AI Cuts Law Firm Work for In-House Legal Teams by 13%, Study Finds
A recent study by LexisNexis, conducted with Forrester, suggests that widespread use of AI tools within corporate legal departments could reduce the volume of legal work sent to outside law firms by 13%. The research modeled a hypothetical in-house legal team at a North American company with $10 billion in annual revenue.
This composite organization includes 70 attorneys and 10 paralegals, with a legal budget representing 0.33% of revenue. Over a three-year period, the study projected how AI tools might impact their workflow and external legal spending.
Key Findings
- 13% reduction in work handled by outside counsel: By adopting AI, the in-house team could retain more routine and transactional matters internally. This would increase the number of matters handled in-house by 5% in the first year, totaling 1,312 additional matters over three years. The resulting external legal fees avoided would exceed $600,000 for this organization.
- 25% less time spent advising the business on legal inquiries: Attorneys using AI tools like Lexis+ AI sped up research, memo drafting, and summarization, cutting the time spent on legal questions by a quarter. With 56 attorneys using AI over three years, time savings valued at over $570,000 were projected.
- 50% time savings for paralegals on administrative tasks: Paralegals reduced their time spent on document summarization and analysis by half. For three paralegals using AI, this translated into savings worth more than $53,000 over three years.
Beyond these measurable impacts, the study noted improvements in quality of life for legal staff and the ability to focus on higher-value work.
Context and Considerations
The study was based on interviews with only four senior in-house legal professionals experienced with Lexis+ AI. Their data was combined into a single composite model, so the results serve as projections rather than hard facts. Still, the findings point to meaningful efficiencies achievable through AI adoption.
If scaled across large companies such as those in the Fortune 500, a 13% drop in external legal work could translate into millions of dollars in cost savings within the U.S. legal market. For example, the AmLaw 100 firms collectively generate around $158 billion in revenue, highlighting the potential market impact.
Law firms focusing on routine, transactional, or lower-risk matters may face greater competition as in-house teams increasingly handle such work internally with AI support. Firms specializing in complex, high-risk cases are less likely to see significant change.
It's also worth considering that new legal demands may emerge, potentially increasing external legal work. However, AI tools could be adapted internally to meet those needs as well, which might further shift work away from law firms.
What This Means for Legal Professionals
In-house legal teams can gain significant efficiency gains by adopting AI tools, freeing up time and resources to focus on strategic, high-value work. Law firms should anticipate some reduction in routine legal matters sent out, adjusting their service offerings and pricing models accordingly.
Legal professionals interested in practical AI applications and training can explore courses designed to enhance their skills and keep pace with technology-driven changes in legal practice. For more information on AI training tailored for legal roles, visit Complete AI Training - Courses by Job.
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