Recent research suggests certain industries more bought in on AI and legal tech
As the legal technology landscape rapidly evolves alongside ongoing exuberance about all things AI, it’s appropriate to ask how businesses across industries are reassessing their investment strategies in legal data analytics and artificial intelligence. In our recent research on industry perspectives on litigation and arbitration, Burford surveyed 400 senior lawyers and finance professionals to gauge their views on AI and legal technology’s impact on litigation and arbitration. Survey respondents came from the construction & real estate, consumer goods & services, energy, food, healthcare, manufacturing, mining, pharma & life sciences, retail and transportation & supply chain sectors.
Legal spending trends
While enthusiasm for AI’s potential is clear across sectors, the data reveals a disconnect between great expectations and the modest AI investments most organizations are making or planning to make.
Despite its high perceived usefulness, the vast majority (89%) of senior in-house lawyers and finance leaders say their business will be investing less than 5% of their legal budget into this category within the next year.
Those in the construction & real estate, food and transportation & supply chain sectors intend to spend the least on AI, with more than nine in ten saying their businesses are likely to devote less than 5% of their legal budgets to it.
Of those in industries that are most likely to spend more than 5% on their AI and data analytics budget, such as healthcare, pharma & life sciences and retail, only about one in five respondents say their businesses plan to allocate this amount.
Anticipated impact of legal technology
There is broad agreement among senior in-house lawyers and finance leaders across sectors regarding the expected impact of advancements in legal tech over the next 15 years:
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More than half (55%) agree that technology could lower the cost of litigation and arbitration.
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Almost three in four respondents (72%) say technology will help automate routine tasks.
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Just over two in three (68%) say technology will improve efficiency of document review processes.
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Respondents in the consumer goods & services industry have the highest expectations for legal tech and AI, while those in the mining industry have the lowest.
However, respondents are less confident that AI can accelerate dispute resolutions, help to assess case outcomes or inform litigation strategies based on predictive analysis. This cautious outlook, as well as their low intended spend on legal technology, highlights the current limitations of AI in the legal field.
In many ways, this caution isn’t surprising. AI is only as good as the data to which it has access. In the context of commercial disputes, data is largely incomplete or not publicly available due to the fact that the majority of commercial disputes settle privately, making details, outcomes and values inaccessible. AI can only analyze data and identify patterns based on data it can access.
As the world’s largest provider of legal finance, Burford has reviewed hundreds of billions of dollars' worth of commercial disputes over the past 15 years, and our unique data set informs a proprietary model that is applied to potential and ongoing matters in the portfolio. Burford combines our substantial and unique data set with employee expertise to deliver insights that are both data-driven and grounded in human judgment. AI may evolve to play a larger role in the legal industry, but human expertise remains the most important part of Burford’s legal finance capabilities.
Cautious optimism about legal tech and AI’s potential
While the potential of AI to revolutionize the legal landscape is widely recognized across industries, actual investment in these technologies remains modest. Despite the enthusiasm for AI's ability to automate routine tasks, improve efficiency and reduce litigation costs, there is a clear gap between the anticipated benefits and the current financial commitment to these tools. Industries such as healthcare, pharma & life sciences and retail are leading the way in AI adoption, but even in these sectors, the investment levels are still relatively low.
As AI continues to develop it may eventually play a more significant role in legal technology, but for now, human expertise remains indispensable in navigating the complexities of commercial disputes and legal finance.
