By Ryan Zahrai, Founder of Zed Law
In 2026, adoption will hinge on two things: platforms must earn trust with measurable efficiency or accuracy results, and practitioners will shape the market by backing tools that solve real legal problems without compromising ethics or security. The age of hype is over; it is time for AI to prove itself in practice.
The past two years have already shown the full cycle. Firms tried everything, pushed the early tools hard, and worked out very quickly what held up and what fell apart under pressure. Some outputs were impressive. Some were unusable. Others got firms and lawyers in trouble before courts, with fake case citations. And once the excitement settled, one truth became obvious: adoption was never about novelty. It was always going to come down to performance and return.
Most firms are well past the experimentation phase now. The Thomson Reuters Tech, AI and the Law 2024 report found that close to two thirds of firms already (or at least report to) have an AI strategy or a responsible-use policy in place. Curiosity is over. The industry has moved into the stage where people want results they can rely on, not tools that look good in a demo.
And that shift brought the real questions to the front.
- What does it save?
- What does it protect?
- What does it earn?
Those are commercial questions, not hype questions. They are also the questions that will define which platforms survive the next year and which ones quietly disappear.
Where the Money Is Actually Moving
AI has delivered internal efficiency everywhere. Lawyers are already saving serious time. Some estimates put it at close to 190 hours a year per practitioner. Research cycles are faster. Drafting takes less time. Repetitive tasks no longer clog the pipeline.
But here is the tension the profession has walked straight into: almost none of that efficiency shows up for clients when it comes to pricing.
In the U.S., an ACC survey showed almost 60 percent of in-house teams still haven’t seen any real savings from their external firms’ use of AI, which tells the efficiency is there, but the value isn’t reaching the client.
Time-based billing sits at the centre of the issue. Firms are charging on a model that reflects how work used to be done, not how it is done now. AI has cut the time on routine work to a fraction of what it was, yet the pricing structure has barely moved. That position is becoming harder to justify. Not because clients want cheap work, but because they want to pay for judgement and commercial clarity, not the machine-assisted parts of the process.
We addressed that tension early. Our routine work moves through our AI-first systems, and a lawyer signs off on the output. It removes bottlenecks, gives us predictable delivery, and exposes the true cost of the work. Once you know that, value pricing becomes the obvious path. And when you break your firm away from time billing to efficiency driven value based pricing, margins actually increase.
Where we can, we don’t bill for the hours AI saves. We bill for the result. Clients pay for the part that matters. They do not subsidise inefficiency or legacy pricing psychology. And because the model aligns with reality, it builds better relationships and better commercial outcomes on both sides.
This is also where lawyer-designed platforms like Veraty make sense. They support high-volume, repeatable work with accuracy and the right safeguards for both non-legal teams enabling on-demand lawyer verification, while also ramping up efficiency gains and margins for lawyers in law firms. They let firms build pricing models around predictable delivery rather than guesswork. It is not about building a bigger tech stack. It is about building a business that matches how work is actually produced.
What Will Drive Adoption in 2026
Three forces will shape the financial side of legal AI over the next year.
- Margin quality: AI improves margin only when pricing keeps pace with delivery cost. Firms holding onto the old model will get a temporary lift, then run into resistance when clients start reviewing how the work is being done.
- Client expectation: Other industries have already adjusted their pricing for AI-assisted work. Law will follow. In-house teams now understand which parts of a matter are routine, which parts are automated, and which parts require proper legal judgement. They will choose firms that deliver routine work quickly, accurately, and at a price that reflects reality.
- Revenue stability: AI finally makes advisory subscriptions, fixed retainers, and embedded legal services commercially viable. These models baseline for speed and give firms compounding revenue instead of relying on time, while freeing up lawyers to provide the edge case value and nuanced advice that AI won’t pick up. For clients, they create predictable budgets. For firms, they produce stable, defensible margin without stretching hours. For the first time in memory, there’s a win/win.
The Structural Shifts Behind the Money
Beneath the financial pressure, several structural shifts are shaping the next phase of adoption.
The tolerance for unproven tools has collapsed. Firms are not onboarding AI because it sounds promising. They are testing accuracy under load, consistency across matter types, and how much oversight the tool actually requires. The bar is higher because the profession knows what failure looks like.
Specialist providers will move ahead. Legal practice is too regulated and too risk-sensitive for generic systems. Firms now understand the difference between tools that feel helpful and platforms that are safe enough to build a workflow around. That distinction will only sharpen as the regulatory environment tightens.
Data governance has become non-negotiable. Firms are restricting what they upload, how long it is retained, and where it flows. Boards and procurement teams are asking harder questions about privacy and security. Innovation is still moving, but with stronger guardrails.
The market will stay split. Some firms will deepen their AI use because their clients expect speed and consistency. Others will remain manual by choice or risk profile. Adoption has moved from a universal expectation to a strategic decision based on practice area, client base, and commercial model.
More than half of Australian firms are planning to increase their legal-tech spend this year, but they’re not buying just anything with an AI label on it. They’re backing tools that actually hold up in real matters and referral counts — document review, research, drafting — the parts of the workflow where the efficiency is real.
Where the Competitive Edge Sits
The firms that get ahead will be the ones that treat AI as part of their operating model, not their marketing. Routine work moves through the system. Lawyers focus on the decisions that actually shift a matter. Pricing reflects the value delivered, not the minutes spent. And the business rewards efficiency instead of punishing it.
The gap is already opening. Some firms are holding onto the old structure and using AI as a quiet margin booster. Others are reshaping how they deliver, price, and support clients because the workflow has genuinely changed. Those firms will build the more durable model.
Clients and business buyers of legal services know the difference. And if they don’t yet, they will. They are not paying premium rates for the automated parts of the job. They are paying for judgement, accuracy, and commercial clarity. AI gives firms the space to lift margin, but the model only works if clients can see the value on their side as well.
The way forward is practical. Use AI where it makes sense. Price in a way that reflects the work clients actually receive. Build a structure that is consistent, predictable, and aligned with how matters are run today.
The firms that do that will set the pace in 2026. The rest will spend the year trying to explain a pricing model that no longer fits the way they work.
Author Bio:
Ryan Zahrai, Founder of Zed Law, offers pragmatic legal solutions for startups and scaling businesses. Known for his “polite intensity,” Ryan’s transparent, business-first approach addresses commercial contracts, capital raising, privacy, and disputes. His clients value his ability to simplify the complex with ethical, results-driven advice.
