Having spoken at the end of 2025 to a number of legal tech law firms leaders about their predictions for this year, Legal IT Insider has turned the microphone over to the vendor community, who have the advantage – albeit from their own lens – of deep insights gleaned from working with multiple private practice and in-house organisations.
The shared thoughts and forecasts are fascinating. Strip away the branding, and vendors largely agree on one thing: 2026 will be a breakthrough year for generative AI and may well be one of reckoning, too. AI will become embedded in the legal workflow, and business models, skills and ownership structures will – and must – start to shift.
From AI tools to workflows and operating systems
“AI is now fully embedded in the legal sector. The conversation has moved from building custom trained models to integrating AI into everyday workflows,” says Samuel Smolkin, founder and CEO of Office & Dragons, which was acquired by Litera in 2024.
Office & Dragons was a UK-founded plug and play legal document drafting platform, now part of the wider Litera stack. Smolkin predicts: “The real leaders will be the ones who connect AI directly to the tools people already use, such as Word, Outlook, and review platforms, while tying it to firm data sources and systems.”
The competition to be the platform that everyone lives in and connects to will continue to be fierce in 2026, none more so than in the document management arena. At NetDocuments, which has done a great job of enabling its customers to use custom and pre-built AI apps, Kerri Dearing, VP of international, observed: “In 2026, legal AI will accelerate beyond point solutions and embed itself within the workflows that legal professionals rely on every day,” adding: “The document management system is no longer just a system of record; it is becoming the foundation of the legal operating system, bringing together content, workflows and AI to drive consistency, control and momentum.”
The future of DMS was a hot topic at Legal IT Insider’s 30th anniversary knowledge exchange last year and that will remain a focus for this year. Marcel Lang at SharePoint-based DMS provider Epona has long banged the drum that law firms need to live in a native Microsoft world, last year winning customers such as Al Tamimi. He told Legal IT Insider: “In 2026, AI will obliterate the traditional concept of legal document and knowledge management. Static archives will give way to intelligent ecosystems that predict, advise, and act in real time. Firms that cling to old systems won’t just lag—they’ll disappear from the competitive landscape.”
Change of this nature rarely happens quickly in the legal world but at Legal IT Insider we spoke last year to many senior legal technology leaders who are watching this space with active interest.
It will be interesting to see how the arrival of model context protocol (MCP) impacts law firms’ plans this year. Marking a change of tone for iManage that we saw evolve in the second half of last year, Sam Grange, AI engineering lead, said: “While proprietary, closed AI partnerships have served their purpose by maintaining tight control – and with good reason too – the industry will embrace open innovation-led AI systems where LLM providers enable secure, governed interoperability without gatekeeping.
“This shift mirrors a broader market evolution. Apple, historically notorious for closed standards and developer control, is abandoning its walled-garden approach in favour of open integration, with the arrival of Model Context Protocol (MCP), a standard for connecting AI with external tools and data. The future belongs to platforms that empower users to build their own secure integrations, not those dictating partnerships from above.”
Trust, explainability and speed
Being on top of your underlying, good quality, data underpins everything – that isn’t new. But it is at the heart of one of the key themes for 2026 – trust, explainability, and the ability to move fast.
“In 2026 the defining question for legal AI won’t be what the tools can do, but whether firms are prepared to stand behind the answers they produce,” says Errol Rodericks, product & solutions marketing director at Palo Alto-headquartered data management company Denodo.
Rodericks adds: “As AI moves from experimentation to expectation, governance, explainability, and confidence in underlying data will quietly become the real constraints on innovation – particularly in a profession shaped by ethical walls, confidentiality, and accountability. The firms that progress fastest will be those that treat trusted data as a core operating capability, using AI to augment professional judgement rather than replace it.”
At contract lifecycle management provider Sirion, which works exclusively with corporate clients, CEO Ajay Agrawal agrees. “In 2026, the defining question won’t be ‘How powerful is your AI?’ but ‘Can I trust it to act on my behalf?’ he says. “The winners won’t be the vendors with the biggest models. They’ll be the ones that transform CLM into a true system of engagement, where every action is conversational, explainable, and auditable. Accountability, not features, becomes the enterprise buying criteria. And the leaders will be those organizations that treat governance and explainability as inseparable pillars of responsible automation.”
As we move away from closed platforms towards open integration, a further trend emerges.
“BYOLLM bring your own large language model AI is going to be huge as more and more nuanced areas develop their own AI tools and want to merge these in with the main stream legal technology software on offer,” says Knovos’ solicitor and director Sid Jiwnani. “This gives a company the ability to use fine-tuned AI with all the maturity of long-standing software solutions.
“BYOC bring your own cloud is also going to be a hit as users demand more control and ownership over their own data and therefore choose to ask their technology providers to install the solution on client owned cloud storage. This gives a company the best of both worlds, full control over the data with full service support from the vendor.”
A new kind of legal professional
While much of this journey this year will focus on technology, it is important not to forget the human factor. Sanjeeta Patel, director of marketing at LexisNexis UK, observed: “As AI becomes more pervasive, firms will place greater emphasis on mentoring and training to address concerns around judgment, professional development, and how lawyers learn in an AI-enabled environment.”
This emphasis on people is likely to accelerate the trend we saw in 2025 towards hiring AI experts – and the war on talent that entails.
“In 2026, the “legal AI expert” will become indispensable,” says Agrawal. “Law firms and in-house legal teams will proactively invest in defining, recruiting, and integrating this role to stay ahead of competitors. These professionals will serve as the critical translation layer between law and technology, helping organizations fully leverage AI in legal practice.”
An absence of the right talent is likely to become a competitive blocker. Joe Stephens, consulting attorney and legal AI expert at Steno, says: “Law firms in 2026 will realise their biggest technology bottleneck isn’t budget or tools, it’s the absence of professionals who can actually implement them. We’re seeing a widening skills gap: lawyers who understand practice but not technology, IT staff who understand systems but not legal workflows, and vendors who understand features but not adoption barriers. The firms that will dominate are those building internal teams of legally-trained technologists who can evaluate tools, customize implementations, train resistant practitioners, and measure real outcomes. The issue isn’t about hiring more IT support, it’s about recognizing that technology deployment is now a core legal competency.”
The great AI reality check: ROI and hype collide
If writing cheques for talent is likely to increase, it is likely to decrease for POCs where there is no demonstrable ROI, according to our vendor forecasts.
“2026 is when the music stops, says Domino Data Lab’s chief field data scientist Jarrod Vawdrey. “CFOs are done writing blank checks for ‘AI innovation’ that can’t be tied to actual business results. We’re already seeing enterprises start to pump the brakes on a significant percentage of their planned AI spending because leadership finally asked the obvious question: ‘What are we actually getting for this?’ And most teams have no good answer from a year of PoCs that never made it into production.”
He adds: “The handful of use cases that actually move numbers will survive. Revenue up, costs down, cycle time reduced… real KPIs that matter. Everything else gets killed. No more pilot purgatory, no more “let’s experiment and see,” no more demos that wow executives but never ship. If you can’t show business impact in three to six months, you’re done. The companies winning in late 2026 are the ones who got religious about measurement early and weren’t afraid to kill their darlings.”
While ‘agentic’ may have been the buzz word of 2025 and many legal organisations are working on projects in this space, there comes a warning from Jan Van Hoecke, VP of product management for AI services at iManage, who says: “2026 is the year when agentic AI will get a reality check, as the gap between marketing promises made in 2025 and their actual competencies will become starkly visible,” he warns. “As adopters in the legal industry share the mixed successes of agentic AI, the market will begin to differentiate between true autonomous agents and the clever workflow wrappers.”
What will be interesting is the extent to which law firms will differentiate and judge what ROI really means. Matthew Stringer, founder and CEO of legal innovation consultancy Stridon, says that ROI should not just be about numbers.
“2026 is the year we stop chasing hype and start measuring human signals – clarity, consistency, and wellbeing,” Stringer says. “Firms will understand that measuring ROI with AI won’t just be about numbers; but by placing people firmly at the centre of their strategy, they will build trust, amplify adoption and see meaningful, positive impact in their organisation.”
The business model of law starts to crack
Will we see a major shift in the law firm business model this year? Will the billable hour get the kick into touch that it deserves? Unlikely. But the business of law model will be a huge topic for debate. Record profits in the US last year, driven in large part by geopolitical instability, are not helping to drive necessary change – despite the fact that there are now parallels being drawn to the high before the financial crash of 2008.
There are other factors at play, too. From BigHand, chief marketing officer Briana McCrory says: “There has been a massive leap forward in AI adoption, but to this point, it has widely been limited to the practice of law. That’s led firms to face this unfolding productivity paradox: Why would we want legal work to be done faster when we charge by the hour?
“In 2026, we’re going to see focus shift to the business of law, with AI (and other tech) investment meant to increase profitability by driving pricing, talent, and matter management efficiencies, not just legal practice ones.”
Change often has to be forced and if it’s not going to come from the markets, this year we can expect it to come from the client. There is broad and growing consensus that this year will see in-house legal teams – particularly the larger and more sophisticated ones – retain much more work in-house. Estimates vary, but the figure that Legal IT Insider has heard most often is a staggering 20% – so, 20% of work currently being conducted by law firms will shift in-house.
At Wordsmith AI, which works exclusively with corporate legal teams, Ross McNairn, co-founder and CEO of Wordsmith AI, says: “The legal trends in AI for 2026 pose a different, more exciting question for in-house teams: what happens when efficiency starts accelerating revenue? For years, legal has been asked to move faster without sacrificing rigour, and too often that has meant becoming the bottleneck.
“Inevitably, legal teams will start thinking much more deliberately about how to harness this leverage to keep more work in-house and reduce external counsel spend. Forward-leaning departments are already mapping the moments where outside counsel is used by default, not because the work is uniquely complex, but because it’s time-consuming and repeatable. On the other hand, as AI compresses routine work into minutes, many law firms will move into revenue-defence mode. They’ll slow-walk adoption for commoditised tasks under the banner of ‘risk,’ because speed collapses billable hours.”
Casting a more positive note for law firms, in 2026, AI may well lead to an increase in the volume of cases that lawyers are able to take on. Mark Feldner, co-founder of Crimson, said: “In 2026, AI efficiencies will result in more demand for certain types of legal work. Much has been said about Jevons paradox – the observation that innovation can cut the cost of a service while increasing the total market for that service – but it does not apply uniformly across the legal space. Rather, there are some areas where AI will have a major impact, and others where it will not.
“AI-related cost savings will not lead to more headline-grabbing mergers or bet-the-company litigation because legal fees are not prohibitive in those contexts: when billions are on the line, a few million in legal fees are small change. By contrast, AI will materially increase the volume of cases in the seven-figure range, where the cost of bringing a claim can be disproportionate to the amount in dispute. For those cases, AI allows lawyers to charge lower, more predictable fees but take on more matters – claims that previously would not have been brought because the cost and uncertainty of legal fees made litigation less attractive. As a result, we expect that commercial caseloads will reach record highs this year.”
Better back office technology will also enable law firms to redefine how they run their business, says Elite Technology’s CEO, Mark Dorman, who observed: “In 2026, the back office becomes the firm’s control center—where leaders can see, model, and act on decisions about pricing, profitability, and client work in real time. Modern technology capable of unifying all firm data makes it possible, but firm leadership makes it happen. The firms that embrace this shift won’t just adopt new systems; they’ll redefine how they run their business to capture opportunities that come from changes ahead.”
Regulation and ownership
The backdrop to all this is regulation, which has been outpaced by generative AI from day one but, Philip Dutton, CEO and co-founder, Solidatus, says will tighten up this year.
“2026 will see regulators expect not just evidence of compliance, with frameworks like DORA, BCBS 239, and AI transparency
mandates, but real-time operational resilience,” he says. “In a similar vein, you won’t get away with saying ‘we think EU data stays in the EU’, you’ll be expected to show it, with lineage that is jurisdiction-aware by design.
“Data lineage will therefore continue to evolve from a static compliance requirement into a live operational control system that demonstrates how data supports financial stability, risk management, and AI oversight on an ongoing basis. The winners will be the organisations that can open a single blueprint and see, in seconds, which data sets are impacted by different regulations, new local rules or a sovereign cloud migration.”
The costs of this may well be prohibitive and it’s no wonder that we have seen an influx of private equity money both in the UK, where the Legal Services Act paved the way for outside investment, and also in the United States, where investors are finding clever workarounds to the restrictive regulations governing law firm ownership.
Dylan Ruga, co-founder of Steno says: “Private equity will infiltrate law firms. Law firms are an attractive asset class because they have outsized returns that are uncorrelated to the broader market. Historically, however, private equity has not been able to invest because rules generally restrict nonlawyers from having an ownership interest in law firms. Private equity has begun testing those rules by employing creative corporate structures that provide services to law firms (generally referred to as MSOs) and those structures extract all of the profits out of the firm without technically being established as a law firm. I expect to see many more of these types of transactions in 2026 and beyond.”
When it comes to the public sector, we can expect things to move more slowly, however. Gary Day, director of public sector at Apogee Corporation, tells us: “Despite major funding announcements, such as the £573m allocated to AI in Whitehall, central government organisations will continue to grapple with the complexity of meaningful AI adoption. The ambition is end-to-end workflow redesign for major efficiency gains; the reality will be careful, phased implementation.
“Procurement frameworks due for renewal will see longer timelines as departments allow newer technologies to settle, integrate, and demonstrate value. There is now a broader recognition that advanced technologies, including AI, often take longer to deliver measurable ROI and social value. As a result, 2026 will be defined more by foundational groundwork than by dramatic AI-driven transformation.”
Training and education
While law firms and legal departments have scrabbled to define their own strategies – including whether their graduate training programmes need to be modernised – law schools and colleges are perceived to have dragged their heels in modernising, but that looks set to change.
“2026 will mark the tipping point where AI literacy transitions from competitive advantage to professional necessity,” says Jerry Levine, chief evangelist and general counsel at Leah (previously ContractPodAI).
“Law schools will integrate AI competencies, legal technology, and ethics into core curricula to prepare graduates for an AI-enabled profession. Students and practicing lawyers will need to critically evaluate AI technologies, communicate effectively with AI systems, and deploy AI tools in their daily practice – and firms and technology partners that support this transition will define the next wave of success.”
Ruben Miessen, CEO of Legalfy, agrees that AI will become mainstream in law schools in 2026, observing: “Legal training needs to change urgently otherwise there will be a stark difference among graduates — between the ‘AI haves’ and ‘AI have nots’.
“The use of legal tech and GenAI is creating a conundrum for the next generation of lawyers. GenAI is able to do the work of juniors, and more senior lawyers are needed to oversee the application of AI, but how will these lawyers be trained? Meanwhile, the pool of law graduates will get more competitive as there is no longer the need for large law firms to hire hundreds of interns and junior associates each year.
“If universities and law schools don’t keep up with the developments in AI, there will be a gap between the skills that graduates have and the jobs they are expected to do.”
Knowledge is king
Much of the weight of bringing training up to speed will fall on law firm knowledge teams, which have seen their role and authority grow exponentially.
Jean-Rémi de Maistre, CEO of Jus Mundi says that this year, knowledge management will continue to evolve, commenting: “Knowledge management will continue to evolve and grow in relevance. AI relies on knowledge to be efficient. Firms with the best knowledge management will power the best AI skills. Instead of just storing information, firms must now develop, measure, and record the knowledge that AI cannot replace. This means being able to review AI-assisted work carefully. It also means utilizing specialized tools effectively and applying human judgment to complex issues. Firms will go beyond collecting precedents by capturing processes, prompts, and best practices. Codifying and sharing these competencies will become a new source of competitive advantage. Openness, experimentation, and continuous learning will also remain essential.”
LexSoft Systems CEO Carlos Garcia-Egocheaga added: “This next year will see the knowledge management function take a direction that focuses on a more advanced and mature way of leveraging AI.
“Conversational AI agents, such as Copilot, Claude, Gemini, or others, will be the primary interfaces that lawyers use for interrogating and searching knowledge management systems, information repositories, and business platforms. Lawyers will expect conversational AI interfaces that understand context, anticipate needs, and autonomously coordinate information retrieval, delivering complete answers or finished work, as opposed to mere search results.
“This represents a major departure from conventional knowledge search. Instead of traditional knowledge search using keywords, lawyers will give complex, multi-step queries in natural human language to AI agents who will then seamlessly execute the task – even working with multiple AI agents in the background – gathering information from across business systems and platforms to deliver complete, comprehensive answers.”
Knowledge managers will continue to lead selection processes, albeit that much of the focus now is on more sophisticated dives, with Andrew Thompson, CTO at Orbital, observing: “The biggest development we’ll see in 2026 is specialist AI companies going hyper-specific as their core strategy. With OpenAI, Anthropic, and Google pouring billions into building models with general intelligence, specialist players are taking a different approach, going deep into specific domains where intelligence alone isn’t enough and contextual data matters just as much. AI products that are specialised for the entire legal domain are already here, but the next step is to go even deeper by building for specific domains that require more expertise than a general approach can offer.
“Law firms should be asking vendors: what have you built specifically for our domain? Can your system access and understand the industry-specific data sources that lawyers currently pull in manually to perform work on behalf of their clients?”
The big picture – an open mindset
The cumulative picture for this year is one of high hopes for change, couched with a warning that change must be strategic and sustainable.
Much of this, at the end of the day, will come down to mindset. The legal profession is still – and will always be – a human-led profession. Change takes bravery, and it is important as we look forward, to reflect on how much already has changed.
At Jylo, founder and CEO Shawn Curran told us: “A year ago, some law firms told us their lawyers would never engage in chain prompting or prompt conditionality in our platform. One year on, lawyers in these firms are vibe coding competitor products to Jylo.
“In 2026, the industry needs to reset its bias and embrace open-mindedness about the future – a new era is upon us!”
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