Burgeoning technologies have completely reshaped the workplace. In particular, Artificial Intelligence has set a new standard — and surge in demand — for how organisations should adopt this phenomenon now and activate its potential in the years to come. If we look at the demand alone, Generative AI software sales are expected to surge to $318 billion by 2032 (a more than 6,000 percent uptick).
The legal tech sector is applying Generative AI to ease the workload of legal professionals on an unprecedented scale, and as a result, many legal professionals have been able to unlock the benefits of AI across many areas of the business. This includes applying AI in leadership to address financial challenges, improve efficiency, and create greater value, all whilst upholding compliance standards which are constantly evolving and being thrust into the wider macroeconomic spotlight.
This is a positive and progressive step forward, especially since legal teams have historically been late adopters of new technologies. Today, more than 85 percent of legal operations professionals now believe that most legal departments will be using generative AI substantially over the next three years.
As legal teams ramp up AI adoption and integration into everyday legal practices, they will experience a rapid transformation from manual processes to automated processes. Effective and strategic utilisation of AI is paramount for maximising its positive influence on daily operations and yielding measurable business outcomes.
How is AI Transforming the Legal Sector?
Manual processes have traditionally dominated the legal industry. One prime example of this is budgetary and staffing restraints for firms, which have typically functioned on laborious and outdated processes.
AI, and now generative AI, hold the potential to redefine how legal teams operate by automating routine and administrative tasks, and freeing up more time for strategic thinking and problem-solving. Furthermore, AI can allow for more attention to the creative and relationship-oriented aspects of legal work, which need a human touch and which cannot be replaced by technology.
Generative AI can also contribute to accelerating profitability across legal businesses. According to a recent survey, generative AI is shifting the bottom line for legal firms. Thirty-six percent of legal operations professionals have already experienced the impact of generative AI on their department’s budgets and resource allocation.
More than two-thirds (67 percent) of legal professionals also believe that generative AI will enable them to bring more work in-house, while the wider generative AI adoption will simultaneously lead to cost savings (70 percent). Harnessing technology like generative AI and large language models (LLMs) offers a promising avenue for optimising critical day-to-day processes, including contract management.
A large part of contract management is the understanding that contracts are the single source of truth for the relationships a business has with its suppliers, partners, and customers. This makes contract data one of the most valuable and untapped assets in the enterprise and a prime resource to fuel innovation with generative AI.
By integrating contract data across the enterprise and applying generative AI, legal teams can ensure that intent documented in every contract is fully realised in practice, resulting in business outcomes around revenue, cost savings, compliance, and risk.
Contract Management is Prime for AI Transformation
It’s important to note that there remains discord when it comes to some legal businesses acknowledging the benefits AI brings to the table in theory and leveraging such benefits in practice. Despite recognising the untapped potential of AI, only 19 percent of the legal operations workforce sometimes or always relies on generative AI for pre-execution contract management, such as contract generation and review.
Even worse, less than eight percent use generative AI for post-execution contract management. This represents a significant opportunity for legal departments to enhance strategic outcomes by expanding the role of AI throughout the entire lifecycle.
The power of AI lies within its ability to process and analyse vast amounts of contract data with speed and accuracy while automatically identifying patterns and anomalies that might go unnoticed by human oversight. By applying purpose-built AI to contract data, legal teams gain contract intelligence that reveals trends, opportunities, and hidden risks at scale.
Upskilling AI for Aspiring and Legal Professionals
Although legal professionals are keenly aware of the benefits of AI, nearly 40 percent of legal operations professionals express discomfort or unease with generative AI tools, while an additional 33 percent feel they lack access to the appropriate technology required for their roles – an increase from 21 percent last year. This underscores the need to address both skill and technology gaps among seasoned professionals, but also among aspiring legal professionals.
For starters, universities must implement AI training into their curriculum to ensure that new graduates are equipped with the necessary technical skills and confidence. For legal professionals who are well into their careers, legal education bodies must ensure they provide enhanced training and continued education that empower these experts to stay agile and adapt to a digitally evolving landscape.
Several strategies are available to equip teams to effectively use AI technology. For instance, legal teams can institute enterprise-wide Innovation Days to tackle existing business challenges with AI-powered solutions. This approach promotes experiential learning and presents an opportunity for teams to learn best practices through collaboration and exploration.
Additionally, partnering with a trusted technology implementation partner can expedite the adoption of new technologies, making the process more efficient, cost-effective, and fruitful. Legal professionals play a pivotal role in shaping AI policies and showcasing leadership through the adoption of generative AI.
By embracing this technology, they can effectively tackle financial challenges; enhance operational efficiency; and add substantial value while maintaining compliance standards. The potential benefits of generative AI, especially in contract management, are evident, offering opportunities for comprehensive organisational transformation. Through generative AI, legal businesses have the potential to revolutionise not just the legal departments, but the entire enterprise.
