AI adoption in legal sector risks leaving small firms behind

LawtechUK has issued a warning regarding the growing disparity between large and small law firms, highlighting that smaller practices are facing significant challenges in leveraging emerging AI technologies to remain competitive. The UK lawtech sector has undergone remarkable growth, with over 90% expansion since 2020, resulting in more than 380 companies now operating in the field. The data reveal that while over 82% of UK lawyers are either utilising or plan to adopt AI tools, larger firms are leading this charge—nearly 80% of them have integrated AI into their operations, compared to just 37% of small firms.

Christina Blacklaws, Chair of the LawtechUK Advisory Panel, noted that "investment in UK lawtech reached nearly £140 million in 2024, with almost a third of that amount going to participants in the LawtechUK programmes." She further added that adapting AI tools leads to lower operating costs and higher client satisfaction; however, hurdles remain, including client restrictions and legal privilege concerns. Informal feedback from a recent conference identified training gaps and cultural resistance as the most significant barriers for small firms in adopting legal technology.

Beth Fellner from LawtechUK expressed concern about the implications of this divide, saying, "there’s a lot of talk about AI transforming legal services, but transformation for who? If small firms are left behind, clients lose out, and so does the wider economy." She emphasised the value of LawtechUK in supporting smaller firms to overcome digital challenges. Additional barriers to adoption revealed by another survey included cost, outdated infrastructure, and limited technical confidence.

In response to these challenges, LawtechUK's mission is to drive digital transformation within the legal sector through various initiatives such as free training programmes, adoption toolkits, and partnerships with local law societies. Their ecosystem is designed to assist small and medium-sized law firms, making it easier for them to adopt suitable technology.

One example of a supportive tool is GitLaw, which provides free legal document templates, aiming to alleviate the financial pressures on small firms. Nick Holzherr, co-founder of GitLaw, stressed the need for accessible tools during automation trends and said, “many tools are either poor quality or far too expensive, even though the underlying ‘frontier’ AI models are already incredibly powerful.”

Additionally, London-based Genie AI aims to support small legal firms by enabling the efficient production of high-quality legal documents. Its user base largely consists of firms with fewer than 50 lawyers. Genie AI's CEO, Rafie Faruq, highlighted the necessity for democratizing legal technology access, stating that "the rapid AI adoption in BigLaw risks leaving smaller legal practices and businesses behind." He advocates for providing broad access to legal AI to spur productivity growth across the entire legal landscape.

As the legal sector evolves, the disparity between large and small firms regarding technology adoption raises critical questions about the future landscape of legal services in the UK. Without targeted support for smaller firms, the potential benefits of AI could remain unattainable, undermining both client service and economic growth within the sector.