Dive Brief:
- In-house legal budgets are likely to remain flat for 2025, but C-suite executives are keen to fund productivity-oriented AI investments, which can also relieve pressure on in-house lawyers, according to a panel of legal operations leaders.
- Hiring and retention has become more difficult given in-house lawyers’ expanding workloads, forcing GCs to innovate on new work processes and work-life balance, along with more alternative legal service provider usage to trim their law firm spending, a panel of legal ops professionals said Thursday during an Axiom webinar.
- AI implementation requires a pragmatic approach, and will be achieved incrementally, as the technology won’t provide a full array of solutions for all legal department needs, said Amelia McPherson, global head of legal for Irdeto, a cybersecurity company.
Dive Insight:
For next year’s budgets, 61% of GCs said they expect an increase, with an average 4% rise, according to a survey of 200 GCs on legal budgeting in 2025 that was conducted last month by Axiom and Wakefield Research.
Much of the spending will go toward AI-oriented technology, with nearly every GC (96%) saying they expect AI to meaningfully reduce legal department costs. More than one-third of GCs (35%) said their legal tech spending will be for virtual legal assistants, such as AI-powered chatbots. More than a quarter (27%) plan to acquire AI-powered predictive analytics tools and 26% said they want AI-powered contact review software.
AI capability is a useful selling point that can help win funding approval for new tools, said Brent Dyer, director of legal operations, employment law and litigation for Trend Micro, a cybersecurity firm.
Touting a product’s AI capability is “a great way to get things that I wouldn't otherwise get,” he said. “If I go in and say, ‘It's going to use AI and these AI tools will create efficiencies,’ suddenly people get excited and more willing to give you the money.”
When incorporating AI tools, legal departments must “roll it out in chunks” for various tasks, McPherson said. The technology isn’t “a mammoth of a beast” that can attack a department’s entire needs; McPherson has found AI to be “excellent” for first-pass redlining.
“You just keep building (AI) on top of that use case where it handles one more task in your environment,” she said.
In Dyer’s view, “AI is vastly overblown,” but it can be helpful for “low-level tedious tasks that are necessary to get done but really aren’t the best of anyone’s time or mental faculties.”
“I don’t want a product that’s going to write my legal brief or my contract,” he said, but rather help attorneys understand some of the issues they need to include in their documents. “To me that is a selling point.”
In-house departments are losing lawyers because the work has become more demanding, with increased loads, Dyer said.
Companies have realized that in-house legal work is more cost effective than sending work externally, Dyer said. “They realized, ‘Hey, I have this person and their fully loaded in-house rate is like $100 an hour and I can’t find [an external] lawyer to do anything for $100,’” he said. “It means more work for everybody.”
That has made hiring more difficult, he said. “You get fewer candidates and the candidates you get tend to not be as great as they were. It really is a challenge to find people,” Dyer said.
“What I’ve been trying to do is let’s create processes that help people. So if I can’t hire somebody new because I can’t find them or I have no budget, what can I do that helps my contracts lawyers so their job is easier? Maybe I need to buy a process. Or it means I have to go find interim talent” through an ALSP, he said.
Axiom is an on-demand supplier of legal talent and also operates an Arizona-based law firm, Axiom Advice & Counsel LLC.
Irdeto uses outside firms for only “specialized matters,” McPherson said, with in-house lawyers and ALSPs handling most of the company’s work.
Flexible legal talent tends “to be less distracted” than lawyers at law firms, Dyer said.
“Lawyers from law firms can be really distracted by law firm problems,” said Dyer, a former partner at a medium-sized firm. “You can find that they’re not looking to do the best work for me, they’re looking to do what is best for their career.”
