Law Firms and Legal Departments Should Align on AI Strategy

As artificial intelligence accelerates change across the legal industry, both law firms and the corporate legal departments they serve are undertaking major transformations largely in isolation from one another.

The disconnect is emerging at a time when the two sides’ strategic choices are becoming more consequential and more interdependent, as Elizabeth Duffy of the Thomson Reuters Institute writes in a recent article. Duffy calls for closer coordination between the two parties on AI strategy.

Corporate leadership expects AI to significantly influence near-term business strategy. Adoption in the legal sector has climbed sharply over the past year.

General counsel are pushing efficiency to the top of their priority lists as legal departments reconsider how to structure and staff work.

The piece argues that despite operating on parallel tracks toward AI-driven transformation, law firms and legal departments rarely coordinate their planning. But each side’s decisions directly shape the other’s options.

In-house departments are moving toward greater selectivity, automating routine work, blending internal and external expertise, and strategically expanding the footprint of certain functions in-house.

Law firms are sorting into distinct models, ranging from AI-native disruptors and boutique advisory practices built on senior judgment, to integrated firms combining brand strength with AI-enabled delivery.

Duffy contends that shared questions about work allocation, trust, talent development, and industry-wide standards require joint conversation rather than siloed decision-making. Choices made now will be difficult to reverse later.

Firms and their clients should treat AI-related strategic planning as a shared enterprise risk management concern rather than a unilateral decision, given how tightly the two sides’ outcomes are linked.

As legal departments grow more selective about routing work externally, they must evolve their conversations around outside counsel spend to match changing engagement models.

Board governance discussions at law firms should address how talent development and pricing commitments will compound over time as firms commit to specific AI-driven business models.