Legal services firms are redesigning their businesses around AI faster than any other professional services sector, according to new research from Barclays, and almost all of them say they will spend more over the next year.
Legal services firms are further ahead than other professional services businesses in reshaping how they work around AI, and almost all of them expect to spend more over the next year, according to research published by Barclays on 11 November 2026.
How far ahead are legal firms on AI?
Nearly a third of legal services firms, 32%, say they have redesigned their business model and workflows to make full use of AI. That compares with 16% across business and professional services as a whole and 9% among property services firms. A further 26% say AI is widely embedded across several business functions.
The figures come from the Barclays Business Prosperity Index, a quarterly survey the bank has run since late 2024. This round was carried out by Censuswide between 16 and 23 October 2026 among 1,100 senior managers across business and professional services, of whom 125 worked in legal services. The legal-sector findings therefore rest on a comparatively small base and should be read as indicative rather than precise.
Firms already using AI report practical gains. Three in 10, 30%, cite a greater ability to scale operations, and 28% report faster service delivery.
How much do firms plan to invest?
More than nine in 10 legal services firms, 93%, say they are likely to increase investment over the next 12 months. That is eight percentage points above the business and professional services average. Almost half, 48%, describe themselves as very likely to increase investment, against 32% across all the sectors surveyed, which Barclays says is the highest proportion of any sector in the research.
Confidence is high on a longer view. Some 97% say they are confident about their business over the next three years, and 63% expect their next major phase of growth to be focused in the UK, compared with 55% across business and professional services overall.
Barclays says its own anonymised client data points the same way. Comparing Q3 2026 with Q3 2025, loan balances among legal practices rose 12.7% and the number of loans increased 4.5%. That client data covers around 204,000 business and professional services firms across the bank’s business banking and UK corporate divisions, not legal practices alone.
Firms also appear to be planning further out. More than four in 10, 42%, say they are making major investment, sourcing and supply-chain decisions much further ahead than they were 12 months ago.
What is holding AI adoption back?
The barriers firms cite are the ones that tend to occupy compliance officers. Data security leads at 33%, followed by workforce resistance at 27%, implementation costs at 26% and concerns about accuracy, also 26%.
Those last two sit alongside a regulatory backdrop that has tightened this year. The SRA published its warning notice on the misuse of AI in August 2026, which deals directly with both inaccurate output and client information entering AI systems without adequate safeguards.
Where is client demand growing?
Demand is rising fastest in the areas where clients are under pressure. Some 74% of legal services firms report increased demand for regulatory and compliance advice. Cybersecurity and data protection work and restructuring, turnaround and insolvency support each sit at 73%, with AI strategy, implementation and governance at 72%.
Regulatory change is being read as an opportunity as much as a burden. More than a quarter, 25%, say it is helping them develop new services, and 27% say it is encouraging investment in technology and automation.
What skills do firms say they need?
Skills shortages remain a constraint, though legal firms report them less often than the wider sector. Across business and professional services, 71% say skilled labour shortages are affecting their ability to grow. Among legal firms the figure is 63%, with 31% citing upskilling existing staff as a workforce challenge.
On investment priorities, data and legacy systems lead at 21%, with AI and automation and product or service development both at 20%. Looking out three years, firms expect cybersecurity skills to matter most at 28%, followed by risk and compliance and AI and digital skills, both at 23%.
What does Barclays say?
Barclays said its £22bn Business Prosperity Fund, which provides lending and refinancing to eligible business banking and UK corporate banking clients, is available to firms investing in technology and people.