The Legal AI Expectations Gap

From typewriters to laptops, and law libraries to online databases, the legal industry is always adapting to technological change. But the current shift—the rapid rise of artificial intelligence (AI)—is noteworthy for several reasons, including how quickly it’s evolving, its significant potential to transform how lawyers work, and, importantly, how it's reshaping client expectations. As legal AI tools become more commonplace, a disconnect is emerging between law firms and their corporate clients. This misalignment in expectations presents both challenges and opportunities for law firms.

Let's dive in and explore how lawyers and law firms can navigate the current AI landscape and bridge the expectation gap.

The Current AI Landscape in the Legal Industry

The legal industry's relationship with AI took a dramatic turn in November 2022 with the public release of ChatGPT. Generative AI came into the spotlight, igniting a rapid exploration of AI's potential across industries, including legal.

As a practicing lawyer or law firm leader, you may already be experimenting with AI—either “playing around with it” a bit or making it an important part of your workflow. A recent “2024 Investing in Legal Innovation Survey” (the “2024 Survey”) from LexisNexis revealed that 75% of legal professionals have used AI tools, and 90% of law firms anticipate increasing their AI investments over the next five years.

But what does this AI adoption actually look like in practice? Let's consider a few examples of use cases:

Deposition Summaries and Medical Chronology: AI-powered platforms can now analyze thousands of documents in a fraction of the time it would take a human team, flagging relevant information for further review. Examples include, our Record Insights®, which is an AI-assisted medical chronology and analysis tool that can extract relevant medical information and create user-friendly reports in a matter of minutes, and Deposition Insights™, a transcript summarization and analysis tool.
Legal Research: Advanced AI tools trained with the right data can sift through vast databases of case law, statutes, and legal articles, providing relevant precedents and insights in seconds.
Contract Analysis: AI systems can review and categorize contracts, extracting key information and flagging potential issues or inconsistencies.

While these and other tools offer the potential for significant benefits, the challenge lawyers and law firms face lies in effectively integrating these tools into their practices while managing client expectations about their capabilities and limitations.

Legal Technology Solutions

At Lexitas, we are fully committed to building AI tools that help lawyers do their jobs better and faster.

AI-enabled deposition summaries

medical record summaries

The Expectation Gap: Law Firms and their Corporate Clients

As legal AI continues to evolve, a disconnect has emerged between law firms and their corporate clients. This gap in expectations, particularly around billing, work distribution, and the appropriate use of legal technology, presents both challenges and opportunities for the legal industry.

The 2024 LexisNexis survey illustrates the expectation gap many firms are facing. Let's break down some key areas of misalignment:

Billing Expectations: According to the 2024 Survey, 80% of corporate legal executives expect their outside counsel bills to be reduced as a result of AI technology. However, only 9% of law firm leaders reported that their corporate clients have expressed this expectation to them.
Work Distribution: 72% of in-house counsel predict AI will allow more work to be done internally. Meanwhile, 70% of law firm leaders believe AI will enable them to offer new, value-added services.
Transparency and Approval: 68% of in-house counsel said they approve of their outside counsel using AI tools on their company's legal work. However, only 38% of law firm leaders believed their clients approved of such use.
Cost Expectations: While 76% of corporate executives anticipate that AI will decrease costs for their own legal departments, fewer than half (47%) of law firm leaders expect AI to decrease costs for their firms.

These disparities create a complex landscape for lawyers and law firms to navigate. Understanding and addressing these gaps is crucial for maintaining strong client relationships and effectively leveraging AI technologies in practice.

Essential Conversations with Clients Around Legal Technology and AI Use

So, how can you, as a lawyer or law firm leader, address these misalignments? The key is open, proactive communication. Here are four critical areas to focus on in your client conversations:

1. Be Transparent About Legal AI Usage

Transparency is critical for setting expectations. Be upfront about your firm’s AI adoption strategy. Initiate conversations about which tasks involve AI and why. And address potential concerns head-on. Be prepared to explain your firm's safeguards and quality control measures. In-house lawyers—78% of them according to the 2024 Survey—expect to be informed about their outside counsel's use of AI. Having frank discussions about AI with clients can lead to great client satisfaction and set your firm apart from competitors.

2. Clarify AI Capabilities and Limitations

An important aspect of being transparent is painting a realistic picture of what AI can and cannot do. While AI excels at tasks like rapidly analyzing vast amounts of data for due diligence, it can't replace human judgment in complex legal reasoning or courtroom advocacy. Highlight the continued importance of human expertise. Explain how your lawyers use AI as a tool to enhance their work, not replace their judgment.

3. Address Cost Expectations

Discuss the investments required to implement AI technologies effectively at your firm. Explain how these upfront costs ultimately benefit clients through improved service quality and efficiency, and how AI may affect billing differently in the short and long term. While initial costs might be higher, explain how efficiency gains could lead to more value-added services or cost savings over the long term.

4. Set Realistic Timelines

When discussing AI implementation with clients, it's crucial to address the fact that AI adoption isn't an overnight transformation—it's a gradual process that requires time, patience, and ongoing refinement. Perhaps your firm is dipping its toe in the water with pilot projects in a specific practice area or office, allowing you to test and refine an approach before a broader rollout. Let clients know how this sort of measured approach helps manage risks and allows for necessary adjustments along the way.

Also, be upfront about the integration challenges. Implementing AI tools often involves customizing systems, preparing data, and training staff—all of which take time. There's also a learning curve—your team will need time to adapt to new workflows, and the AI systems themselves improve with use and feedback. Gradual improvement can lead to enhanced service quality in the short term, with more substantial cost efficiencies following later.

Lastly, remind clients that AI is rapidly evolving. Your firm's approach will need to adapt continuously, which may impact timelines and outcomes. By setting these expectations early, you can help clients develop a more nuanced understanding of the AI implementation process, preventing frustration from unmet short-term expectations.

Conclusion

As the legal industry continues to navigate the AI revolution, success will require not just adopting new technologies, but in having clear and transparent conversations with clients. By addressing the expectation gap head-on, law firms can position themselves as trusted (and aligned) partners to their clients. Lawyers and law firms who can effectively bridge the gap will be well-positioned for success moving forward.

John Baker is the Chief Information Officer of Lexitas. Mr. Baker has over 20 years of experience as a technology executive across many industries including legal. He is a thought leader in technology, having lectured at conferences and top ranked universities in addition to his work leading technology teams, and supporting Lexitas clients regarding their technology and cybersecurity interests.

Connect:

Related Resources

Is AI a Tool or Threat for Legal Professionals?

Artificial Intelligence - Complementary Tool or Competitive Threat for Legal Professionals?

The rise of artificial intelligence (AI) within the legal sector presents both challenges and opportunities. As AI technologies become more prevalent, concerns about job security and the future role of legal professionals have surfaced.

Lawyers Must Embrace Legal AI to Meet Client Expectations

Lawyers Must Embrace Legal AI to Meet New Client Expectations

The legal industry is at a critical juncture, where adopting legal AI is no longer a choice but a necessity.

Strategies for the Ethical and Practical Implementation of AI in Law Firms

As legal technology and AI continue to advance at a rapid pace, the ABA issued Formal Opinion 512 on the ethical use of generative AI tools.