External law firms are falling so far behind their in-house counterparts — and showing little urgency to adapt — a reckoning seems inevitable.
As many have observed, it’s hard to tell a room full of millionaires that their way of doing business is wrong. Yet new research from the Association of Corporate Counsel (ACC) and Everlaw suggests that outside lawyers may soon face pressure to change. The study surveyed 657 in-house legal professionals across 30 countries to assess how widely generative AI is being adopted — and the findings are striking.
The Findings
- 67% of respondents are now using or testing GenAI tools, up from 38% last year.
- 91% report efficiency as the top benefit.
- 64% expect to rely less on external counsel due to AI.
- 24% say they’re likely to push for reforms to the billable hour model.
However, while in-house teams are racing ahead, law firms are largely stagnant. Nearly 60% of corporate counsel don’t even know whether their external lawyers are using AI, and a staggering 80% admit they aren’t asking or requiring them to do so. Even among firms that claim to be using GenAI, 59% of clients say they’ve noticed no change in billing or efficiency — implying that firms may be talking more than acting.
The Paradox
In-house lawyers are reaping the benefits of AI yet remain reluctant to demand the same from their outside counsel. Reasons include deference to law firms’ autonomy, fear of AI mistakes affecting outcomes, and lack of control over external AI use. Some also believe it’s too early, or that firms haven’t adjusted pricing to reflect AI-driven efficiencies — though few have actually asked them to.
The Implications
This complacency might seem to justify law firms’ inertia, but it’s a risky illusion. As in-house counsel continue to adopt and trust AI tools, they’ll inevitably realise how much more cost-effective and efficient their legal functions can be — and how far their external lawyers are lagging.
If outside firms don’t adapt, clients may simply turn to “AI-first” firms that deliver faster, cheaper, and more transparent results. It’s only a matter of time before general counsel start demanding the same standards they’ve already set internally.
In short: if law firms don’t wake up soon, their clients will — and they’ll take their business elsewhere.
Source: Above the Law
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