents were largely in agreement that AI would not become mainstream over the next two or three years, but they differed on when the technology would be commonplace. While 21 percent said it would only take five years, 39 percent predicted up to 10 years, while 37 said it would take over a decade.

The survey also found discrepancies between legal departments’ access to extractable data and their ability to turn that data into actionable insights, another sign that legal is perhaps not yet entirely ready for the technology.

While 34 percent said their department had access to extracted data from contracts, 29 percent said they were effective at using such data to develop business strategy and minimize risk. The gap widened with extracted outside counsel spend data, with 65 percent noting they had access to such data, but only 49 percent saying they were effective at using the data to minimize cost.

Haddad noted that “using the information typically involves some form of change management,” and in the legal sector, there is “slower pace of evolution” and “not a high appetite for change.”

He added that despite wide access to legal spend data, “selection and management of outside counsel is a lot less data-driven than it could or should be” in the legal industry. Instead of being a quantifiable assessment, he noted, “right now it’s all about handshakes and referrals.”

CT-born, New York-based legal tech reporter covering everything from in-house technology disruption to privacy trends, blockchain, AI, cybersecurity, and ghosts-in-the-machine. Continually waiting for law to catch up with tech. (It's like waiting for Godot, but without the clowns)