Artificial Intelligence in Dispute Resolution: Developments, Challenges, and Perspectives for Legal Practice
Picture the year 2040. Corporate disputes no longer require human lawyers to resolve. Instead, AI collects facts from available data, drafts legal documents automatically, and submits these to the opposing party and the court. The general counsels involved grow frustrated that human judges still decide cases, slowing down the process and driving up costs. Soon, AI might even be authorized to deliver judgments.
This scenario is not far-fetched. AI continues to transform the way legal work is done. Its influence on dispute resolution grows steadily. While we're not at that futuristic stage yet, AI's use is already reshaping dispute resolution by improving efficiency and cutting costs. According to the 2025 International Arbitration Survey from Queen Mary University of London and White & Case, 91% of respondents expect to use AI for research and data analytics in the next five years.
But what about all dispute resolution professionals—lawyers, in-house counsel, judges, and arbitrators? Should AI be involved at every stage of the legal process? Can companies and law firms afford to ignore AI? This article highlights where AI adds value, the risks involved, and what lies ahead.
Where AI Adds Value
AI already boosts efficiency by saving time for parties and counsel, which directly reduces costs. These are the primary reasons for adopting AI, according to the 2025 International Arbitration Survey, which gathered input from over 2,400 legal professionals worldwide.
Other benefits include reducing human error, ensuring fairness by providing all parties equal access to legal resources, and improving outcome predictions.
Key AI applications in dispute resolution include:
- Data analysis for document production, organization, and review
- Legal research
- Text editing and generation
- Predictive analytics to develop litigation strategies
In predictive analytics, AI analyzes past court and arbitral decisions to forecast case outcomes and highlight key issues. This insight informs strategy, supports litigation funding decisions, and influences case management. AI also reduces errors like miscalculating damages. Moreover, AI levels the playing field between smaller and larger players by simplifying data-intensive tasks, freeing lawyers to focus on legal arguments.
Challenges, Risks, and Pitfalls
Using AI in dispute resolution brings challenges that vary depending on its application. While AI handling administrative tasks like scheduling faces little resistance, its role in evaluating evidence or drafting legal reasoning is more controversial. For example, 85% of counsel oppose AI drafting award reasoning, according to the 2025 survey.
Acceptance depends on what AI can accomplish and the importance of human judgment and due process in each step. Currently, few laws regulate AI use in judicial or arbitral decision-making, and the human element remains crucial. Emotions and subtleties, especially in witness testimony, are difficult to replicate with AI.
A major concern is AI producing flawed or biased outputs that go unnoticed. Over half the respondents in the 2025 survey cited this risk as a reason for cautious AI adoption. Faulty AI results can lead to lost cases or misunderstandings. Liability questions also arise: who is responsible if AI causes errors? Clear contracts and insurance could help mitigate these risks.
Data security and confidentiality are additional hurdles. AI tools often improve by learning from user input, which raises concerns about information sharing between competing clients or within large firms. Ethical walls may lose effectiveness if AI systems pool data across different teams. Compliance with data protection laws like the EU GDPR and professional secrecy obligations is critical.
Finally, many legal professionals lack experience with AI, which slows adoption. As AI use grows, prompt engineering skills will become essential. Ethical concerns persist as sensitive data is entrusted to complex systems not fully understood by most users.
Outlook for the Future
AI advancements offer significant opportunities for dispute resolution. While AI may not replace human decision-makers soon, it will alter the roles of in-house counsel, lawyers, judges, and arbitrators.
AI can handle large volumes of data, allowing legal professionals to focus on the core issues of a case. The legal community and lawmakers will face ongoing challenges around AI use, resulting in new regulations and court decisions that define acceptable practices.
Questions remain about disclosure: should parties reveal AI use? Should courts allow parties to opt out of AI involvement? Cases of AI-generated false citations already attract attention and highlight the need for scrutiny.
Ultimately, disputes involve human interactions and require weighing facts alongside soft factors like tact and sensitivity—areas where AI has limits. The efficiency gains from AI are clear and will benefit everyone involved, making AI a valuable tool rather than a threat.
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