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As 2025 approaches, in-house legal departments are bracing for a wave of challenges that will test their adaptability and resilience. From technological advancements to evolving client expectations, the landscape is rapidly changing. This blog explores the key challenges that in-house legal teams will face, offering insights and strategies to help them navigate this dynamic environment. With the integration of legal AI and other innovations, these challenges can be transformed into opportunities for growth and efficiency.

While legal AI offers significant benefits, it also presents challenges in terms of implementation and risk management. In-house legal teams must navigate the complexities of integrating AI into their workflows without compromising on quality or security.

In 2025, the emphasis will switch from incorporating AI into legal processes to meet the ever-shifting and ever-accelerating demands of internal stakeholders. A staggering 81% of in-house lawyers cited delivering work faster as a key benefit of AI, and 61% said providing an improved service to internal stakeholders, the latest ³ÉÈËÓ°Òô in-house AI survey found.

Bhavisa Patel from Eversheds Sutherland notes, "Activities such as legal research, document review, and contract analysis will become simpler and quicker, allowing lawyers to concentrate on complex and strategic work."

However, ensuring that AI tools are reliable and secure remains a top priority. Despite increasing adoption rates, four-fifths (80%) of UK in-house legal professionals are concerned about inaccurate or fabricated information from public-access generative AI platforms. The challenge lies in leveraging AI for lawyers while maintaining rigorous due diligence and safeguarding intellectual property law.

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In 2025, in-house counsel will increasingly demand agility from their external legal partners, pushing for greater flexibility in fees, work approaches, and collaborative innovation. This shift is driven by the need for more dynamic and responsive legal services that align with the fast-paced business environment. A significant change will be the integration of AI into legal processes, with 71% of in-house teams expecting their external counsel to utilise generative AI. This expectation is not just about adopting new technology but also about transforming pricing structures to reflect AI-driven efficiencies.

Bob Mignanelli, Chief Operating Officer for Legal at Haleon, emphasises the importance of alternative fee arrangements (AFAs) for providing price certainty, stating, "Our starting point is always an alternative fee arrangement, because it gives us price certainty." This sentiment reflects a broader trend where in-house teams are moving away from the traditional billable hour model, seeking more predictable and value-driven pricing.

Moreover, the use of AI in legal services is expected to enhance efficiency and reduce costs, prompting external counsel to rethink their pricing models. As noted in the document, 39% of private practice lawyers anticipate adjusting their billing practices due to AI, highlighting the growing impact of technology on legal pricing.

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Data security will continue to be a pressing challenge for legal departments in 2025. Allison Wooddisse, who heads up ³ÉÈËÓ°Òô' Risk and Compliance legal guidance team, says "Phishing remains the leading cause of cybersecurity breaches."

Legal teams must implement robust confidentiality agreements and non-disclosure contracts to protect sensitive data and maintain client trust. The challenge is to stay ahead of cyber threats while ensuring compliance with regulatory law and maintaining the integrity of confidentiality and non-disclosure agreements.

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In-house legal teams are increasingly seen as strategic partners within organisations, but fostering effective collaboration remains a challenge. Efftichia Dower, former Legal Counsel at Onfido and current Vice President Legal at M42 Health, says "As in-house lawyers we are true business partners and therefore can be excellent 'eyes' on myriad projects across the business."

Building a collaborative culture requires overcoming communication barriers and aligning legal strategies with business objectives. Utilising legal tech, such as case management software, can facilitate better communication and collaboration, but the challenge lies in integrating these tools seamlessly into existing workflows.

Firms often pay a premium for top talent and offer a wider range of training and qualification schemes. Yet transitioning client-side is often said to come with greater creative freedom, a broader job function, strategic-involvement in key decision-making, and a better work-life balance.