AI in Law Firms

Last month, legal AI company Harvey raised $200 million at an $11 billion valuation, while its Stockholm-based rival Legora tripled its valuation to $5.55 billion after a $550 million funding round. The figures reflect how quickly AI has moved from an experiment to an everyday tool in commercial law firms.

Allen & Overy, now A&O Shearman, was the first law firm in the world to deploy generative AI across its business when it adopted Harvey in 2022. Firms including Linklaters, Clifford Chance, Freshfields and Macfarlanes have since built AI into their daily work, and Harvey says more than 100,000 lawyers across 1,300 organisations use it for tasks such as contract analysis, due diligence and drafting. Legora has grown quickly as its main challenger, and the competition between the two has pushed valuations in legal technology to record levels.

Clients are driving much of the change. Legora's chief executive Max Junestrand said general counsel are now writing fixed-fee arrangements into their budgets after years of only discussing them, and that some corporate clients are moving around 10% of their panel firm budgets to the firms that show the most measurable innovation. If work is priced by the task rather than the hour, firms that use AI to work faster keep more of the fee, which changes how law firms make money.

The risks became clear in June 2025, when Dame Victoria Sharp, President of the King's Bench Division, heard two cases in which fake citations had been put before the court. In Ayinde v London Borough of Haringey, a pupil barrister cited five authorities that did not exist, and in Al-Haroun v Qatar National Bank, 18 of 45 citations in an £89 million claim were fictitious. The court referred the lawyers to their regulators, stressed that checking the accuracy of material put before the court is the lawyer's own responsibility and warned that those with leadership responsibilities, such as managing partners, must make sure their firms comply.

Overall, AI is becoming central to how commercial law firms compete and price their work, while the courts have made clear that the professional standards behind that work have not changed.