"Law firms dramatically accelerated their technology investments in 2025, with spending on tech and knowledge management tools growing 9.7% and 10.5% respectively - the fastest real growth likely ever experienced in the legal industry, according to the newly released 2026 Report on the State of the US Legal Market from Thomson Reuters and Georgetown Law's Center on Ethics and the Legal Profession."
"The surge in technology spending comes as firms race to deploy generative AI capabilities while simultaneously managing record demand growth that saw billable hours increase 2.5% for the year, hitting as high as 4.4% growth in July. However, the report warns that "tectonic forces" in the legal industry are creating fundamental tensions between transformative technology investments and outdated billing structures."
""Such changes streamlined workflows but left the fundamental practice of law untouched. Now, the use of advanced AI-driven technology like generative AI represents something different: A technology that can draft briefs, analyze contracts, and synthesize case law in ways that can actually alter how legal work gets done. For an industry that's operated essentially the same way since Langdell introduced the case method in the 1870s, this is uncharted territory.""
Law firms accelerated technology investments in 2025, with spending on tech and knowledge-management tools rising 9.7% and 10.5% respectively. Firms raced to deploy generative AI capabilities while managing record demand growth; billable hours increased 2.5% for the year and peaked at 4.4% in July. Technology spending growth outpaced core inflation by seven percentage points, representing the most significant investment acceleration since at least 2007. Talent costs rose 8.2%, increasing pressure on firm economics. Advanced AI tools can draft briefs, analyze contracts, and synthesize case law, creating fundamental tensions with outdated billing structures. Firms with intentional AI deployment plans appear to be gaining competitive benefits.
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