In-house legal teams profit from AI

Unlock Editor's Digest without cost

FT editor Roula Khalaf selects her favourite stories on this weekly newsletter.

On a recent visit to a brand new team in Barcelona, ​​Maria Varsellona, ​​general counsel at consumer goods giant Unilever, said she found a motivated group of lawyers and data experts who had traveled from across Europe to affix the corporate. The team is one among the group's three so-called powerhouses – legal delivery centers with a complete of 85 employees that were arrange in March last yr to handle high volumes of legal contracts. The other two are in Mexico City and Bengaluru.

Although Unilever announced plans in July to chop around a 3rd of its office jobs in Europe – as a part of a technique to spice up growth and productivity – Varsellona says the impact of those cuts will probably be “minimal”, no less than for the legal team. That's since the changes made since she took office in 2022, including the creation of the centers, have improved efficiency.

Other firms, including GE and BT, arrange similar legal advice centres within the 2000s – many in India or Eastern Europe – to handle routine legal work at a lower cost. But what sets Unilever's centres apart is that they use the newest technologies, including generative artificial intelligence, meaning they’ll handle increasingly complex legal documents and tasks.

Many of the highest 10 legal teams featured on this FT Innovative Lawyers Europe 2024 report are moving beyond just experimenting with generative AI to using it of their each day work. And for some, it’s delivering advantages faster than expected.

At Unilever, Europe's most modern in-house legal department this yr, technology is already enabling the team to do more work in-house, faster and more cost-effectively. As AI enables large firms to do more legal work themselves relatively than outsourcing it to external law firms, it has the potential to remodel the economics of the company legal industry.

“Towards the top of last yr, we realized that generative AI was a possibility we couldn’t afford to miss,” says Varsellona. Her team was one among the primary on the earth to speculate heavily in the usage of tools resembling Microsoft’s Copilot and CoCounsel, an AI assistant specifically for legal practitioners. The tools are utilized in the delivery centers and across the legal department.

The team found that using AI tools in the corporate to automate tasks resembling contract drafting and review increased productivity. Internal analytics show that lawyers using this technology saved a mean of half-hour per day. It also freed up time for problem solving and reduced the use of out of doors consultants for these tasks.

As more legal teams implement AI tools, they could be more selective in outsourcing work to outside law firms, relatively than counting on them simply because there's an excessive amount of to do. “You turn to outside counsel when you will have a very difficult query and you wish their expertise to make the precise decision,” Varsellona explains.

Chipmaker ASML's legal and compliance team adopted the legal AI tool ContractMatrix earlier this yr and is now beginning to measure the associated advantages and time savings. It uses the tool to review third-party contracts and summarize regulations, in addition to for research tasks.

The team believes that AI will reduce the fee of external lawyers over time. “If you will have a fast query, you don't have to select up the phone and pay 500 euros right away, you may ask the generative AI,” says Sandrine Auffret, chief legal officer at ASML.

Normally, you see in law firms that the larger ones eat the smaller ones. Soon it can be the case that the fastest eat the slowest

She also expects changes in how law firms work with the corporate, including a discount of their fees if additionally they use generative AI themselves. “We recently renegotiated all of our terms and conditions with our preferred law firms and included a clause in our contract that they need to pass on the savings they make through generative AI,” says Auffret.

The legal team at Spanish energy company Repsol developed its own generative AI tool called Lexia and likewise used Harvey, one other AI tool. In lower than six months, the team of 160 lawyers tracked greater than 12,000 prompts or queries entered into these tools.

“We are only originally,” says chief legal officer Pablo Blanco Pérez. “This isn’t magic, but a possibility. It is like when the Internet got here along.” But as technology develops, competition will increase because speed will develop into a key factor, he adds. “Usually, you see in law firms that the larger ones eat the smaller ones. Soon the fastest will eat the slowest.”