Law Firms Failing to Deliver Value from AI
At a recent conference in Stockholm, a senior in-house lawyer voiced a sentiment shared by many legal professionals: law firms utilizing AI are not providing tangible benefits to clients. During a discussion at the Pocketlaw – now Miramis – Inhouse conference, this lawyer expressed frustration over the lack of change, stating firmly, 'We get nothing. They haven’t changed, and probably next year the same work will cost even more.'
The Disconnect Between Law Firms and Clients
This discontent highlights a critical issue within the legal industry – a disconnect between how law firms employ AI and the expectations of their clients. A survey by the Association of Corporate Counsel (ACC) showed that a staggering 80% of in-house counsel do not require or encourage the use of generative AI (GenAI) by their law firms, primarily due to uncertainty and a lack of visibility regarding AI's implementation in legal practices. Notably, many law firms struggle to bridge this gap, failing to communicate the advantages of their AI investments to clients effectively.
The Transparency Gap: Challenges for In-House Counsel
The transparency gap is alarming: despite the promise of AI to expedite workflows and reduce costs, many in-house attorneys remain unsure about the AI capabilities of their external counsel. A compelling report indicated that 59% of in-house teams were unaware of whether their outside attorneys were using GenAI on their matters effectively. The result? A growing trust deficit between firms and clients and delayed progress in adopting AI technologies in legal work.
Adoption Rates and Applications of AI in Legal Work
Interestingly, while the adoption of AI by in-house teams has accelerated, from 23% in 2024 to 52% in 2025, law firms have lagged behind in showcasing how AI can enhance their services. In-house teams increasingly rely on AI for drafting contracts, conducting research, and streamlining compliance tasks while law firms often focus on large-scale document review in transactions that most corporate clients do not encounter.
Value Proposition: What Clients Desire
For in-house lawyers, the ideal utilization of AI would translate into increased efficiency in routine tasks, allowing legal teams to devote more time to strategic matters that add value to the business. They want tangible demonstrations of how law firms leverage AI to enhance service delivery, whether through predictive analytics for case outcomes or streamlining the contract review process.
Forward-Thinking Solutions for Law Firms
To build a better client-firm relationship, law firms should adopt a more collaborative approach, integrating with their clients in the AI adoption journey. By educating in-house teams about their AI capabilities, law firms can dispel confusion and foster partnerships that drive efficiency and transparency. This involves direct communication about their AI tools, their intended impact on cost structures, and their potential for reducing legal service turnaround times.
Actionable Insights for In-House Counsel
In-house lawyers must assert their needs when engaging with external counsel. Here are some practical steps to bridge the transparency gap:
- Ask the Right Questions: Inquire about specific AI applications, such as which tools are used and how they validate accuracy.
- Formalize Guidelines: Implement AI-related provisions in service agreements to ensure transparency and quality assurance.
- Link AI to Pricing Models: Push for billing models that reflect increased efficiency due to AI, ensuring clients see these benefits in their fees.
Conclusion: Moving Towards Greater Transparency
As the pressure mounts for law firms to prove the utility of their AI investments, transparency will be crucial in shaping the future of client-firm interactions. By engaging in open discussions about AI capabilities, both parties can work together to define mutual expectations that enhance efficiency and trust. For in-house counsel, recognizing these dynamics presents an opportunity to lead their organizations into a technology-driven future. LISTEN TO SAMPLE RECEPTIONISTS AT: CallsToBooked.com
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