Lincoln International’s experts share their key takeaways for the legal technology segment after attending the 2025 TLTF Summit.

1

Today, AI dominates discussions in the legal sector. From startup founders designing new solutions to managing partners of established law firms, every sector player is weighing the risks and rewards of AI-powered legal technology.

Since the launch of ChatGPT just three years ago, an explosion in large language model adoption has been impossible to ignore. Legal professionals now have access to solutions that promise to make work more efficient, accurate and strategic, and it is no surprise professionals are eager to adopt them. Understanding how these tools work (and where they fall short) is crucial for legal professionals.

As legal professionals continue to navigate the AI-powered evolution, being knowledgeable about AI enables firms and practitioners to think critically about new workflows, compliance risks and long-term value.

2

Despite initial excitement, not every AI product fits the legal profession’s needs. According to the Gartner Hype Cycle, the sector has entered the “Trough of Disillusionment.” Zach Posner, Co-Founder and Managing Partner at The Legal Tech Fund, captured the situation best: “Today’s AI is the worst AI we’ll ever see.”

The good news: legal technology is past the initial peak of inflated expectations. For law firms and legal departments, this means many solutions have yet to deliver on bold promises. The complexity of legal work, rooted in jurisdictional nuance and high stakes, demands custom, context-driven technology. Users in the legal sector understand that now, and so do technology providers.

Even though the initial hype and inflated expectations have dampened, this isn’t the end of the road for AI in law. The gap between hype and reality is narrowing as buyers demand solutions that truly work for their unique needs.

3

A tidal wave of money is being thrown into AI-powered legal technology. In Q1-Q3 2025 alone, more than $5 billion has been poured into legal technology to fund startups and scale-ups working to crack the legal sector’s biggest problems. Thanks to this veritable tsunami of capital, a new AI solution is emerging almost every day.

The areas to watch after TLTF 2025:

• Tools that automate document management and billing, freeing up fee earners for higher-value work and reducing human error (e.g., Filevine )
• Private cloud and on-premises deployment platforms that help legal practitioners stay compliant and aligned with business objectives (e.g., Eudia)

The legal sector is finally catching up to the technological advances seen in other industries. If nothing else, the sector’s historically cautious approach has prepared it for responsible, sustainable innovation in AI.

4

As the initial hype fades, real progress is visible as the new wave of funding is being spent to build and commercialize new software tools. The legal industry, which has traditionally been a technological laggard, has never moved so fast.

The sector’s next stop on the Gartner Hype Cycle is the “slope of enlightenment.” With more funding and increasingly better product fit, law firms and in-house counsel are unlocking meaningful efficiencies.

In 2026, it is imperative that legal practitioners continue examining the AI-powered solutions at their disposal to find the best product fit. To make the most of the opportunity, legal professionals must invest in education and stay ahead of regulatory changes.

5

Perhaps the most profound impact of AI will be a fundamental shift in the business model of law. Efficiencies unlocked by AI will change the day-to-day operations for firms and in-house teams alike.

As technology automates lower-level tasks (e.g., contract review, document management), the “time = money” paradigm is fading. Legal professionals now face heightened client expectations for efficiency, transparency and value-add, not just time spent.

Alternative Fee Arrangements, including flat fees, capped fees, blended rates, subscriptions and value-based billing, are gaining ground. For some, this is a challenge; for others, a chance to lead. The most successful firms will embrace the AI revolution and focus on delivering outcomes instead of hours.