Unlike previous waves of legal technology which have delivered only incremental gains for legal teams, Generative AI is different.

In a Survey of chief legal officers carried out in August by our firm, Deloitte Legal, 95% reported their function as having engaged with Generative AI. Further, 93% agreed that it has the potential to bring value to their organisations in the next 12 months.¹

By leveraging large language models that are trained on text-heavy Datasets of unprecedented scale, Generative AI technologies are uniquely adapted to exactly the kind of nuanced, document-based legal work that historic legal technologies have struggled with.

Combined with Generative AI's versatility across a wide range of legal use cases, the technology represents a watershed moment in the legal industry.

Another Deloitte Legal Survey from June found that 79% of legal respondents believe Generative AI will have a moderate to significant long-term effect on how legal work is performed and a further 49% predicted that some legal tasks will become entirely obsolete, performed instead by Generative AI.² This is particularly notable given the technology's commercial availability for less than two years.

Further, some key practice areas and legal activities stand to be most transformed. Survey respondents suggest that contracts and commercial has the highest potential, where 73% predict a significant effect, followed by legal operations, corporate transactions and mergers and acquisitions and regulatory and compliance.

Naturally, the first use of Generative AI people tend to think of is as an efficiency tool. This is understandable when 82% of Survey chief learning officers expect workloads for their functions to increase in the next year. In some cases—and particularly in scaled legal work—efficiency gains can be highly material.

For example, in M&A, AI is being used to accelerate due diligence processes, assess risks more effectively and provide predictive insights that can guide decision making, potentially transforming the pace and success rate of M&An activities. Eighty-eight per cent agreed that Generative AI would deliver productivity and efficiency gains in legal work.

However, Generative AI will provide greater value than simply efficiency gains. Legal functions can expect to see more qualitative, experiential benefits—both for their lawyers and their customers. For example, some legal functions are leveraging Generative AI to streamline and improve their interactions with the business, in the process accelerating responses to basic queries and improving customer satisfaction rates. Sixty-two per cent noted this potential benefit.

As Generative AI is adopted across legal functions, they will need to adapt their size, shape and skill base to continue to operate most effectively, with man and machine working in harmony to use new capabilities to deliver better results more quickly.

Almost half of Survey respondents expected legal departments to remain a similar size, but with meaningful changes to composition, seniority or skill sets. However, only 27% of chief legal officers believe they currently have the right skills mix. This suggests a significant gap to close and a key worry for senior legal team Leadership.

The changing composition of the legal function is driven by a few trends. First, new skill sets will be required to first implement and then efficiently run Generative AI-enabled solutions across the legal department, leading to a proportionate increase in technology-focused staff.

Second, lawyers will need to evolve their skill sets to be able to effectively operate Generative AI solutions and compound the AI-augmented value they can deliver.

Third, Generative AI will likely deliver the greatest gain in scaled legal tasks where traditionally more junior legal support has been applied, meaning possible increases in average seniority within legal teams.

As Generative AI continues to evolve, its effect on corporate organisations—and the legal sector more narrowly—is only expected to increase. As organisations navigate this transition, legal functions have a unique dual role to play.

Not only can they play a role as a key guardian to Generative AI's safe introduction into an organisation, but they can also drive Generative AI adoption and transformation within the function itself.

On the former, legal functions will work closely with other functions like risk, IT, Data and human resources to establish governance and risk frameworks for Generative AI's safe and ethical use. On the latter, legal functions can take a number of actions in readiness.

By putting Generative AI into the hands of lawyers, this will demystify the technology, enabling lawyers to better understand how it can be best applied to meet the needs of their legal teams and the wider business.

Second, legal teams should consider putting in place light-touch functional governance around identifying, evaluating and prioritising legal use cases to drive transformation across the function.

Third, focus on Data hygiene—identifying the Data that is critical to solving business problems and then beginning to centralise and cleanse. This will enable them to unlock Generative AI's insight-rich potential.

Finally, legal functions should consider performing some longer-term planning to ensure that they have the right blend of internal skills and external partners to capitalise on Generative AI's potential and continue to operate efficiently against a quickly changing backdrop.

In conclusion, the integration of Generative AI into legal functions is not just inevitable; it is already underway. For legal functions, staying ahead means embracing these changes, adapting to new roles and continuously learning to leverage AI capabilities. The future promises a more strategic and impactful legal profession, powered by the transformative power of AI.