How LegalTech & AI Are Reshaping the Legal Industry in 2025

Is AI Really Changing the Way Legal Professionals Work?

LegalTech adoption is accelerating, but is it delivering on its promises? Over the past year AI - especially Generative AI (GenAI) has sparked intense debates in the legal industry. Some believe it will revolutionise legal workflows, while others argue that it’s overhyped and still struggling to meet the profession’s high standards.

Our latest Definely LegalTech Adoption Report 2025 dives into the real-world impact of LegalTech and AI, uncovering what’s working, what’s not and what the future holds for in-house teams and private practice.

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LegalTech adoption: where are we now?

The increase in AI-driven solutions, automation and legal tools has redefined how legal professionals manage contracts, compliance and casework. Yet, our research reveals that adoption isn’t as seamless as many expect.

• Less than one-third of legal professionals are fully satisfied with their LegalTech investments. 
• Budget constraints (50%) and integration challenges (41%) remain top barriers to adoption.
• Over 40% of respondents feel their AI adoption is behind or uncertain compared to their peers.
• Security and confidentiality remain major concerns, with firms closely scrutinising how AI tools handle sensitive legal data.

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The AI trust gap

AI’s integration into legal workflows has created a divide. While some firms are actively exploring AI-driven legal research and contract automation, for example, others remain hesitant. Our findings show that security and confidentiality concerns remain a top priority:

• 75% of respondents cite accuracy and reliability as a primary issue with AI-generated legal work.
• Many legal professionals remain cautious about fully relying on AI for critical legal tasks.
• Resistance to change remains a key barrier, with over a third of respondents still skeptical about the benefits of AI adoption.

Lawyers operate in a field where precision matters, and AI’s inability to guarantee accuracy continues to be a sticking point.

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LegalTech and the changing relationship between in-house teams & external counsel

One of the shifts we’re seeing is how LegalTech influences the relationship between in-house teams and external counsel.

• More legal teams are looking to self-serve technology to reduce spend on routine work.
• Automation is gaining traction, but many still see external legal expertise as essential for high-value, strategic matters.
• A significant number of legal professionals remain cautious about relying on AI for critical tasks like contract analysis and document automation.

Despite these shifts, many legal professionals firmly believe that advice from external counsel will always be necessary. While technology can automate tasks and improve efficiency, it cannot replace the expertise, critical thinking and nuanced judgment that external counsel provides. Organisations should prioritise using technology to enhance existing processes, not replace them. As AI and automation improve, in-house teams are becoming more self-sufficient, relying less on external counsel for routine legal tasks. This shift could have implications for law firms, requiring them to redefine their value.

What’s next for AI & LegalTech?

LegalTech is evolving rapidly, but challenges remain. Firms and legal departments looking to stay ahead should focus on:

• Investing in AI solutions that deliver measurable ROI and align with legal workflows
• Prioritising security and data privacy when selecting LegalTech vendors
• Enhancing AI transparency and accuracy to build trust among legal professionals
• Improving collaboration between firms and clients by leveraging integrated tech solutions

As the industry continues to adapt, one thing is clear: LegalTech and AI aren’t going away - firms that fail to embrace change risk being left behind.

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