How Corporate Legal Departments Are Rethinking Legal AI

In the latest Wolters Kluwer’s Straight Talk, Ken Crutchfield and Jennifer McIver explore how legal departments are rethinking legal AI. Based on the perspectives of corporate legal departments, they are questioning whether the primary value of legal AI lies in cost savings or improved outcomes. 

McIver notes that corporate legal departments are scrutinizing how law firms they work with leverage AI, whether they are using it to handle client matters more efficiently or to improve internal processes. Although efficiency is expected to lower costs, AI paradoxically enables more precise timekeeping for firms, which can lead to increased billable hours. This has raised questions about whether the use of AI translates into reduced invoices or more accurate billing.

Crutchfield points out that AI often improves outcomes rather than just saving time. AI tools may allow firms to tackle tasks they previously struggled with, delivering higher-quality results. While this can drive efficiency, it doesn’t always decrease costs. 

For example, invoice costs may be lower, but partner-level review costs may increase. Instead, legal departments might receive greater value through better legal outcomes, particularly in complex or high-stakes cases.

This tension has prompted some corporate legal departments to include AI usage requirements in their guidelines for outside counsel. However, McIver emphasizes that value, not just cost, should remain a priority. Firms unable to effectively integrate AI risk falling behind competitors, as corporate legal departments increasingly expect both technological competence and strong results.

The conversation is gradually shifting from a focus on cost saving to a broader perspective on how AI can support legal teams in managing workloads, enhancing strategy, and driving better decisions. Efficiency remains important, especially in uncertain economic conditions. However, long-term success will depend on how well legal AI contributes to meaningful and strategic outcomes.