Law firm leaders have a lot to think about in 2025. The pressures facing the legal market aren’t new, but they are intensifying—particularly for mid-market firms, which find themselves caught between well-resourced global firms and agile boutiques. The term ‘mid-market’ is often used as a catch-all, but in reality, it covers a broad spectrum of firms. As a result, while the challenges vary, there are clear themes emerging – and one issue sits firmly at the top of the agenda: artificial intelligence (AI).
No Longer Optional
The past year has seen AI adoption move from an efficiency tool to a fundamental driver of transformation in law firms. For mid-market firms, the challenge is not whether to engage with AI but how to do so effectively. Larger firms can invest at scale, embedding AI across multiple practice areas, while boutique firms—often more flexible—face fewer barriers to adoption. For firms in between, the investment case is trickier. Partners with a smaller profit pool may be hesitant to commit to large-scale AI investments, especially when returns are not immediately clear. Yet, with AI adoption accelerating across the profession, mid-market firms cannot afford to wait on the sidelines.
Simply put, AI is happening whether firms are ready or not. The key question is whether they put a framework in place to harness the benefits—or risk being left behind as competitors integrate AI into their workflows. A strategic, structured approach to AI implementation is now a necessity, not a luxury.
Beyond the technology itself, AI adoption brings communication challenges. Firms must align internally on how AI will reshape workflows and ensure buy-in from partners and staff. Without clear messaging, firms risk internal resistance, particularly from those concerned about job security or the financial outlay required. AI also impacts a firm’s positioning in the recruitment market, as younger lawyers increasingly expect to work in tech-enabled environments. A firm that appears hesitant or directionless on AI risks being left behind by competitors who can demonstrate a clear plan.
Externally, firms must also communicate effectively to clients. In-house teams are already weighing up whether they can use AI to take more work in-house. Firms that proactively show how AI enhances their service delivery—improving speed, accuracy, and cost-effectiveness—will have a competitive advantage. Those that fail to articulate this risk being seen as laggards in an increasingly tech-driven legal market.
The Big Picture
AI is fundamentally reshaping the nature of legal work. It is already streamlining research, document review, contract analysis, and due diligence—tasks that have traditionally underpinned the profitability for a lot of mid-market firms handling volume-based work. For those relying on these types of matters, the challenge is clear: AI-driven efficiencies will reduce billable hours, pushing clients towards alternative pricing models such as fixed fees or value-based billing.
At the top end of the mid-market, firms handling high-value transactions or complex disputes may find it easier to justify premium pricing while incorporating AI. However, those focused on lower-margin, high-volume work will find it much harder to compete if clients—particularly in-house legal teams—are using AI to bring more tasks in-house or are demanding more cost predictability and transparency. AI has the potential to provide more accurate time estimates and billing forecasts, but firms must decide how to balance efficiency gains with their revenue model.
This shift in workflow requires a corresponding shift in communication strategy. Firms must be able to clearly articulate their AI approach, both internally and externally. Internally, lawyers and support staff need to understand how AI will be integrated into their roles and what this means for their career development. Externally, firms must position themselves effectively to prospective clients, explaining how AI improves their service quality while maintaining the human expertise that remains essential to legal work. Firms that fail to communicate these benefits risk being perceived as either slow adopters or as firms that are overly reliant on AI without a clear value proposition for clients.
Some firms might be looking at their legal project management (LPM) systems as a way to navigate these pressures, using AI to assist with how they plan, budget, and execute work more effectively. AI-enhanced LPM tools can automate task allocation, predict potential bottlenecks, and improve communication with clients.
For firms that adopt these tools, the benefits include better cost control, greater transparency, and improved client outcomes. AI-driven LPM can provide firms with an edge against both global competitors (by offering more flexibility and agility) and ALSPs (by demonstrating enhanced efficiency and project oversight). However, firms should be mindful of how they communicate these efficiencies to clients. If clients perceive AI-driven LPM as a cost-cutting measure rather than a value-enhancing tool, it could create resistance rather than reassurance. Firms must clearly articulate how these innovations improve service quality, rather than simply making the firm more profitable.
The challenge for mid-market firms is not just adopting AI but doing so in a way that aligns with their business model. Firms must be strategic about where they implement AI, focusing first on areas where efficiency gains translate directly into competitive advantage. Clear internal communication is essential to ensure alignment on AI strategy and expectations. Externally, firms must proactively explain to clients how AI enhances service delivery and improves value. A compelling AI strategy will also be a differentiator in attracting and retaining legal talent. Lawyers and support staff need the skills to leverage AI effectively, and a firm’s success with AI will depend on how well its people understand and integrate it into their workflows.
Mid-market firms in 2025 do not have the luxury of ignoring AI. Those that embrace the shift, build the right frameworks, and communicate effectively will not only survive but thrive. The firms that hesitate, waiting for a ‘perfect’ moment to invest, may find the window closing faster than expected.
