​The conversation around AI in the legal profession has often been focused on productivity. How much faster can lawyers review documents, complete research or prepare an initial draft?

A new report from Deloitte suggests the impact will go much further than that.

Deloitte’s The AI Imperative: Reshaping of the Legal Industry draws on responses from more than 100 senior legal leaders, including General Counsel, Heads of Legal and Legal Operations Directors across four regions.

The report suggests AI will affect more than how legal work gets done. It could also change which work stays in-house, how firms price their services and the skills legal teams will need (or need to invest in).

The report findings

• AI adoption has moved well beyond the experimental stage. In 2024, 76% of respondents reported no AI adoption. In 2026, only 2% said the same, while 61% were actively deploying AI within their legal functions.

• AI investment is increasing quickly. 79% of legal departments had increased their AI spending year on year. Among those increasing their budgets, the average rise was 67%.

• Legal teams expect a sizeable portion of their workload to change. Respondents estimated that AI could automate or save the equivalent of 28% of legal work within the next two to three years.

• More work may be handled internally. 66% of respondents identified bringing work back from external providers as a priority. Business self-service, where other teams can complete certain legal processes without direct lawyer involvement, was also high on the agenda.

• In-house teams are looking for measurable savings from their advisers. When asked what they wanted from external providers’ use of AI, 78% selected lower costs. Improved quality was the next most common response at 57%.

• The billable hour is expected to come under pressure. 85% of legal leaders believe AI will affect how law firms price their services. The proportion of external work billed hourly is expected to drop from 72% today to 44% within two to three years.

• Legal roles are likely to change before team sizes do. 58% of General Counsel expect their teams to remain broadly similar in size but shift in composition, seniority and skills.

• Most organisations have not yet redesigned their roles. While technology and AI literacy are expected to become increasingly important, 84% of organisations have not yet reshaped legal positions around the use of AI.

What does this mean for law firms?

The message for private practice is that clients will increasingly expect AI efficiencies to be visible.

It may no longer be enough for a firm to say it is using AI internally. In-house clients will want to understand how that technology is improving delivery, reducing unnecessary time and influencing the final fee.

That does not necessarily mean the billable hour will disappear. However, it does suggest greater scrutiny of work that can be completed more efficiently and stronger demand for fixed fees, outcome-based pricing or other arrangements that share the benefit of those efficiencies with the client.

What does it mean for in-house teams?

For in-house legal functions, AI is increasingly being considered as part of a broader operating model rather than simply another piece of software.

The potential to automate routine work, improve self-service and bring selected matters back in-house could help legal teams manage growing workloads without equivalent growth in headcount.

It could also change what in-house teams recruit for. Legal knowledge will remain fundamental, but it may increasingly sit alongside commercial judgement, adaptability, process improvement and confidence working with technology.

More senior lawyers may spend a greater proportion of their time on complex, strategic and business-facing work. At the same time, new positions may emerge across legal operations, legal engineering, knowledge management and AI governance.

Conclusion 

The findings do not suggest that lawyers are about to be replaced by technology. They do suggest that the value placed on different parts of a lawyer’s role will continue to change.

For the New Zealand legal market, the pace and form of adoption may differ between organisations. However, the wider direction is becoming difficult to ignore.

AI is beginning to influence team structures, career pathways, client expectations and the commercial relationship between in-house teams and law firms. The question is moving from whether legal work will change to how firms and legal professionals will respond.

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Source: Deloitte, The AI Imperative: Reshaping of the Legal Industry, June 2026.