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AI & Future Technologies

Corporate attorneys don’t want to pay law firms for ChatGPT when they could use it themselves

Zach Warren  Manager for Enterprise Content for Technology & Innovation / Thomson Reuters Institute

· 5 minute read

Zach Warren  Manager for Enterprise Content for Technology & Innovation / Thomson Reuters Institute

· 5 minute read

Many corporate attorneys believe their outside law firms should use generative AI for legal work, according to a new report; but they also feel strongly about how that generative AI should be used

Corporate law departments and their outside law firms are in alignment: Generative AI and public-facing platforms like ChatGPT can and should be used in legal work. Those positive feelings extend to corporate attorneys wanting their outside firms to utilize generative AI — but only if law firms create new value through that technology that the department can’t achieve on its own.

According to a recent survey from the Thomson Reuters Institute, both corporate law departments and law firms believe generative AI has a future in law. More than 80% of both groups responded that generative AI can be applied to legal work, and more than half of both groups (54% of corporate respondents, 51% of firm respondents) said that the technology should be applied to legal work.

When it comes to whether corporate legal departments believe their law firms should be using generative AI for legal work, however, the results were slightly more mixed: 44% of law departments answered affirmatively that their outside firms should be using the tool, 23% said their firms should not, and 33% said they did not know.

What accounts for the difference? Corporate respondents that said they were against their law firms using generative AI cited a few common risks, such as accuracy, privacy, and confidentiality. However, central in those responses was also value: Corporate respondents don’t want to pay their outside firms to use generative AI or ChatGPT in a way department lawyers could just as easily do themselves.

“When instructing outside law firms, we have a reasonable expectation of the professional competence of the lawyers we have engaged,” answered one corporate legal respondent. “Both individual lawyers and firms must remain responsible for their work output and advice. Should AI be used for chargeable work, the cost to clients would need to be significantly reduced.”

Similarly, another respondent answered with respect to both accuracy and cost: “The concern is that we would be paying for advice that is perhaps not verified [or] confirmed. Instead, ChatGPT may be relied upon without advising the client.”

These opinions may not surprise many firms, particularly those who are plugged into what corporate clients expect from them. In fact, value and pricing is the top reason why corporate attorneys say they would recommend one firm over another, followed by service and expertise according to Thomson Reuters Market Insights.

AI’s impact on rates and value

Still, corporate legal departments and law firms don’t seem to have brought generative AI into rate conversations just yet — or really into any conversations at all. When asked whether the law firms they work with use generative AI or ChatGPT, a vast majority (83%) of corporate law respondents said they did not know. Just 6% said they knew their firms were using generative AI; and the remaining 11% said their firms were not.

This confusion persists despite the large potential for the kind of disruption that generative AI carries for both internal tasks and external work product. Law firm respondents reported exploring a wide variety of use cases for generative AI, including knowledge management, back-office functions, brief and memo drafting, and more. Similarly, corporate respondents that said their firms were using generative AI cited use cases including legal research, brief and memo drafting, contract drafting and review, back-office functions, and question-answering services.

The report also showed that many law firms do not yet have enterprise-wide generative AI policies in place, which would seemingly be a pre-requisite for discussing generative AI usage with corporate clients. However, considering the wide swath of potential generative AI use cases cited by law firms, clients may not want to wait that long, particularly as many have strong opinions about the ethics of how generative AI tools should be used.

“All legal advice should be from a human and not AI,” said one corporate legal survey respondent. “It is possible that you could use AI in some way, but writing legal briefs, pleadings etc. should be generated by a human lawyer who has gone to school, passed the bar, upholds the oath we took. and who is bound by ethical duties.”

Another added: “We pay for work from legal minds, especially in the realm of litigation, we want the briefing to be completed with the trial strategy in mind.”

In the midst of uncertainty around generative AI tools, there can be an opportunity for enterprising law firms and attorneys. A number of corporate law attorneys believe generative AI should be used in their outside firms now, and even more are waiting to see what the future holds.

By beginning the generative AI conversation with clients now, law firms can create their own policies, and ensure they are formalizing generative AI use in a way that complies with client requests for the future. Particularly given how quickly generative AI technology is progressing, a proactive conversation between law firm and corporate client can go a long way if the technology quickly turns from a nice-to-have to a must-have.

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