9 ways AI is reshaping the legal industry in 2026-2027

Legal AI in 2026: From pilot program to everyday practice

A year ago, the question was whether lawyers would use AI. In 2026, it’s whether they can afford not to.

AI adoption across the legal industry has surged. ILTA’s 2026 Technology Survey of more than 500 firms found that 94% of law firms are now using or exploring generative AI, up from 80% a year earlier. Inside corporate legal departments, AI use has climbed from 23% in 2024 to 52% in 2025 and 85% in 2026, according to the Association of Corporate Counsel (ACC).

AI’s reach across the legal world is widening just as fast. This year, it reached the Texas Supreme Court in a case about AI deposition transcripts. It sparked new statewide court rules and a first-of-its-kind California law. It’s reshaping the billable hour, and it’s giving overstretched courts new ways to tackle the court reporter shortage.

Here are nine exciting ways AI is changing legal work for attorneys, court reporters, and courtrooms now and heading into 2027. Plus, get tips on what to look for in AI tools so you’re using technology that delivers accuracy you can actually rely on.

1. Legal AI went from experiment to everyday tool

Most law firms now have AI tools, but far fewer are using them to their full potential. ILTA’s survey found Microsoft 365 Copilot in use at 76% of firms, followed by a cluster of legal research and AI assistant tools at 43% to 44%. Yet only two tools reach at least half of a firm’s lawyers: Copilot (52%) and Westlaw Advantage (50%), according to LawNext’s coverage.

That gap is fast becoming a competitive divide. With nearly every firm investing in AI, using it well is no longer a nice-to-have. It’s what clients expect, and firms that wait risk losing ground to faster, leaner competitors that are already putting AI to work. Adoption numbers also depend on who’s asked. Everlaw’s 2026 Legal AI Adoption & Impact Report found that 49% of legal professionals use generative AI in their own work, which means firms that move now can still get ahead.

2. Big Tech and Big Law are betting big on legal AI

Law firms are putting real money behind AI. In a Law.com survey, nearly 70% of Am Law 100 respondents said AI and innovation spending rose more than 5% through Q2 2026, and over a quarter expect increases above 15% by year-end.

AI products built specifically for lawyers are multiplying, and big firms are rolling them out:

• Microsoft launched a Legal Agent in Word (April 2026).

• Anthropic launched Claude for Legal, with 20 legal platform connectors and 12 practice-area plug-ins (May 2026).

• Google launched Gemini Enterprise for Legal (August 2026).

• OpenAI launched Astra for Law, which searches more than 230 million URLs of U.S. law (September 2026).

• Verbit advanced its Legal Visor technology and capabilities, giving attorneys real-time insights during and after depositions and litigation, from flagging inconsistent testimony to surfacing key admissions.

• Law firms are adopting AI training tools firmwide. Littler (May 2026), Brownstein Hyatt Farber Schreck (June 2026), Fisher Phillips – nearly 900 attorneys, and Ogletree Deakins – roughly 1,100 attorneys (both September 2026) have rolled out DepoSim, the AI deposition simulator developed by AltaClaro in partnership with Verbit.

What this means for legal teams: Powerful AI models are now widely available, so the real advantage comes from the quality of what you feed them. An AI that summarizes a deposition is only as reliable as the transcript behind it.

3. AI is putting the billable hour to the test

Citi’s law firm research, reported by Bloomberg Law, found that three-fourths of firms expect AI to affect the billable hour model by 2028. About half say it already has, and two-thirds say associates use AI daily. Yet demand for lawyer hours rose 4.2% in the first half of 2026, compared with a typical rate of about 1.5%. So far, AI isn’t shrinking legal work. It’s changing how the hours are spent.

Firms are adapting. Ropes & Gray now lets its more than 1,000 associates and counsel count 100 hours of AI experimentation and training toward their billable targets.

Clients are pushing, too. In the Thomson Reuters Institute’s 2026 Future of Professionals research, almost one-third of corporate legal professionals said they’re reconsidering relationships with firms that can’t show AI-driven value within 12 months. Only 6% said most of their firms deliver the productivity gains they expect.

See what AI could save your team: Enter your deposition volume into the Legal Visor ROI calculator to estimate your time and cost savings.

4. AI deposition transcripts are getting their day in court

One of the year’s most closely watched legal tech cases is about transcripts. In In re Hughey, a Texas trial court struck an AI-generated deposition transcript because a certified shorthand reporter hadn’t prepared it, and an appeals court agreed. When the Texas Supreme Court heard the case in October 2026, the justices seemed open to allowing AI transcripts, largely because verified video can confirm accuracy. “There’s an error in the transcript, and we’ve got the video and we can just watch that,” Justice Kyle Hawkins said.

The National Court Reporters Association filed a brief opposing the AI transcript, so the stakes are high on both sides. Whatever the court decides, the debate is shifting from “human vs. machine” to verifiability: Can you trust the record, and can you prove it? That’s why verbatim accuracy still matters in legal transcription.

It’s also where Verbit stands out. Verbit’s legal transcription solutions pair proprietary AI optimized for legal terminology with human expertise. Law firms and court reporters get fast turnaround on deposition transcripts without giving up the verbatim accuracy a record needs to hold up. Learn more about the benefits of AI transcription for legal teams.

5. The court reporter shortage is rewriting the rules of the legal record

A Texas A&M study commissioned by the state’s court administration office lays out the math (summary findings):

• Active certified shorthand reporters in Texas fell 14% from FY2005 to FY2025, while the number of trial benches grew more than 14%.

• Nationally, about 1,120 stenographers retire each year, and only about 200 enter the field.

• Digital court recording costs about $72,733 per courtroom per year, compared with $118,000 to $168,000 for a certified reporter.

• 42 of Texas’s 254 counties already authorize electronic recording.

Other states face the same pressure. In August 2026, the California Supreme Court ruled 7-0 that courts must provide an official verbatim record to low-income civil litigants who request one, including by electronic recording when no reporter is available. As the opinion put it, “a verbatim record created by electronic recording is better than no record at all.” In Oklahoma, 75 of 198 court reporter positions are vacant, and lawmakers are weighing a 12-courtroom recording pilot.

Notably, the Texas study recommends a trained human recorder in every courtroom. The opportunity isn’t replacing people. It’s giving each skilled professional far more reach. For stenographers, AI is fast becoming a court reporter’s secret weapon. For newcomers, digital court reporting is a growing career path. Tools like Verbit Legal Capture help both groups produce accurate records faster.

6. Agentic AI is the next frontier for legal work

Agentic AI is AI that can plan and carry out multi-step tasks on its own, rather than just answering one prompt at a time. It’s the biggest buzzword in legal tech for 2026, and the numbers vary widely. DISCO’s 2026 report found that 62% of legal respondents say they use agentic AI. The ACC’s in-house research found fully autonomous AI below 5% in every workstream studied. In practice, most legal teams use agents for defined tasks, with lawyers reviewing the results.

As agentic AI matures, here’s what it could offer legal teams:

• Less administrative work: Agents can build case chronologies, organize exhibits, and draft routine discovery requests and correspondence.

• Faster document review: They can work through large document sets and flag what needs a lawyer’s attention first.

• Connected workflows: Instead of switching between tools, agents can carry work from transcript to summary to follow-up tasks in a single flow.

• More time for high-value work: Every hour saved on process goes back to client counseling, case strategy, and trial prep.

Ethics guidance is keeping pace. Alabama’s Formal Opinion 2026-01 explicitly covers agentic AI. It reminds lawyers to verify AI output and keep fees reasonable when AI cuts the time a task takes.

7. Courts are writing their own AI rulebooks

After years of individual judges issuing their own standing orders, 2026 brought broader AI rules for courts and lawyers:

• New York, AI rule for attorney filings (effective June 1, 2026): Lawyers must independently confirm that AI-assisted filings contain no fake or fabricated cases. They don’t have to disclose AI use.

• Florida, statewide AI policy for lawyers (effective June 15, 2026): A single statewide policy replaced a patchwork of local orders. By signing a filing, a lawyer confirms that every cited authority exists and is cited accurately.

• Iowa, rules for judges’ own AI use (effective January 1, 2027): New court rules set standards for how judges use AI and create a committee to approve AI tools.

• California, a first-of-its-kind AI law for lawyers and arbitrators (signed September 2026): SB 574 requires lawyers to verify citations and bars them from handing the practice of law to AI or entering confidential information into public AI tools. Arbitrators can’t hand their decisions to AI.

• Federal courts, national AI guidance (final recommendations expected by the end of 2026): The judiciary’s AI task force has identified more than 60 issues to address. Its interim guidance warns against using AI for core judicial functions like decision-making, and final recommendations are targeted for the end of 2026.

Courts are still early in using AI themselves. A Thomson Reuters Institute and National Center for State Courts (NCSC) survey found that about half of state courts have an AI policy or governance body, but just over 10% have built AI into daily operations. Meanwhile, 59% reported staffing shortages in the past year. For more on where courtroom technology is heading, see how legal technology improves courtrooms and legal practices.

9. AI skills are becoming core legal skills

The next generation of lawyers will train with AI from day one. Starting in fall 2026, UNLV’s Boyd School of Law requires first-year students to take a course on the responsible use of AI. The National Conference of Bar Examiners (NCBE) has piloted NextGen bar exam questions, some drafted with AI assistance, under AI-assisted remote proctoring with human review.

AI is also changing how practicing lawyers sharpen their courtroom skills, and DepoSim is leading the way. Developed by AltaClaro in partnership with Verbit, it’s the first AI deposition simulator built for lawyers. Instead of waiting years to rack up real deposition experience, attorneys can step into a realistic, live deposition on demand. AI agents play the witness, opposing counsel, and court reporter, so lawyers have to handle objections, exhibits, and unexpected answers in real time. Each session ends with rubric-based feedback within minutes, and with adjustable difficulty and unlimited sessions, skills that once took years to build can grow in weeks. To turn that practice into a repeatable prep process, see the Legal Visor Deposition Playbook.

The firms investing in AI are winning the race for top legal talent, too. Thomson Reuters’ Future of Professionals research found that almost a quarter of law firm professionals would turn down a job at a firm without professional-grade AI tools.

Legal AI risks to watch: Hallucinations, privilege, and compliance

The opportunity legal AI offers is real, and so are the risks. Here’s what smart legal teams are watching as they choose AI tools for legal work in 2026-2027.

• Fake case citations are still a problem. Researcher Damien Charlotin’s AI Hallucination Cases database has logged 2,184 court decisions worldwide involving AI-fabricated content, including 1,492 in the U.S. and 864 involving lawyers (as of October 10, 2026). The penalties are getting tougher. In June 2026, the Ninth Circuit suspended two attorneys for six months over AI-generated briefs with fake citations.

• Unapproved “shadow AI” tools create blind spots. The ACC found that 41% of in-house legal departments don’t check for shadow AI, meaning employees using AI tools the company hasn’t approved. In 73% of departments, a non-legal team such as IT gives final approval on AI tools.

• Attorney-client privilege and confidentiality are being tested. In Tate Group Automotive v. Legacy Automotive Capital, the Texas Business Court ruled that materials uploaded to ChatGPT kept their work-product protection. But the party still had to identify every discovery document it shared with the tool. In California, SB 574 now bars lawyers from entering confidential client information into public AI tools.

• The return on AI spending is hard to prove. An Axiom report found that 83% of in-house teams can’t tell whether their AI spending is paying off, and only 7% have scaled AI across their organization.

• The record has to hold up in court. As In re Hughey shows, an AI transcript is only useful if it can survive a challenge. Look for legal transcription with verbatim accuracy, verifiable audio or video, human review where it counts, and enterprise-grade security.

The takeaway: AI should speed up legal judgment, not replace it. Verify the output, protect client data, and keep a human accountable for the result.

The bottom line: Why accurate legal transcription is the foundation of legal AI

Every trend on this list comes back to one thing: legal AI is only as strong as the record behind it. Deposition summaries, real-time case insights, and agentic workflows all start with what was said in the room. If the transcript is wrong, everything built on it is wrong too.

That’s why law firms, courts, and court reporters turn to Verbit. Verbit combines proprietary AI optimized for legal terminology with human expertise to deliver accurate, verbatim legal transcription at the speed modern litigation demands. Legal Capture helps court reporters and courts cover more proceedings and produce reliable records faster. Legal Visor gives attorneys real-time insight during and after depositions, so they can catch inconsistencies and act on key testimony while it still matters.

The legal teams that win in 2027 won’t just use AI. They’ll use AI they can trust. Book a demo to see how Verbit can help your team get there faster.