Law firms sharply increased AI use in 2025, driving record tech spending and new billing models.
Why it matters: For GCs and law firm leaders, rapid AI adoption is more than hype—it’s changing how firms bill, staff, and meet rising client demands. Those who adapt fastest may win new business, but risk missteps as expectations and workflows evolve.
- 72% of AmLaw 200 firms used at least one AI tool by Q4 2025.
- Legal tech spending increased 9.7% in 2025, the highest on record.
- 69% of legal professionals use generative AI tools for legal work.
- 51% of lawyers expect more tasks will shift to alternative legal service providers.
AI adoption in law firms hit new highs in 2025, transforming billing systems and legal workflows. According to the 2026 State of the US Legal Market report, law firm technology spending jumped 9.7%, outpacing any previous year. By year-end, 72% of AmLaw 200 firms had deployed at least one AI-based tool—a major step up for sector digitalization.
Most legal professionals—69% surveyed—now rely on generative AI platforms like ChatGPT and Harvey to draft, research, or process routine documents. Harvey AI in particular saw adoption surge to over 100,000 lawyers, driving $190 million in annual recurring revenue.
This technology is changing more than internal process. A 2026 Wolters Kluwer survey found 51% of lawyers expect more routine legal tasks will be handled by alternative legal service providers—companies specializing in cost-effective, tech-driven support—as AI automates research and administrative work.
Firms are now rethinking billing models in the wake of these shifts. According to RICC & Co. managing partner Wei Xin, "broad AI adoption may prompt clients to further require higher service efficiency, reduced billable hours, and greater substantive involvement from senior lawyers." Client expectations are rising, forcing firms to focus on measurable value beyond hours billed.
By the numbers:
- 72% — AmLaw 200 firms using at least one AI tool by Q4 2025
- $190M — Annual recurring revenue reported by Harvey AI
- 9.7% — 2025 increase in overall law firm tech spending
Yes, but: Law firms face obstacles in integrating AI into legacy billing and compliance systems, and risk misalignment with client value if adoption outpaces process change.
What's next: Firms are watching for further AI tool launches and regulatory developments in 2026 to guide future investments.