At LegalWeek New York, organized by Law.com, the focus was unmistakable: legal technology and the rapidly expanding role of AI in legal services. With a large number of exhibitors showcasing tools designed to improve and transform legal work, AI dominated both the exhibition floor and the strategic discussions.
Several major announcements during the week illustrated the enormous momentum in the sector. Legal AI company Legora announced a $550M Series D funding round, valuing the company at $5.55B, and also revealed its acquisition of Walter AI, a team building an agent-native legal AI platform where AI agents can execute legal workflows. At the same time, Harvey announced a partnership with The LegalTech Fund to invest in new startups.
A particularly interesting side event hosted by LegalTech Hub gathered CEOs, founders of legal tech companies and investors, offering a valuable glimpse into the scale of capital now flowing into the sector. The event opened with a keynote by Nick Baughan
Nick Baughan, Marks Baughan
from Marks Baughan, followed by several engaging panel discussions exploring the different investment strategies shaping the legal tech landscape. One theme that emerged clearly was how different types of players are approaching innovation. Incumbents such as Thomson Reuters benefit from vast proprietary data but often rely on acquisitions to maintain innovation speed. Private-equity-backed SaaS platforms such as Clio, Litera and Diligent are expanding their platforms through deeper workflow integration and by adding new technology capabilities. At the same time, highly valued AI-native companies such as Harvey and Legora are reaching valuations where an eventual IPO could become the next natural step.
In short, it is a very good time to be building a legal tech company.
Nikki Shaver, Legaltech Hub, Fiona McClune, StrucrureFlow and Helena Hallgarn, VQ
But how are law firms responding?
An excellent keynote at the conference: “2026 State of the Industry” by Patrick Fuller and Heather Nevitt, highlighted the strategic challenge facing law firms today.
Financially, many firms are doing very well: rates are increasing, profits remain strong and headcounts
are growing. Ironically, this success can create complacency even as clients’ expectations change.
Corporate legal departments increasingly expect faster, cheaper and smarter services, and many also want proactive AI-driven insights. Yet the internal readiness of law firms still lags behind the ambition. Firms rate their AI adoption at around 4.5 out of 7, while lawyers’ readiness to use AI tools is rated at 3.9 out of 7. Although 75% of firms offer AI training, many are not investing in the specialist roles required to support real transformation.
Perhaps the biggest obstacle lies in incentives. Most firms still reward lawyers primarily based on billable hours, and 72% of firms have no plans to change compensation structures to reflect AI use. At the same time, only 19% have adjusted pricing models to account for AI-enabled efficiency.
The keynote compared the current moment in the legal industry with companies such as Apple and Netflix, which were willing to reinvent their business models even when it threatened existing revenue streams. They disrupted themselves before the market forced them to.
The message for law firms was clear: adopting AI tools alone will not be enough. Real transformation requires redesigning pricing models, incentives, workflows and client relationships.
The firms that win in the AI era will not necessarily be those that adopted the technology first.
They will be the ones that redesign their business models to make it work.
The key question for leadership in legal services today is therefore simple:
What are you willing to redesign?
