Two-thirds of corporate counsel will bring work in-house next year to reduce costs: That’s the major takeaway from an industry survey from Everlaw and the Association of Corporate Counsel (ACC) released this fall.

The State of Collaboration in Corporate Legal Departments includes responses from 373 chief legal officers, general counsel, other in-house counsel, and legal operations professionals from U.S. corporate law departments. The report contains other insights into corporate law cost-cutting reasonings, such as:

• Only 42 percent of in-house legal professionals are happy with cost transparency from outside counsel; and just 38 percent with cost predictability.
• Only 41 percent say they've always felt comfortable requiring their law firms to use modern technology for better efficiency, but 68 percent say they've at least sometimes felt comfortable doing so.
• One in four in-house professionals plan to cut the number of law firms they work with in the next year, with cost effectiveness (79 percent) overwhelmingly the top reason.

Now that we know what’s on the minds of corporate legal decision-makers, what can we do about it?

Tips for in-house teams

For corporate law departments bringing work back in-house, finding the right legal operations partner for services like eDiscovery or Managed Review can help you manage costs and increase efficiency.

Honest and transparent discussions about staffing and pricing should happen early in your selection process. Get to know the individuals who will be working on your matters and ask how they price, what is included in the price, when they invoice, and any contingencies that may impact the total cost of your project.

Once you have a basic understanding of the people working on your matters and the pricing model, your potential provider may be able to point out pricing efficiencies or draw from their experience to create a model that delivers the most value for your spend. Furthermore, once you have a better sense of the volume of data that will be processed and hosted for the project, your partner can help create an estimate and budget for the matter, notifying you of scope-creep or specific billable triggers that may require an adjustment.

Questions about artificial intelligence are certain to come up during the search as well: The survey revealed that 33 percent of in-house professionals will look to technology or AI to control costs, nearly triple last year’s response.

While AI offers tremendous potential for efficiency and cost reduction, there are pitfalls for those who rush into it blindly. A computer lacks the judgment of a human, may confidently offer misleading answers (called “hallucinations”), and at times requires plenty of guidance to elicit the appropriate response (effective prompt engineering). Lawyers must still understand what was produced and how it’s useful to their case. They must analyze search results for gaps or context, ensure defensibility of discovered documents and collection methodology, and manage data confidentiality and privilege issues.

For litigation matters, for example, even if a firm used pure AI to handle document production and predict documents for relevancy, AI will not tell you why that document is the smoking gun or the document that will release your client from all liability. Similarly, AI will not (or at least should not) write motions to dismiss, and certainly AI will not argue a case in court, or depose witnesses.

Litigation support partners, however, can fill this gap as lawyers venture into the world of generative or predictive AI.

Tips for outside counsel

The survey results show in-house teams want to work with law firms that have transparent costs and are committed to using modern technology to increase efficiency.

Furthermore, 39% of in-house professionals surveyed said they will shift work from big to smaller firms. Is your smaller firm prepared to compete for this work? A 2022 Thomson Reuters “State of Small Firms” report revealed 83% of the law firms surveyed thought they were doing too much busy work: excessive work on manual tasks that technology could help eliminate or make easier.

Of those firms, 81% hadn’t addressed the problem. Are you one of them? Consider your time spent on eDiscovery and managed review and ask whether a technology partner could help manage the load and give your firm the tech and cost-efficiency makeover that in-house counsel are looking for.