The Evolution of AI in Legal Services: From Generative AI to Agentic AI

Introduction

Artificial Intelligence (AI) is reshaping professional services, yet many industries—including legal—are only scratching the surface of its potential. The recent Actionstep UK Midsize Law Firm Priorities Report (2025) provides one of the most comprehensive insights into AI adoption in midsize law firms. Their detailed research highlights that while process automation is widely adopted (54% of firms), legal-specific Generative AI (GenAI) adoption remains low, with only 26% experimenting and a mere 2% seeing significant use.

Actionstep has done an excellent job of outlining the current challenges and opportunities in AI adoption, sparking a vital conversation about the future of AI in legal services. Their insights extend beyond research, as they have actively integrated AI into their legal practice management solutions. By embedding AI to streamline workflows, improve automation, and enhance client interactions, Actionstep demonstrates how AI can be practically implemented in legal operations (see their AI approach). Their report findings indicate that concerns over data privacy (74%), regulatory compliance (61%), and AI reliability (51%) are some of the key barriers, reflecting broader industry hesitations also noted in Microsoft’s Work Trend Index. However, a new evolution in AI—Agentic AI—may provide a path forward, offering greater automation, efficiency, and reliability for legal professionals.

Generative AI vs. Agentic AI: What’s the Difference?

Generative AI (e.g., ChatGPT, Microsoft Copilot, Harvey AI) is primarily used for drafting, summarising, and research assistance, acting as a co-pilot for legal professionals rather than an autonomous system. While powerful, its hallucination risks and lack of workflow integration mean it has low adoption rates in the legal sector.

Agentic AI, on the other hand, goes beyond passive assistance to actively manage tasks, integrate into workflows, and make autonomous decisions within set parameters. This type of AI can execute predefined legal workflows, automate due diligence, monitor compliance risks, and even handle client interactions, reducing the need for manual intervention.

Why Legal Firms Have Stalled on AI Adoption

Thanks to Actionstep’s in-depth research, we now have a clearer understanding of why midsize law firms have been cautious in embracing AI. Their report highlights key barriers:

Cost Constraints (46%) – AI solutions are perceived as expensive, especially for smaller firms with limited budgets.
Resistance to Change (43%) – Legal professionals remain cautious, fearing workflow disruption and regulatory risks.
Data Privacy & Compliance Concerns (74%) – Ensuring AI outputs meet regulatory standards is a significant hurdle.
Low Confidence in AI Accuracy (51%) – Many firms worry about unreliable AI-generated content, particularly in legal settings.

Microsoft’s Work Trend Index further echoes these challenges, noting that while professionals see AI’s potential, adoption lags due to a lack of clear ROI and implementation strategies.

The Role of Governance and Compliance in AI Adoption

As AI adoption grows, governance and compliance are critical in ensuring trust, accountability, and risk mitigation. AI implementations risk becoming unreliable, non-compliant, or even legally indefensible without a structured governance framework. This is where firms like Secure Step Forward (SSF) provide crucial guidance.

The key governance framework for AI in legal services includes:

ISO 42001 – AI management systems covering risk, governance, performance evaluation, transparency, and accountability in AI deployment.
ISO 27001 – Information security management system (ISMS) ensuring law firms protect sensitive client data and maintain cyber resilience.
GDPR – Data protection regulations ensuring AI systems handle personal data responsibly and lawfully.
NIST AI Risk Management Framework – Guidelines for assessing AI risks and mitigating bias.
AI Act (EU) – Emerging regulations that will define permissible AI applications in legal and compliance functions.

Why is this helpful? Governance frameworks help firms:

Ensure regulatory compliance and avoid penalties.
Build trust with clients by maintaining transparency and accountability.
Reduce risks of AI-generated inaccuracies or biases that could impact legal decisions.
Enhance operational resilience by embedding AI risk management into business continuity planning.

With Secure Step Forward’s expertise, law firms can implement AI responsibly, ensuring they leverage automation and intelligence without compromising legal, ethical, or regulatory standards.

The Next Wave: How Agentic AI Can Overcome These Barriers

Unlike GenAI, Agentic AI offers structured, autonomous execution, reducing the need for constant human oversight. Here’s how it could bridge the adoption gap:

AI-Driven Compliance & Regulatory Monitoring
- Continuous AML risk assessment and due diligence automation.
- Real-time tracking of GDPR, ISO 27001, and sector-specific regulations.
- Automated alerts for policy changes and risk flags.
Client-Facing AI Assistants
- AI-powered client portals with real-time case updates.
- Smart legal chatbots capable of answering inquiries outside business hours.
- Proactive client engagement (e.g., deadline reminders, case progress notifications).
AI-Augmented Legal Workflows
- Automated contract review and drafting with human oversight.
- Smart document classification and retrieval, reducing admin time.
- Agent-driven legal research, filtering out unreliable AI-generated content.

Preparing for What’s Next: A Phased Approach for Law Firms

Given the current barriers to AI adoption, a phased approach is crucial:

Phase 1: AI Experimentation – Identify low-risk use cases (e.g., document summarization, client chatbots).
Phase 2: Process Integration – Introduce AI into back-office automation, compliance tracking, and reporting.
Phase 3: Agentic AI Implementation – Deploy AI-powered legal assistants for automated workflows, client services, and compliance automation.

Conclusion: AI is No Longer Optional

Actionstep’s research provides a much-needed reality check for firms grappling with AI adoption. Their findings highlight both the hesitations and the opportunities, offering law firms a benchmark to measure their AI readiness. Moreover, their practical application of AI in legal technology solutions sets a compelling example for firms looking to bridge the gap between theoretical AI potential and real-world implementation.

Firms that embrace Agentic AI early will gain efficiency, reduce risk, and enhance client services, positioning themselves ahead of the curve.

As Microsoft’s report emphasizes, the future of AI in professional services is not just about automation but also augmentation—helping legal professionals focus on high-value tasks. At the same time, AI handles repetitive, time-consuming work.

For legal firms, the question is no longer if AI will be adopted but when and how. Thanks to Actionstep’s insights, the conversation is now moving beyond the hype to a strategic and informed AI roadmap for the legal industry.

Sources:

Actionstep UK Midsize Law Firm Priorities Report (2025)
Microsoft Work Trend Index (2024)

Is your organisation prepared for the AI-driven future?

Ready to strengthen your compliance strategy?

Convert Risk into Opportunity.

Secure Step Forward provides tailored strategies to ensure compliance, reduce operational risks, and drive business growth.

Navigate Risk, Achieve Compliance, Build Resilience