Legal: where the industry stands with AI

Where legal stands with AI

Legal practice in October 2026 uses AI at most firms for first drafts, document review and research, and the profession's rules have settled on one answer to it: the lawyer who signs checks the output and answers for it. In the 2026 survey of the International Legal Technology Association (ILTA), a trade body for law-firm technology staff, 94% of more than 500 mostly US member firms said they use or are testing generative AI. The tools changed who does the first pass. The signature still decides who is responsible.

Use is ordinary. In a May 2026 survey by Clio, the practice-management software (the system that holds a firm's cases, documents and billing) many small firms run, about three in four US solo practitioners (lawyers practicing alone) and small firms used AI for legal work. Fewer than a third had seen revenue rise from it, and Clio's own explanation is the hourly bill: time saved turns into fewer hours billed. Brazil looks similar: the São Paulo bar, OAB-SP, reported in March 2026 that 77% of lawyers there use AI often.

Still promise: a tool that runs a matter on its own from intake to filing, and proof that the savings reach either the client or the firm. We found no independent test of the newest models from the big AI labs on real legal work, so the accuracy figures you will be quoted come from vendors.

What changed since August

California wrote the checking duty into law. Governor Gavin Newsom signed SB 574 on 30 September 2026, the first US state law on how lawyers use generative AI, in force from 1 January 2027 (Bloomberg Law, 30 September). A lawyer who files a paper in a California court must personally verify every citation in it and disclose when generative AI helped write it, and must keep confidential client information out of open-access AI tools; tools limited to the firm remain allowed (Ropes & Gray client alert, October 2026). Our piece Legal: California signs lawyer AI law as assistants reach small firms covers what it means for daily work.

England's regulator moved from guidance to warning. The Solicitors Regulation Authority (SRA), which licenses solicitors in England and Wales, issued a warning notice on misuse of AI on 17 August 2026 after 42 reports of possible AI misconduct in a year (SRA, 17 August). Days later the profession's disciplinary tribunal struck off a lawyer, ending his right to practice, for using AI-invented authorities in his own defense (Legal Futures; Legal Cheek, September 2026).

The AI labs moved closer to law firms. On 17 September OpenAI released Astra for Law, a version of its GPT-6 Astra model built around an index of US case law, sold by invitation to large US firms with no published price (SiliconANGLE, 17 September). For small firms the closer move came on 23 September, when 8am, the company behind the MyCase practice-management system, released a connector letting the Claude assistant read a firm's records there, under the permissions already set (8am, 23 September).

Best practices now

The check is a named step. Someone opens the source for every citation before filing, and the file records who. The Florida Supreme Court made that a statewide rule from 15 June 2026: whoever signs a filing certifies that every cited authority exists and is cited accurately, replacing judge-by-judge orders (Jones Day, June 2026). Spain's national bar council set the same line in an April 2026 circular and advises firms to record when and why they used AI (Abogacía Española, 10 April).

Client facts go only into tools under contract. In February 2026 two US federal courts split. A New York judge held that a defendant's chats with a consumer chatbot were not privileged, meaning the other side could demand them, while a Michigan court protected a self-represented plaintiff's ChatGPT prompts (Orrick, March 2026).

Pricing is where small firms leave money behind. Large US firms raised hourly rates by more than 7% in the second quarter of 2026 (Thomson Reuters Institute, Law Firm Financial Index), and Thomson Reuters' June 2026 survey of legal professionals found most firms had not changed their pricing to reflect AI. The working move is a fixed fee on routine matters, with the checking and the sign-off as the priced product, the argument Era Haus made in Where the Work Goes When AI Makes It Cheap.

Some large firms are rewriting training around AI. Sidley Austin's London office added a compulsory AI placement for every trainee from September 2026 (Legal Cheek, September 2026).

What firms and their clients are doing

Freshfields, the London-founded firm, signed a multi-year deal with Anthropic on 23 April 2026 to give its 5,700 staff the company's assistant and build legal tools together (Freshfields, April 2026). Morgan & Morgan, the largest US personal-injury firm, said on 14 September it will spend at least $1 billion on AI over ten years. It plans to license its own platform, MX2, which pulls medical records and drafts documents, to other firms from late 2027 (Bloomberg Law, September 2026).

Clients are building too. On 8 October AT&T named its in-house legal unit, LegalEdge, a design partner for OpenAI's legal tools; the unit was set up in January to keep work AT&T used to send to outside firms (AT&T newsroom, 8 October). Neither AT&T nor the firms above has published a savings figure.

New firms sell the routine work at a fixed price. Falcon, a Belgian firm launched on 1 October, reviews six contracts a month for a flat €1,000, each signed off by a lawyer and aimed at small European businesses (Artificial Lawyer, 2 October).

In Latin America the firms bought into the vendor. When Magnar, a Chilean legal AI platform trained on local law, raised US$8 million in September, two of the region's leading law firms, Argentina's Beccar Varela among them, were investors. Magnar says close to 30,000 lawyers use it and is entering Brazil and Mexico (Latin Lawyer, September 2026).

The tools, by size of firm

Corporate. Microsoft 365 Copilot leads, at 76% of the mostly US firms in the ILTA survey: lawyers draft, summarize and search inside Word and Outlook. Thomson Reuters CoCounsel, a research assistant tied to the Westlaw case-law database, and Anthropic's Claude each reached 44%. Harvey is a large-firm tool that drafts and checks documents against the firm's own past work, used by 84% of firms with more than 700 lawyers (LawNext, September 2026); it publishes no price. Legora, a Swedish rival to Harvey, announced offices in Madrid and Munich in June 2026 to sell to large firms there (Legora newsroom).

Small business. The AI a small firm already has usually sits inside its practice-management system. In the US and other English-speaking markets, Clio has sold Clio Work, a research and drafting workspace built on the vLex legal database it bought in November 2025, on its own since April 2026, and added court-docket search in August (LawNext, April and August 2026). MyCase users can now question their own case files and invoices through Claude. Spellbook, an add-in for Microsoft Word, checks a contract clause by clause against a firm's standard positions (Spellbook, June 2026); it publishes no price.

Freelance and solo. Clio's May 2026 report flags heavy use of general chatbots such as ChatGPT among solos and small firms, mostly for first drafts and document summaries. The rule from the privilege cases applies most here: no client facts in a consumer account. A solo lawyer in Chile or Argentina has Magnar. No independent survey shows what solo lawyers in Mexico or Argentina actually use.

What to watch over the next year

The checking duty becoming the written rule. California's law takes effect on 1 January 2027. The US Tenth Circuit, the federal appeals court for six western states, has proposed a rule requiring filers to certify that a human verified any AI-assisted filing, to start in January 2027 (FindLaw, September 2026). If more courts copy Florida, a firm can keep one verification routine instead of reading each judge's orders.

Discipline moving from fines to the license. Chile's Supreme Court suspended a lawyer for a month in June 2026 over chatbot-invented citations (Emol, 4 June). The US Fifth Circuit heard argument on 31 August on whether a case should be reassigned after a judge's clerk drafted an order with AI-invented material, and had not ruled by 13 October (Mississippi Today, 1 September). Brazil's federal bar launched a national AI plan in June; a binding rule from it would put written AI duties on every lawyer in Brazil.

Confidentiality and insurance. In a May 2026 survey by the broker EPIC, 7 of 13 US lawyers' liability insurers reported more AI-related claims over the past year, and some insurers already write AI exclusions into their policies (Insurance Business, May 2026). An appeals court ruling on the privilege split, or an exclusion in your own renewal, would turn "use a contracted tool" from good practice into a buying requirement.