Gartner predicts that legal, risk, and compliance functions will double their technology expenditures by 2027. The driving force behind this increase is the growing interest in generative AI and machine learning technologies, which promise to automate numerous high-volume, low-value tasks. However, Gartner analysts warn that many assurance leaders may set their expectations too high too soon.
“Some assurance leaders are prematurely expecting AI technology to enhance productivity greatly,” cautioned Weston Wicks, senior director analyst in the Gartner Legal & Compliance Practice. He advises leaders to pilot and experiment with AI while maintaining a healthy skepticism regarding its immediate benefits. Gartner underscores this by placing AI technologies at the "Peak of Inflated Expectations" in their 2024 Hype Cycle for Legal, Risk, Compliance, and Audit technologies.
Figure 1: Hype Cycle for Legal, Risk, Compliance and Audit Technologies, 2024
AI-enabled applications largely influence the rapid evolution of the legal technology landscape. Wicks notes that assurance leaders are convinced that adopting generative AI tools is essential for managing the increasing complexity of global regulations. As a result, innovations such as compliance monitoring solutions have made significant strides in the Hype Cycle, reflecting their growing importance.
Gartner expects that generative AI will also impact adjacent innovations in analytics, pushing areas like data governance and legal analytics closer to the "Trough of Disillusionment." Wicks emphasises the importance of focusing on more mature technologies, such as corporate legal operations and contract lifecycle management, nearer to the "Plateau of Productivity." These tools are likely to deliver more immediate productivity gains than emerging innovations.
Despite the optimistic outlook for generative AI, Gartner's experts urge caution for early adopters. “Early lessons learned by assurance leaders include understanding the importance of information management and data governance,” Wicks stated. He highlights the necessity of involving humans in decision-making processes to mitigate risks and biases associated with AI technologies.
While the potential for AI in legal and compliance functions is substantial, assurance leaders must navigate the hype with care, balancing innovation with practical implementation strategies. Gartner predicts that the benefits from these advancements will become increasingly evident over the next five years, provided that organizations approach them thoughtfully.