Key insights:

• • • AI is now a talent and client expectation, not a differentiator 鈥� A large majority of tax & audit professionals regularly use AI, and many employees and clients now expect their firms to have strong AI capabilities.

    • Firms need to choose a deliberate AI strategy 鈥� There are three primary paths for AI adoption, and no matter which a firm chooses, the key message is that firms should actively define their AI direction rather than delay decisions.

    • Successful AI adoption requires governance and people-focused leadership 鈥� Beyond implementing technology, tax & audit firm leaders must establish AI governance, clearly communicate strategy, and align their AI with employee needs.

As AI adoption within the tax & audit profession accelerates 鈥� 81% of professionals say they are now using AI tools regularly 鈥� firm leaders are experiencing unprecedented pressure from talent, clients, and their firm鈥檚 own financial performance, according to the recent 成人VR视频听2026 Future of Professionals Report.

For example, retaining and recruiting top tax talent remains a critical concern in the profession, and AI has just ratcheted up the pressure even more. More than one-quarter of professionals say they would not accept a job at a firm lacking professional-grade AI, and almost 1-in-3 say they would consider leaving if their expectations for AI are not met within the next two years.

To help tax & audit firm leaders better navigate this fraught environment, 成人VR视频 has published a new action paper, Future of Professionals Report 2026: Actionable insights for tax & audit leaders, that provides practical guidance for navigating talent shortages, rising client expectations, and financial pressures, all within the context of the rapidly evolving technological environment.

You can download your copy of the听2026 Future of Professionals Report听here

Many tax & audit professionals surveyed say client expectations are rising, with AI-enabled quality becoming an important criterion for retaining outside tax & audit firms. At the same time, nearly half of respondents say they feel pressure to generate financial gains from AI, while one-third say their firms have yet to adapt commercial models accordingly. If left unaddressed, these pressures can compound, the paper points out, ultimately threatening a firm’s ability to attract and retain both clients and talent.

Finding your strategic path for AI adoption

Fortunately for those tax & audit professionals who feel overwhelmed by the strictures of advanced technology, the paper identifies three primary strategic paths for AI integration that could fit your firm, including:

• • • Using AI to elevate by leveraging AI to handle routine tasks, freeing professionals to focus on complex, high-value advisory work. Firms adopting this path aim to deepen client relationships and command premium fees that are based on expertise rather than volume.
    • Using AI to scale by focusing on productivity and using AI to increase capacity and consistency without increasing headcount. This path is particularly attractive for managing busy tax seasons and reducing recruitment strain.
    • Using AI to reimagine by rethinking the firm鈥檚 entire business model. Instead of periodic compliance, firms provide clients with continuous, proactive support and real-time insights, shifting from a service provider to a strategic partner.

A minority of respondents say their firms are deferring strategic decisions on AI, but the paper warns that any delay carries significant risks, especially as clients and talent expectations increase.

Universal priorities for firm leaders

Regardless of their chosen path, however, the paper outlines four priorities that every firm leader needs to address in order to succeed, including:

1. 1. 1. Govern the tools being used 鈥� More than one-third of professionals admit to using unauthorized AI tools, which greatly increases firms鈥� liability risks. Establishing clear governance, approving secure tools, and providing usage guidance are essential to mitigate these risks.
      2. Clarify the firm鈥檚 strategic direction 鈥� Firms must articulate their AI ambitions, internally and to clients, even if the path is not yet finalized. Understanding whether the goal is efficiency, expertise, or transformation can help guide decisions on tools, pricing, and hiring.
      3. Align AI with your professionals鈥� needs 鈥� Nearly half of professionals say they value work fulfillment as the primary benefit of AI, and a significant portion say they would consider leaving if their expectations go unmet. Engaging with teams to ensure AI deployment aligns with what they want is critical, whether they want more time, more complex work, or both.
      4. Define the role of early-career professionals 鈥� As AI automates more tasks, tax & audit firms must ensure that junior staff still receive the structured development needed to build professional judgment. Ensuring supervision before automation erodes these opportunities is vital for talent success.

As the paper clearly outlines, those tax & audit firm leaders that govern AI effectively, articulate a clear strategy, and invest in their people will be the ones best positioned to succeed in an increasingly AI-driven market.

You can download a full copy of the听Future of Professionals Report 2026: Actionable insights for tax & audit firm leaders听paper here

Key insights:

• • • GCs place increased importance on commerciality 鈥� Business enablement is becoming the fastest-growing priority for corporate legal general counsel, creating an opportunity for UK law firms to not only provide legal advice, but to help GCs demonstrate business value to their C-Suite.

    • Business savviness serves as a differentiator 鈥� When asked why they would select one law firm over another, the proportion of UK GCs mentioning business-savvy saw a marked increase in our latest report, as did the concepts of commerciality, knowledge of the client鈥檚 business, and knowledge of the client鈥檚 sector.

    • Understanding the business is critical in an AI world 鈥� Clients are largely ahead of their outside firms on AI usage and sentiment. As AI automates more routine legal work, successful UK law firms can provide additional value above AI output by translating legal advice into practical business guidance and better commercial outcomes.

The definition of what it means to be a successful law firm in the United Kingdom is expanding. No longer is it enough to simply provide subject matter expertise for clients, with good lawyering becoming table stakes to even be considered for a panel. Neither is it enough to provide this expertise in a cost-saving and time-efficient manner, as clients are increasingly expecting of all firms.

Today, clients are expecting their outside UK law firms to go further into truly understanding the client鈥檚 business proposition, according to the recent 2026 State of the UK Legal Market Report from the 成人VR视频 Institute (TRI). And while efficiency and expertise remain top priorities, more corporate general counsel than ever before are rating business savviness and commerciality as key areas of focus. Clearly, GCs don鈥檛 just want legal advice from their outside firms, they want positive business outcomes.

Rather than provide an additional imposition on firms, however, forward-thinking law firm leaders in the UK will view this as an opportunity to stand out. Particularly in an AI-driven age in which low-level work continues to be automated, leaning into commerciality can offer lawyers a way to showcase their value while providing the positive business outcomes that clients truly desire.

Increased focus on enabling business processes

Client needs for outside counsel have evolved in recent years, simply because the corporate legal department itself has evolved. Business pressure has demanded that GCs turn their departments into a business enabler, rather than a cost center. And now corporate executives are measuring legal department success on how well it supports the rest of the organization.

Amid this pressure, GCs have seen mixed results. They have instituted a number of changes to their departments in recent years, leading to the development of corporate legal operations teams and an increased focus on success metrics that tie back to the rest of the business. And while 86% of global GCs say they believe their legal department is a significant contributor to organizational objectives, according to TRI interviews, only 17% of C-Suite executives agree. GCs are doing the work, but corporate executives aren鈥檛 seeing their preferred results.

In order to close that expectation gap, it鈥檚 unsurprising that GCs are doubling down on business enablement at the top of their agenda. When asked about their strategic priorities over the coming year, efficiency remained the primary focus for most GCs. However, business enablement represented the fastest growing priority, doubling its share of mentions to 27% of GCs in our latest research.

The definition of what it means to enable the business varies depending on the GC, of course. Some mentioned the need to enable business initiatives, others mentioned support specifically for M&A activities, while still others pointed to the imperative to meet changing business needs such as business innovation.

As a result, GCs are now increasingly turning their attention towards how their outside law firms can help with business enablement, and in doing so they鈥檙e shifting their criteria for choosing outside firms in the UK. When asked what drives favorability when selecting one firm over another, the proportion of GCs mentioning business-savvy rose to 37% in our most recent survey, compared to 31% from the year prior. Diving deeper into more specific sub-themes, the concepts of commerciality, knowledge of the client鈥檚 business, and knowledge of the client鈥檚 sector all saw increases in the portion of respondents mentioning those factors.

As the report notes, under real pressure to demonstrate their strategic value upwards, GCs are looking for external advisors that can help them meet their commercial goals. Those UK lawyers who want to stand out can begin by not only providing legal advice, but much-desired business advice as well.

The impact of commercial focus

Law firm leadership and partners in the UK have long said that they鈥檙e happy as long as their clients are happy. However, what does it mean for clients to truly be happy? That definition has shifted over time, and even has different permutations based on clients鈥� industry and geographic location.

When measuring their own success, UK general counsel place less emphasis on compliance & risk compared with their global counterparts, and less emphasis on cost & financial outcomes than do GCs based in the United States. Instead, UK GCs are heavily focused on quality & effectiveness, getting to the best outcome possible regardless of what it takes to get there.

UK law firms should be measuring their own success similarly. As the report notes, the ability to understand a client鈥檚 industry, strategic priorities, and risk tolerance 鈥� and then to translate legal advice into practical guidance for decision-making 鈥� has become central to how today鈥檚 clients select their outside counsel. Although work is cost-sensitive to a degree, law firms will ultimately be judged on their ability to deliver on high-stakes, bet-the-company matters, in which superior outcomes will outweigh marginal cost savings.

This is particularly true in an AI-centric environment. Previously, law firms were more readily able to compete on price for some low-level, repeatable work. Now, however, that work is increasingly being automated away. Clients are largely ahead of their outside law firms in both AI usage and sentiment towards AI鈥檚 impact on the legal industry, the UK report shows.

As the report notes, the ability to understand a client鈥檚 industry, strategic priorities, and risk tolerance 鈥� and then to translate legal advice into practical guidance for decision-making 鈥� has become central to how today鈥檚 clients select their outside counsel.

What’s more, corporate legal departments are becoming unafraid to use AI in those situations in which it makes cost-efficient sense with little legal risk. This means that law firms need to stand out not only from one another, but from the output that internal AI tools can provide.

Understanding the client鈥檚 business context can help provide this additional value, the report notes. That does not mean every lawyer needs to become a business consultant; but it does mean that firms must embed commercial understanding into the way they advise clients, staff matters, manage relationships, and measure success. Lawyers who can connect legal risk to business consequence will be better positioned to earn client trust, strengthen panel relationships, and demonstrate value in ways that AI tools cannot easily replicate.

As corporate legal departments in the Uk and elsewhere continue on their own path to become business enablers, they will increasingly expect their outside counsel to evolve with them. Those firms that thrive will be those that understand not only the law, but the client’s market, pressures, priorities, and definition of success.

In the UK legal market of 2026 and beyond, commerciality is not simply an added benefit 鈥� it is becoming central to what clients believe good lawyering looks like.

You can download a full copy of the 成人VR视频 Institute鈥檚 recent 2026 State of the UK Legal Market Report here

Key takeaways:

• • • The wash sale loophole is likely closing 鈥� For clients that have been harvesting crypto losses and immediately repurchasing the same asset should know that 鈥渨ash sale鈥� strategy may soon work exactly like it does for stocks 鈥� with a mandatory 30-day waiting period.

    • Non-compliant holders have a potential off-ramp 鈥� A proposed voluntary disclosure program would let clients that haven’t properly reported digital asset income to get into compliance with reduced penalties 鈥� but it鈥檚 only available for a limited time.

    • Staking and mining income treatment is changing 鈥� Proposed legislation would allow taxpayers to elect to defer recognizing newly minted digital assets as income, which could be a meaningful planning opportunity for active miners and stakers鈥� or a trap, depending on their situation.

Walk into any conversation with a cryptocurrency-owning client right now and you’re navigating the same awkward reality: The rules are genuinely unclear, have been unclear for years, and yet the IRS has increasingly expected compliance anyway. Now, however, the U.S. House Ways and Means Committee is trying to resolve that tension.

And crypto legislation is one piece of a much larger shift reshaping the tax profession and potentially impacting clients right now. The recent 2026 State of Tax Professionals Report from the 成人VR视频 Institute maps the challenges and opportunities defining the profession this year, including AI adoption, advisory pricing, talent constraints, and the growing gap between what clients want and what firms are charging for it.

Add to that list now, the changes coming for crypto asset owners and their tax, audit & accounting advisors.

New legislative changes for crypto owners

The package of crypto legislation 鈥� a collection of seven separate bills 鈥� currently under consideration by Ways and Means is serious enough that their tax advisors need to start thinking now about what it means for clients.

Some of these new proposals include:

The wash sale rule: A strategy that may be changing

Of all the provisions in the package, extending wash sale rules to digital assets will have the broadest practical impact. Currently, crypto investors can sell at a loss, immediately buy back the same position, and still claim the deduction 鈥� a strategy unavailable to stock investors. The proposed legislation would change that, applying to digital assets the same 30-day before-and-after window that governs stock transactions.

For clients with active portfolios, this isn’t just a planning consideration 鈥� it’s a recordkeeping one. Every transaction would need to be evaluated against a rolling 60-day window across potentially multiple wallets and exchanges. The change to this rule was hardly unexpected 鈥� the question was never really whether the wash sale rule would come to crypto, but when. Tax advisors should begin their honest conversation with clients by acknowledging that.

Mining and staking: A choice with consequences

For clients who mine or earn staking rewards with crypto, the proposed gives crypto miners and stakers the ability to elect to defer income recognition, which would treat newly minted digital assets more like self-created property than an immediate taxable event.

In practice, the calculus is complicated. Deferring income means the cost-based question gets pushed forward, not eliminated. If the asset appreciates significantly before sale, a client who deferred income recognition could face a larger ordinary tax event later. If the asset depreciates, owners have lost the ability to recognize the loss in the year of receipt.

Making the right choice 鈥� with the advice of a tax professional 鈥� depends almost entirely on the client’s individual circumstances, such as their marginal tax rate, their expectations for the asset’s trajectory, and their liquidity needs. This is exactly the conversation that tax professionals need to be having with clients around this issue.

The voluntary disclosure program: A limited window

Perhaps the most immediately actionable provision for many tax advisors is the proposed one-time voluntary disclosure program, which gives taxpayers who haven’t properly reported crypto income the opportunity to get into compliance with reduced penalties and a clean slate.

The IRS has run these programs before, and the pattern is consistent 鈥� the best terms are early, enforcement pressure increases after the deadline, and clients that wait because they hope the problem will disappear tend to regret it.

Simplification and opportunity

Not everything in the package adds complexity. would exclude gains or losses on network fees and regulated US dollar stablecoins by removing a reporting headache that has made crypto compliance so cumbersome for everyday users. And the Charitable Deductions for Digital Asset Donations Act would eliminate the qualified appraisal requirement for donated digital assets when market prices are readily available, lowering the friction on a strategy that has always made good tax sense for clients that holding appreciated crypto with charitable intent.

The tax advisors that will offer their clients the most value in a post-legislation world are the ones already holding these proactive conversations, and reviewing which clients have crypto exposure, identifying which may have unreported income, flagging which miners and stakers should be thinking about the deferral choice, and identifying charitable giving opportunities before the appraisal requirement disappears.

In addition, the voluntary disclosure program is the clearest example of how proactive advisory work can pay off. Clients that have quietly hoped their unreported crypto transactions would stay below the radar need someone to tell them plainly that a window for clean resolution is likely opening 鈥� and that waiting for it to close is not a strategy. That conversation is uncomfortable, of course, but it鈥檚 also exactly what a trusted advisor is for.

Beyond compliance, the considered package of crypto legislation creates the need to have genuine planning conversations that didn’t exist before. For example, the wash sale question is time-sensitive, and the staking deferral election requires modeling. None of this requires tax advisors to wait for final regulations; rather, it requires they know their clients well enough to know which ones have exposure, which have opportunity, and which needs a conversation they haven’t thought of requesting.

Right now 鈥� in the space between a Congressional hearing and a presidential signature 鈥� that is the most valuable thing a tax professional can offer.

You can download a copy of the 成人VR视频 Institute鈥檚听2026 State of Tax Professionals Report here

Key insights:

• • • De-banking reasons have to be articulated and verifiable 鈥� De-banking that鈥檚 driven by category avoidance rather than individual risk assessment, exposes institutions to legal, regulatory, and reputational harm and pushes legitimate customers out of the regulated financial system.

    • A screening flag is not a conclusion 鈥� Proper investigation must follow any identified red flag before any de-banking decision is made.

    • Political considerations have no place in de-banking decisions 鈥� The only defensible standard is documented, individualized risk analysis that would be applied consistently not matter the customer.

De-banking 鈥� or the involuntary removal of a customer from financial services 鈥� has moved from a compliance back-office concern to a front-page issue. Members of Congress have called for hearings.; advocacy groups representing small businesses, cryptocurrency firms, firearms dealers, and faith-based organizations have filed complaints; and financial institutions, often caught between genuine compliance obligations and growing pressure to justify their de-banking decisions, are operating in an environment with significant legal and reputational exposure on both sides.

Banks have the legal right to exit customer relationships, of course; however, what is in dispute is whether the decisions driving those exits are defensible. Are they grounded in documented, individualized risk analysis? Or are they being shaped by broad category avoidance, reputational anxiety, or political considerations that have no formal basis in law?

Getting this wrong is not a minor procedural failure; rather, it鈥檚 a legal exposure, a regulatory liability, and, increasingly, a legislative headache.

Objectivity requires removing politics from the process

The de-banking debate did not emerge recently. During , the U.S. Department of Justice (DOJ) initiative began in 2013, the government applied pressure on banks to exit relationships with industries it found undesirable, including payday lenders and firearms dealers, without formal legal prohibition.

The episode revealed a structural vulnerability: Financial institutions are susceptible to removing customers not because individual accounts present documented risk, but because external pressure, political or otherwise, has labeled entire categories of customers inconvenient. (The DOJ ultimately acknowledged the program was in August 2017.)

Banks have the legal right to exit customer relationships, of course; however, what is in dispute is whether the decisions driving those exits are defensible.

Yet, that pattern has persisted in subtler forms. Today, cannabis businesses operating legally under state law, money services businesses, crypto exchanges, and organizations associated with politically sensitive causes routinely report being dropped from banking relationships with little explanation and no apparent individualized analysis. The common thread is not confirmed financial crime, rather it鈥檚 membership in a certain category of enterprises.

In , President Trump issued an Executive Order titled “Guaranteeing Fair Banking for All Americans,” directly addressing this pattern and directing federal banking regulators to remove “reputation risk” and other subjective criteria from supervisory guidance and examination materials.

This is precisely where objectivity becomes a legal and operational imperative, not just a principle. A risk-based de-banking or off-boarding process must apply the same documented criteria to every customer, regardless of industry association, political affiliation, or public profile. When an institution debanks one customer for activity it tolerates in another, the inconsistency itself becomes the liability. have long reinforced that risk-based compliance means evaluating customers on their own merits, and that blanket policies applied to industries rather than individuals do not satisfy that standard.

Screening raises questions, and investigation answers them

One of the most consequential errors that financial institutions make is treating a screening alert as a final determination rather than a starting point. Know your customer frameworks, customer due diligence requirements, governmental watchlists, adverse media flags, and transaction monitoring alerts are tools for identifying accounts that warrant closer review. By themselves, they are not grounds for termination.

The gap between a flag and a confirmed risk finding is where decisions 鈥� both defensible and indefensible 鈥� are actually made. An adverse media hit on a business owner may reflect a decade-old civil dispute that has no bearing on current account activity. A transaction pattern that triggers a monitoring alert may have a straightforward, documented business explanation. Enhanced due diligence exists precisely because some customers require deeper analysis before a meaningful risk determination can be made.

---

A risk-based de-banking or off-boarding process must apply the same documented criteria to every customer, regardless of industry association, political affiliation, or public profile.

A sound investigation process includes several elements that are often absent in practice, such as documented escalation paths from front-line staff to BSA officer to legal review; a genuine opportunity for the customer to respond to concerns before a decision is finalized; findings recorded in writing with sufficient specificity to withstand external scrutiny; and a proportionality review requiring the institution to evaluate whether risk mitigation short of termination is viable before defaulting to de-banking.

The stakes extend well beyond any single customer relationship

Financial institutions often treat de-banking as a discrete internal risk decision; however, the aggregate effect of category-based de-banking carries systemic consequences that regulators and legislators are increasingly unwilling to overlook.

When categories of legitimate customers cannot access banking services, the burden falls hardest on those with the fewest alternatives. Equally important, pushing customers out of the regulated financial system does not eliminate risk; instead, it relocates it to less transparent channels in which illicit activity is harder to detect and report.

Three states 鈥� Florida, Tennessee, and Idaho 鈥� have already enacted fair access laws requiring that financial institutions make services available based on objective risk criteria. And more than a dozen additional states have proposed . At the federal level, the would require larger banks to provide services based on quantified, documented risk standards.

Practical steps for financial institutions

Institutions need to build defensible, consistently applied processes as the foundation for any de-banking decision. There are several steps they can take, including:

• • • Audit current de-banking criteria for political and categorical language 鈥� Review existing off-boarding policies for any language that excludes industries or customer types based on perceived political sensitivity or reputational association rather than documented risk.
    • Establish a neutrality standard in all de-banking decisions 鈥� Require that every de-banking decision be traceable solely to facts in the customer file. External pressure, government signals, and industry headlines should play no role in the determination.
    • Separate screening from decision-making 鈥� Build a formal investigation step between any monitoring alert or red flag and a de-banking decision. Document what was reviewed, who reviewed it, and what the findings support.
    • Create a customer response mechanism 鈥� Where legally permissible, provide customers with an opportunity to respond to concerns before a final decision is made. Record whether and how that response was considered.
    • Establish a proportionality review 鈥� Before exiting a relationship, require a written determination that any other risk mitigation, including enhanced monitoring, transaction limits, or additional documentation requirements, was evaluated and found insufficient. Document everything.

As regulatory scrutiny around de-banking decisions intensifies, financial institutions can no longer treat it as a routine internal decision. The path forward demands consistent, well-documented, and objectively applied processes that stand up to legal, regulatory, and public scrutiny. Institutions that embed neutrality, transparency, and proportionality into their decision-making will not only reduce risk but also will strengthen trust in the financial system as a whole.

You can find more about the challenges facing financial institutions here

• • • The real gap in AI transformation is between tools and strategy 鈥� Many law firms mistake owning AI tools for having an AI strategy, measuring success through usage data alone rather that measuring the created value for clients and the firm.

    • 鈥淐hange agility鈥� is operationally required 鈥� Because AI reinvents itself every few months, firms must embed continuous learning as a standard operating reflex rather than a one-time training event.

    • There are 5 key markers that denote true transformation 鈥� Firms pulling ahead share five consistent traits that compound into a durable competitive advantage.

Organizations with a visible AI strategy are 3.5-times more likely to experience critical AI benefits compared to those without one, and almost twice as likely to be experiencing revenue growth because of their AI investment, according to recent 成人VR视频 research.

For law firms 鈥� organizations in which the human dynamics of transformation are particularly complex 鈥� new details are emerging that separate those firms that are executing AI transformation well from those firms that are not, say two practitioners that work on law firm AI transformation every day 鈥� , Principal Consultant of AI Strategy and Transformation Services at 成人VR视频; and , an organizational and process transformation specialist on the same team. Together these two help firms move from adopting AI tools to rethinking how their legal work gets executed and delivered.

Both have said they鈥檝e observed that the firms pulling ahead are those that have put their lawyers at the center of the firm鈥檚 transformation strategies.

The gap between activity and accomplishment

Many law firm lawyers who are serious about their AI strategies have attended AI webinars, learned the vocabulary, and can readily name the leading tools in their practice area. Going one layer deeper, however, begs a key question on whether those tools have changed how those lawyers work and deliver value to clients.

Snavely says he sees this disconnect often, especially as firms can confuse having AI tools with having an AI strategy. In fact, many firms measure the effectiveness of their AI strategies with usage data, but Snavely and Lein argue that only focusing on usage does not give a full picture. Rather, they say that the key to effective AI transformation is driving measurable value for clients and the firm. 鈥淎wareness and simple use are not a strategy,鈥� Snavely notes. 鈥淭he real question is whether lawyers have actually changed how they work and the benefits that brings to the firms and its clients.鈥�

Since AI is always evolving, law firms need to alter their cultural paradigms to better prioritize a proactive mindset that treats constant technological change as a standard operating environment rather than a temporary disruption 鈥� a concept known as 鈥渃hange agility.鈥�

Lein underscores the challenge by pointing out that the technology-first mindset is getting the order of operations backwards. When firms lead with the tool rather than the lawyer’s problem, they are asking people to change their entire workflow for a solution that does not yet feel worth the investment of time and mental bandwidth to change.

鈥淲hen you lead with the tool, you are asking lawyers to change their process or approach to the work for something that has not yet proven its value,鈥� Lein says. 鈥淪tart with the problem, then the right technology becomes obvious.鈥�

To address this challenge, Snavely and Lein recommend that law firm leaders do the harder work of mapping lawyer problems to AI capabilities and identifying those professionals who can bridge that gap before investing broadly in AI adoption. Simultaneously, they should also focus on opportunities that AI can unlock for clients that were not previously possible.

What ‘change agility’ looks like

Since AI is always evolving, law firms need to alter their cultural paradigms to better prioritize a proactive mindset that treats constant technological change as a standard operating environment rather than a temporary disruption 鈥� a concept known as 鈥�change agility,鈥� Snavely explains.

鈥淐hange agility is not a skill you train once,鈥� he adds. 鈥淚t鈥檚 a strategic reflex you build into the organization 鈥� change agility means continuous learning is baked in, not bolted on.鈥�

Lawyers are being asked to keep up with a technology that reinvents itself every few months; and without careful prioritization, firms will see their professionals burn out from the noise of the technology changing.

At the same time, the pair acknowledge that constant change is exhausting. Lein flags a particular fatigue risk that leaders often underestimate. With prior technology cycles, there was a stabilization window in which people could absorb, adapt, and refine 鈥� however, this does not exist with AI tools.

Lawyers are being asked to keep up with a technology that reinvents itself every few months; and without careful prioritization, firms will see their professionals burn out from the noise of the technology changing.

Emerging indicators that some firms are succeeding

To strike the balance, both experts agree that a key part of the solution to better AI transformation within a law firm is clarity of direction. People can tolerate a great deal of ambiguity if they understand where the firm is heading and what their role is in getting there. Firm leaders who communicate a clear AI strategy 鈥� one that is connected to the firm’s overall direction and not just bolted on 鈥� give their people something on which to orient themselves amid constantly changing dynamics.

Further, Snavely and Lein identify five markers that consistently distinguish those law firms making progress from those generating activity without resulting AI transformation. These five markers include:

1. Fostering an acceptance of failure 鈥� Firms that have normalized rapid experimentation 鈥� trying, adjusting, and moving forward 鈥� without the expectation of getting it right the first time are outpacing those that still operate under the assumption that AI adoption will occur solely through webinars and one-time training events.

2. Developing consistent storytelling as a key tactic in communications 鈥� In the highest performing firms that Snavely has assessed, the same client success stories circulate repeatedly and consistently across interviews with different lawyers. These firms treat these success stories as cultural infrastructure, repeating them until they become part of the firm鈥檚 shared identity.

3. Establishing role clarity 鈥� Lein observes a meaningful difference between firms that formally incorporate AI into job descriptions and those that have left it as an informal add-on. 鈥淓nsuring AI is a clear part of a lawyer鈥檚 role is a meaningful job satisfaction signal and a leading indicator of adoption depth.

4. Aligning performance incentives with AI experimentation 鈥� Most law firms are still in early thinking mode on compensation structure alignment, but those firms with incentive frameworks that reward AI-driven value creation with new service offerings, recovered time that can be redirected to higher-value work, and measurable client outcomes, will more effectively reinforce the behaviors that drive transformation.

5. Defining what 鈥済ood鈥� looks like at the work-product level 鈥� Firms that define explicit standards for quality and build those standards into how AI output is supervised and evaluated will position themselves better over the next few years than those that leave expectations undefined.

Lein frames all these markers as both a cultural and a structural imperative because AI can amplify existing organizational behavior 鈥� both productive and dysfunctional 鈥� within a firm. 鈥淎I is an accelerator of work, but it is also an exacerbator of bad cultural issues,鈥� he explains.

Together, these five signals can complement each other and more importantly, compound into a durable competitive advantage for those law firms that act upon them.

You can find out more about the challenges of AI in the legal industry here

Key takeaways:

• • • Deploying AI and governing it are two different things 鈥� Most tax, audit & accounting firms are further along on deployment of AI than they are with setting up how it will be governed.

    • AI literacy and understanding will be key attributes 鈥� The skill that will define the next generation of auditors isn’t knowing how to use AI; rather, it’s knowing when to distrust it.

    • Risk assessment needs to be re-thought 鈥� The risk assessment gap is a structural problem, not a technology maturity problem. And no better model is going to fix it.

There is a version of AI adoption that looks like progress, but isn’t. It involves a pilot program that runs well, gains a positive internal review and a mention in the firm’s next thought leadership piece 鈥� and then nothing changes throughout the firm. The workflow that got automated stays automated, and everything else stays the same.

This pattern is more common than many tax, audit & accounting firms want to admit. The organizational work that scaling AI actually requires 鈥� such as deciding who owns the outputs, redesigning quality review, working out what happens when a model gets something wrong 鈥� doesn’t surface in a pilot. Instead, it surfaces in production. And those firms that have been running the same pilot for more than a year aren’t being cautious, they鈥檙e simply avoiding those decisions.

A recent survey by tech market research group International Data Corp. (IDC) of 1,005 audit and accounting professionals globally captures the gap precisely. The study showed that two-thirds of firms have AI embedded in strategy or underway in pilots, but only 7% . That distance between deployment and readiness is where most of the real work is hiding.

The audit profession is underinvesting in a key skill

Ask most audit firm leaders what skills their people need for an AI-driven practice, and the answers come back quickly: data analysis, AI literacy, and technology proficiency. Those aren’t wrong answers, but they’re incomplete in a way that matters.

The skill that will actually define audit quality in an AI-enabled environment isn’t the ability to use the tools; rather, it鈥檚 the ability to pressure-test what those tools produce. To read an AI-generated summary and identify what it might have missed, or to recognize when a flagged pattern in a data set is just noise rather than a red flag, or even to override a confident-sounding output when professional judgment says something doesn’t add up.

That’s closer to editing than accounting 鈥� and it’s a fundamentally different capability than simply being familiar with AI systems. Yet most re-skilling programs are building that familiarity, while it鈥檚 the understanding and judgment that separates auditors who use AI well from auditors who use it credulously.

Indeed, excessive trust in AI outputs is the specific failure mode the profession needs to train against 鈥� and that鈥檚 not getting enough attention.

The risk assessment problem is permanent

There’s a version of the AI-in-audit story in which every limitation is temporary 鈥� the AI models will improve, the training data will get better, the accuracy will increase. For most audit applications, that’s probably true, but for risk assessment, it isn’t.

Risk assessment requires professional skepticism: the trained disposition to question, probe, and not accept appearances at face value. AI models are trained to find patterns and produce coherent, confident output. Those two orientations are in direct tension. A model that identifies a pattern and presents it with confidence is doing exactly what it was designed to do. However, the problem is that professional skepticism sometimes requires distrusting precisely that kind of coherent, confident output 鈥� and then asking what the pattern is missing, who might be motivated to produce it, and whether the data behind it can be trusted.

That gap isn’t a technology maturity problem. It’s a structural problem. Nearly 80% of audit leaders in the IDC survey say they recognize the risk of algorithmic bias in functions like risk assessment and fraud detection 鈥� and that recognition points at something real. The right response isn’t to avoid AI in risk assessment entirely, of course, but it is to be clear-eyed about where AI’s role ends and where the auditor’s begins. Summarizing, flagging, and organizing are appropriate uses of AI, but the judgment about what the output means belongs with someone else.

Governance that actually means something

Most tax, audit & accounting firms have an AI policy; however, far fewer have built the infrastructure that makes it operational.

The two requirements that matter most are traceability and explainability. Traceability means that every AI output cites its source 鈥� if it can’t show its work, the firm shouldn’t rely on it. Explainability means the auditor who is reviewing the output can follow the reasoning and form an independent view of whether it holds together. Both of these concepts should be requirements, not preferences. The audit partner signing the report needs to be able to stand behind every conclusion in it, and that requires being able to read the chain from input to output.

Naturally, the more difficult governance question is what “human in the loop” actually means when the processes are operational. As a principle, everyone agrees that the “human in the loop” is critically important. However, as a set of design decisions 鈥� determining at which specific points in a workflow human judgment required, how does the interface prompt it, and who is accountable when it doesn’t happen 鈥� most firms haven’t worked that out. That kind of imprecision is where audit risk can accumulate quietly.

Where AI is genuinely earning its place

None of this is an argument against AI in audit, of course. Document extraction, first-draft writing, data summarization are all areas in which AI is delivering real value, and the gains aren’t marginal. Contracts that once took days to review can be turned around in hours. Workpaper summaries and client communications that traditionally consumed senior staff time are now being handled in the first-draft stage by tools that do it well. Those hours are going back to partners and managers, and their work is better for it.

The honest picture of AI in audit is not the hype version 鈥� transformational overnight, replacing roles, reshaping everything at once. Instead, it’s more incremental than that, more uneven, and more dependent on organizational decisions than technology ones. The audit firms making the most of it aren’t the ones that moved fastest; rather, they’re the ones that were clearest about what they were trying to solve, built governance structures that could handle the friction, and invested in the human judgment that AI can support but cannot replace.

That clarity 鈥� about what AI is good for, what it isn’t, and what it requires of the people using it 鈥� is where the real work is.

You can find more about the challenges facing audit service professionals here

Key insights:

• • • Law firms and clients are both redesigning for AI 鈥� Both sides are rethinking how legal work gets done, including thoughts on operating models, talent, technology, and the role of automation in delivering services.

    • There鈥檚 a communication gap despite shared dependence 鈥� Even though each side鈥檚 AI choices directly affect the other, many law firms and legal departments are still planning separately, without enough transparency or coordination.

    • There are 5 critical shared questions they need to address together 鈥� Law firms and their clients need joint conversations about pricing, work allocation, trust, talent development, and wider industry standards to better shape a sustainable future together.

A law firm choosing its 2030 strategic business model without knowing how its clients are evolving is navigating blind 鈥� and vice versa.

And yet, across the legal profession, that is exactly what is happening. Law firms and corporate legal departments are each embarking on significant transformations 鈥� redesigning their operating models, reimagining their talent models, and making decisions about technology. What is striking is how often they are doing so in isolation from each other, retreating into their respective silos at precisely the moment when their futures are most deeply interconnected.

The pace of change raises the stakes. Ninety-one percent of corporate C-Suite leaders say the rise of AI will have a significant impact on their five-year business strategy. Further, AI adoption has nearly doubled across the legal sector over the past 12 months, and half of legal professionals say they expect agentic AI to be central to their workflow within two years.

Clearly, the decisions being made today about talent, technology, pricing, and relationships will lock in outcomes that are hard to reverse.

The AI view from corporate law departments

On the in-house corporate side, General Counsel are contending with broadening mandates, increasing demand and complexity, and a pace of business that shows no signs of slowing. Not surprisingly, AI is increasingly the strategic response: , up from 25% who said that last year. And for most that means AI-enabled capability to do more, faster, and at greater scale.

成人VR视频 Institute鈥檚 GCO 2030 research maps out what the transformed legal department could look like 鈥� from tech-forward functions that scale routine work through automation, to seamlessly integrated teams that blend internal and external expertise, to legal departments that actively supercharge peer functions like HR and Finance.

The common thread through all of this is a shift toward strategic selectivity: Doing more with sharper focus and engaging outside counsel differently as a result.

The AI view from law firms

Among law firm leaders, AI is unavoidable 鈥� in every leadership conversation that 成人VR视频 Institute researchers held with managing partners in recent months, the issue of AI came up. For many, it is seen as a lever for growth, although law firms vary considerably in how far they have moved from consideration to execution.

In fact, our recent research points to four possible models emerging on the horizon that have AI-native disruptors built around agentic automation, elite advisory boutiques in which senior judgment is the product, integrated powerhouses that combine top-tier brand with AI-enabled delivery at scale, and those that hold back from AI adoption (although the research suggests this is a delay, not a strategy). What unites the more progressive scenarios is that strategy requires genuine commitment: A firm simply cannot pursue all models at once, and the choices made about talent, pricing, and client relationships will compound over time.

You can access the full feature article,听The 2030 legal department: 5 ways AI will transform how in-house teams work听here

The problem, of course, is that both sides are designing futures that will inevitably shape the other 鈥� yet two-thirds of GCs say they do not know how their outside firms are approaching AI, and law firms report genuine uncertainty about what their clients want. This shows a clear communication gap at the heart of the legal ecosystem, and it is opening at precisely the moment that demands coordination.

The futures being designed in those silos are not mutually exclusive. When a corporate legal department shifts its model 鈥� whether automating routine work, restructuring how it engages external counsel, or reorienting toward strategic advisory 鈥� it changes the demand profile that law firms face. When a firm repositions itself around premium complexity or agentic delivery, that changes what clients can rely on externally, and therefore what they must build internally. Each side鈥檚 choices narrow or expand the options available to the other.

Addressing 5 critical questions together

Against that backdrop, there are several questions the legal profession cannot answer from within a single organization 鈥� questions that require genuine conversation between firms and the clients they serve.

The first is the question of value and pricing 鈥� In an AI-enabled legal market, how is value defined and paid for, and can the answers be fair to both sides while still encouraging innovation? If AI dramatically accelerates the delivery of advice, does efficiency become the new floor or the new ceiling? Are clients paying for outcomes, risk reduction, speed 鈥� or some combination of all three? And which side absorbs the productivity dividend?

The second question concerns where the work lives 鈥� As both law firms and legal departments expand their AI capabilities, the traditional allocation of work between in-house and external counsel will shift. Determining what genuinely belongs in each place and why 鈥� based on, for example, risk, complexity, relationships, and strategic importance 鈥� is a conversation that requires honesty from both sides.

Third is the question of trust and transparency 鈥� How can firms and their clients build shared frameworks for disclosure, governance, and accountability around AI use in a way that strengthens relationships rather than undermines them? Without these frameworks, AI integration risks eroding the relationship foundations upon which legal advice depends.

Fourth, the talent pipeline question 鈥� As the type of routine work that historically served as the apprenticeship model for past generations of lawyers rapidly disappears, both firms and legal departments face a shared responsibility for how legal talent is trained and developed.

Fifth, and perhaps most structurally significant, is which challenges are ecosystem-wide? 鈥� Data standards, interoperability, shared risk frameworks, and ethics and assurance are not problems any single organization can resolve alone but rather, are ones that require coordinated action across firms, legal departments, technology providers, and academia.

Indeed, none of these questions can be resolved in isolation, and avoiding them does not preserve the status quo, it simply locks in poor defaults. Leadership in this moment doesn鈥檛 mean having all the answers, but it does mean being willing to ask the questions out loud, with the people who need to be in the room.

The firms and legal departments that come to these questions together, rather than arriving at the table with entrenched positions already locked in, will be better positioned to build a future that is resilient, transparent, and sustainable.

To start, pick one of the five questions above and put it on the agenda for your next client or firm meeting. Not as a negotiation, but as an open conversation worth having.

That is how the communication gap between law firms and corporate legal departments gets closed 鈥� one honest conversation at a time.

Start your legal department鈥檚 future planning using our reimagine guide from the Value Alignment Toolkit

Key insights:

• • • UK law firms face a more selective growth market in 2026听鈥� Client demand remains steady, but external legal spend expectations have cooled, with growth concentrated in areas such as Regulatory, Labor & Employment, and international work.

    • Legal expertise alone is no longer enough 鈥� UK legal buyers increasingly favor law firms that combine technical excellence with commercial judgment, business understanding, and practical guidance aligned to client priorities.

    • AI adoption is becoming a client expectation听鈥� Corporate legal teams are moving faster than their outside law firms on GenAI, and many UK legal buyers now expect outside counsel to use AI to improve efficiency, workflows, and the quality of legal work.

The legal market in the United Kingdom today has shifted into a new normal. While law firms saw an explosion of demand and spending immediately following the pandemic, increasing client caution has resulted in a shift in priorities. Today鈥檚 law firms cannot simply rely on their old ways of providing legal service to succeed, as UK clients expect firms to combine expertise, commercial judgment, international reach, and visible AI-enabled improvements in how legal work is delivered.

Jump to 鈫�

2026 State of the UK Legal Market

A new report from the 成人VR视频 Institute, “2026 State of the UK Legal Market,” reveals how the UK legal market is shifting, as more judicious clients are beginning to force law firms to reassess their strategy. Overall anticipated net spend from legal clients has seen declining growth rates in recent years, and while some practices like Regulatory and Labor & Employment continue to see strong demand growth, other practice areas such as Insurance, IP, and Disputes face potential contraction.

This shift is also guided by emerging buyer preferences. The report reveals an increasing commerciality to the UK legal market, one in which clients increasingly favor advisors that combine legal excellence with commercial judgement, and those that are leveraging AI to bolster not only efficiency but improve the overall legal work product.

You can find out more about

Taken as a whole, the report paints a picture of clients that now are moving faster than their outside legal advisors, strengthening their internal capabilities, and setting clearer (and higher) expectations. This means that UK law firms cannot rest on their laurels, as clients increasingly push their outside firms to keep up with new business challenges.

The market is cautious, but opportunity remains

The report reveals that UK legal buyers are more cautious about external legal spend than they have been at any point in the last five years. That may mean law firms can no longer rely on the broad-based demand that defined the post-pandemic period and instead need to be more precise about where opportunity exists 鈥� and where it doesn鈥檛.

The report tracks buyer sentiment through net spend anticipation (NSA), which measures the share of buyers expecting to increase external legal spend over the next 12 months minus those expecting to decrease it. Since its 2021 peak, UK NSA has fallen steadily to +5 percentage points in 2025, returning the market to the more stable, single-digit baseline that was seen before the pandemic.

For those law firms looking to capture increased business, the report makes clear that legal expertise is now the price of entry, not the point of differentiation. The firms that stand out will be those that know how to apply their expertise in ways that reflect the client’s business realities.

Indeed, that is becoming even more important as corporate legal departments face growing pressure to demonstrate their own value to the wider organization, and they鈥檙e increasingly pointing to improvements in their own quality and effectiveness even before mentioning cost savings, efficiency, or time savings. Not surprisingly, more than one-third of UK legal buyers now cite business savviness as a reason they favor a particular law firm.

To help demonstrate their internal value, clients are pushing their outside law firms to leverage advanced technology to improve the overall effectiveness of legal work. Of course, this has resulted in a clear gap, the report notes, between how corporate legal teams are moving and how law firms are responding. For instance, the report shows that more than half of UK corporate legal respondents say their organizations are already using GenAI tools across the business, compared with just about one-third law firm respondents who said this.

That difference in outlook matters because clients increasingly believe AI will become a larger part of how legal work is delivered, and they鈥檙e not content to simply wait and see whether their outside counsel will fully adopt the technology. Indeed, corporate legal departments are expecting their outside law firms to keep pace with how legal work is changing, and they will reward those firms that do.

You can download

a full copy of the 成人VR视频 Institute’s “2026 State of the UK Legal Market” by filling out the form below:

Key insights:

• • • Capital and human resource drains 鈥� Managing the billable hour model is seen as wasting capital and time for both law firms and clients.

    • The billable hour and talent retention听鈥� The billable hour may be contributing to a talent drain in litigation defense and other practices.

    • Data may be the answer 鈥� One firm is pivoting to data-driven pricing based on key performance indicators (KPI), which it views as a win-win for both the firm and its clients.

鈥淭he billable hour is a gigantic waste of time for everyone involved.” That is the blunt assessment of founding partner Bob Kopka. 鈥淚t stifles innovation, penalizes efficiency, and has grown into a status quo that costs more than it benefits.”

The administrative-industrial complex

The primary target of Kopka鈥檚 critique is the massive administrative overhead required to manage the billable hour. On the client side of the firm鈥檚 work in defense litigation, insurance companies employ vast departments and third-party vendors specifically to review, audit, and cut legal bills. In response, law firms like Kopka have had to build their own payment departments to counter this, represented by teams of billers trained on dozens of different platforms and appeals departments dedicated to what Kopka describes as “chasing payments on appeals, most of which are both unfair and unsuccessful.”

This administrative-industrial complex, Kopka argues, creates a world in which lawyers spend as much time justifying their work and subsequent compensation as they do practicing the law.

“The time to set up new matters, add timekeepers, approve budgets as well as approve invoices, and cut separate checks for every matter is arduous,” notes Kopka Law COO Donna Markus. By moving to a monthly retainer or portfolio-based alternative billing model, Kopka Law aims to dismantle this bureaucracy, freeing up significant capital and human resources for both the firm and the client.

Killing the profession 6 minutes at a time

Perhaps the most provocative aspect of Kopka鈥檚 stance is the link between billing models and the legal industry鈥檚 talent crisis. The traditional model requires attorneys to feverishly capture every one-tenth of an hour, documenting their day into six-minute increments with hyper-specific narratives and present-tense verbs.

According to Markus, this isn’t just an annoyance; it鈥檚 an existential threat to the defense bar. 鈥淭alent is leaving the defense side because of the tedious nature of capturing their time,鈥� she warns, adding that when a lawyer鈥檚 value is reduced to a billing code, the “most valuable time a lawyer can spend” 鈥� engaging in free thinking 鈥� is often treated as a non-compensable activity because it doesn’t fit into a standard billing code.

This administrative-industrial complex, Kopka argues, creates a world in which lawyers spend as much time justifying their work and subsequent compensation as they do practicing the law.

“We are professionals,” Kopka states. “Our performance should be reviewed and judged by our KPIs [key performance indicators], not on whether a billing entry ‘appears excessive’ or whether the attorney obtained permission to do a jury verdict search”.

Why the billable hour hates AI

Kopka and Markus also highlight a dangerous paradox in the modern legal market: The billable hour actively penalizes law firms and their lawyers for becoming more efficient. As AI increasingly automates routine legal tasks, firms that use AI to finish a task in 30 minutes that used to take three hours are effectively cutting their own revenue under the traditional model.

And as AI starts to replace some billable activities, many insurance clients are refusing to pay for software or AI costs while simultaneously expecting to reap the benefits of the efficiency and cost-savings that those tools provide.

Kopka sees alternative billing models as flipping this incentive. Under a well-constructed billing arrangement, a firm has every reason to invest in cutting-edge technology. If they can achieve the client鈥檚 desired outcomes faster and with fewer resources, they are rewarded for their efficiency rather than punished for it.

Data as the solution for the 鈥渋nertia of fear鈥�

If the benefits are so clear, why then has the rest of the industry been so slow to follow? Kopka and Markus attribute the delay to “inertia born of fear” 鈥� including the fear of being underpaid or simply not knowing how to measure value besides using the clock.

They argue that this fear is no longer justifiable because the data exists to solve it. “Fear not,鈥� they insist. 鈥淲e have metrics.” Between the insurance company’s data on frequency and severity and the firm’s own data on litigation categories, there is more than enough information to fashion a mutually beneficial pricing arrangement.

The Kopka model focuses on key performance indicators (KPIs), rather than simply time spent on a matter. These KPIs include:

• • • cycle time and case disposition
    • early evaluation and consistent communication
    • indemnity outcomes relative to injury type
    • strategic collaboration and value added

Kopka believes this approach restores the firm-client relationship and moves it toward a true partnership. The law firm is finally treated as an independent contractor, rather than a legal services vendor that needs to be micro-managed. This gives the law firm the autonomy to focus on delivering legal services that achieve the client鈥檚 goals, instead of having to hold endless discussions about how the firm is managing itself as a business.

A call to action for the defense bar

Kopka Law sees its success with these models as a challenge to its peers. The firm uses the term alternative billing arrangements, arguing the legal industry鈥檚 attempts to use what are commonly called alternative fee arrangements (AFAs) actually focus on the wrong objectives. 鈥淎FAs are often designed solely to save the client money,鈥� explains Markus. 鈥淭hey鈥檙e destined to fail because they potentially force the law firm to compromise or cut corners to meet a low-cost bar.鈥�

Instead, Kopka aims for a win-win model that appropriately 鈥� and perhaps even generously, if structured and executed properly 鈥� compensates the law firm for excellent service and the achievement of specific, agreed-upon goals.

Kopka Law is actively encouraging other firms and insurance carriers to enter these negotiations. The firm sees it as a necessary evolution to stabilize budgets and make legal spend more predictable for clients.

For Kopka and Markus, the message is clear: The legal industry has the metrics and the tools to do better. And the better approach, they argue, is a firm-client partnership that鈥檚 driven by data, aligned incentives, and a commitment to results over activity. And with AI and advanced data analytics, that model is within reach for most law firms.

You can find more about how law firms are managing their billing and pricing issues here

Key insights:

• • • A significant visibility gap persists between legal departments and the C鈥慡uite 鈥� Most general counsel believe their legal department contributes strategically, yet senior executives often fail to see or understand that value.

    • Strong internal relationship鈥慴uilding is critical (and often underdeveloped) 鈥� This capability enables legal teams to spot risks earlier, stay embedded in decision鈥憁aking, and make their work more visible across the business.

    • Closing the gap requires communicating legal鈥檚 value and increasing true AI fluency 鈥� For legal teams to be seen as proactive, strategic partners rather than task executors, communication and strong AI fluency are essential.

General counsel (GCs) have spent years doing more with less, tightening their legal spend, and aligning the law department鈥檚 priorities with the wider business. And yet, despite all of this effort, a striking visibility gap persists. While 86% of GCs believe their department is a significant contributor to overall organizational objectives, only 17% of the C-Suite agrees, according to the , from the 成人VR视频 Institute, which was based on more than 2,300 interviews with corporate general counsel. Meanwhile, 42% of C-Suite executives say the legal function contributes little or not at all to company performance.

The challenge for GCs is whether their staff have the skills and capabilities to make their work visible, relevant, and understood by the business at large. To address this perception gap in 2026, every GC needs to prioritize building richer internal relationships with business leads, moving from task-based to outcome-focused messaging, and improving the team鈥檚 collective AI fluency.

Empower teams to build internal relationships

Nearly half of all GCs surveyed for the report cited staffing and resource constraints as the top barrier to delivering additional value, a concern that has remained stubbornly consistent for years. Beyond headcount, the report underscores that the deeper challenge facing legal departments is relational.

Internal relationship-building is one of the most critical and underrated people skills in a legal department’s collective skill set. Indeed, 68% of GCs rate internal dialogue as their most valuable source of information about emerging risks. In fact, the most successful GCs use a deliberate combination of formal and informal methods to build connections with the internal business units that they serve.

You can learn more about how to assess your legal department鈥檚 strategic positioning with the听成人VR视频 Institute鈥檚 Value Alignment toolkit, here

Some run structured weekly face-to-face sessions with business departments, complete with schedules, plans, and frameworks. Others rely on walking the halls, open-door policies, and ad-hoc conversations that keep the corporate law department visible and accessible on a human level.

The report offers a five-dimensional framework to help GCs audit where, with whom, and how often legal is in dialogue with other parts of the business.

Use communication tactics that focus on business outcomes

Even when legal departments are doing excellent work, they often describe it in the wrong language. Many in-house lawyers categorize their contributions in task-based terms 鈥� such as 鈥淲e support M&A鈥� or 鈥淲e analyze contracts鈥� 鈥� rather than in value-creating terms.

Some in-house legal leaders have progressed to stakeholder-level framing, such as, 鈥淲e protect the company from competitive threats鈥� or 鈥淲e support new business opportunities.鈥� Still, neither of these levels truly communicates value to a C-Suite audience, the report shows.

To effectively align the law department’s priorities with business goals, in-house attorneys need to develop the skill of communicating through a business lens. For example, one GC states that the primary goal of the law department is to “find the fastest and most compliant way for the sales department to sell products.” This response reframes the legal function鈥檚 activities as much more business fluent and value-added.

Legal teams are not always good at touting their accomplishments, however, and this is a challenge when a lot of the work can be categorized as invisible. For example, when protecting the company is done right, threats are eliminated before they occur and no one notices. When efficiency is unlocked through process improvement, the C-Suite only sees the outcome if someone connects the dots explicitly. This is why surfacing invisible value is now a business imperative for corporate law departments.

Advancing from AI literacy to AI fluency

The most significant skills challenge facing legal departments in 2026 is how to best use AI strategically. Mentions of AI as a strategic priority among GCs have doubled in the past year, according to the report. In fact, almost half of all GCs now reference AI in their survey interviews. Yet the report draws a sharp distinction between being AI literate and being AI fluent, with most departments being the former but not the latter.

To close that gap, the report recommends a six-layer model covering learning, empowerment, ownership, accountability, usage, and expectations.

At its core, the model asks GCs to start with open encouragement and access to AI tools to build momentum, then shift toward more formal expectations around adoption to make AI use a daily habit.

You can download a full copy of the 成人VR视频 Institute鈥檚 here