How AI Is Reshaping the Legal Industry
- Jenny Kay Pollock
- 1 day ago
- 4 min read
By Moha Shah, Venture Capital Leader & Innovation Operator | Fortune 100 to Startups | AI, Mobility, Climate, & Fintech/Insurtech
AI is set to transform many industries, including one of the most storied in the world – the legal sector. In this article, we’ll explore how AI is driving the legal industry’s transformation, AI-native startups to watch, and legal professionals’ views on AI’s impact on law firms’ business models and workflows.
Law is a legacy industry with centuries-old firms like Cadwalader, Wickersham & Taft (1792), Shearman & Sterling (1873, now A&O Shearman following its merger with Allen & Overy in 2024), and Kirkland & Ellis (1909). Before the Gen AI wave, most leading law firms were known for commanding high billable rates and a rigorous work culture often compared to investment bankers’ 80+ hour weeks. According to Mordor Intelligence, the legal services market size in the U.S. is projected to reach $437.1B by 2031.
Since ChatGPT’s launch in November 2022, Gen AI has started to unlock efficiencies across many legal workflows, from reviewing case law to assisting with drafting legal documents, and corporate and in-house legal teams are taking notice.
How Will AI Reshape the Legal Industry?
The legal industry is ripe for AI-driven transformation for several reasons. First, it is a data-rich sector with vast amounts of unstructured data like case law, legal briefs, and contracts – some of which are preserved in libraries or archives around the globe. Gen AI tools and agents can ingest large volumes of data to optimize workflows. Second, the operating model of many law firms is built on traditional staffing models and workflows. Third, most lawyers are trained through a traditional educational curriculum and exams that have remained largely constant over the years. In the U.S., for example, lawyers typically attend college for four years, law school for three years, and then need to pass a state bar exam to practice law.
Today, legal professionals can use AI tools for a range of tasks – conducting legal research, drafting legal documents, analyzing contracts, and more. As more lawyers and legal teams leverage AI, the operating model of law firms is expected to evolve significantly over the next few years – driven largely by AI-native ventures pushing the industry to rethink operational norms and workflows.
AI-Native Legal Tech Startups To Watch
According to Grand View Research, the global AI legal tech market is forecasted to reach $3.9B by 2030. Against this backdrop and the rise of robust Gen AI models, many leading venture capital (VC) firms are backing emerging legal tech startups.
Harvey, founded in 2022, is one of the AI-native legal tech startups aiming to reshape how law firms operate. Harvey’s customers include in-house legal teams and leading law firms. In March 2026, Harvey’s valuation reached $11B in a $200M fundraising round led by Sequoia and GIC. It’s also attracted investors such as Andreessen Horowitz, Coatue, Kleiner Perkins, and OpenAI Startup Fund.
In addition to Harvey, below are fast-scaling AI-native legal tech startups to watch.
Sandstone – Based in NYC and co-founded in 2025 by Nick Fleisher and Jarryd Strydom. Sandstone aims to leverage AI agents to support the workflows of in-house legal teams. In January 2026, it raised a $10M Seed round led by Sequoia.
Eudia – Based in San Francisco and co-founded in 2023 by Omar Haroun, Ashish Agarwal, and David Van Reyk. Eudia’s AI platform serves legal teams across several use cases such as contract management, M&A, litigation, and marketing compliance. In February 2025, Eudia raised a $105M Series A round led by General Catalyst.
Legora – Based in Sweden and co-founded in 2023 by Max Junestrand and Sigge Labor. Legora’s AI-powered capabilities serve legal teams to automate tasks such as reviewing contracts, legal research, and regulatory compliance. As of March 2026, Legora reached a $5.55B valuation in a $550M Series D round led by Accel.
What Do Lawyers Think About AI’s Rise in the Legal Industry?
I’ve worked with many lawyers during my tenure in financial services – a heavily regulated industry – and greatly value their counsel. Some lawyers – current or former – are reluctant to make public remarks on AI’s impact on the legal industry. Andrew Yang, CEO of Noble Mobile and a Columbia Law School alumnus, shared a law firm partner’s anonymized views in an X post on July 25, 2025: “AI is now doing work that used to be done by 1st to 3rd year associates...”
The Center on the Legal Profession at Harvard Law School published a February 2025 article by Senior Research Fellow Robert Couture, which examined AI’s impacts on large law firms’ business models. Couture interviewed chief operating officers and partners at 10 AmLaw100 firms focused on AI deployment, who offered insights across several areas, including productivity gains, client collaboration, billing, and staffing impacts. With the rise of Gen AI tools, Couture’s study revealed interesting insights into staffing models: additional roles, such as data scientists and AI engineers, may be added to the law firms’ staffing, while associate-level hiring would likely remain unchanged. One of Couture’s interviewees noted, “Our staffing models won’t change without generational replacement so the same number of associates will be used.”
Key Takeaways
As legal professionals begin embracing AI tools and AI agents, below are some key takeaways:
The legal sector is evolving as traditional workflows are being reimagined due to innovative AI-native solutions and partnerships with AI-native legal tech startups.
Fast-growing AI-native startups such as Harvey, Eudia, Sandstone, and Legora aim to make many workflows from legal research to drafting legal documents more efficient, enabling legal teams to focus on higher-value tasks like judgment and strategy.
Lawyers’ perspectives on AI’s impact vary, but some believe that AI will transform staffing at law firms.
As AI advances, the operating model of law firms across workflows from staffing to billing is set to evolve.
Additional WxAI Articles: How AI Is Reshaping Other Industries
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