New research by Deloitte Legal finds that AI adoption in legal departments has moved rapidly from experimentation to active deployment, with corporate legal teams expecting significant automation, greater cost pressure on external advisers, and a reset of the skills needed in the profession.
Deloitte’s report, The AI Imperative: Reshaping of the Legal Industry, is based on a survey of 121 senior legal leaders worldwide conducted between April and May 2026. The findings point to three major shifts in the legal market: more work being automated or insourced, growing pressure on law firms to change pricing models, and a change in the shape and skills of legal teams.
Key findings:
- 61% of legal departments are now in AI deployment phases, while 10% say AI is fully embedded across daily workflows.
- Just 2% of senior legal leaders report no AI adoption within their organisation, compared to 76% in 2024.
- 61% of legal departments are already experimenting with or piloting agentic AI.
- 79% of legal departments say AI investment has increased year-on-year, with budgets rising by an average of 67% among those increasing spend.
- 78% of legal leaders say cost reduction is the leading benefit they want from external providers use of AI.
- 96% say technology and AI literacy will grow in importance for in-house lawyers, while 84% of organisations have not yet redesigned roles around AI.
- Legal departments expect AI to save or automate an average of 28% of legal work over the next two to three years.
- 85% of legal leaders believe AI will change how law firms’ pricing works, with hourly-rate work expected to fall by more than a quarter (from 72% today to 44%) within two to three years.
Tom Brunt, partner in Deloitte Legal, said: “AI is rapidly shifting from a productivity tool to a structural force in the legal sector. In-house teams are using it to reduce costs, enable business self-service, bring work back in-house and improve the speed and quality of delivery. Legal leaders are now focused on how quickly they can redesign teams, processes and AI-provider relationships to capture these benefits responsibly. The organisations that pull ahead will be those that treat AI as a transformation challenge, not just a technology rollout.
“This however will increase pressure on law firms to demonstrate how AI is being used and how efficiencies are reflected in pricing, with the billable hour model facing greater scrutiny as clients demand more transparent, outcome-based approaches.”
ENDS
About the research
Deloitte’s report, The AI Imperative: Reshaping of the Legal Industry, is based on a survey of 121 senior legal leaders conducted between April and May 2026, supported by RSGI. Respondents included General Counsels, Heads of Legal, Legal Operations Directors and Managing Legal Counsels across multiple industries and regions, including the UK & Ireland, EMEA, APAC and the Americas.
