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Legal departments have spent years discussing the potential of artificial intelligence. Now they are beginning to fund it at scale.
Gartner predicts that legal technology budgets will double globally by 2028 as corporate legal teams expand their use of specialized AI tools across a growing number of workflows. The forecast marks a turning point for a function that has traditionally lagged behind finance, operations and marketing in technology investment.
The shift reflects more than enthusiasm for generative AI. Legal leaders are under increasing pressure to deliver faster outcomes, manage growing regulatory complexity and control external legal spending. AI is emerging as one of the few technologies capable of addressing all three challenges simultaneously.
As a result, legal departments are moving beyond pilot projects and isolated experiments. They are beginning to treat AI as a long-term operational capability that can reshape how legal work is performed, managed and measured.
Why legal technology budgets are rising faster than expected
The latest Gartner forecast suggests that legal teams are entering a new investment cycle. Rather than purchasing standalone software for individual tasks, organizations are increasingly adopting comprehensive legal AI platforms that support multiple workflows across the department.
The business case is becoming easier to justify. Specialized legal AI tools can assist with contract review, legal research, compliance monitoring, document drafting and knowledge management. These activities consume significant amounts of lawyer time and often involve repetitive processes that can be accelerated through automation.
For legal departments facing rising workloads and constrained headcounts, productivity gains are becoming a primary driver of investment. AI allows legal professionals to process larger volumes of work without proportionally increasing staffing costs.
The trend also reflects broader enterprise adoption of artificial intelligence. As senior executives approve larger AI budgets across their organizations, legal departments are securing funding for projects that may previously have struggled to compete for investment.
Legal technology vendors are benefiting from this momentum. Companies such as Harvey, Legora, GC AI and Thomson Reuters CoCounsel have positioned themselves as platforms designed specifically for legal workflows, offering capabilities that general-purpose AI systems often cannot match.
The result is a rapidly expanding market in which legal technology is no longer viewed as an administrative support function but as a strategic investment capable of improving business performance.
The new operating model for in-house legal teams is taking shape
One of the most significant implications of legal AI adoption is the changing role of in-house counsel.
Corporate legal departments have historically relied on outside law firms to manage peaks in workload or provide specialist expertise. AI is beginning to alter that equation by allowing internal teams to complete a larger share of legal work themselves.
Contract review offers a clear example. Tasks that once required hours of manual analysis can now be completed much faster with AI-assisted tools that identify clauses, flag risks and suggest revisions. Similar efficiencies are emerging in legal research, policy reviews and compliance assessments.
This does not mean lawyers are being replaced. Instead, the technology is changing how legal professionals allocate their time. Routine work is increasingly automated, allowing lawyers to focus on negotiation, risk assessment, strategy and business advisory responsibilities.
For many organizations, this transition represents a broader shift in expectations. Legal departments are being asked to contribute more directly to business outcomes rather than operating solely as risk management functions.
As AI reduces administrative burdens, legal teams gain greater capacity to participate in commercial decision-making and organizational planning.
Law firms are investing heavily to avoid being left behind
The transformation is not limited to corporate legal departments.
Major law firms are investing substantial sums in AI development as they seek to protect margins and strengthen competitive positioning. Recent announcements from leading firms demonstrate growing confidence that AI will become a defining feature of legal service delivery during the next decade.
These investments are focused on more than automation. Firms are developing proprietary systems capable of leveraging institutional knowledge, internal precedents and practice-specific expertise. The goal is to create technology assets that competitors cannot easily replicate.
This approach reflects a broader recognition that AI may eventually influence how clients evaluate legal providers. Efficiency, speed and technology capabilities are becoming increasingly important components of legal procurement decisions.
The legal sector has traditionally adopted new technologies cautiously. Concerns around confidentiality, accuracy and professional responsibility have often slowed implementation. Those concerns remain valid, particularly when dealing with generative AI systems that can occasionally produce inaccurate outputs.
Human oversight continues to be essential. Legal professionals remain responsible for validating advice, ensuring compliance and exercising professional judgment. The most successful implementations are likely to combine AI-driven efficiency with rigorous review processes.
The next phase of adoption will therefore be defined not by experimentation but by governance, integration and measurable business value. Legal departments that can demonstrate clear returns on technology investments are likely to secure additional funding, while those that cannot may struggle to justify spending.
What appears increasingly certain is that legal AI has moved beyond the stage of curiosity. The conversation is no longer about whether artificial intelligence will become part of legal operations. It is about how quickly organizations can integrate it into the core of their legal function and what advantages they can gain by doing so.
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