The in-house legal departments the firm serves were initially skeptical of the technology and sought reassurances that the firm wouldn't use it at all on their legal matters — a position that gave way to requests that the firm use the technology, but explain how it was used, Williamson told Law360 Pulse.
Now, as the technology has permeated the legal sector, especially in corporate law departments, he said there's been a new turn: Clients want to know how the firm's use of AI is saving them money.
It's not an easy question to answer, however top of mind the question may be among in-house legal departments.
A survey by e-discovery company Everlaw of 300 in-house leaders released last week reported that the vast majority — 92% — of in-house teams reported that their law firms had passed along savings from the use of AI to them.
But a month ago, the alternative legal services provider Axiom painted a murkier picture in a survey of 500 in-house leaders. Nearly 60% of those leaders said their outside firms had driven up fees while marketing their use of AI as a perk, with only about 30% reporting any shared savings.
And just a few weeks ago, the Association of Corporate Counsel found that roughly half the 575 in-house professionals it surveyed saw no clear savings from their firms' use of AI. Another 30% said they were unsure whether they had seen any savings — double the number who said they were uncertain when asked the same question last year.
Monique White, vice president of legal operations for the industrial real estate company Link Logistics, told Law360 Pulse that her team was among those pushing for answers at the negotiating table. She described seeing the splashy billboards and advertisements for legal AI companies Harvey and Legora.
"You know the firms are leveraging it," she said. "But we don't, from a corporate legal department standpoint, clearly understand how that translates into value, and that's what our leadership is asking for."
In a brainstorming session earlier this year with legal ops leaders from other companies, White said they explored whether paying their firms partly in tokens — the currency for AI use — might be a solution.
She imagined legal departments saying to their firms, "We'll front you the token, so there's no question around cost, but we expect you to use it and show value and optimization through the delivery of services."
Ford Motor Co.'s director of legal ops, Whitney Stefko, told Law360 Pulse that Ford has been "bullish" about demanding answers from its outside law firms on their AI use and where they might be seeing efficiencies. But that doesn't mean Ford is getting clear answers, she said, describing law firms as being "very close-lipped" on the issue. She pointed to communication breakdowns between firms and clients around AI cost optimization.
"All the law firms are screaming, 'You're asking us to tell you how we're using AI in order to show how we're saving you money,'" Stefko said. "I actually don't think that's what most legal teams are asking for."
What they really want, she said, is to know how firms are improving their delivery of legal services to clients because of AI. That could look like firms expanding services for the same price — or a better price, she said.
Legal experts have pointed to the way AI is reshaping relationships between corporate clients and their firms, with many raising questions about how the technology will change pricing models, including the billable hour.
The conversations between firms and their clients about AI aren't happening in a uniform way. The Axiom study found that only 1 in 5 in-house legal departments even requires its firms to say when they're using the tech, let alone how it's creating value and who gets a share of any savings.
Williamson said Outside GC's conversations with clients about potential AI savings happen on a case-by-case basis, each one a "snowflake" of unique concerns and explanations. Even so, the talks tend to end up in the same place.
"I think sometimes the savings that clients are expecting are maybe smaller than they're looking for," he said.
He noted the lack of hard data on how much firms are actually saving when they use AI. Plus, the tools are expensive, he said. The firms pay to operate AI, and they can often end up facing extra work when their corporate clients — many of whom are using the tools themselves before coming to the firm — bring them flawed, AI-drafted documents to "review," he said.
"Sometimes they end up spending more time and more money than they would have had they just let us do the drafting from the outset," he said.
While most of the respondents to the Everlaw study said they received some savings from their firms, only a small percentage — 13% — said those savings were significant.
Everlaw's chief legal officer, Gloria Lee, said the results pointed toward "a wide spectrum" of experiences for firms and clients on discussions around use of AI.
"But what this tells me is that clients are asking, and the reality is that nothing changes on the law firm … end unless clients are demanding it, and that's, I think, the position that in-house teams are in right now," Lee said. "They have the ability to ask these questions."
--Editing by Robert Rudinger.
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