One other week, one other research demonstrating the hole between what in-house authorized professionals need from their outdoors legislation companies and what they’re getting on the subject of innovation and know-how. Regardless of all of the AI discuss, we aren’t there but.
This time, the research was curiously from a legislation agency. Thompson Hine, an Am Regulation 200 midwestern-based legislation agency, carried out the study of virtually 200 senior in-house authorized professionals to have a look at how they had been embracing innovation.
The research, entitled Bridging the Notion Hole-Disconnects, Expectations and Alternatives, additionally centered on how in home authorized perceived their legislation companies had been doing.
That is the fourth such research that Thompson Hine has carried out. Thompson Hine partnered with Corporate Counsel to conduct it.
A Disconnect
Because the title suggests, the research discovered some fairly evident disconnects. Solely 5% of these surveyed mentioned they noticed quite a lot of innovation from their legislation companies. That share was the identical in 2023 and a rise of solely two share factors since 2020. That ain’t a lot progress.
And right here is the primary disconnect. When requested how a lot innovation their companies declare, the respondents mentioned 20% of them are really claiming to be tremendously progressive.
Why the Hole?
As somebody as soon as advised me, “There are companies that wish to be progressive and there are companies that wish to say they’re progressive.” Fairly merely, companies are sometimes telling purchasers what they assume they wish to hear on the subject of innovation. Some companies are content material to say we did innovation, pat themselves on the again, and examine the field.
Identical to again within the early days of changing to computer systems, there have been companies that purchased desktops for all attorneys only for the optics when purchasers visited, even when nobody knew methods to use them.
Then there’s a definition drawback. In-house authorized professionals are eager about innovation and know-how to assist them get extra work executed quicker and extra effectively. Regulation companies’ curiosity in innovation and know-how is usually restricted to lowering non-billable hours or advertising. When a legislation agency says it’s progressive, it is probably not progressive in a means that resonates with in-house.
As well as, observe that solely 16% of these surveyed mentioned their outdoors companies had been superior to in-house authorized departments when it got here to innovation. Solely 3% mentioned their outdoors legislation companies had been supplying them with all of the innovation wanted.
Take into consideration that. Regulation companies are sometimes smaller. They function in follow teams. This could make them extra nimble than the giant firms they serve.
Furthermore, legislation companies are service suppliers. You’d assume they’d wish to be forward of their clients in innovation to offer higher service, not behind.
We see the identical factor with attitudes towards issues like AI. Twenty-three p.c of the in-house people say AI has come a lengthy means and ought to be used versus 18% of the surface attorneys. Exterior attorneys are extra involved about accuracy and privateness than in-house. This hole squares with the findings of the Association of Corporate Counsel (ACC) which I reported final week. That survey discovered that use of AI in-house had grown to near 70%.
Why the Hole, Half Two
So why aren’t legislation companies eager about utilizing issues like innovation and AI to offer higher service? Before everything, the billable hour mannequin limits sturdy innovation and use of know-how. Adoption of progressive strategies and issues like AI inevitability influence the billable hour and legislation companies comprehend it.
Secondly, the consensus decision-making course of engaged by most legislation companies additional inhibits adoption. The partnership mannequin all too usually leads to too many choice makers, any one among which might say no loudly and lengthy sufficient to have an effect. Add to the truth that attorneys are skeptical and unbiased by nature and also you get delay and infrequently blindness to innovation.
Add this all up and it’s not a great search for outdoors attorneys. However they aren’t utterly responsible.
So, It’s Straightforward to Blame Exterior Attorneys?
At first blush, it’s straightforward responsible outdoors legislation companies for dragging their toes on the subject of innovation and know-how. However there’s something else at work which makes it straightforward for companies to securely and blissfully preserve the established order and not rush to innovate and undertake know-how to offer higher service. In-house authorized professionals simply aren’t demanding change. In actual fact, they reward their companies for the established order.
We see this with the Thompson Hine findings: regardless of the truth that 93% of the survey respondents say innovation is essential or at the least essential in deciding on companies, they apparently are content material with seeing quite a lot of innovation from solely 5% of their companies.
We noticed an analogous hole within the ACC Examine: 59% of these in-house authorized professionals didn’t know if their companies had been utilizing know-how on their authorized issues and 80% weren’t demanding and even encouraging their outdoors attorneys to make use of GenAI.
To paraphrase an earlier commentary: there are authorized departments which can be demanding innovation and there are authorized departments who wish to say they’re demanding innovation.
What Is In-Home Authorized Rewarding?
Which brings me to one other latest study, this one by Thomson Reuters of legislation agency charges which it carried out. Primarily based on the findings, the research’s conclusion says it all:
The authorized career has achieved what most industries can solely think about: The power to lift costs yr after yr, with purchasers constantly agreeing to pay extra. Over the previous decade, legislation companies have pushed charges at twice (or extra) the speed of inflation, and 2025 is not any exception — labored charges are up 7.4% in comparison with only a 2.8% inflation charge. This isn’t only a routine cost-of-living adjustment, fairly it’s an indication of real pricing energy that has basically reshaped how authorized providers companies generate income.
To be honest, the research additionally means that this gravy prepare might quickly be ending attributable to a wide range of components. That could be true, though that sounds slightly just like the “dying of the billable hour” that has been predicted so long as I’ve been training legislation. It hasn’t occurred but.
Thoughts the Hole
Right here is the easy truth: except and till purchasers demand change by their outdoors legislation companies, it’s not going to occur. And why ought to it? Regulation companies, notably giant ones, are making means too a lot cash to alter. Their purchasers aren’t pushing them to alter and reward them yr over yr with giant charge will increase.
A part of the rationale for all that is in-house attorneys are nonetheless attorneys. They’ve the identical reluctance to alter and skepticism as these of their outdoors companies from which many of them got here. A part of it’s as a result of the follow of legislation remains to be relational: in-house authorized professionals belief and depend on their outdoors attorneys. They are reluctant to tamper with their legislation companies’ enterprise and perceived wants. Plus, authorized division budgets are usually comparatively small when in comparison with that of the general enterprise.
And simply like in-house authorized professionals depend on and belief outdoors lawyer for his or her experience, the enterprise should belief and depend on the authorized division’s recommendation and experience.
Need Change? Demand It
So all of us bump alongside singing a Kumbaya innovation tune however with little actually altering at many legislation companies. In-house whines; legislation companies make adjustments in title solely. Is it about to alter with the appearance of GenAI and agentic AI? Not except purchasers make it so.
Maybe it’s time for in-house authorized to have a intestine examine with their outdoors counsel. Or just vote with their toes. One factor that’s not going to effectuate change is persevering with to do nothing.
And the following time in-house counsel complains about their outdoors attorneys, maybe remind them to thoughts the hole.
Stephen Embry is a lawyer, speaker, blogger, and author. He publishes TechLaw Crossroads, a weblog dedicated to the examination of the strain between know-how, the legislation, and the follow of legislation.
