AI set to define law firm profitability as adoption gaps widen across the profession

Sydney, Australia - 23 March 2026 - Australian law firms are increasingly seeing artificial intelligence as central to improving productivity and profitability, but uneven adoption of the technology risks creating a growing performance divide across the profession according to new global research from LEAP Legal Software.

The survey of 700 legal professionals, globally including 219 in Australia and New Zealand, suggest firms that integrate AI effectively may gain an efficiency and margin advantage, while slower adopters risk falling behind.

In Australia, 92% of legal professionals believe their firms have moderate to high potential to improve profitability, with 50% saying that potential has increased over the past year. At the same time, 65% report that profitability is now a high or top priority in business decision-making, signalling a profession increasingly focused on operational performance rather than expansion alone.

However, the research shows that pricing pressure, administrative workload and uneven AI implementation are also shaping firms' ability to convert that ambition into results.

 "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," said Tina Shergold, Head of LEAP Australia and New Zealand.

"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."

Australian legal professionals lagging on AI adoption

With mounting pressure to improve productivity, 66% of Australian based respondents identified client pricing expectations as a major constraint on revenue growth, the highest for any region. At the same time, many legal professionals are spending significant portions of their day on administrative tasks, limiting the time available for billable or strategic work.

Unsurprisingly, AI is emerging in most regions as one of the profession's most significant efficiency tools. Over half (57%) of global respondents report regular use of integrated AI solutions, however this number drops to 37% in Australia. As a result, globally 71% say the technology is already saving their firm moderate to significant time but this falls to 50% in Australia.

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

 "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."

Pricing pressure and capacity constraints shaping growth

While legal professionals remain optimistic about the revenue potential of their firms, structural constraints are shaping how growth in the Australian market is achieved. Pricing pressures and capacity challenges are affecting how firms scale work effectively, with 37%reporting difficulty delegating or leveraging their teams, suggesting that productivity improvements may depend as much on workflow design as market demand.

 "Australian firms are confident about growth, but they are also operating in one of the most price-sensitive legal markets," said Shergold.

 "That combination is forcing firms to rethink how work is delegated, how teams are structured and how technology supports productivity across the practice."

 Workforce stability and knowledge continuity remain critical

Despite 61% of Australian firms prioritising competitive salaries, retention pressures remain present across the profession, with workload intensity and burnout continuing to influence workforce stability. This instability has led to increased risks in knowledge continuity, with 33% of Australian respondents reporting no documented processes in place when staff leave, creating potential gaps in training, consistency and service delivery.

 In a profession built on expertise, undocumented workflows can quietly undermine operational resilience and financial performance.

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

Technology integration shaping operational efficiency

In Australia, automation of repetitive workflows, document management and legal research tools top the list of technology investments most likely to improve productivity indicating a possible shift toward operational efficiency as a core driver of financial performance.

 At the same time, platform fragmentation continues to affect workflows, with many professionals relying on multiple systems daily. This fragmentation can dilute the intended benefits of technology investments by slowing processes and increasing training demands.

Confidence remains strong, but execution will define outcomes

 Taken together, the findings suggest the legal sector in Australia is entering a phase where profitability will depend less on demand alone and more on how effectively firms manage productivity, technology and knowledge.

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

 Firms that fail to address these operational gaps risk seeing strong client demand translate into weaker financial performance.

 ENDS

Research Methodology

The Profitability in Law: Global Report 2026 draws on a quantitative survey of 700 legal professionals across Australia, New Zealand, the United States, Canada, the United Kingdom and Ireland. Fieldwork was conducted between 10-28 November 2025. Participants included firm leaders, partners, senior practitioners and operational decision-makers representing a range of firm sizes and practice areas. The study examined how firms are managing profitability across four core areas: strategy and revenue, people and retention, technology and operations, and AI adoption. Fieldwork was analysed in January 2026 to identify both global trends and market-level differences in how firms are responding to profitability pressures.

About LEAP Legal Software

LEAP Legal Software is a cloud-based legal practice management platform supporting over 71,000 legal professionals worldwide. With more than 30 years of innovation, LEAP integrates matter management, legal accounting, document automation and AI-driven tools to help law firms operate more efficiently and profitably.

Australian-owned and headquartered in Sydney, LEAP delivers practice-area-specific solutions across Property, Estates, Personal Injury, Criminal Law, Litigation and Family Law, combining deep local expertise with the experience of a global legal technology organisation.