In-house legal leaders say AI is now standard in legal departments but guardrails over outside counsel data use lag behind adoption pace

AI (artificial intelligence) has moved from experiment to core business tool inside corporate legal departments, but senior in-house leaders say the governance challenge has shifted — the real risk is now not internal use but controlling what outside counsel do with company information when using AI tools, according to reporting from Law.com. Johnson & Johnson director of legal operations Chris Potter is cited as flagging that some of his biggest concerns involve AI use by outside counsel rather than internal teams. While J&J encourages firms to use the technology, it expects strict controls around company information — a posture that reflects a broader industry shift toward demanding contractual and policy-level AI governance from law firm panel members. The story mirrors a wider pattern: legal departments across large corporates are increasingly treating AI as standard, but the governance infrastructure — data use policies, vendor agreements, client consent frameworks, and oversight protocols — has not kept pace with the speed of adoption. The gap is sharpest at the boundary between in-house teams and their external advisers, where information flows are substantial and historically lightly governed. For law firms, this creates a direct commercial pressure: clients are beginning to impose specific requirements on how firm AI tools may interact with client data, which in turn requires firms to have robust, auditable AI governance frameworks in place. Separately, Bloomberg Law reports that firms including Kirkland & Ellis — which has committed $500 million to AI — are seeking to capitalise on proprietary internal data as a competitive differentiator in the AI era, building client-facing tools that leverage their own institutional knowledge.