{"id":32605,"date":"2025-06-26T04:47:23","date_gmt":"2025-06-26T04:47:23","guid":{"rendered":"https:\/\/financialrush.com\/?p=32605"},"modified":"2025-06-26T04:47:23","modified_gmt":"2025-06-26T04:47:23","slug":"build-or-buy-legal-teams-split-on-how-to-exploit-ai","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32605","title":{"rendered":"Build or buy? Legal teams split on how to exploit AI"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"article-body\">\n<p>After decades of being labelled risk-averse technology laggards, corporate legal departments are emerging as enthusiastic early adopters of artificial intelligence.<\/p>\n<p>Legal services \u2014 often information-dense, analytical and procedural \u2014 are fertile ground for the AI-powered automation of tasks including drafting contracts and providing initial legal opinions, experts say.<\/p>\n<p>For in-house legal teams considering AI legal tools, an early and important question is whether to build tools in-house or buy them from a software supplier. What are the pros and cons of each approach?<\/p>\n<h3 id=\"the-builders\" class=\"n-content-heading-3 o3-editorial-typography-subheading\">The builders<\/h3>\n<p>Given the complexity and cost of designing, testing and rolling out proprietary software, many companies building their own legal AI tools are in the technology sector.<\/p>\n<p>Hewlett Packard Enterprise (HPE), for instance, encourages its legal team to act as \u201ccitizen developers\u201d by building AI applications themselves rather than relying solely on third-party products.<\/p>\n<p>This initiative began in 2023 when HPE held an company-wide \u201chackathon\u201d for staff to propose ideas for technology projects. The legal department won with its \u201cproof of concept\u201d for using generative AI to help monitor regulatory compliance, which led to the team developing tools exploiting the technology for various tasks, including contract analysis.<\/p>\n<p>HPE trialled a third-party software supplier\u2019s AI software to use for its legal department but was \u201cunderwhelmed\u201d by its performance, says Jeff Fougere, HPE\u2019s associate general counsel specialising in cyber security and IT. <\/p>\n<p>There were also concerns about sharing sensitive information such as contracts and negotiating strategies with software suppliers. \u201cWhat we decided at the time was, OK\u2009.\u2009.\u2009.\u2009this technology is still pretty new. We\u2019re not super confident sharing all of that information\u2009.\u2009.\u2009. maybe we can build something ourselves,\u201d he adds. <\/p>\n<p>Now the tools are used by between 50 and 100 of HPE\u2019s legal team worldwide, he estimates.<\/p>\n<p>Building the tools internally has several benefits, Fougere says, including giving HPE more control over its data, therefore minimising the risk of leaking sensitive information.<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title o3-type-body-highlight\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image js-teaser\" data-id=\"285f1c78-6deb-47ac-b5d3-1b59b78e15c1\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/285f1c78-6deb-47ac-b5d3-1b59b78e15c1\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:3100\/1743\"><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>It has allowed the company to revise and fix problems \u2014 such as the AI producing incorrect data or \u201challucinations\u201d \u2014 faster than if it were using a third-party product, says Fougere. Building the AI software has proved \u201csignificantly\u201d cheaper than buying third-party tools, he says, which can cost \u201cthousands of dollars per user, per year\u201d.<\/p>\n<p>Some legal departments start by building relatively basic tools and wait for them to prove their value before proceeding to develop more complex ones.<\/p>\n<p>\u201cAI initially is just dealing with the low complexity, high volume stuff,\u201d says Andy Cooke, chief legal officer at TravelPerk, an online business travel management platform. <\/p>\n<p>The Barcelona-headquartered company, which in January raised $200mn to fund its expansion, began building AI tools to answer simple legal queries in 2023. Now they are used for tasks including monitoring whether new features in the company\u2019s platform could breach industry regulations and to extract legal information from company emails.<\/p>\n<p>To build the software, Cooke says the team starts by replicating features of the commercially available third-party tools they like, connecting them together \u201clike Lego blocks\u201d.<\/p>\n<p>The initial legal AI tools were relatively simple, the aim being to build \u201cuseful products that meet business needs\u201d. More complex tools will be built in future iterations of the technology, he adds.<\/p>\n<h3 id=\"the-buyers\" class=\"n-content-heading-3 o3-editorial-typography-subheading\">The buyers<\/h3>\n<p>For other corporate legal departments \u2014 especially ones with limited IT resources and smaller legal teams \u2014 building bespoke tools in a fast-changing technology, in which there is a growing third-party market, is hard to justify.<\/p>\n<p>Stationary supply chain Staples Canada uses software from legal AI start-up Luminance for managing and negotiating several hundreds of thousands of contracts, says Adrian Lang, chief legal and privacy officer. <\/p>\n<p>The software uses a traffic-light system to identify contract clauses in need of closer review \u2014 with red signalling high concern, yellow for matters to negotiate and green for clauses that are ready to approve. Automating part of the review process has saved between a couple of hours and a day or more per contract, she estimates.<\/p>\n<p>Even if it were possible to justify the resources required to build such a tool internally, keeping up with the standards of legal software suppliers could prove challenging, says Lang, who leads a legal team of six.<\/p>\n<p>\u201c[Third party] technology quickly overtakes [in-house IT] and unless you\u2019re actually committed to continually investing in that build, then it quickly becomes obsolete,\u201d says Lang. \u201cOr at least\u2009.\u2009.\u2009. certainly not nearly as cutting edge as other new products on the market.\u201d<\/p>\n<p>Spanish energy group Repsol initially built its own legal AI software for contract drafting and negotiation. The software was at first only designed for one type of contract \u2014 for exploration and production \u2014 in three countries. The in-house software worked \u201cquite well\u201d, according to Repsol general counsel Pablo Blanco P\u00e9rez. But the company switched to legal AI start-up Harvey after testing its software and finding that it was more versatile and cost-effective.<\/p>\n<p>Harvey was \u201cmuch better\u201d at handling different contract types, he says. To reach the level of versatility that Harvey had, Blanco knew they would have to invest a lot more money and resources. \u201cAnd we think that Harvey is going to invest a lot of money in improving the tool,\u201d he says.<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title o3-type-body-highlight\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image js-teaser\" data-id=\"cba88ff9-41ea-4137-a16e-8e46ec652d30\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/cba88ff9-41ea-4137-a16e-8e46ec652d30\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:2290\/1288\"><img decoding=\"async\" class=\"o-teaser__image\" src=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fwww.ft.com%2F__origami%2Fservice%2Fimage%2Fv2%2Fimages%2Fraw%2Fhttps%253A%252F%252Fd1e00ek4ebabms.cloudfront.net%252Fproduction%252Ff2ad53ea-8858-460e-a296-5e411673579b.jpg%3Fsource%3Dnext-article%26fit%3Dscale-down%26quality%3Dhighest%26width%3D700%26dpr%3D1?source=next&amp;fit=scale-down&amp;dpr=2&amp;width=240\" alt=\"A woman with curly hair wearing a blue top is focused on working at a computer with code displayed on screens in the background\"\/><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>Despite the growing interest in legal AI software, many in-house legal teams are short of staff and in some cases lack even basic legal IT such as conventional document management systems, says Weston Wicks, an expert in legal and compliance technology at research company Gartner. That can make it difficult to commit to building their own AI tools, he says.<\/p>\n<p>Legal departments with limited budgets can cut the cost of building their own tools by using \u201clow code\u201d and \u201cno code\u201d development platforms, he says. These allow users to build applications with little to no knowledge of coding by using intuitive drag-and-drop tools.\u00a0<\/p>\n<p>But in-house teams willing to spend significant sums on building advanced tools are still in the minority, says Wicks: \u201cI don\u2019t think [many] law departments are going to sink millions of dollars yet into their legal [AI] tech\u2009.\u2009.\u2009.\u2009building it from scratch.\u201d<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/b5ec2894-3628-4083-90ff-d671533c3da8\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"After decades of being labelled risk-averse technology laggards, corporate legal departments are emerging as enthusiastic early adopters of&hellip;\n","protected":false},"author":7,"featured_media":32606,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-32605","post","type-post","status-publish","format-standard","has-post-thumbnail","category-tech","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32605","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32605"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32605\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32606"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32605"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32605"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32605"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}