Law firms that choose a strategic business model for 2030 without knowing how their clients are evolving are acting blind. And vice versa. But that is exactly what is happening across the legal profession. Law firms and corporate legal departments are each embarking on significant transformations, including redesigning operating models, rethinking talent models, and technology decisions. What is surprising is how often they isolate themselves from each other and retreat into their own silos, at the very moment when their futures are most deeply interconnected.
The speed of change increases risks. 91% of business executives say the rise of AI will have a significant impact on their business strategy over the next five years. AI adoption has nearly doubled across the legal sector in the past 12 months, with half of legal professionals saying they expect agent AI to become central to their workflows within two years. Decisions made now about talent, technology, pricing, and relationships will lock in outcomes that will be difficult to reverse.
Inside the firm, general counsel are grappling with expanding mandates, increasing demands and complexity, and a pace of business that shows no signs of slowing. AI is becoming increasingly important as a strategic response. Forty-three percent of GCs surveyed listed efficiency as a top priority this year, up from 25 percent last year. The Thomson Reuters Institute’s GCO 2030 study maps out what a transformed legal department will look like, from technology-advanced capabilities that enhance day-to-day operations through automation, to seamlessly integrated teams, and legal functions that proactively strengthen peer functions such as human resources and finance. What they have in common is a shift towards strategic selectivity. That means doing more with more focus and, as a result, engaging with external advisors differently.
The emergence of AI is inevitable among law firm leaders. The extent to which companies have moved from consideration to implementation varies greatly, but for many this is seen as a lever for growth. Our recent research points to four models likely to emerge. These are AI-native disruptors built around agent-driven automation, elite advisory boutiques where senior judgment is the product, integrated powerhouses that combine leading brands with AI-enabled delivery at scale, and companies that rein in AI adoption. However, research suggests this is a delay rather than a strategy. What unites the more progressive scenario is that strategy requires real commitment. Companies cannot pursue all models at once, and choices about talent, pricing, and customer relationships become more complex over time.
The problem, of course, is that each side is designing a future that will inevitably shape the other, yet two-thirds of GCs say they don’t know how external law firms are approaching AI, and law firms report that they are truly uncertain about what their clients want. This communication gap is opening at exactly the moment when adjustments are needed. As corporate legal departments shift models, the demand profile facing law firms also changes. As companies reposition themselves, what clients can trust externally changes, and therefore what they need to build internally. The choices each side makes narrows or expands the options available to the other side.
5 important questions
There are some questions that legal professionals cannot answer from within a single organization. These questions require real conversations between companies and their clients.
The first is value and pricing. How will value be defined and paid in an AI-enabled legal market? If AI dramatically accelerates delivery, will efficiency be the new breaking point or the new breaking point? And which side will absorb the productivity dividends?
The second is where the work resides. As both sides expand their AI capabilities, it will take honesty on both sides to determine what truly belongs in each place based on risk, complexity, and strategic importance.
The third is trust and transparency. How can companies and customers create a shared framework for disclosure, governance, and accountability around AI in a way that strengthens rather than undermines relationships?
The fourth is the human resources pipeline. As routine work, which has historically served as a model for apprenticeships, disappears, both sides will face a shared responsibility for how to develop legal talent.
Fifth, what are the challenges across the ecosystem? A framework of data standards, interoperability, and shared risk requires concerted action across businesses, legal departments, technology providers, and academia.
None of these can be solved alone. Also, avoiding them will not maintain the status quo, it will only perpetuate bad defaults.
