Artificial intelligence continues to transform the legal industry, going from experimentation to mainstream adoption across law firms. Law firms have moved past simply experimenting with AI tools and have incorporated them into their daily workflows.
But the rush to automate shouldn't come at the expense of the client experience. While AI offers a measurable opportunity to improve efficiency and increase margins, what many attorneys overlook is its potential to amplify the human relationships law firms are built upon.
We'll look at how AI is changing the legal industry, some of the challenges and concerns that come with these changes, and how firms can increase automation while delivering a better experience for clients.
Key Takeaways
- AI adoption is growing rapidly in the legal industry, with nearly half of firms using or planning to use AI in 2026.
- This is changing how firms operate, with attorneys shifting to a supervisor role, the billable hour model coming under pressure, and automation upending how junior associates learn their craft.
- AI is also creating challenges, with hallucinations, bias, and confidentiality risks leading to liability concerns for law firms.
- Many law firms focus on AI's ability to improve profits and efficiency, but overlook how, when properly used, it can deliver a more human-centered experience for clients.
- Firms that will get the most out of AI are those that use it to improve the client experience, not just to replace human interactions.
How Is AI Impacting Legal Work in 2026?
AI usage continues to expand in the legal industry. According to a report by Thomson Reuters, usage of generative AI in law firms nearly doubled from 14% in 2024 to 26% in 2025. And in 2026, 45% of law firms say they plan to use generative AI or already do so.
But while adoption grows, the question of how effectively law firms use AI is more complicated. For example, while 89% of law firm professionals believe AI can be used in the legal industry, nearly half of firms lack a formal AI policy.
Firms that currently use AI are largely focused on cost reductions and efficiency gains, while overlooking the impact that AI can have on the client experience.
According to our Legal CX Report, only 40% of clients say their law firm is caring, despite 72% of attorneys describing their own firms as caring. This perception gap is especially striking at a time when firms are investing heavily in AI-powered automation.
AI can be a tool to make the client experience more meaningful. But if it's only being used to cut costs and human touchpoints, it's not solving the actual perception gap. Law firms should use AI to elevate the client experience, improve access to the justice system, and create more space for human connection.
As we consider how AI can be used to close the perception gap between attorneys and their clients, here are five ways AI is impacting the legal industry in 2026.
1. The Rise of 'Agentic' AI
Agentic AI is more autonomous than earlier generations of AI. Whereas AI was previously largely reactive and produced results based on a specific prompt, agentic AI requires less human direction.
For example, when reviewing a contract, it can:
- Reference relevant case law.
- Flag potentially problematic clauses.
- Produce a summary without step-by-step instructions from a human.
This means firms can more efficiently use AI for legal documents.
Tasks that previously required hours of time can now be done within minutes. Agentic AI is especially helpful in reviewing discovery documents, completing first-pass due diligence in M&A transactions, checking for regulatory compliance, and summarizing case law research.
This increased efficiency shifts the attorney's role from executor to supervisor. Instead of spending an entire workday reviewing documents, the attorney can spend 45 minutes reviewing what the AI has generated and applying their own legal judgment.
Firms that retrain their lawyers in how to review and challenge AI-generated results aren't just improving their margins. They're also delivering a higher level of service to clients.
2. The 'Missing Middle' in Junior Talent
AI is increasingly able to automate entry-level tasks that would have previously been assigned to junior associates, such as document review, contract drafting, and legal research. While this automation has allowed law firms to get more work done with fewer junior associates, it's creating a potential future problem called the "missing middle."
The missing middle is the experience gap in the pipeline that junior associates used to rely on to become mid-level and senior attorneys. The tasks that AI is now automating were the ones that junior talent previously used to learn their craft.
When those learning opportunities are automated, junior associates miss out on becoming better attorneys. This is a problem that law schools and bar associations are already having to grapple with as they struggle to give young talent the expertise they need to thrive in the industry.
3. The Decline of the Billable Hour
While the billable hour hasn't disappeared, its position as the foundation for how law firms generate revenue is quietly being undermined.
When a task that previously took a senior associate eight hours can now be done in one hour, hourly billing structures will quickly see a drop in revenue.
Law firms are approaching this challenge in a variety of ways via:
- Flat fees.
- Value-based pricing.
- Subscription-style retainers.
Fundamentally, law firms addressing this issue are focusing more on the value delivered instead of the time spent on a task.
The result can lead to new ways of thinking about client relationships. For example, some firms are offering bundled services while others are offering tiered subscription models.
While there is not yet one single replacement for the billable hour, firms should remain open to solutions while being receptive to client feedback.
4. New Regulatory and Liability Landscapes
The regulatory landscape of AI in legal practice continues to evolve. The ABA's Formal Opinion 512, issued in 2024, sets out attorneys' obligations for using generative AI ethically.
Among other issues, the ABA advises attorneys to stay informed of the risks, benefits, and limitations of AI. It emphasizes the need for firms to maintain client confidentiality when using AI tools and for lawyers' fees to be reasonable and reflect the actual amount of time spent on a task.
Many state and local bar associations have been developing their own guidelines around the ethical use of AI.
While many of these guidelines are broadly similar, firms should be aware of local nuances. For example, West Virginia has issued guidance recommending that lawyers obtain client permission before using generative AI, a standard most other bar associations do not require.
5. The Rise of the 'Legal Technologist'
The rise of the legal technologist role has been one of the most consequential shifts caused by AI. The legal technologist combines both substantive legal knowledge with a deep understanding of AI, data architecture, and workflow design.
Despite their technical expertise, legal technologists shouldn't be confused with IT professionals. They're strategists who evaluate AI tools, design implementation plans, and find ways to apply technology to legal workflows.
Many law schools are now offering concentrations in legal technology to help train for this new role. While larger firms have embraced the legal technologist role with dedicated technology departments, small and midsized firms are filling the gap by using fractional legal tech consultants.
As AI grows and becomes more complex, the role of the legal technologist will continue to develop.
What Are the Concerns and Consequences of AI in Law?
AI in law comes with some significant risks that legal professionals need to be aware of. These are four of the top concerns and consequences that come with incorporating AI into law practice.
1. The 'Black Box' Problem
AI systems are notoriously opaque. Even their own developers can't fully explain why an AI system comes up with certain results or claims.
For attorneys, this lack of transparency creates significant risks. For example, if an AI system flags a clause as being a contractual risk, there's not always an explanation as to why it did so. A competent attorney will need to be able to explain to a client or judge why that clause was flagged.
Some AI systems are responding by including features that better link reasoning to specific sources. But lawyers need to realize that these features are imperfect. Attorneys shouldn't let AI become a substitute for their own judgment and must always review any AI-generated outputs.
2. Bias and Discrimination
AI systems risk perpetuating bias and discrimination, largely because they learn from historical legal data, which itself is prone to human bias.
For example, a 2025 study published in Nature found that generative AI produced résumés for women that made them appear younger and less experienced compared to résumés generated for men. These outputs occurred despite the AI being presented with the same initial information.
Attorneys need to be aware of this risk, especially when using AI for tasks like screening intake, prioritizing client outreach, and assessing case value. While AI outputs may look objective on the surface, they could disadvantage certain clients if attorneys aren't vigilant.
Utilizing diverse training data and subjecting outputs to human oversight are essential to help overcome these limitations.
3. Hallucinations and Accuracy Leading to Liability
Hallucinations are when an AI model generates factually incorrect information. They pose a significant liability risk for lawyers, as shown by the multiple cases where attorneys were sanctioned for using AI-generated documents that cited non-existent cases.
The problem is especially difficult because hallucinated case citations often look exactly like real ones. Attorneys need to be on guard against hallucinations that sound authoritative but could be completely wrong. Failing to do so is not only an ethical breach but may also result in professional consequences.
4. Client Confidentiality and Privacy
AI brings up important confidentiality and privacy concerns. Many AI tools rely on input data to train their future models. For firms inputting confidential client information, there is a risk that it could appear in outputs later on for other users.
Even AI tools marketed for legal use have varying data privacy standards, making it important to never assume that client information is protected. That's why attorneys need to understand how any AI system they use handles client data.
Law firms also have to create clear AI usage policies that specify what tools are safe to use for which tasks and what type of data can be input into them. Ensuring all associates and staff with access to confidential data understand these policies is essential for maintaining trust with clients.
Case Study: How AI Handles Midsized Law Firm Communication Challenges
Let's take as an example a midsized personal injury law firm with 10 attorneys and 15 support staff who are currently handling around 600 active cases. Staff are finding that around 30% of their time is being spent on client communication, such as responding to messages and manually sending case status updates. Despite these efforts, client satisfaction is low because staff are struggling to keep up with the volume of calls and messages.
The firm decides to utilize AI-powered law firm communication software to send out automatic case status updates, milestone notifications, and instant responses to common inquiries. Implementing this technology, including integrating it with the existing case management system and training staff, takes about a month.
As a result of this increased automation, clients no longer need to phone the firm directly to learn about their case's status, leading to a 40% drop in call volume within 90 days. Staff are able to focus more on meaningful case work instead. That shift, combined with instant automated replies to their queries, leads to a significant increase in client satisfaction.
Most importantly, adopting more automation doesn't reduce the human relationship between the firm and its clients. Attorneys have more time to focus on substantive client conversations while AI takes care of logistics.
Case Study: How AI Handles Enterprise Law Firm Case Prioritization Challenges
In another scenario, let's take a large enterprise litigation firm that handles thousands of cases at once. With a huge volume of client communication to handle, attorneys lack a systematic way of judging which client situations require immediate attention compared to others that are less urgent.
The firm introduces AI response software that effectively triages incoming client messages. Client communications are automatically analyzed to flag for urgency signals and to direct high-priority cases to the appropriate attorney.
Because the software integrates with the firm's existing case management system, prioritization data can flow directly into attorneys' daily workflows without requiring staff to manually redirect them.
This AI-powered triaging leads to a significant reduction in response times on urgent case matters, which in turn reduces client escalations. Because attorneys are focusing on high-value work that makes the best use of their skills, they are able to deliver a better level of service, leading to an overall increase in client satisfaction.
What Are AI Trends in the Legal Industry?
A number of AI trends will continue to reshape the legal landscape in the coming years. Here are some of the ones to keep an eye on.
Multimodal AI Will Transform Evidence Review at Scale
These are systems that can process text, images, audio, and video at the same time. Multimodal AI will allow firms to analyze deposition recordings, process multimedia evidence, and review exhibit libraries concurrently and at scale.
These systems will also become more specialized, with models trained on datasets specific to different practice areas.
Client-Facing AI Will Enhance, Not Replace, Service
AI's focus will shift from internal workflows to the client experience. Firms will need to use AI in a way that improves client experience and doesn't try to replace the human experience.
For example, AI-generated case updates and on-demand progress summaries provide real value while allowing attorneys to focus on high-impact work.
Regulation Will Reshape AI Use in Legal Practice
AI regulations will continue to evolve. The EU's AI Act was adopted in 2024 and is being phased into effect. It follows a risk-based framework that prohibits certain AI practices, imposes stricter compliance requirements on high-risk systems, and requires transparency for lower-risk uses.
While the U.S. has taken a more hands-off approach at the federal level, state legislatures and bar associations continue to introduce their own requirements.
Access to Justice Will Expand Through Responsible AI
AI has the potential to expand access to justice by making it easier to serve more clients at a lower cost. However, it remains to be seen whether firms will actually prioritize access or simply improve margins.
Firms that use AI to better serve underrepresented clients and deliver better outcomes will be at the forefront of where the legal industry is heading.
Improve Client Communication With Case Status
AI presents an exceptional opportunity for law firms, but only if the client experience is at the center of their AI strategy. AI should amplify the human experience and improve communication, not replace it.
Case Status empowers firms to deliver and scale the exceptional experience every client deserves through intelligent automation and AI-powered client engagement. Features such as real-time case visibility, smart triage, and secure messaging give clients greater insights and access to their cases while freeing up attorneys to focus on impactful work.
Clients are able to stay better informed and feel more in control of their cases through our mobile app. Staff and attorneys, meanwhile, save time thanks to AI-assisted matter prioritization and automated updates and messaging.
The result is a law firm that feels more responsive and trustworthy from the client perspective, even at scale. Book a demo today to see how Case Status can improve client communication at your firm.
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