In-house legal teams start to see AI gains

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

On a recent visit to a new team in Barcelona, Maria Varsellona, chief legal officer at consumer goods group Unilever, says she found an energised group of lawyers and data experts who had moved from all over Europe to join the company. The team is one of the company’s three so-called powerhouses — legal delivery centres collectively employing 85 staff, set up in March last year, to handle large volumes of legal contracts. The other two are in Mexico City and Bengaluru.

Although Unilever announced plans in July to cut around a third of its office roles in Europe — as part of a strategy to boost growth and productivity — Varsellona says that, for the legal team at least, the impact of these cuts will be “minimal”. That is because changes made since she took her role in 2022, including setting up the centres, have improved efficiency.

Other companies, including GE and BT, set up similar legal process centres in the 2000s — many in India or eastern Europe — to handle routine legal work at a lower cost. However, the difference with Unilever’s centres is that they are using the latest technologies, including generative artificial intelligence, which means they can handle increasingly complex legal documents and tasks.

Many of the top 10 in-house legal teams featured in this 2024 FT Innovative Lawyers Europe report have also moved beyond experimenting with generative AI to using it in everyday work. And, for some, it is delivering benefits sooner than expected.

At Unilever, this year’s most innovative in-house legal team in Europe, the technology is already allowing the team to handle more work in house, faster and more cheaply. As AI enables large companies to do more legal work themselves, instead of sending it to external law firms, it has the potential to change the economics of the corporate legal industry. 

“Towards the end of last year, we understood that generative AI offered an opportunity that we couldn’t miss,” says Varsellona. Her team was one of the first, globally, to invest heavily in deploying tools such as Microsoft’s Copilot and CoCounsel, a legal-specific AI assistant. The tools are used in the delivery centres and across the wider legal department.

The team found that using AI tools in house to automate tasks, such as contract drafting and review, boosted productivity. Internal analyses show that lawyers using the technology are saving on average 30 minutes a day. It has also freed up time for problem-solving and reduced the use of external counsel to handle these tasks.

As more legal teams implement AI tools, they can become more selective about the work they send to external law firms, rather than relying on them simply because there is too much to handle. “You are going to go to the outside counsel when you really have a difficult question and you need the expertise to make the right judgment call,” explains Varsellona.

The legal and compliance team at chipmaking equipment provider ASML rolled out the legal AI tool ContractMatrix earlier this year and is starting to measure the benefits and the time savings it delivers. It uses the tool to review third-party contracts and summarise regulation, as well as for research tasks.

The team expects AI to reduce the cost of using outside lawyers over time. “When you have quick questions, instead of picking up your phone to a law firm and immediately paying €500, you will have the ability to ask the generative AI,” says Sandrine Auffret, ASML’s chief legal counsel.

She also expects to see changes in how law firms work with the company, including a reduction in their fees, if they are also using generative AI themselves. “We recently renegotiated all our terms and conditions with our preferred law firms, and included a clause in our contract that they have to pass on savings they generate from generative AI,” Auffret says.

The legal team at Spanish energy company Repsol developed its own generative AI tool, Lexia, and has also been using Harvey, another AI tool. It has tracked more than 12,000 prompts or queries made in these tools in less than six months by its team of 160 lawyers.

“We are just at the beginning,” says general counsel Pablo Blanco Pérez. “It’s not magic, it’s an opportunity. It’s like when the internet came in.” But, as the technology develops, competition will increase as speed becomes the key issue, he adds. “Usually, among law firms, you see the bigger ones eat the smaller ones. Soon it will be that the fastest eat the slowest.”