Law firms are being asked to show their AI workings, survey finds

AI is changing the way in-house legal leaders think about their own functions and their expectations of external counsel.

KPMG's latest General Counsel Outlook survey shows that AI is a top operational priority for senior in-house lawyers, attitudes around billing have evolved, and that GCs still have accuracy concerns despite the widespread willingness to bring AI into their workflows.

The findings, based on a survey of nearly 500 general counsel and senior legal leaders across 28 jurisdictions, show that in-house teams are already using AI day-to-day and forming expectations based on that.

Three-quarters of legal teams have already implemented AI use cases that are delivering measurable value.

Teams are using AI across functions - 70% of respondents use it for research and 65% use it for compliance and regulatory monitoring. Contract management, board and executive reporting and governance all had high rates of adoption too.

“Adoption is no longer the real question - most legal teams are already experimenting with AI. The real differentiator will be how deeply those capabilities are embedded into workflows, governance and decision-making,” said Andrew Giverin, global legal business services leader at KPMG Law UK.

“The legal functions that lead will likely be those that use AI not just to work faster, but to rethink how legal insight is delivered across the enterprise.”

Tech-first, headcount second

AI has impacted the way GCs think about human and non-human resources.

The report found that on top of over half of respondents deeming AI their top operational priority, 35% also said that expanding team capacity without increasing headcount is a key priority, and 71% said they plan to invest more in tech than talent.

In terms of upskilling their teams, more than half of GCs named understanding and implementing AI across the business as a top priority for talent and capacity, and 81% of respondents reported strong organisational investment in developing legal team skills.

Nearly 90% believe increased AI use will allow lawyers to focus on higher-value work by automating administrative tasks.

Cautious optimism and transparency expected

The widespread adoption of AI has yielded results senior lawyers are satisfied with, but the upsides are coupled with a dose of caution.

79% of survey respondents said AI has already improved efficiency in core tasks like document review, and 70% have seen measurable cost savings through AI adoption.

However, the savings aren’t being celebrated blindly - 65% are concerned about accuracy and appropriateness.

Just 26% of respondents strongly agree that success metrics for AI integration are well-defined and tracked, and only 25% believe their tools are specifically tailored to their team’s specific needs.

Law firms are also now being judged on their use of AI. 82% of GCs expect firms to clearly explain how they use AI, and two-thirds want more tech-enabled services from their external providers.

“Transparency around AI use is no longer optional. Law firms are now evaluated not only on legal expertise, but also on how effectively they deploy, govern and explain the technologies supporting their work,” the report said.

Efficiency gains are also putting pricing models in the spotlight, with 87% saying they prefer value-based pricing over hourly billing.