When prompted to deliver an assessment of the current state of generative AI adoption at U.S. law firms, ChatGPT responds, “As U.S. law firms enter 2026, GenAI use is spreading fast but unevenly.”
Fair enough. But law firm leaders might offer a somewhat more complex assessment than the world’s best-known chatbot. As many of the surveys and reports on AI released during the last year have acknowledged, law firms are asking deeper questions about artificial intelligence and how they can extract the greatest return on their investment.
Firms “unanimously agree that lawyer productivity will increase dramatically” as a result of AI tools, according to one Harvard University study. Clearly, however, the hype is running into reality. Some firms may have even entered what the International Legal Technology Association termed a “trough of disillusionment,” a moment when inflated expectations and excitement about a new technology remain unrealized.
In fact, the last year may be looked upon as a turning point in AI’s development in the legal industry—the moment when firms moved beyond the “gee-whiz” excitement of a new tech toy and started demanding proof that it will actually transform their businesses.
Cutting the Fat
As the American Bar Association’s recent report on AI’s impact on the law noted, “AI is no longer an abstract concept.”
Indeed, Best Law Firms found in its most recent annual survey of nearly 5,000 U.S. law firms that 70% are either exploring the potential for generative AI adoption or have launched pilot projects to test tools in select practices. Large law firms have made the most progress, with nearly a quarter saying they have fully implemented generative AI tools across multiple practice areas.
“If Al is going to have longevity among organizations, they have to be able to show a viable return on investment (ROI) as a direct result of their investment in Al,” Thomson Reuters noted in a 2025 report. “When GenAI burst upon the public scene just 2½ years ago, many professionals initially thought about ROI just in terms of efficiency, most commonly measured in time and cost saved. Not surprisingly, that is still where we're seeing many organizations chalk up their early ROI victories.”
The Next Frontier of Productivity
Best Law Firms, in its annual U.S. survey, asked midsize and larger firms about the ways they are currently using AI tools and how they plan to deploy them in the future. AI, they said, is already transforming legal research and cutting time-intensive tasks in the marketing department, such as developing content and creating client pitches. Many also told Best Law Firms that they were using AI to enhance the firm’s knowledge management systems and to automate routine correspondence.
Those results are promising. Firms are seeing faster matter turnaround and fewer associate hours spent on lower-value work. In one example cited by Harvard University’s Center on the Legal Profession, an AI-driven complaint response cut associate response time from 16 hours to three or four minutes. “Lawyers have seen productivity gains greater than 100 times,” the Harvard research noted. “Using AI for the automation of initial drafting has demonstrated not only time savings but also increased accuracy.”
As one in-house counsel quoted by Law.com said at an Association of Corporate Counsel panel discussion, “AI is like the Ozempic of legal work. It’s removing all the fat—removing all the extra tasks that you do not want to do.”
Preserving Billables
With many seeing major gains in productivity in litigation support and discovery, knowledge management, and marketing and business development, law firm leaders might fear AI’s impact on billable hours and revenue. The picture may be brighter than it appears, however.
Harvard’s research, which focused on the perspectives of Am Law 100 firms on the integration of artificial intelligence into their operations, asked whether clients or firms benefit when productivity dramatically increases. Most firms told Harvard that stronger productivity benefits both, “although the exact mechanisms were not yet clear.”
Ninety percent of firms interviewed by Harvard said that “the total number of hours worked would be similar or even expand while attorneys will have the opportunity to spend more time on analysis and strategy…Conveniently, their clients agreed with this expectation and are comfortable with the current fee arrangement systems and approach.”
Indeed, in its survey of nearly 5,000 U.S. firms, Best Law Firms found that 40% of firms believe AI is having an appreciable impact on their billing practices. However, more firms said they were seeing an increase in efficiency without a decrease of billable hours than a reduction in billable hours for certain tasks.
Where Firms Are Struggling
Sixty percent of lawyers now say artificial intelligence is a must for their practice, and 95% believe AI will be a central component of their workflows within five years, according to a recent Thomson-Reuters survey.
Nonetheless, firms continue to struggle with significant questions around AI adoption. Embroker, a business insurance provider, noted in an April 2025 report that many firms are hesitating to adopt AI tools because of concerns around data privacy, misuse or unintended consequences, and security vulnerabilities.
In that report, 41% of the 200 law U.S. firms Embroker surveyed saw data privacy as a fundamental concern, regardless of the size or practice focus of the firm. Thirty-nine percent cited security vulnerabilities, cyberattacks or data breaches targeting AI systems. Overall, three-quarters of the lawyers surveyed said that, in general, they were cautious about using AI tools.
The most cited reason for such caution? Legal and ethical issues due to misuse or unintended consequences of AI technology. Some 42% of respondents said ethical issues were their most significant concern.
They have good reason to remain vigilant. According to Damien Charlotin, a French lawyer and data scientist who is tracking AI hallucinations in cases around the globe, courts have found significant AI-produced hallucinations in 736 cases since April 2023. Of those, more than two thirds have occurred in the United States.
A Plan Is Good for ROI
Despite these concerns, data from the International Legal Technology Association finds that only 45% of law firms have an official policy on the use of generative AI tools or on vetted or sanctioned tools and applications.
The lack of a visible plan for AI not only poses potential ethical risks, but it could also be a competitive hazard. In its 2025 Future of Professionals Report, Thomson Reuters found that firms with a visible AI strategy were twice as likely to experience revenue growth as those with “more informal or ad-hoc adoption approaches” and nearly four times more likely to see some form of ROI compared to other firms. “That puts those organizations that haven’t developed an AI strategy at risk of being left behind within a matter of years,” the report said.
More than half of the firms in Thomson’s survey said they are already seeing return on investment from AI. Efficiency and productivity are the most noticeable immediate benefits. And “more advanced organizations now are starting to also see wider ROI opportunities.” These include leveraging AI to improve quality, enhance the client experience, improve work-life balance, build skills, and attract and retain talent.
That’s the good news. Potentially more worrisome for firm leaders is the escalating spending on technology and knowledge management. In its just-released report on the state of the legal market in 2026, Thomson reported that the average law firm’s technology budget rose 9.7% in 2025 and knowledge management increased 10.5%. The last year has seen “the most rapid real growth in these expense categories likely ever experienced,” Thomson said.
A Transparency Gap
Clients are increasingly resisting rate hikes as well and asking their outside counsel when they will see the financial benefits of AI. A 2025 Association of Corporate Counsel survey found that 59% of companies said they “have seen no clear savings yet” from outside counsel who use AI. And among those who have seen positive results, the ACC said, “the most common savings are related to efficiency gains rather than direct cost reductions.”
The lack of clear communication from firms around their AI efforts has created a “transparency gap” that “threatens to stall progress and obscure opportunities for efficiency and cost savings,” the ACC said.
Given growing client frustration, rising costs, and a murky economic forecast, firms would do well to:
1. Ensure They Have a Formal AI Policy. As ILTA’s survey showed, half of firms do not. If firms have just one AI-related goal in 2026, creating an official generative AI policy should be it. The policy should clarify which tools the firm permits or sanction—and which it does not. This will not only reduce risk but may yield competitive advantages as well.
2. Create A Billing Story That Won’t Implode. Before clients demand it, consider what the firm will say when AI speeds up routine work. If a firm tells clients, “AI saved time,” those clients are almost sure think, “our bill should be smaller.”
3. Demonstrate Client-Friendly Transparency. Be ready with smart answers to real questions from clients about your firm’s AI policies. The ACC’s list 10 AI transparency and readiness questions for outside counsel may be good place to start.
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David L. Brown is a legal affairs writer and consultant, who has served as head of editorial at ALM Media, editor-in-chief of The National Law Journal and Legal Times, and executive editor of The American Lawyer. He consults on thought leadership strategy and creates in-depth content for legal industry clients and works closely with Best Law Firms as senior content consultant.
