The rise of artificial intelligence (AI) and automation is reshaping law firms, driving change across everything from document management and contract review to client onboarding and compliance. With tools like ChatGPT and Microsoft’s Co-Pilot, firms are finding new ways to streamline workflows, improve efficiency, and deliver services that meet modern client expectations. Yet, for many firms, navigating AI adoption is a balancing act – rushing in too quickly can risk security breaches or misalignment, while being too late risks missing out on competitive advantages. So, how are law firms using AI and why is planning crucial for success?
A New Era of AI and Automation in Law
AI’s role in the legal industry has evolved dramatically over the last decade. Traditional automation focused on predictable tasks, like organizing client files or tracking billable hours. However, today’s AI systems offer a deeper level of insight and creativity. Unlike basic software, AI can adapt to new scenarios, predict outcomes, and assist with complex research. Law firms are now using AI in a myriad of ways, from generating legal drafts and reviewing contracts to assisting in marketing and providing financial insights. The transition has been especially notable from 2023 to 2024, as more firms are moving from cautious testing to more robust implementations.
Caution and Change: Law Firms Attitudes Toward AI
Law firms are naturally cautious adopters of AI, primarily due to data security and compliance risks. Generative AI tools like ChatGPT are powerful but pose potential issues when handling sensitive client data. Many firms, especially larger ones, have initiated trials of AI tools, often limiting them to non-sensitive tasks like drafting or internal document management. Microsoft’s significant investment in AI, particularly with Co-Pilot, has also encouraged law firms to adopt AI carefully, as this tool helps prioritise and manage workloads, allowing legal professionals to focus on high-value work.
A poll conducted during Law Firm Ambitions webinar on Current AI
and Automation in Law Firms reflected these mixed attitudes. Around 44% of respondents reported trying AI at work, while 17% have yet to engage with it at all. AI adoption is typically higher in larger firms, which can dedicate more resources to secure deployment and robust data management. On the other hand, smaller law firms can find AI easier to implement across the organisation, often due to fewer constraints across the business and simpler workflows.
The Many Uses of AI in Legal Workflows
AI is enhancing legal workflows by supporting various tasks, each aimed at improving efficiency and reducing costs. Some of the most common applications of AI in law firms include:
Document Management and Drafting: Document management systems like iManage and NetDocuments, both Microsoft partners, have integrated AI capabilities to assist with drafting, research, and discovery. These systems allow law firms to manage documents more efficiently by automating organization and retrieval.
Timekeeping and Analytics: Tools like iTimeKeep now offer automated time tracking and analytics, recognizing when lawyers are working on certain documents or emails, which supports accurate billing.
Contract Review and Analysis: AI tools from providers like PocketLaw and Thomson Reuters are increasingly used to review contracts, streamline analysis, and ensure compliance with legal standards. These tools reduce the time lawyers spend on repetitive contract checks and improve accuracy.
Risk Management and Compliance: For many law firms, managing risk and ensuring compliance are top priorities. Tools like Intapp focus on compliance, helping firms manage sensitive data securely and avoid costly breaches. Firms are also implementing AI to flag compliance issues in real time and perform file audits.
Client Insights and Financial Predictions: AI-powered tools such as ShareDo offer predictive analytics on pricing, helping firms estimate when a case might settle or what pricing would be most competitive. These insights allow firms to add value for clients while also streamlining internal planning.
Results from a poll conducted by Law Firm Ambition
Data Challenges and the “Data Gap”
A key challenge for AI in law is the “data gap” – the discrepancy between AI’s potential and the quality of data it relies on. AI systems perform best with high-quality, centralised, and well-organized data, so many law firms are focusing on tagging and consolidating data to ensure accuracy. Poor data management can lead to incorrect insights and missed opportunities, making data preparation an essential first step for any firm planning to implement AI.
Managing Security Concerns with AI
Security and data protection are central concerns for law firms, which handle sensitive client information. Policies for data tagging, access permissions, and “need-to-know” restrictions are being developed to ensure only authorized personnel can view specific data. Microsoft’s Co-Pilot, for example, offers features that restrict access to certain files, and Practice Management Systems like Actionstep, LEAP and Clio are embedding security protocols to prevent unauthorized data access. AI’s ability to “learn” from interactions with documents raises the stakes for security, and firms are adopting best practices to minimize risks of oversharing or data breaches.
AI for Marketing and Client Engagement
AI has also opened new doors in marketing and sales, where it assists with content creation, data analysis, and personalised client outreach. AI systems now allow firms to produce customised email templates, write targeted content, and analyse client data to understand service needs. Sales-oriented applications of AI include crafting tailored outreach videos, automating content creation for websites, and generating insightful data summaries to inform client relations. Marketing teams can also use AI for predictive analytics to better understand their audience and forecast future trends.
Ben Trott, the founder of Marketing Lawyers looks at the transformative potential of AI in law firm marketing, exploring how AI can revolutionise the creation of marketing content, uncover valuable marketing insights and automate data generation. Ben highlights here the tools and processes that can drive efficiency and innovation, ultimately reshaping how law firms approach their operations and marketing strategies.
AI Adoption and Value-Based Pricing
AI is nudging law firms towards a value-based pricing model rather than traditional hourly billing. As AI reduces the time required for routine tasks, firms can offer clients competitive pricing aligned with the value delivered. This approach reflects a broader shift in the industry where efficiency, rather than pure hours billed, is central to pricing. The adoption of value-based pricing could help firms cover the cost of AI investments while providing cost-effective services to clients.
The Future: What Law Firms Want AI to Do
Polls indicate that law firms are keen to see AI perform tasks that enhance compliance, auditing, and client insights. 
When Law Firm Ambition asked what firms would like AI to handle, 76% of respondents indicated compliance alerting and file audits, 66% wanted drafting and summarising documents, and 65% sought client matter and financial insights. As AI technology advances, it will likely expand its capabilities across these areas, becoming an indispensable tool for modern law practice.
Preparing for an AI-Driven Future
To benefit from AI, law firms must have a solid foundation in data management and security. Planning for AI integration, assessing vendors, and implementing centralised data storage will ensure firms can harness AI’s potential without undue risk. Firms that adopt AI strategically, secure their data, and structure their processes around AI’s strengths will be better positioned to compete and deliver value-driven services in the years to come.
The use of AI in law is not just a trend; it represents a fundamental shift in how legal services are delivered. By embracing AI cautiously and strategically, law firms can navigate its challenges and capitalise on its benefits, staying competitive in an increasingly AI-driven industry.
About Cashroom
Cashroom provides expert outsourced accounting services for Law Firms including Bookkeeping, Management Accounts and Payroll services. Our mission is to free lawyers from the complexities of legal accounting by supporting the industry with accurate management information and allowing lawyers to do what they do best – practice law.
