Every now and then, some data surfaces that ought to give us pause in our echo chamber. One such piece of data is from Cushman and Wakefield\u2019s Legal Sector Leasing Trends<\/a> report for Q2 2026.<\/p>\n The headline: it was a record-setting quarter for law firm leasing. Law firm leasing totaled 7.3 million square feet, exceeding the previous quarter by 23%; 27% over the same quarter last year. Looking at the first two quarters of 2026 together, the leasing is 17% higher than last year\u2019s first two quarters. And new leases in the first two quarters composed some 57% of the legal leasing. That\u2019s a lot of carpet.<\/p>\n Most of this activity occurred in major markets, says Cushman, and was driven by Am Law 100 firms. But here is the Cushman conclusion that\u2019s really got my attention:<\/p>\n Law firms remained focused on growth, with expansion activity reaching its highest share since 2019 and downsizing activity continuing to decline.<\/p>\n<\/blockquote>\n And lest we think that the Cushman conclusion is a bit of an exaggeration and the legal market is really suffering, remember that revenues reportedly<\/a> grew some 12.4% in the first half of this year and demand grew 4.8%. And the salary scale and bonuses for associates are through the roof<\/a>. Partners\u2019 compensation can top $40 million. And jobs in the legal market are increasing<\/a>.<\/p>\n Yet here we all are predicting the sky is falling. That the hordes of associates law firms have traditionally hired to fuel the leverage model will be replaced by AI. That AI will upend the traditional law firm model. It hasn\u2019t happened. At least not yet.<\/p>\n Think about it. If AI was going to replace the need for lawyers, why would you need to increase your square footage by 17%? Lawyers may not be the best businesspeople in the world, but it doesn\u2019t take a rocket scientist to figure out that fewer bodies mean fewer offices. Fewer offices mean less rent. And more profit.<\/p>\n And remember all the talk about remote working becoming the norm? Again, the same concept applies: the more people working outside the office, the less space you need.<\/p>\n Moreover, if AI is doing all that work that young lawyers used to do, then billable hours and revenue should decrease, not increase. Compensation should be going down, not up.<\/p>\n What the F**k Is Going On?<\/strong><\/p>\n It makes no sense unless one of three things is happening. First, we were all just plain wrong. Second, we underestimated the power of law firms and the billable hour\u2019s continuing dominance. Or third, what we think is going to happen just hasn\u2019t happened yet. Let\u2019s look at them one at a time.<\/p>\n Possibility Number One: We Blew It<\/strong><\/p>\n So, could we be wrong? It\u2019s possible. The AI coup de gr\u00e2ce assumes one very important thing: that demand for legal services will stay the same or go down. But that is not necessarily true. Indeed, some believe that AI will actually increase demand<\/a> for legal services. It\u2019s the Jevons paradox.<\/p>\n Certainly, there will be new and novel issues that will explode. Witness the recent product liability claims against Facebook for allegedly addicting kids to social media. And who knows what else will come down the pike. So yes, we could be wrong.<\/p>\n Don\u2019t Bet Against the House<\/strong><\/p>\n And here\u2019s something that has happened time and time again: underestimating the resilience of law firms and the billable hour. Somehow the law firm house keeps winning. Let\u2019s face it, how many times have we all heard that the billable hour is dead, only for it to come back like Dracula at midnight?<\/p>\n But it\u2019s bigger than the billable hour. Law firms are masters at resisting change and dealing with it only when they have to. I have seen it over and over again. They have an uncanny ability to absorb supposedly disruptive change without allowing it to disrupt the things they care most about.<\/strong> <\/strong>We see it now with AI: they buy it but don\u2019t use it.<\/a> The business model of firms, lawyers\u2019 independent streak, and their risk aversion make change slow and hard..<\/p>\n Take the rainmaker with $10 million worth of business. Firm management can talk all it wants about changing the business structure and management, but if Charlie ain\u2019t happy, nobody\u2019s happy. Things might change on the surface, but underneath the hood? Not much.<\/p>\n And don\u2019t forget that for larger businesses, the chief legal decision-makers are lawyers. In-house counsel. Independent. Also risk averse. Loath to tell their outside lawyers what to do and how to do it. That\u2019s why clients say they want more use of AI by their firms but don\u2019t demand it<\/a>.<\/p>\n Possibility Number Three: We Aren\u2019t There Yet<\/strong><\/p>\n Which brings us to the third possibility: the changes we think are coming haven\u2019t happened yet. Given law firm resilience and reluctance to embrace change, that\u2019s a possibility. It\u2019s also possible that law firms will take AI and figure out a way to use it that doesn\u2019t explode their business model, their profits, or how they do their work.<\/p>\n They\u2019ve managed to do this in the past with things like e-discovery, which was supposed to radically alter litigation economics. Instead, law firms adapted. They went from using contract lawyers to specialized discovery teams to using vendors as the technology evolved. Law firms adapted.<\/p>\n And cloud computing was also supposed to transform law practice. Law firms adapted. Data analytics arrived. Firms adapted. Remote work came along. Law firms adapted.<\/p>\n And now AI. So, before we bet on the remaking of the legal profession (I\u2019m sure you can use Kalshi to bet on something like this, by the way), remember that law firms have a pretty damn good track record. A record of consistently absorbing what\u2019s assumed to be disruptive technology without letting it disrupt their institution.<\/p>\n And as the Jimmy Buffett warned in the song \u201cMa\u00f1ana\u201d: there\u2019s a danger in describing an ocean when we haven\u2019t seen it.<\/p>\n Maybe AI is different. But we just may wind up just being wrong.<\/p>\n Stephen Embry is a lawyer, speaker, blogger, and writer. He publishes\u00a0TechLaw Crossroads<\/a>, a blog devoted to the examination of the tension between technology, the law, and the practice of law.<\/em><\/strong><\/p>\n \n The post AI And The End Of The Law Firm: We May Wind Up Being Wrong?<\/a> appeared first on Above the Law<\/a>.<\/p>\n One thing I learned as a trial lawyer, sometimes the hard way, is that trusting your gut instinct is not the same as relying on data. That\u2019s why in later years I became such an advocate of data-based litigation analytics.<\/p>\n Data has the unpleasant way of separating what we think is going on from what is really happening. And these days, that can lead us to overestimate our gut and underestimate the resilience of lawyers and law firms.<\/p>\n I once had a complex multi-party construction defect case. I naively believed my client was impressive and credible. I thought a jury would love this guy. I thought I knew what a jury would think. But when I did the jury research (this was before data analytics became the norm), I discovered the mock jurors immediately discredited him because of the business that he was in. And what they assumed about the people in that business. That changed everything about my strategy, to say the least.<\/p>\n Like me, we have developed a collective gut instinct about AI and the future of law in general. How it will mean fewer lawyers. How it will transform offices into hotel spaces as lawyers can work anywhere and everywhere. How it will kill the billable hour. How it will remake the practice of law and the law firm as an institution. But there\u2019s an irritating little problem: hard data is suggesting otherwise.<\/p>\n What\u2019s Really Happening<\/strong><\/p>\n Every now and then, some data surfaces that ought to give us pause in our echo chamber. One such piece of data is from Cushman and Wakefield\u2019s Legal Sector Leasing Trends<\/a> report for Q2 2026.<\/p>\n The headline: it was a record-setting quarter for law firm leasing. Law firm leasing totaled 7.3 million square feet, exceeding the previous quarter by 23%; 27% over the same quarter last year. Looking at the first two quarters of 2026 together, the leasing is 17% higher than last year\u2019s first two quarters. And new leases in the first two quarters composed some 57% of the legal leasing. That\u2019s a lot of carpet.<\/p>\n Most of this activity occurred in major markets, says Cushman, and was driven by Am Law 100 firms. But here is the Cushman conclusion that\u2019s really got my attention:<\/p>\n Law firms remained focused on growth, with expansion activity reaching its highest share since 2019 and downsizing activity continuing to decline.<\/p>\n<\/blockquote>\n And lest we think that the Cushman conclusion is a bit of an exaggeration and the legal market is really suffering, remember that revenues reportedly<\/a> grew some 12.4% in the first half of this year and demand grew 4.8%. And the salary scale and bonuses for associates are through the roof<\/a>. Partners\u2019 compensation can top $40 million. And jobs in the legal market are increasing<\/a>.<\/p>\n Yet here we all are predicting the sky is falling. That the hordes of associates law firms have traditionally hired to fuel the leverage model will be replaced by AI. That AI will upend the traditional law firm model. It hasn\u2019t happened. At least not yet.<\/p>\n Think about it. If AI was going to replace the need for lawyers, why would you need to increase your square footage by 17%? Lawyers may not be the best businesspeople in the world, but it doesn\u2019t take a rocket scientist to figure out that fewer bodies mean fewer offices. Fewer offices mean less rent. And more profit.<\/p>\n And remember all the talk about remote working becoming the norm? Again, the same concept applies: the more people working outside the office, the less space you need.<\/p>\n Moreover, if AI is doing all that work that young lawyers used to do, then billable hours and revenue should decrease, not increase. Compensation should be going down, not up.<\/p>\n What the F**k Is Going On?<\/strong><\/p>\n It makes no sense unless one of three things is happening. First, we were all just plain wrong. Second, we underestimated the power of law firms and the billable hour\u2019s continuing dominance. Or third, what we think is going to happen just hasn\u2019t happened yet. Let\u2019s look at them one at a time.<\/p>\n Possibility Number One: We Blew It<\/strong><\/p>\n So, could we be wrong? It\u2019s possible. The AI coup de gr\u00e2ce assumes one very important thing: that demand for legal services will stay the same or go down. But that is not necessarily true. Indeed, some believe that AI will actually increase demand<\/a> for legal services. It\u2019s the Jevons paradox.<\/p>\n Certainly, there will be new and novel issues that will explode. Witness the recent product liability claims against Facebook for allegedly addicting kids to social media. And who knows what else will come down the pike. So yes, we could be wrong.<\/p>\n Don\u2019t Bet Against the House<\/strong><\/p>\n And here\u2019s something that has happened time and time again: underestimating the resilience of law firms and the billable hour. Somehow the law firm house keeps winning. Let\u2019s face it, how many times have we all heard that the billable hour is dead, only for it to come back like Dracula at midnight?<\/p>\n But it\u2019s bigger than the billable hour. Law firms are masters at resisting change and dealing with it only when they have to. I have seen it over and over again. They have an uncanny ability to absorb supposedly disruptive change without allowing it to disrupt the things they care most about.<\/strong>We see it now with AI: they buy it but don\u2019t use it.<\/a> The business model of firms, lawyers\u2019 independent streak, and their risk aversion make change slow and hard..<\/p>\n Take the rainmaker with $10 million worth of business. Firm management can talk all it wants about changing the business structure and management, but if Charlie ain\u2019t happy, nobody\u2019s happy. Things might change on the surface, but underneath the hood? Not much.<\/p>\n And don\u2019t forget that for larger businesses, the chief legal decision-makers are lawyers. In-house counsel. Independent. Also risk averse. Loath to tell their outside lawyers what to do and how to do it. That\u2019s why clients say they want more use of AI by their firms but don\u2019t demand it<\/a>.<\/p>\n Possibility Number Three: We Aren\u2019t There Yet<\/strong><\/p>\n Which brings us to the third possibility: the changes we think are coming haven\u2019t happened yet. Given law firm resilience and reluctance to embrace change, that\u2019s a possibility. It\u2019s also possible that law firms will take AI and figure out a way to use it that doesn\u2019t explode their business model, their profits, or how they do their work.<\/p>\n They\u2019ve managed to do this in the past with things like e-discovery, which was supposed to radically alter litigation economics. Instead, law firms adapted. They went from using contract lawyers to specialized discovery teams to using vendors as the technology evolved. Law firms adapted.<\/p>\n And cloud computing was also supposed to transform law practice. Law firms adapted. Data analytics arrived. Firms adapted. Remote work came along. Law firms adapted.<\/p>\n And now AI. So, before we bet on the remaking of the legal profession (I\u2019m sure you can use Kalshi to bet on something like this, by the way), remember that law firms have a pretty damn good track record. A record of consistently absorbing what\u2019s assumed to be disruptive technology without letting it disrupt their institution.<\/p>\n And as the Jimmy Buffett warned in the song \u201cMa\u00f1ana\u201d: there\u2019s a danger in describing an ocean when we haven\u2019t seen it.<\/p>\n Maybe AI is different. But we just may wind up just being wrong.<\/p>\n\n
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