According to the results of the EY General Counsel Study, the top three challenges facing legal departments today are geopolitics (76%), the regulatory environment (75%), and technological advancement (74%). The growing pressure to respond to increasingly complex business issues is forcing legal departments to evolve — yet this evolution is constrained by budget limitations. In fact, 87% of legal leaders surveyed cite cost reduction as a top priority. However, this may begin to shift, as 83% expect an increase in financial resources over the next 12 months.
A Volatile Business Landscape Hits Legal Functions Hard
The rising unpredictability of the business environment is having a direct impact on how legal departments operate. They face increasing pressure to expand their knowledge, speed, and operational agility to handle more complex cases. As highlighted in the EY General Counsel Study, the forces driving change are primarily geopolitical tensions, regulatory volatility, and technological progress. Interestingly, just over half (54%) of respondents also pointed to sustainability as a key factor.
Internal challenges compound these external pressures. Budgetary constraints remain the main barrier to adapting legal departments to the new reality. Yet, optimism is growing — 83% of respondents expect financial resources to increase in the next year. Of those, 43% believe the increase will be under 10%, while 32% anticipate a rise of between 10–20%.
“Legal departments are a clear reflection of how fast the business environment is changing. Rapid developments in technology, regulation, and geopolitics often result in legal being the first stop for impact analysis. This puts strain on organizational structures that take time to adapt — time that legal teams don’t always have, which is why more are turning to external support,” says Zuzanna Zakrzewska, Managing Partner at EY Law.
Technology Seen as the Strategic Enabler
Despite budget pressures, developing and implementing tech strategies remains a high priority. A full 75% of legal professionals report active initiatives in this area. However, they face hurdles — including disorganized data (52%) and incompatible legal/business systems (44%). Surprisingly, only 25% of respondents rank generative AI as a high priority for their departments. Instead, 63% see broader technology adoption primarily as a tool for cost control. Notably, automation efforts so far have focused on administrative tasks like invoice verification (38%).
These findings are consistent with EY’s broader AI implementation study in Poland, which shows that only 5% of organizations have adopted AI in the compliance area — compared to 41% for customer service, marketing, and market analysis. This suggests that current AI tools may not adequately address legal and compliance demands, particularly those involving data confidentiality.
“Legal data is often highly sensitive, requiring AI implementations in this area to be handled with exceptional care. Moreover, legal analysis should be a core part of any AI rollout. This includes not just compliance with the AI Act, but also data protection, IP rights, and cybersecurity. No AI deployment — regardless of industry — should happen without legal team involvement,” emphasizes Justyna Wilczyńska-Baraniak, EY Partner and Head of IP, Tech & Data Privacy at EY Law.
Compliance and Risk Management: Key Legal Priorities
With rapid developments in AI, data protection, and ESG, compliance has become a top concern for 93% of legal departments. At the same time, tracking regulatory changes across jurisdictions (60%), interpreting unclear laws (50%), and accessing the right data for risk management and reporting (48%) remain significant challenges.
The survey also reveals a striking gap between expectations and reality. While 81% expect their organization to boost investment in risk management, only 49% have appropriate procedures in place — and fewer than 30% have documented the key elements of their risk frameworks.
This gap presents an opportunity for legal departments to take a leading role in improving risk oversight and transparency across their organizations. Yet, in the past year, only 11% of legal departments have held discussions with key internal stakeholders, and just 17% have implemented processes to benchmark organizational maturity against other departments.
“Legal teams have a unique opportunity to become strategic risk management partners. The growing importance of compliance highlights the need for effective procedures and closer cross-functional collaboration. Proactive engagement and operational transparency not only ensure legal compliance, but also help build trust across the organization. However, this requires concrete steps to establish the legal team as a trusted internal advisor,” concludes Magdalena Kasiarz, Partner and Head of Restructuring at EY Law.
Methodology
The 2025 EY Law General Counsel Study was conducted by Oxford Economics on behalf of EY. It surveyed 1,000 legal leaders from organizations with over $1 billion in revenue, across 21 countries and seven industry sectors. The quantitative data was complemented by in-depth interviews with selected general counsels worldwide. The study was carried out between November 2024 and March 2025.
Source: ceo.com.pl
