Artificial intelligence (AI) governance and political instability are primary concerns for law firm leaders in 2026, according to a report from MD Communications.
The survey – What Lies Ahead 2026: Navigating Threats and Seizing Opportunities – highlights the dual pressures of technological transformation and geopolitical volatility on the global legal profession, which is creating heightened uncertainty.
While AI continues to reshape legal technology, concerns persist about its implications. The survey found that 95% of respondents are concerned about AI governance, and 72% about investment costs. Furthermore, 59% reported that technology has reduced the need for trainees or junior lawyers, raising questions about future talent pipelines. Only 5% of respondents said they trusted current AI quality controls.
Melissa Davis, founder and chief executive of MD Communications, said the research findings showed lawyers were “at a crossroads”. She added: “Legal leaders are embracing AI but remain concerned about the governance, investment and quality controls needed to use it safely and credibly.”
The report comes as the International Bar Association (IBA) has repeatedly underscored the need for robust governance of AI within the law, warning that opaque systems risk undermining fundamental rights and the rule of law. The IBA’s own Future of Legal Services Commission cautioned last year that AI governance remained “next year’s problem” for many firms.
William Peake, global managing partner of offshore law firm, Harneys, said: “AI remains the dominant issue and law firms’ sluggish adoption rates suggest that they’re not quite getting it.
“Senior lawyers need to drop the hubris by suggesting that AI will not impact how they do business. It’s an issue that eschews favouritism – we are all impacted and need to act accordingly.”
Political instability is another major factor shaping strategic decisions. The report revealed that 77% of legal leaders expected geopolitical volatility to affect their growth plans in 2026.
Respondents emphasised the importance of international collaboration and cross-border networks to maintain competitiveness in that environment, a theme discussed at the 2025 IBA annual conference.
The report also found that the legal profession is changing, with 19% of respondents saying the dominant partnership model is no longer the best available option for private practice. Some 88% of respondents added that wage increases for newly qualified and junior lawyers were unsustainable in their market segment, underscoring growing unease about the sustainability of traditional business models.
The report also raised concerns about employee wellbeing, with firms facing pressure to compete on factors beyond remuneration, such as culture, flexibility and meaningful work.
Despite such pressures, the report signalled continued commitment to workplace culture and values. Even as law firms faced external pressures to weaken diversity, equity and inclusion (DEI) policies in 2025, most leaders surveyed emphasised that a strong culture – rooted in these values – remained a cornerstone of competitiveness in changing times, a view endorsed by junior lawyers in the report.
Sadiq Jafar, managing partner at Hadef & Partners in Dubai, said: “Business must increasingly appreciate that workplace culture is a key differentiator. As competition for talent intensifies… firms that invest in professional development and articulate a clear sense of purpose will attract and retain the best professionals.”
Despite executive-mandated changes in US DEI policy by the Trump administration, 86% of firms surveyed said they had not reviewed their DEI policies in the last year.
Christine Braamskamp, London managing partner at Jenner & Block and author of the report’s foreword, said: “As I look at the risks identified in people’s contributions to this report, whether geopolitical or business-based, I take the lesson that firms will face change better if they are well run, live their values and have a good culture.”
Davis added that while geopolitical instability was reshaping how firms think about growth and risk, “leaders consistently point to culture and values as their anchor and differentiator”.
The report was compiled through structured interviews and a global survey of 1,400 partners, law firm leaders, legal technologists and bar associations, including the IBA and the Law Society of England and Wales.
Email your news and story ideas to: [email protected]
