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Corporate legal departments are not standing on the sidelines and waiting to see how the adoption of generative artificial intelligence (Gen AI) technology plays out. One in two (50%) corporate executives say their companies are using Gen AI now for legal matters, 32% say they intend to increase hiring more professionals to take advantage of Gen AI technology and 28% report having a dedicated budget for Gen AI tools.
These results from the LexisNexis 2024 Investing in Legal Innovation Survey: The Rise of Gen AI at Top Firms & Corporations — which surveyed executives in corporate legal departments at Fortune 1000 companies, as well as managing partners and other senior leaders at large law firms — suggest that this year may well be the inflection point when corporate legal departments deploy Gen AI solutions at scale.
In-house legal executives who are blazing this trail at leading tech companies advise their colleagues in the profession to make sure they lay the groundwork for this adoption by ensuring that ethical considerations are central to their use.
“The first thing you want to do is start by developing a set of tenets that really guide decision-making in every element of the application of AI, from ideation to deployment to use and to governance,” said Justin Grad, director and associate general counsel for Amazon Web Services, in comments during a recent Wall Street Journal event for corporate executives and law firm managing partners. “Those tenets can come across as cliché at first, but you really want to prioritize them and focus them on areas like ethics and safety, security and privacy, transparency and explainability. You want to be able to work back from an output to understand why the technology did what it did with sufficient detail.”
Grad noted that it’s not enough to simply create these guiding principles and then put them on the shelf, but rather they need to be embedded into the culture of the department and become the ethical framework for how Gen AI is used on a daily basis.
The panelists at the Wall Street Journal event also discussed the importance of corporate legal executives committing to an iterative process with Gen AI and accepting the imperfections of the technology when deployed at scale.
“AI is this never-ending journey of continuous improvement and change,” said Kevin Fumai, assistant general counsel for Oracle.
For example, the panelists emphasized the need to bring practicing lawyers into the development and customization of Gen AI tools for the corporate legal department. These legal subject matter experts are crucial to defining — at a granular level — the use cases that will have the most impact for the unique needs of the organization.
“Another thing that I think is critical … is managing hallucinations to an acceptable tolerance level,” Grad said. “Given the nature of these technologies, the way they draw inferences based on these massive data sets, based on the state of the technology today it’s going to get it wrong some of the time. You have to get comfortable with that if you’re going to deploy these technologies at scale and in good ways.”
As more Gen AI tools come to market, in-house counsel need to determine whether they are going to pursue a model that is for general purposes or one that has a more legal-specific design.
“Once you pick your model, you want to make sure you put the right guardrails in place,” said Grad.
He cited a few categories of guardrails that are important for corporate legal usage of Gen AI tools:
This article was based on one of the panel discussions at the Wall Street Journal event, “What Every Managing Partner & C-Suite Leader Needs to Know About Legal AI,” which took place on January 31st in New York City. Watch the entire session, Generative AI & The General Counsel Perspective, for more insights from industry leaders.