A new study from LexisNexis confirms what many have suspected: in-house counsel are increasingly relying on GenAI tools and large language models (LLMs). And that use? It’s probably the lowest it will ever be. That’s something outside counsel need to be thinking long and hard about.

The study, titled The Total Economic Impact™ of Lexis+ AI for Corporate Legal Departments, was conducted for LexisNexis by Forrester Consulting. Forrester interviewed four decision-makers who had used LexisNexis GenAI tools and then constructed a composite organization to illustrate the potential savings in-house legal teams might achieve with the tools, which I guess it did.

What Caught My Eye

But that’s not what caught my eye. Here is what did:

· Organizations are still struggling to identify GenAI solutions that meet both their business objectives and security/governance requirements.

· Even so, the study suggests that in-house teams could reduce by about 13% the amount of work referred to outside counsel by using GenAI.

· GenAI could also cut by 25% the time spent by in-house legal annually on routine business inquiries.

· In-house paralegal time could be reduced by as much as 50% through AI tools.

· By automating routine work, legal staff could better meet day-to-day demands and perhaps improve their work-life balance.

Some of the participant comments are equally enlightening. One likened the GenAI tools to having a virtual associate or paralegal right at their side. Another said they turn to GenAI when time is of the essence. Yet another pointed out that work sent to outside counsel is inherently more expensive, not just because of the hourly rate, but because outside counsel often put more time into a matter, and it drags on and on. One participant bluntly observed that outside counsel are incentivized to bill time, not necessarily to finish work quickly and well.

GenAI, they also said, was especially helpful in reducing time spent on lower-value tasks that don’t require high-level attorney expertise. As one put it, GenAI helped them meet internal client turnaround expectations and expand their capacity to take on more work.

The parallels between the study findings and what the three in-house counsel on the LegalGeek panel on which I previously reported shared are striking. Both groups highlighted the internal hurdles they face in expanding AI use in their departments. Both noted that a significant objective in their use of AI was to reduce spending on outside counsel. Both emphasized how GenAI tools help reduce time spent responding to routine and often repetitive questions from the business.

And both voiced a familiar skepticism: that outside counsel don’t always have their best interests at heart when working on and billing for the matters referred to them.

So, What’s the So What?

Here’s why this matters. First, the lingering concerns in-house counsel have about security actually point to more, not less adoption ahead. GenAI vendors aren’t dumb. They know this is a pain point and are continuing to address the issue to increase usage. Everyone in the study and on the panel want to do just that.

Second, in-house lawyers aren’t dumb either. They see clearly that GenAI can help reduce outside counsel spend and as the tools improve and get more secure, that trend will only accelerate. As the Panel noted, most in-house teams want to refer matters to outside counsel only when they lack the needed expertise or when faced with litigation matters. (The study participants noted, by the way, that GenAI helped them reduce time spent by outside counsel on litigation matters, as well.) And by freeing up time spent on routine work, in-house lawyers can not only get more done they can handle matters they used to outsource simply because they didn’t have the time.

I’m not sure about a couple of study findings. Somehow, I doubt that freeing up time will result in in-house legal teams achieving a greater work life balance because they can get their work done sooner. Typically, the workload always seems to somehow expand to fill whatever time is available. Other tech innovations certainly didn’t provide more leisure time; they only increased the amount of work expected and demanded. And as for the 50% reduction in paralegal time? That sounds like fewer paralegals.

What Is Certain

But one thing is certain: the relationship between in-house and outside counsel is changing. Yes, as I’ve noted before, technology will likely create more legal work, not less, at least for the short term. But the division of labor between inside and outside legal teams is shifting.

Outside counsel need to understand that change and define how and where they can bring value to in-house legal perhaps in new and different ways.

Stephen Embry is a lawyer, speaker, blogger and writer. He publishes TechLaw Crossroads, a blog devoted to the examination of the tension between technology, the law, and the practice of law.

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