By James Tuke, CEO, AI Futures Forum.
Back in May, our report, ‘AI In UK Law Firms – Benchmarking Its Adoption and Anticipating the Future’, established that AI adoption had become a reality for the vast majority of UK law firms. The conversation then was focused on the matrix of internal stakeholder pressures and the tactical challenges of implementation. The key question was how firms would navigate this new terrain.
The summer of 2025 has brought clarity to a strategic landscape that is evolving at a remarkable pace. Our follow-on meta research, detailed in this September 2025 update and drawing on UK and US data, reveals a fundamental shift: the primary driver of AI strategy is no longer internal debate but a powerful, external force: the client.
The Client Imperative Hardens into a Mandate
The most significant shift we have observed is the dramatic acceleration of AI adoption and trust within in-house legal departments. What was once a gentle nudge towards efficiency has become a measurable market force that is fundamentally reshaping the client-firm relationship.
Latest data shows that trust in AI as a reliable legal resource among General Counsel has nearly doubled in a single year, jumping from 21% in 2024 to 40% in 2025. This is not just a change in sentiment; it is backed by significant financial commitment: the same Thomson Reuters/Legal Business survey reveals a remarkable 80% of GCs now expect to allocate up to 20% of their legal budgets to technology, a substantial increase from 68% in 2024.
The implication for law firms is profound. In-house teams are no longer just asking for their external counsel to be more efficient; they are actively building their own technological capabilities. With frequent legal tech use by in-house teams growing from 34% to 44% in the past year, clients now have a sophisticated, first-hand understanding of what the technology can do – and they expect their law firms to be on the same page. This hardening of expectations is creating a new baseline for service delivery.
A Tale of Two Firms: The Growing Adoption Divide
While the market as a whole is moving forward, our research also highlights a significant and growing divergence in AI adoption between firms of different sizes. This is creating a two-speed legal market.
On one hand, headline figures show continued momentum. A Thomson Reuters survey from April 2025 found that generative AI usage among legal professionals had nearly doubled in a year, from 14% in 2024 to 26% in 2025. A new LexisNexis report, published after we completed this update, now puts this figure now 61%, indicating a very healthy appetite for the technology across the profession.
However, a closer look reveals a more nuanced picture. A June 2025 SRA report highlights that while small firms are keen to innovate, their current AI adoption rate is a more moderate 14%. The key barriers they face are predictable but potent: the cost of implementation, the difficulty in finding suitable products for their scale, and a pervasive fear that any significant investment will be quickly rendered obsolete by the pace of technological change.
This contrasts sharply with the strategy of larger firms. Many are moving beyond being passive consumers of technology to become active investors and even developers, with firms like A&O Shearman and Mischon de Reya making direct strategic investments in the legal tech ecosystem. This is not just about buying software; it is about shaping the tools that will define the future of legal work, creating a strategic advantage that smaller players will find increasingly difficult to match.
Navigating the New Reality
These findings underscore that the challenge for law firms has moved beyond simple adoption to one of strategic alignment. The data shows that navigating this complex environment requires a clear, structured approach that acknowledges both the external pressures and the internal realities of the firm.
For senior management, this means moving beyond tactical experiments to build a coherent, value-driven strategy that addresses the new client mandate for efficiency and technological fluency. The firms that thrive will be those that can successfully bridge the gap between the potential of AI and the practicalities of their own business model, culture, and client relationships.
Both a summary and the full report, ‘AI in Law Firms: An Update (September 2025)’, provide a more in-depth analysis and can be downloaded free-of-charge from the AI Futures Forum website.
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About the author: James Tuke is the founder of multiple tech-related ventures, such as Treat Digital, and is now also the CEO of the AI Futures Forum, a site dedicated to in-depth discussion about AI. He also advises firms and senior management about their AI strategy.
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Legal Innovators Conferences in London and New York – November ’25
If you’d like to stay ahead of the legal AI curve then come along to Legal Innovators New York, Nov 19 + 20 and also, Legal Innovators UK – Nov 4 + 5 + 6, where the brightest minds will be sharing their insights on where we are now and where we are heading.
Legal Innovators UK arrives first, with: Law Firm Day on Nov 4th, then Inhouse Day, on the 5th, and then our new Litigation Day on the 6th.
Both events, as always, are organised by the Cosmonauts team!
Please get in contact with them if you’d like to take part.
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