A new Thomson Reuters Report highlights a phenomenon unique to legal and big law: clients aren’t talking to their lawyers about things that could disrupt the status quo—especially around AI and billing.

The report is full of interesting findings, but here’s one with broad and troubling implications: 57% of clients want their firms to use GenAI, but 71% don’t even know if their firms are actually doing so. 89% of all respondents see a real use case for GenAI in their work. Nevertheless, the report notes that just 8% of in-house counsel are inserting GenAI provisions in RFPs or outside counsel guidelines.

The Disconnect Between Clients and Law Firms

When it comes to artificial intelligence, clients just don’t know what their lawyers are doing. They aren’t asking if their lawyers are using AI tools for greater efficiencies. And if they aren’t asking, they sure as hell either aren’t demanding use for improved service and lower costs.

We have seen this before. As I have discussed, clients say they want innovation from their law firms to be innovative but don’t demand it. I’ve also talked about a similar thing with hourly rates. Clients bitch and moan about rate increases but rarely push back. (A recent Report showed an overall increase of 5.1% in 2024 and 5.4 increase in 2023)

The Billable Hour Bottleneck

Let’s face facts: when your business model is built solely on the amount of time spent on a task, there’s not a lot of incentive to use GenAI—unless it’s for non-billable work. So unless and until clients demand it, law firms ain’t going to do it.

Yes, there are some justifications for the billable hour model. It encourages thoroughness. It encourages accuracy: the assumption is that more time spent presumably means a more accurate work product.

But AI and GenAI tools can supply a lot of work without jeopardizing thoroughness. And legal workflows are full of tasks that can be done more efficiently with AI, without compromising thoroughness or professionalism.

So why aren’t clients demanding the use of tools that could lower costs and improve output?

So why aren’t clients demanding the use of tools that could lower costs and improve output? Why aren’t they asking hard questions of their law firms? Why are they signing off on rate increases without requiring some accountability on efficiency?

Why In-House Lawyers Aren’t Pushing Harder

A few reasons.

Start with the people managing legal work in large corporations: in-house counsel. Most of them went to the same law schools and worked at the same firms as their outside counsel. They’ve internalized the billable hour mindset. Years ago, I convinced one in-house counsel to let me do work on a flat fee basis. It worked great. But every time I pitched it afterward, the answer was the same: “That’s an interesting idea, but we can’t do that.” Why? Inertia. Habit. A mindset problem.

And by the way, when legal services for my clients were managed by businesspeople instead of lawyers? Totally different experience. The focus shifted to outcomes, not time. They looked at impact instead of just thoroughness.

We see this with legal ops as well. I have wondered how legal work would be managed if a legal operations professional was put it charge of a corporate legal department.

Another reason? Many lawyers still aren’t convinced GenAI applies to their work. Around 40% of law firm lawyers said it shouldn’t be used at all; over 40% of in-house counsel said the same.

Lawyers are surprisingly bad at hard conversations

 Yet another reason: lawyers are surprisingly bad at hard conversations. The report notes how often clients simply stop sending work to outside counsel rather than having a difficult conversation about what’s not working. That’s a lot of time and investment to throw away instead of trying to fix the relationship. That’s classic passive-aggressive behavior that too many lawyers display.

Also, many lawyers think their work is too “special” for AI. GenAI might be fine for other kinds of legal tasks, but not theirs. They’re special snowflakes. In-house counsel aren’t any different. They’re uneasy with the idea of outside lawyers using tools that reduce the amount of lawyer time and energy required because the work they are doing is, well, special.

Add to this the risk-adverse nature of all lawyers-outside counsel or inhouse-combined with the ability of outside lawyers to manipulate this nature. So you see outside lawyers saying “Well could use AI but if we did, we would have to check everything and it would end up costing more”. The suggestion being that any error, no matter how minor or unlikely, is unacceptable. And some in-house counsel buy that argument, even when it’s kind of ridiculous.

The Report makes the point that ROI of GenAI tools has not yet been firmly established. That’s certainly true. But it’s also hard to prove ROI, if you accept the premise and argument that everything has to be checked and rechecked. As the Report also notes, there are always some who insist on 100% accuracy but AI tools can not of course be achieved. Of course, this argument ignores the acceptable range of human error we all deal with.

It’s also clear that many in-house counsel don’t fully understand what GenAI can do. That’s not surprising when over half of respondents said their company doesn’t offer GenAI training. Of those who do, 34% offer it less than annually, and 19% only once a year. That’s not going to cut it in an industry evolving as fast as this one.

In-house counsel often just don’t want to interfere with outside counsel’s judgment.

Finally, in-house counsel often just don’t want to interfere with outside counsel’s judgment. After all, outside counsel are hired to do something that in-house counsel can’t do or don’t have the capacity to. Outside counsel are hired for this expertise. So questioning about how they exercise their expertise seems counter to the whole reason for hinging them in the first place and even insulting. When combined with all the other reasons, But that hesitation, combined with everything else, means in-house counsel are keeping their noses out of places where they should actually be sticking them.

Until Clients Demand Better, Nothing Will Change

End of the day, until clients ask the tough questions and demand the use of GenAI, change isn’t coming. And until someone starts managing how the work gets done—not just who does it—the status quo will remain firmly in place.

The Survey was done online and included 1,702 respondents from both law firms and corporate legal departments.