As 2024 comes to a close, legal technology business, Search Acumen, outlines its predictions for 2025. These include:
- 2025 will be a tipping point for AI in the legal sector
- Technology will begin to more significantly challenge traditional business models, particularly around skills and fee structures
- Consolidation in LegalTech sector with drive product quality
2025 will be a tipping point year for AI
Since the launch of Chat GPT in 2022, AI has moved at pace through exploratory phases and into mainstream use. 2025 will be the year when AI use by legal professionals becomes the industry standard. 2025 will see a breakthrough in AI confidence, linked to improved accuracy and personalisation of AI platforms that promote user accessibility. These shifts in confidence will see AI move from being a predominantly tactical tool, to a core strategic priority/capability for firms, with this technology integrated across all business processes and trusted to take on more complex tasks.
Andrew Lloyd, Managing Director of Search Acumen said:
“Through 2024, surveys have shown we have been teetering close to 50% of professionals regularly utilising AI tools to support their work, and in some cases already breaching that threshold. That will conclusively tip over the halfway mark in 2025, making AI the norm, rather than the exception. Beyond individual use, improvements in accuracy will support confidence, while enhancements in user experience of AI platforms will make these tools even easier for legal professionals to pick up and integrate into their workflows. Both of these factors will empower business leaders to take a clear strategic approach to AI integration across all aspects of their businesses Because of this, 2025 will be a year when we start to see AI challenging the fundamentals of legal businesses models that have, for the most part, remained stoic for decades.”
Technology will disrupt traditional law firm business models changing the nature of legal work, and disrupting traditional pricing models
Increased confidence in and strategic use of AI, will mean the first easily noticeable changes to traditional business models. This will happen in two ways. Firstly, changing focus on skills for lawyers and legal support staff. Secondly, albeit it at a slower pace of change, fee structures.
With regards to changing legal roles Andrew Lloyd commented:
“Over the last two years AI has become a mainstay across the legal industry, but still mainly as a support tool for isolated low skill, high volume administration tasks, and, even in this case, with very tight oversight from a human co-pilot. Next year as confidence in the technology improves, AI will be trusted to take on increasingly complex tasks across administration but also, critically, analysis. That shift will trigger more comprehensive changes in what the future of legal careers look like. AI prompt engineering and tool usage will become key features of roles, particularly within legal support and more junior advisory roles, and all roles will become more about providing client insight, rather than account management. Importantly, this isn’t representative of a dystopian vision of the future. These changes are largely being driven through bottom-up adoption by lawyers keen to develop their careers without the burden of unnecessary administration work, rather than through a maelstrom of technological change or top-down imposition by leadership.”
With regards to fee structure roles Andrew Lloyd commented:
“With AI driving efficiency in volume tasks and starting to more consistently automate initial analytics work, 2025 will require some introspection around fee models. On one hand, it will help firms drive competitive pricing, especially in many sectors of commercial law – like social housing due diligence – where fee compression is a real challenge. On the other hand, firms are going to need to think about how they price-in AI-driven efficiencies to maintain attractive margins. I don’t think we’ll suddenly see the industry shift on-masse from hourly rates, but I do think the pace of technological change will mean we start to see firms trialling new pricing models at the margins to understand how they can best capture client demand and balance that with improved profitability.”
LegalTech market consolidation will create better technology products for lawyers
Across the technology space, from proptech to regtech, fintech and legaltech, these markets are maturing through consolidation and mergers and acquisitions (M&A). This will continue in 2025. As clients’ understanding of technology improves and they move from experimental or isolated use cases to a more strategic approach, the onus is shifting within law firms from R&D to clear return on investment. That means a flight towards easy-to-integrate and user-friendly tools and technology one-stop-shops that tackle a multitude of client pain points within a single platform. That evolution in client mindset will solidify the requirement for more significant, professionalised, end-to-end technology platforms. This will in turn drive M&A as the LegalTech sector consolidates to achieve the scale required to deliver these services.
Andrew Lloyd said:
“Most technology verticals have been consolidating as these markets mature, both on the client and supplier side. This will again be a feature of 2025 as client expectations evolve and the preferences for hyper-personalised, user-friendly, end-to-end tech platforms becomes even more established.”
