The number of UK-founded legaltech companies jumped by 17% last year to 315 amid record levels of investment in the sector, according to new research.
The jump in start-ups is recorded in LawtechUK’s latest investment snapshot report, which also reveals that the total investment in UK legaltech firms rose by 35% in 2025 to hit £188.8m.
Publication of the research has coincided with a pledge by the UK government to invest a further £4.5m in LawtechUK, a Ministry of Justice (MoJ) backed body which aims to drive technological innovation and boost legal services providers’ understanding of legal technology.
The government is also investing a further £12m in the MoJ’s Justice AI-Unit which has been tasked with using the technology to boost efficiency within the cash-strapped court system.
LawtechUK’s latest research found that in the second half of 2025, 20 UK-founded lawtech companies secured £42m in funding, with an average raise of £2.1m, boosting total investments for the year to £188.8m.
“This signals a market moving beyond early experimentation toward sustained confidence in lawtech as a scalable asset class,” the report says. “This momentum is reinforced by a healthy acquisition landscape, with four deals completed in H2 and 12 across the full year, indicating sustained investor confidence as the sector moves into 2026.”
The additional investment in LawtechUK was announced at Microsoft’s AI Tour roadshow in London on Tuesday (24 February) by David Lammy, the UK’s justice secretary and deputy prime minister.
The MoJ has committed to three separate payments of £1.5m spread out over the next three years to LawtechUK, which offers free education programmes with four stages of support, including legal technology monitoring. To date, the body has received £7.5m in government funding since its launch seven years ago.
Lammy also unveiled a further £12m investment in the MoJ’s AI unit, which is preparing to pilot a new AI listing assistant – J-AI – for judges in the criminal courts based on technology that has already been utilised in the NHS to cut hospital waiting times.
Lammy said: “J-AI will process all the information and data available to the judiciary and help them to make more intuitive listing decisions: to flag cases that may need court action to help them progress, to estimate time needed for each case to help efficient scheduling and to identify opportunities to list additional cases.”
A national roll-out of the AI listing assistant will be sanctioned on the proviso that the pilot scheme is successful.
AI for legal advisors and district judges in the magistrates’ courts is also being piloted, with the aim of speeding up case progression by transcribing material and summarising judgments.
Lammy emphasised how the MoJ has been using AI via Microsoft Copilot, a conversational AI-powered assistant that helps boost productivity and streamline workflows.
Justice Transcribe, an AI pilot from last year which records meetings, removing the need for handwritten notes, is estimated to have saved 25,000 working hours.
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