What's Happening?
Corporate legal departments are increasingly adopting artificial intelligence (AI) tools, with nearly half of surveyed departments having integrated generative AI into their operations, according to a report by the Thomson Reuters Institute. Despite this
rapid adoption, many departments are primarily measuring AI's return on investment (ROI) through cost savings, which may not fully capture the technology's value. The report highlights that only a quarter of legal departments are currently measuring AI ROI, and of those, 80% focus on internal cost savings. This narrow focus on efficiency could lead to budget cuts and a perception of the legal department as a cost center rather than a strategic asset. The report suggests that legal departments should adopt a broader measurement framework that includes effectiveness, risk management, and strategic contributions.
Why It's Important?
The emphasis on cost savings as the primary metric for AI's value in legal departments could undermine the broader benefits that AI can provide. By focusing solely on efficiency, legal departments risk being perceived as less valuable to the overall business, potentially leading to budget and headcount reductions. A more comprehensive measurement approach could help legal departments demonstrate their strategic value, such as enabling faster product launches, preventing compliance risks, and improving stakeholder satisfaction. This shift in perception could enhance the department's role within the organization, aligning it more closely with business priorities and supporting its long-term sustainability.
What's Next?
To address the measurement gap, the Thomson Reuters Institute has introduced new resources, including a Metrics Library and an AI Success Metrics guide, to help legal departments develop a more comprehensive measurement framework. These tools aim to assist general counsels in capturing the full value of AI, beyond just cost savings, by focusing on quality, capacity, strategic contribution, and risk. As legal departments continue to integrate AI into their operations, adopting these resources could help them better articulate their value to the C-Suite and align their metrics with business outcomes.
