Key Takeaways
- • EY's Pulse of the Legal Function 2026 report finds 49% of companies have made significant changes to their legal departments, and 71% say the General Counsel has become more influential and closer to the CEO.
- • Regulation (85%), geopolitics (76%) and technology including AI (68%) are the main challenges cited by respondents.
- • Limited resources remain a barrier, with 41% of respondents citing a lack of funding or resources as an obstacle to transformation.
- • Automation of repetitive tasks (78%) and time savings (71%) are the main expected benefits of generative AI, but only 24% of respondents have integrated AI solutions at scale.
- • EY private equity partner Javier Bustillo says general counsel are increasingly involved across the investment cycle, and that funds want lawyers who understand the business.
Summary
Legal departments are taking on a more strategic role in M&A and private equity transactions, according to EY's Pulse of the Legal Function 2026 report, as technology, regulatory complexity and geopolitical uncertainty reshape their work. The report finds that 49% of companies have made significant changes to their legal departments, while 71% say the General Counsel has become more influential and closer to the CEO.
Francisco Silvan, M&A partner at EY, says legal teams are moving "from simply validating transactions to helping design them from the outset." Their remit extends beyond structuring deals and anticipating risks to ensuring value is realised after closing. Due diligence is also expanding, with ESG, compliance, cybersecurity, data protection and artificial intelligence increasingly part of the analysis, and commercial due diligence gaining importance in assessing business prospects. Silvan notes that in-house teams play a key role in coordinating external advisers and enabling timely decisions, although 41% of respondents cite limited funding or resources as a barrier.
In private equity, Javier Bustillo, EY's Private Equity partner, says general counsel are increasingly involved from acquisitions and portfolio management through to exits. He argues that "a strong general counsel can shorten due diligence, avoid surprises and improve deal terms," and highlights the importance of financial knowledge, corporate governance, regulatory awareness and technology skills.
On AI, the report finds automation of repetitive tasks (78%) and time savings (71%) are the main expected benefits of generative AI, yet adoption is uneven: 48% of respondents are exploring the technology or in its initial stages, while 24% have integrated solutions at scale. Silvan sees opportunities in document review and contract analysis but stresses that "the lawyer's judgement, critical analysis and responsibility remain essential."
Bustillo also points to the growing impact of foreign investment rules, sanctions, competition law and tariffs on transactions, which he says are "extending timetables and increasing the use of conditions precedent, deferred payments and specific indemnities."
Francisco Silvan, M&A partner at EY, says legal teams are moving "from simply validating transactions to helping design them from the outset." Their remit extends beyond structuring deals and anticipating risks to ensuring value is realised after closing. Due diligence is also expanding, with ESG, compliance, cybersecurity, data protection and artificial intelligence increasingly part of the analysis, and commercial due diligence gaining importance in assessing business prospects. Silvan notes that in-house teams play a key role in coordinating external advisers and enabling timely decisions, although 41% of respondents cite limited funding or resources as a barrier.
In private equity, Javier Bustillo, EY's Private Equity partner, says general counsel are increasingly involved from acquisitions and portfolio management through to exits. He argues that "a strong general counsel can shorten due diligence, avoid surprises and improve deal terms," and highlights the importance of financial knowledge, corporate governance, regulatory awareness and technology skills.
On AI, the report finds automation of repetitive tasks (78%) and time savings (71%) are the main expected benefits of generative AI, yet adoption is uneven: 48% of respondents are exploring the technology or in its initial stages, while 24% have integrated solutions at scale. Silvan sees opportunities in document review and contract analysis but stresses that "the lawyer's judgement, critical analysis and responsibility remain essential."
Bustillo also points to the growing impact of foreign investment rules, sanctions, competition law and tariffs on transactions, which he says are "extending timetables and increasing the use of conditions precedent, deferred payments and specific indemnities."
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