The great AI disconnect: Firms and legal departments are not communicating about AI usage

2026-03-18 · Source: Thomson Reuters Institute · Field: Legal & Regulatory — Legal Technology (LegalTech), Corporate Law & Business Legal Services · Depth: Intermediate, medium

Summary

A Thomson Reuters Institute (TRI) report, "2026 AI in Professional Services Report," reveals a significant communication and measurement gap between law firms and corporate legal departments regarding AI usage. Over half of law firms are using or considering GenAI, and more than half of corporate legal professionals believe their outside counsel should use AI. However, 68% of corporate legal professionals are unaware if their firms use AI, and 85% of law firms and 75% of corporate legal departments are not collecting ROI data on AI usage. This disconnect raises concerns about billing models, potential erosion of trust, and the ability to maximize AI's benefits, with some corporate clients fearing firms may bill for hypothetical time saved by AI.

Key takeaway

For legal professionals managing outside counsel, you must proactively initiate discussions about AI usage, billing implications, and data security protocols. Do not wait for firms to lead; establish clear guidelines and expectations for AI integration into client matters. Implement an external-facing metrics program to measure efficiency gains and ensure fair pricing, safeguarding trust and maximizing the benefits of AI for your organization.

Key insights

A significant disconnect exists between law firms and corporate legal departments regarding AI usage transparency and ROI measurement.

Principles

• Transparency builds trust in professional relationships.
• Value-based billing may replace hourly billing with AI use.

Method

Law firms should communicate AI usage, develop an AI billing strategy, and articulate value. Corporate legal departments should lead conversations, set expectations, and build external-facing metrics programs.

In practice

• Discuss AI usage and client acceptance with law firms.
• Establish baselines for legal matters to measure AI ROI.
• Mandate human-in-the-loop oversight for AI applications.

Topics

• Legal AI Adoption
• AI Billing Models
• AI ROI Measurement
• Generative AI
• Agentic AI

Best for: Legal Professional, Executive, AI Product Manager

Related on AIssential

• Inside the Shift: The AI Adoption Boardgame & why law firm leaders can’t afford to play it safe — Strategic AI adoption, not mere experimentation, is crucial for law firms to remain competitive and meet client expectations.
• ‘We Get Nothing From Law Firm AI Use’ – Client — In-house legal teams are leveraging AI at scale, creating a disconnect with law firms not passing on AI-driven cost savings.
• Professionals feel disrespected when clients fact-check them with AI, study says — Professionals feel disrespected when clients use AI to fact-check their expertise, diminishing engagement and trust.
• The 4 Plates: Are you measuring the real value of AI in your legal department? — Measuring AI value solely by efficiency risks undervaluing legal departments and inviting budget cuts.
• Wrap: Legal Spend Shock, Billions Battle, TR Deal, Legal Innovators California + More — Generative AI is rapidly transforming the legal sector, driving both innovation and client expectations for efficiency and cost savings.
• Legalweek 2026: When a profession built on prudence begins to wonder whether caution itself could become negligent, you’re no longer talking about tools. — Legal AI adoption is hindered by cultural resistance, fear, and misaligned incentives, not technical limitations.

Open in AIssential →

Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.