The AI Value Gap and Its Implications for Law Firms
As of late September 2026, a new report titled 'The AI Value Gap' has emerged, highlighting a significant issue in AI adoption within UK law firms. While AI integration has become widespread, many firms are struggling to realise the anticipated benefits.
Research from Thomson Reuters indicates that 91% of fee earners believe their organisations are not achieving the full potential of AI. This suggests that the issue is not merely one of under investment. Firms with a clear AI strategy are nearly four times more likely to see measurable returns compared to those without, yet only 18% of firms systematically collect return on investment metrics.
Interestingly, despite the increasing use of AI, billable hours in several major US firms are on the rise, raising questions about the effectiveness of AI in delivering promised time savings. The traditional explanations for this discrepancy, such as immature tools or inadequate governance, do not fully account for the scale of the value gap.
The report suggests that the value gap is fundamentally a confidence gap, particularly among leadership. Evidence from Thomson Reuters’ Stand out Lawyers survey reveals that even among partners who frequently use AI, only about one third have discussed its impact with most clients. This lack of communication hinders the ability of partners to convey the value of AI effectively.
Additionally, there are concerns regarding ownership of the AI generated assets. As firms train AI systems using their partners' accumulated knowledge, questions arise about who reaps the benefits from these systems. The traditional compensation structures, such as billable hours or profit sharing, do not account for the long term value generated by AI.
Firms like Kirkland & Ellis have made substantial investments in proprietary platforms, indicating a shift towards ownership and control rather than merely seeking efficiency. Some firms are even considering establishing their AI capabilities as separate commercial entities to avoid disruption.
The competitive landscape is evolving, with established AI firms now entering the legal application space. Recent launches, such as Anthropic’s Claude for Legal and OpenAI’s Astra for Law, demonstrate that foundation labs are expanding into direct applications, which may challenge existing vendor relationships.
Despite these challenges, the report advocates for a proactive approach to AI strategy. The firms that are successfully closing the value gap are those that have designated accountability for AI adoption, clearly defined their objectives, and engaged in ownership discussions before resentment builds.
As technology continues to advance, the readiness of legal teams to utilise AI effectively will remain a critical factor in determining success. The choice to embrace this technology and ensure accountability lies with the firms themselves.