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When AT&T's corporate legal team decided last summer that to stay competitive on AI they needed to create their own department dedicated to working with artificial intelligence tools, they used their many partnerships with outside law firms as a model.
The company had been combining talent from competing outside firms for years, choosing the best skill sets and putting them together on AT&T projects, forming new types of virtual law firms that were expected to work seamlessly with the company's legal department, said AT&T's general counsel, David McAtee:
"Now we've added another player in that equation. It is an in-house law firm that's virtual first, AI first, and 100% focused on practicing law in a different way than any of us grew up practicing".
That player is LegalEdge, which the company describes as "a law firm inside our corporate legal department", one primarily dedicated to using and testing AI legal tools. Its focus is largely litigation and some regulatory work.
Since it launched in mid-January, it has taken on nearly all the company's legal research and e-discovery. On some legal matters, it already performs 20% to 25% of the work that had been almost entirely outsourced to law firms and legal tech providers, and its use cases keep growing.
Note to readers: yesterday, at the International Trademark Association annual meeting in London, Susan McGahan, assistant vice president and senior legal counsel for AT&T Corp., said AT&T has found "thousands of use cases for artificial intelligence models in our intellectual property work, both in-house and for outside counsel". She said the company is also ensuring that outside counsel working with the company will use similar AI tools: "If you are not on the AI train, you have got to get on it, or lose us a client. You can't be using your paralegals as much as you did before".
She also emphasized the importance of logging and keeping evidence of human oversight during all AI processes, and explained how AT&T constructs human oversight guard rails.
So far, 30 people work at LegalEdge. Unlike the rest of AT&T's legal department, they work remotely and clock billable hours — not for payment, but to allow the company to measure the effectiveness of the AI. Some of its lawyers, while not straight out of law school, have less traditional experience. A job ad for a LegalEdge lead attorney seeks a candidate with "up to five years of experience," and applicants are asked to perform exercises demonstrating their AI proficiency.
Note to readers: our legal industry job posting service, which is a separate company, sends out legal position job ads for AT&T and many other Fortune 100 companies. You can read our AT&T LegalEdge ad by clicking here.
AT&T aims to use the team as an incubator for AI adoption across the department, with LegalEdge poised to address challenges from slower adoption of the tools to difficulty measuring the return on investment in them.
McAtee calls it a "clean sheet of paper approach" to AI adoption, saying the legal department felt that "to put enough wood behind the arrow, we had to start from scratch and build a separate strike force."
Being 100% remote allows LegalEdge to pull talent from around the world, he said. The group is now creating its own proprietary, agentic workflows customized to the company, tools that never would have been developed if "you asked everyone just to take off-the-shelf tools and start using them," McAtee said.
Once LegalEdge has developed a tool, the idea is that it will roll it out to the rest of the legal department, he said.
Bill Ryan, AT&T senior vice president and chief compliance officer, said LegalEdge skirts the problem of trying to drive AI adoption at scale across many functions simultaneously. He said it would be difficult to tell employees, "OK, we're going to buy a tool; go change the way you've been working for a very long time."
LegalEdge's siloed approach entails "extracting specific tasks, giving clear ownership," and "saying you must use tools to deliver that work product" Ryan said.
Interesting to note: the team's baseline legal tech includes Everchron, Harvey, Legalmation, Lexis+ AI, and Relatively aiR.
You all know Harvey, Lexis+ AI, and Relatively aiR. But the other two often fly under the radar but are quite the stars:
Everchron is a collaborative, cloud-based litigation management software platform designed for lawyers to manage cases, build chronologies, and analyze evidence. It automatically generates witness files, manages transcripts, and connects documents, aimed at streamlining prep for trials and depositions.
LegalMation is an AI-powered company founded by experienced litigators to automate high-volume litigation tasks. It helps law firms and corporate legal departments (such as the city of Los Angeles, Walmart, law firms like Ogletree Deakins, and Sheppard Mullin, and Fisher Phillips; the list goes on and on) quickly produce, review, and edit initial responsive documents like answers to lawsuits, discovery responses, and document requests.
Ryan said the company is betting on the siloed approach to create data that will help AT&T measure how company time is being spent using the tools, allowing it to determine whether they're working and how:
"That's the way the broader enterprise is looking at AI, that if we're making that investment in the strategy, we're obviously ensuring that it's bringing value back. We're going to have a lot more data and information to evaluate ROI than we would have had historically".
Here is the key thing: AI's ability to perform some of the legal world's growing number of repeatable and data-heavy tasks has changed relationships between companies and their law firms regarding the ability to bring previously outsourced tasks in-house. And while AT&T views LegalEdge as playing a big role in the changing dynamic between the company and its outside firms, neither Ryan nor McAtee sees it as completely displacing the company's outside partnerships. Said Ryan:
"It doesn't mean they're not going to have lots of work to do. But if we're going to do more and more of the research, if we're doing more and more of the initial drafts, if we're doing more and more of the document review, the way they provide value and the way they provide services is going to, just by nature, evolve".
Mary O'Carroll, the former director of legal operations for Google and new CEO of the consulting firm LegalEng, described LegalEdge as a captive legal services provider within AT&T and said she commended the company:
They are trying something very, very innovative and different. I think it's really smart because every legal department is under so much pressure to rethink, you know, what are you doing inside, how are you leveraging technology, what are you sending to outside counsel — because we expect that mix to change. Other legal departments will follow the AT&T example. And they can force outside counsel to adapt, adopt".
And speaking of which, Whitney Stefko, Director of Legal Operations at Ford Motor Co., said AT&T's decision to separately brand LegalEdge seemed particularly significant:
"I think it sends a massive message to the market about this sort of insourcing. Not only in terms of delivery, disrupting what went to outside counsel, but also technology. We're looking it, as are many of my legal operations colleagues in other industries".
I'll sum up with something told to me by a general counsel at the Association of Corporate Counsel conference on legal operations noted at the top of this post:
"Artificial Intelligence is profoundly transforming the legal industry, acting as a force multiplier that is automating routine tasks and forcing a reevaluation of traditional business models.
No, it is not yet replacing the need for human lawyers. But it is rapidly changing the nature of legal work.
Just look at the recent in-house corporate counsel studies suggesting that AI-driven efficiency could cut costs by 30–40% in selected functions normally sent to outside counsel. Big changes are coming".
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