AI is redefining how legal services are delivered, priced and valued. The question facing every firm is simple: are you ready to lead the next wave of transformation, or starting to lag behind?
For IT and operational leaders, the pressure to achieve more with less has never been greater. Rising operational costs and rapid digitisation are fuelling the need for more efficient workflows that free up time for lawyers and high fee-earners to focus on higher value work and strengthening client relationships.
Understanding where to embed digitised, automated systems to support daily workflows is key – and that’s precisely where AI can deliver transformative value. The legal sector’s dependence on high-value, knowledge-intensive tasks makes it a perfect arena to benefit from intelligent automation and agentic AI.
The latest research from Thomson Reuters suggests 77% of legal professionals believe AI will have a high or transformational impact on their work over the next five years, an increase of 10% over compared with the same survey in 2023. And with 70% of in-house lawyers reporting insufficient time to meet their goals, AI has emerged as a powerful, cost-effective solution.Â
Here we explore the opportunities, risks and challenges that come with implementing AI for law firms, along with tips to ensure smarter investment.
How are law firms using AI?
Document review
AI reduces the time spent on document review from days to minutes. Modern tools can analyse thousands of pages in an instant, far quicker than manual review processes, while still identifying key clauses, risks and anomalies. This not only cuts costs but also challenges the traditional billable hour model.Â
Legal research and due diligence
Today’s research tools use natural language processing (NLP) to scan vast databases of case law, legislation and precedents, delivering accurate results in seconds. Sophisticated systems go further, employing predictive analytics to forecast case outcomes based on historical rulings. This empowers lawyers to assess litigation risks quickly and advise clients with greater confidence.
Customer relationship management
AI-enhanced CRMs help law firms personalise client interactions, automate follow-ups, deliver case updates and identify cross-sell opportunities – all with minimal human input. Systems can also analyse past interactions and behaviour to predict client needs, such as flagging when a business may need to conduct a compliance review in line with real-time regulatory updates.
Drafting contracts
AI can assist in drafting standardised contracts, pulling clauses from a firm’s precedent library and customising terms based on specific jurisdictions. In negotiations, it can immediately flag up non-standard terms or clauses, saving valuable time and reducing the risk of human error.
Requests for proposals
Law firms can use intelligent automation to streamline RFP responses by auto-generating answers from past submissions, ensuring compliance and consistency. Here, AI analyses historical data to identify winning themes and competitor strengths, while optimising pricing using previous benchmarks. This cuts response times, boosts efficiency and ensures that legal teams can repeat winning strategies with ease.
AI time tracking for lawyers
New tools can help automate the timekeeping process, improving accuracy, efficiency and profitability. AI-powered tools analyse lawyer activity, and automatically categorise tasks, all of which reduces manual effort and minimises time leakage.
Navigating the shift to agentic AI
While leading firms are already investing in generative AI tools for tasks like legal research and document review, more advanced systems are emerging to streamline entire workflows from start to finish.
Unlike traditional AI tools that rely on prompts and rule-based automation, these next-generation solutions – particularly agentic AI – act independently to plan and execute complex tasks with minimal human intervention.
Think of agentic AI as a digital paralegal, one that can analyse vast datasets of past cases, contracts and regulations in seconds, before going on to spot patterns and make informed judgement calls by itself. In other words, it doesn’t just assist – it decides.
This shift has huge potential for legal workflows and feels like a natural evolution of legal process engineering, moving from automated rule-based systems to what are effectively autonomous members of the team.
Let’s take the scenario of drafting a commercial lease agreement as an example. Whereas traditional AI tools might be used for single tasks like flagging problematic clauses in a contract, agentic AI takes the entire process into its own hands. Within minutes it can draft a new contract using pre-approved templates, engage with a counterparty to negotiate terms, flag unresolved points and communicate the need for human lawyer review, finalise documents, and route for signatures on completion.
While the legal team reviews, approves and bills the client, the AI agent has already begun analysing negotiation trends and win rates to improve its next interaction.
Common pitfalls (and how to avoid them)
Early adopters of AI in law firms are already gaining an edge in efficiency, accuracy, cost reduction and client response times; but firms must also navigate ethical considerations and ensure clear accountability for AI-driven decisions.
AI tools are there to supplement human expertise, not replace it entirely. And while lawyers may need to spend less time scouring libraries and online databases, they still need to tweak approaches, review outcomes and scrutinise discrepancies.
Fake case-law citations – whereby AI tools provide inaccurate or entirely fabricated data, also known as ‘AI hallucinations’ – must be monitored closely, especially now that lawyers could be prosecuted if they don’t check the accuracy of their research.
Robust validation protocols for AI-generated outputs are needed to avoid this. Ongoing training is crucial to ensure that teams can discern between reliable and questionable AI outputs, as well as giving them a clearer understanding of where AI usage is appropriate, and where it isn’t.
Total transparency of AI usage is also important for maintaining ethical standards. Clients should be informed when AI tools contribute to their casework, ensuring informed consent and preserving the lawyer-client relationship. Regulatory bodies may soon mandate disclosure requirements, so proactive firms will stay ahead by adopting clear AI usage policies.
Balancing innovation with accountability will be key as the legal profession continues to integrate AI on deeper levels, ensuring that it enhances service quality without compromising professional integrity or client confidentiality.
Invest in value, not hype
The constant buzz around AI for law firms is understandable given its transformative potential, yet it also creates a risk of rushing ad-hoc investment in new tools for fear of missing the bandwagon.
Before rolling out any system, close collaboration between IT teams and practice group leaders to assess current workflows and identify high-impact areas where AI can drive efficiency. Whether it’s contract drafting, client management or any other core process, prioritising use cases with measurable ROI ensures that investments deliver tangible value, such as reduced operational costs or faster turnaround times.
From there, firms can evaluate whether to build custom solutions, purchase off-the-shelf AI tools or partner with established legal tech providers. Budget allocation should balance immediate gains with scalable, future-proof systems, particularly as agentic AI reshapes end-to-end workflows.Â
Pilot programmes are also a good idea to test feasibility and address ethical, technical and regulatory challenges before company-wide rollout.Â
Right now, the big challenge for IT is tempering expectations and developing a clear investment strategy that aligns with long-term business goals. Success won’t come from simply chasing every shiny new object, but from aligning AI to solve clear inefficiencies.
Is your law firm prepared for the next wave of AI transformation?
We’re here to help you assess your own strengths and weaknesses, and position your firm for what’s next in a rapidly evolving market. Remember that the law firms set to thrive over the coming years won’t just react quickly to change – they’ll be the ones driving it. Â
