AI usage in the legal sector has quadrupled in a single year, with 80% of firms now using artificial intelligence tools — up from just 22% in 2024 — according to new research released by digital-first insurer Embroker.

The findings, published in the Legal Industry 2025 Risk Index, signal a dramatic acceleration in digital adoption among legal professionals, with AI now widely seen as both a business enabler and a strategic tool for mitigating risk.

Insurance and Cyber Protection on the Rise

The survey also points to a parallel shift in how firms approach risk coverage and insurance planning:

• 45% of respondents said they plan to expand their insurance coverage — a steep rise from 14% in 2024.
• 77% of legal professionals now believe their current insurance policies adequately cover their most significant business risks.

Cybersecurity remains top of mind, with more lawyers now recognising the need for dedicated cyber insurance in the face of growing threats related to data handling, AI tools, and digital workflows.

AI Brings New Liabilities Alongside Efficiency

While AI adoption is largely seen as a positive development, it comes with new challenges. Legal professionals are alert to professional liability risks linked to AI integration:

• 43% cite potential malpractice or liability issues.
• 38% are concerned about data privacy breaches.
• 37% warn of legal and ethical implications stemming from misuse or over-reliance on AI tools.

“Legal professionals are rapidly integrating AI into their workflows, but this surge in adoption introduces novel professional liability risks that firms must proactively manage,” said Andy Lea, Chief Insurance Officer at Embroker.

Internal and External Risks Continue to Evolve

The index also highlights a shift in perceived risk categories:

Internally, firms are now more focused on reputational damage and employment-related claims, replacing previous concerns about rising operational costs.

Externally, adapting to disruptive technologies has overtaken professional liability and cybersecurity as the top-ranked business risk.

Risk vs Growth Opportunity

Despite a slight dip in overall business optimism, more firms now see risk as a catalyst for innovation and growth:

The proportion of legal professionals viewing risk as an opportunity has doubled — from 18% in 2024 to 37% in 2025.

In response, law firms are prioritising:

• Infrastructure improvements
• Technological upgrades
• Revenue and sales growth strategies

The report paints a picture of a profession in transition — one that is embracing innovation, strengthening insurance protections, and responding boldly to emerging threats. As AI integration accelerates and external pressures mount, legal businesses are actively reshaping their approach to resilience and risk.

The full report is available to download on Embroker’s website here