Key points:
- Only 55% of law firm attorneys use AI tools, compared to 81% of in-house counsel.
- In-house teams are more likely to trust, regulate, and benefit from AI than firm lawyers.
- Law firms risk losing work to more AI-proficient providers or in-house teams.
Law firms continue to lag significantly behind corporate legal departments in adopting AI tools, potentially putting themselves at a competitive disadvantage, according to Ironclad’s newly published 2025 State of AI in Legal report.
The report, based on a survey of 800 U.S. attorneys and legal operations professionals, shows a 26-point gap in AI adoption: 81% of in-house counsel report using AI for legal work, compared to just 55% of law firm attorneys. Jasmine Singh, general counsel at Ironclad, attributed the disparity in part to exposure and necessity. “There are [law firm] lawyers who just may not have that much exposure to AI in their day-to-day practice,” Singh said.
While 69% of all respondents use AI for legal tasks, this marks a decline from last year’s 74%. Singh suggested the drop reflects a shift from experimentation to selective deployment. “They may have been experimenting with multiple tools,” she said, “now they're just power-using the few that are in their repertoire.”
The divide persists across multiple metrics:
- Only 48% of law firm lawyers operate under AI usage guidelines, versus 67% of in-house lawyers.
- Over 60% of in-house lawyers say AI’s benefits outweigh its risks, compared to under 50% of firm lawyers.
- Comfort with agentic AI systems is twice as high among in-house counsel as among their law firm peers.
These gaps may carry business implications. Singh warned that firms' reluctance to adopt AI tools could eventually influence client behavior: “In-house teams may be more inclined to assign work to firms adept with AI or do more internally than to select firms lagging behind in this area.”
Even attitudes toward job security reflect the divergence. While just 21% of lawyers overall see AI as a job threat, 55% of in-house attorneys believe AI could create more job opportunities. In contrast, 40% of firm lawyers see it as a job reducer, compared to only 37% who view it as job-enhancing.
Concerns remain. Security is the top barrier to adoption for 48% of respondents, slightly more acute in legal departments than firms. Information accuracy, cited by 44%, ranked second, up from 40% in the 2024 report.
