Navigating the New Challenges of AI for In-House Counsel

The rise of generative AI over the past two years has introduced unique challenges for in-house legal teams, already grappling with security and data management issues. While generative AI shows potential to assist in various tasks, such as streamlining document processing, its capabilities do not extend to completely replacing lawyers. This journey into AI is more about enhancing mundane processes than achieving groundbreaking changes.

As outlined in the General Counsel Report 2025 from FTI Consulting and Relativity, many in-house counselors feel ill-equipped to handle the risks that generative AI presents. The rapid pace at which AI technology evolves catches legal teams off guard, complicating their efforts to promote secure and compliant AI usage.

The report highlights a striking statistic: 85% of general counsel described their preparedness for dealing with AI as minimal or non-existent, although this marks slight progress from 93% the previous year. Worryingly, generative AI remains the only area where no participant felt adequately prepared.

One significant factor hindering readiness is the uncertainty surrounding the particular risks of AI. Among these risks, job loss at entry-level positions stands out, underscoring familiar anxieties in corporate environments.

Furthermore, the categories of security and data privacy can overlap significantly concerning AI usage. Alarmingly, about 65% of general counsels believe they are unprepared to secure emerging data sources, such as collaboration tools and cloud storage. These shortcomings could be exacerbated by recent data breaches and privacy incidents, with 21% and 18% of respondents respectively reporting increases in these areas.

A large part of the threat stems from the ways employees may inadvertently compromise confidential information, especially when sensitive client data is funneled into AI models lacking robust security measures. One participant voiced their concern quite candidly, stating their anxiety about being deemed non-compliant during audits due to employees mishandling data.

In summary, as organizations explore the integration of AI in their legal departments, the need for well-established guidelines and protections is more critical than ever. In-house counsel must strive to keep ahead of these challenges to ensure compliance and data privacy.

AI, Counsel, Security