The legal industry is currently awash with predictions about AI, many of them suggesting the profession is on the cusp of dramatic change.
While headlines frequently focus on how generative AI could reduce demand for lawyers, the latest employment figures paint a slightly different picture. According to Reuters, employment across the US legal sector continued to edge higher in May, with the total number of lawyers, paralegals, judges and legal support professionals reaching 1.24 million. Preliminary figures show an increase of 1,200 roles compared with April, while overall legal sector employment has grown by 7.6% over the past five years.
At first glance, this appears contradictory; if AI is making lawyers more efficient, shouldn't firms need fewer of them?
The reality is far more nuanced.
AI is not simply changing the economics of legal work, it is changing what legal work looks like, how it is delivered and where lawyers create value.
AI's impact on the business of law
One of the most interesting observations from conversations on Sonder’s podcast ‘Just Briefly’ has been that AI's impact extends beyond efficiency. As Lizzie Lu, Corporate Partner at Baker McKenzie explained, firms are increasingly beginning to rethink traditional hourly billing models in favour of value-led pricing structures.
For decades, much of the legal profession has been built around time, but if technology enables lawyers to complete certain tasks more quickly, clients are unlikely to accept paying the same fees simply because work took fewer hours. As a result, firms are increasingly focused on the value delivered rather than the time recorded. So we'll see what transpires here in the months and years to come.
More time for higher-value work?
AI's most immediate impact may not be reducing the number of lawyers; it may be changing how lawyers spend their time.
As Frank Aquila of Sullivan & Cromwell recently said on Just Briefly: "In the new era [of AI utilisation], lawyers will be able to do more substantive work."
That observation reflects a growing view across the legal industry. Rather than replacing lawyers, AI is increasingly being used to automate routine and time-intensive tasks such as document review, legal research, due diligence and contract analysis. Work that may once have taken hours can often now be completed in a fraction of the time, allowing lawyers to focus on higher-value activities such as client advisory work, negotiation and strategic problem-solving.
Many of the world's leading law firms are not treating AI as a future possibility; they are actively investing in it today. While Sullivan & Cromwell has publicly encouraged lawyers to embrace and experiment with AI tools, firms such as Freshfields have gone a step further, expanding their AI capabilities through partnerships with technology providers including Anthropic and Google Cloud. Platforms such as Harvey and Legora are also taking the legal industry by storm.
Similar trends can be seen in Australia, where firms such as Clayton Utz, MinterEllison and Allens have been among the most active adopters of legal technology. Across the market, AI is increasingly being used to support research, due diligence and document review, while maintaining lawyer oversight and accountability.
Notably, MinterEllison recently reduced graduate hiring as part of its broader AI transition. However, this appears to be the exception rather than the rule. Across much of the legal market, investment in AI is occurring alongside continued investment in people, training and long-term talent development.
This reflects an important distinction. The tasks most susceptible to automation tend to be repetitive, process-driven and administrative, whereas the work clients value most relies on judgment, negotiation, commercial awareness and relationship management: capabilities that remain distinctly human.
As a result, AI is creating an opportunity for lawyers to spend less time on routine processes and more time advising clients on complex legal and commercial issues. For clients, this may mean faster turnaround times and more efficient service delivery. For lawyers, it may mean spending more of their careers focused on the work that creates the greatest value.
What we're seeing in the talent market
From a recruitment perspective, the market presents an interesting picture.
Over the last few years, we have observed a noticeable reduction in demand for newly qualified lawyers compared to previous hiring cycles. There are likely multiple reasons for this. Many firms have invested heavily in their own internal recruiting functions and graduate talent pipelines. At the same time, advances in legal technology and AI may be reducing the volume of junior-level work that historically served as an entry point into private practice.
Recent US data appears to support that trend. At the 100 largest law firms, the total number of first-year associates remained broadly unchanged between 2024 and 2025, while the average size of first-year classes continued to decline. In other words, firms are still hiring junior lawyers, but they may be becoming more selective about how many they bring in and how that work is structured.
Beyond the NQ level, however, demand for legal talent remains exceptionally strong. Mid-level and senior associates continue to be highly sought after across many of the world's leading law firms. While there is no definitive evidence linking AI directly to this trend, it is reasonable to ask whether technology is contributing to a higher bar for entry.
As law firms build increasingly sophisticated technology platforms, knowledge systems and operational infrastructure, the premium placed on exceptional legal talent may continue to rise. Firms may need fewer lawyers to perform routine tasks, but greater numbers of highly skilled lawyers capable of delivering complex advice, exercising commercial judgement and managing client relationships.
Many firms continue to compete aggressively for top talent. Partner mobility remains active, associate salaries continue to rise in key markets, and high-performing lawyers remain in demand.
The market appears to be rewarding expertise, relationships and commercial judgement just as much as it ever has.
What this means for lawyers
The question is no longer whether AI will transform the profession; it already is.
Historically, junior lawyers developed their skills through document review, legal research, and drafting. As AI takes on more of these tasks, the way lawyers are trained will inevitably evolve. While nobody knows exactly what the profession will look like in a decade, firms remain heavily invested in developing the next generation of talent. Today's associates are tomorrow's partners.
For lawyers, the message is simple: embrace the technology, but don't lose sight of the skills that have always mattered. Commercial judgment, communication, relationship-building, and strategic thinking remain fundamental to long-term success.
AI will change how legal work is delivered. What it is far less likely to change is the demand for talented lawyers who can solve complex problems and provide trusted advice.
The lawyers who thrive in the years ahead are unlikely to be those competing with AI, but those who learn how to work alongside it.
