Across the legal sector, AI has gone from a niche innovation topic to a board-level business discussion. Firms are under growing pressure to modernise operations, improve efficiency, manage rising costs, and remain competitive in an increasingly technology-driven market.
At the same time, legal remains one of the most risk-aware sectors in the world. Trust, confidentiality, governance, and regulatory compliance sit at the centre of everything practices do. That means AI adoption in law carries a very different level of scrutiny compared to many other industries. And that tension is exactly why AI has become such a dominant theme across the sector right now.
At CloudWize, these were some of the biggest topics discussed during our recent breakfast briefing in Leeds with senior legal and technology leaders. But the conversations happening in that room reflect much broader concerns emerging across the legal market as a whole.
Because increasingly, firms are realising the challenge is no longer whether AI should be adopted. It’s how to adopt it safely, strategically, and in a way that delivers genuine operational value across the whole organisational structure.
AI is already being used inside firms – with or without approval.
One of the biggest misconceptions is that AI adoption is still in its early stages. In reality, it’s already widespread.
Research shows that 96% of legal professionals are now using AI tools in some capacity, while 71% are doing so without formal organisational approval. We’re seeing the profession leaning on AI for the drafting of text, summarisation, research, and administrative support – often without formal governance frameworks or clear internal policies in place. This creates a difficult challenge for firms.
Leadership teams are trying to balance innovation and efficiency gains against growing concerns around confidentiality, hallucinated outputs, compliance, and reputational risk. And in many cases, those conversations are happening while the technology itself continues evolving at speed.
As CloudWize CEO Ed Humphrey recently explained:
“It’s not about moving first. It’s about moving in the right way.”
That mindset is becoming increasingly important as firms tread beyond experimentation and begin considering how AI can be operationalised properly across the wider business.
Legal is starting to mirror what happened in financial services
Another reason AI has become such a major talking point in legal, is because firms are now beginning to experience what happened in financial services over the past 12-18 months.
In finance and many other consulting professions, organisations accelerated AI adoption while often simultaneously reducing junior hiring or shifting operational work offshore. The vast proposition of roles affected were more entry-level positions, which perhaps felt like a good idea at the time. But junior talent isn’t junior talent forever, so talent pipelines have started to feel a little light. Now, legal firms are asking whether the same thing could happen within their sector.
Many of the tasks AI handles most effectively – document review, due diligence support, legal research, drafting, and administrative workflows – are also tasks junior legal professionals have historically learned by doing.
If AI removes too much foundational work too quickly, where does the next generation of experienced legal talent come from?
This “missing middle” concern is becoming increasingly common in conversations around legal AI adoption. While firms understandably want to improve productivity and streamline workflows, there is also growing awareness that short-term efficiency gains could create long-term workforce challenges if transformation is handled carelessly.
The solution lies in changing how talent is brought into the business and what the people development strategy looks like. Humans can augment AI and vice versa – it shouldn’t be ‘either, or’.
Businesses are already admitting they made the wrong AI workforce decisions
The event also touched on research from Orgvue, which found that 39% of business leaders had made redundancies linked to AI deployment, yet 55% admitted those decisions were wrong. At the same time, 80% now plan to reskill employees to work alongside AI.
The findings reinforce the point that many organisations moved too quickly toward workforce reduction before fully understanding how AI would realistically integrate into day-to-day operations.
That lesson matters enormously for legal firms now entering a similar phase of transformation.
Because while AI can significantly improve efficiency, it does not automatically replace judgement, contextual understanding, client relationships, or institutional knowledge. Legal services are ultimately still built on trust, expertise, and human decision-making.
This is one of the biggest misconceptions we see around AI transformation. Gaining the most value doesn’t necessarily mean replacing people fastest, but instead identifying where AI can remove operational friction while still strengthening the wider organisation around it. If you need help defining the perfect operating model, we can help – just contact us.
The governance gap is becoming a serious risk
As adoption accelerates, governance is quickly becoming one of the biggest concerns within legal AI discussions.
Many firms are still experimenting with AI through isolated use cases or individual teams, but far fewer have formal governance structures, organisation-wide policies, or clearly defined implementation roadmaps in place. That creates growing exposure around confidential client information, hallucinated outputs, regulatory obligations, data security, auditability, and reputational risk.
And these concerns are well founded. Recent UK court cases involving AI-generated false legal citations have reinforced the risks of deploying AI without appropriate human oversight or governance processes in place.
But with the right partner involved, security and governance is considered from the outset – it’s never a bolt-on afterthought.
Mid-sized firms may have the biggest opportunity
Interestingly, one of the biggest opportunities emerging from this shift may sit with mid-sized legal firms.
Large organisations may typically have bigger budgets and therefore greater access to technology, but transformation can still move slowly because of complex operating structures and lengthy decision-making processes.
As Ed explained:
“You end up operating at the pace of the slowest person in the organisation.”
Mid-market firms, meanwhile, often have the ability to move faster – providing they understand where they sit on the AI maturity curve, approach adoption strategically, and have the right partner involved for the long haul.
This has become a major focus of our own work within the sector. Firms aren’t looking for endless experimentation or overly complicated AI strategies – instead they need practical frameworks, clear governance, measurable ROI, and delivery approaches grounded in real operational experience.
That means identifying where AI can genuinely create value, implementing it safely, and ensuring transformation efforts remain aligned to wider business outcomes from day one.
If your firm is exploring AI adoption, workforce transformation, or governance strategy, get in touch with the CloudWize team to continue the conversation.
.svg)
