The UK legal industry is undergoing a profound digital transformation in 2025, driven by the need for greater efficiency, enhanced client service, and long-term competitiveness. With rising client expectations, shifting work models, and economic uncertainty, technology has become the backbone of change. Our latest Legal Trends Report 2025 highlights how firms are approaching this transformation, with many making significant investments in digital systems, cloud-based infrastructure, and AI-driven solutions.
Driving change through digital transformation
Digital transformation is reshaping how law firms’ function, enabling them to address the challenges of fragmented systems, rising workloads, and client demands. The Legal Trends Report 2025 found that 60% of law firms are planning to upgrade their digital systems in 2025. This drive for system modernisation stems from a need for seamless, integrated solutions. Outdated systems can create bottlenecks, and 24% of lawyers highlight the importance of better system integration to enhance their operational confidence. Firms making these upgrades are laying the foundation for smoother workflows and more agile responses to complex legal operations.
Cloud technology is playing a pivotal role in this transformation, with 42% of law firms adopting cloud applications to boost collaboration, accessibility, and cost efficiency. Yet, perceived concerns about data security remain a barrier, prompting 35% of firms to opt for hybrid models that combine on-premises and cloud solutions. Those that successfully implement robust cybersecurity measures alongside cloud integration are strengthening operational resilience while enhancing their competitive edge.
Artificial intelligence is another game-changer, offering groundbreaking opportunities to transform legal processes. While only 10% of firms have fully integrated AI, an additional 35% are beginning to harness its potential. From customer service and fraud detection to data structuring, AI-driven tools are becoming instrumental in making legal work faster and more accurate. However, hurdles like limited expertise (cited by 32% of lawyers) and data quality issues continue to slow adoption. Firms investing in skills training and data management are positioning themselves as leaders in this evolving space.
Equally critical is how firms are meeting the evolving expectations of clients. The shift toward digital communication has become widespread, with 65% of firms now adopting digital channels as standard. However, while 31% of firms are heavily investing in technology to enhance client experience, only 25% have deployed comprehensive client portals. Firms that integrate streamlined, transparent tools into their processes will not only boost client satisfaction but also gain a pivotal market advantage.
By prioritising system upgrades, cloud integration, and AI adoption—and aligning these innovations with client-focused strategies—firms can meaningfully embed technology into their core operations, maximising both efficiency and client value.
Finance under pressure
Financial hurdles remain a key obstacle to digital transformation. Budget constraints are the most cited barrier, with 42% of lawyers acknowledging cost as a significant challenge in adopting new technology. Additionally, time pressures and the difficulty of measuring return on investment create hesitations to move forward. Despite these concerns, law firms that strategically invest in technology often see long-term rewards, including improved efficiency, client retention, and profitability. Exploring phased implementation plans, public-private partnerships, or grant funding may help mitigate these issues and unlock new opportunities for growth.
Another critical area impacting firm profitability is time capture and billing. A striking 49% of firms report achieving 50% or less of their billable hour targets. Even more concerning, the adoption rate for time capture technology has dropped from 44% in 2024 to just 26% in 2025. This decline suggests that firms are losing out on potential revenue due to inadequate tracking. Investing in modern time capture solutions can radically improve billing accuracy, reduce inefficiencies, and ensure that every billable task is accounted for. Firms tackling time management alongside budget strategies will find themselves better equipped to allocate resources effectively and strengthen their financial foundations.
Cybersecurity: A persistent challenge
Given the volume of sensitive client data handled by law firms, cybersecurity remains one of the sector’s most pressing concerns. Although 65% of firms report improvements in their cybersecurity preparedness, this figure still lags behind other industries, leaving 35% of firms questioning how ready they actually are for cyber threats. A major point of vulnerability is human error—40% of firms cite phishing scams and poor password management as significant risks.
On-premises data storage also poses security challenges, with 26% of firms expressing concerns about maintaining their on-site data’s safety. To combat these threats, firms need to take comprehensive action. This includes rigorous staff training programs, multi-layered security protocols, and regular system audits. By addressing internal vulnerabilities and implementing robust cyber defences, firms can safeguard client trust and ensure compliance with evolving regulations.
The legal sector stands at a critical juncture where digital transformation is no longer optional but necessary for sustained growth and competitiveness. By integrating the right technology into their workflows—across system upgrades, financial tools, and cybersecurity—firms can not only meet the demands of today but prepare themselves for the challenges of tomorrow. Firms acting decisively now will lead the industry into a smarter, more resilient future, ensuring success in an increasingly digital landscape. To learn more about the key trends shaping this transformation, download the full Legal Trends Report 2025.
