Australian law firms lag peers in legal AI adoption

LEAP Legal Software has published research showing Australian law firms are trailing global peers in the use of legal-specific artificial intelligence tools. The study surveyed 700 legal professionals across six markets.

The findings point to a widening gap between firms embedding AI in legal work and those that remain cautious, particularly in Australia, where adoption and trust levels are lower than in other regions. In Australia, 16% of respondents use legal-specific AI daily or as part of core workflows, compared with 49% globally. Meanwhile, 32% reported low or no trust in AI integration, the highest share of any market covered.

For many firms, this sits alongside a broader push to improve margins as pricing pressure and administrative work weigh on legal practices. In Australia, 92% of legal professionals said their firms had moderate to high potential to improve profitability, and 50% said that potential had increased over the past year. Another 65% said profitability was now a high or top priority in business decision-making.

Client expectations on price emerged as a particular pressure point in the Australian market. The research found 66% of Australia-based respondents saw client pricing expectations as a major constraint on revenue growth, the highest proportion among the regions surveyed.

That pressure is driving greater interest in tools that can reduce time spent on routine tasks. Document review and analysis was identified by 54% of Australian respondents as a key use case for AI, while 49% said AI-driven drafting and document generation would improve profitability.

Regular use of integrated AI solutions also remains below the global average. Worldwide, 57% of respondents reported regular use of integrated AI tools, compared with 37% in Australia. Globally, 71% said the technology was already saving their firm moderate to significant time, while the figure in Australia was 50%.

One Australian firm cited in the research reported saving 10 to 15 hours a week through AI tools, illustrating how efficiency gains are already being measured in practice rather than theory.

Productivity divide

The data suggests a split is forming between firms using AI to streamline legal work and those still relying on more traditional processes. Tina Shergold, Head of LEAP Australia and New Zealand, said the economics of legal practice were shifting.

"The Australian legal sector is entering a phase where profitability will depend less on how much work firms win and more on how efficiently that work is delivered," Shergold said.

"Firms remain confident about growth, but pricing pressure and rising operational complexity mean productivity gains will increasingly determine how successfully firms convert demand into sustainable margins."

Her comments reflect a market where firms are not short of demand but face limits in turning that work into profit. The study found 37% of Australian respondents reported difficulty delegating or leveraging their teams, suggesting staffing structures and workflow design may be limiting output.

Trust and caution

Australia's lower adoption rate appears linked in part to concern about the reliability of AI in legal work. Accuracy and risk remain central considerations in a sector where errors can carry professional and financial consequences.

"Our research shows that Australian firms are currently behind other markets in the adoption of legal-specific AI tools," Shergold said.

"While the caution is understandable given the importance of accuracy in legal work, firms that delay adoption too long risk missing out on the productivity gains that AI is already delivering elsewhere."

Technology use is also spread across several systems rather than concentrated in a single workflow. In Australia, 68% of respondents said they were using three or more platforms as part of their digital workflows. That level of fragmentation can slow work and add training demands, reducing the benefit of software investment.

Automation of repetitive workflows, document management and legal research tools ranked among the technology investments seen as most likely to improve productivity in the Australian market.

Workforce pressure

The research also points to operational risks beyond technology. Although 61% of Australian firms said competitive salaries were a priority, retention pressure remains a concern, with workload intensity and burnout continuing to affect workforce stability.

Knowledge management is one area where that strain is visible. A third of Australian respondents, or 33%, said their firms had no documented processes in place when staff leave. In practice, that creates the possibility of lost know-how, inconsistent training and weaker service delivery.

"Many firms are operating with lean teams and limited support staff, which means experienced practitioners are carrying a large share of the administrative and knowledge burden," Shergold said.

"Improving how knowledge is captured and shared within the firm is becoming increasingly important for maintaining both efficiency and service quality."

The study covered legal professionals in Australia, New Zealand, the UK, Ireland, the US and Canada, including firm leaders, partners, senior practitioners and operational decision-makers from a range of firm sizes and practice areas. The findings suggest confidence remains strong across the Australian legal sector, but the gap between firms that improve delivery and those that do not will increasingly shape financial results.

"The Australian legal sector is in a strong position, with firms confident about their future growth," Shergold said.

"The challenge now is how firms translate that confidence into more efficient ways of delivering legal work, particularly as pricing pressure and operational complexity continue to increase."