AI Governance and Geopolitics Dominate Law Firm Priorities for 2026
Law firm leaders are staring at two pressures they can't ignore: governing AI responsibly and dealing with political volatility. A new MD Communications report, What Lies Ahead 2026, puts numbers behind what many already feel-uncertainty is rising and business as usual won't hold.
Across the survey, 95% are concerned about AI governance, 72% worry about investment costs, and only 5% trust current AI quality controls. Meanwhile, 77% expect geopolitical instability to hit their growth plans.
The signal from the data
- 95% are concerned about AI governance; only 5% trust current quality controls.
- 72% cite AI investment costs as a concern.
- 59% say technology has reduced the need for trainees or junior lawyers.
- 77% expect geopolitical volatility to affect growth in 2026.
- 19% say the dominant partnership model is no longer the best option.
- 88% call wage increases for juniors unsustainable in their market segment.
- 86% did not review DEI policies in the last year, despite US policy shifts.
AI governance is the choke point
Firms are embracing AI while questioning how to make it safe, credible and defensible. Melissa Davis noted the profession is "at a crossroads"-leaders want the benefits but worry about governance, spend, and quality controls.
The International Bar Association has warned that opaque AI can undermine rights and the rule of law. If you're deploying AI, you need a framework that answers: who approves use cases, how models are evaluated, how outputs are audited, and what happens when something goes wrong.
International Bar Association guidance is a good reference point, as is the evolving guidance from the Law Society of England and Wales.
Adoption isn't optional
William Peake put it plainly: firms that think AI won't affect how they work are kidding themselves. Slower adopters risk falling behind on service delivery, pricing, and client expectations.
The move now is structured adoption: pilot in low-risk workflows, set clear success metrics, and build an internal review loop. Pair that with training so lawyers understand both the upside and the limits.
Talent and training: the squeeze is real
With 59% reporting reduced need for trainees or junior lawyers, the traditional apprenticeship path is under pressure. That doesn't mean less talent; it means different talent-people who can write prompts, verify outputs, and apply judgment fast.
Create modern training tracks: AI literacy, supervision of AI-assisted work, data security, client disclosure standards, and outcome-focused writing. If you need a starting point for structured AI upskilling, explore curated options for legal roles via Complete AI Training.
Business models under strain
Nearly one in five respondents say the dominant partnership model is no longer the best option. On top of that, 88% believe current salary inflation for NQs and juniors isn't sustainable.
Expect more experimentation: fixed-fee portfolios, hybrids with ALSPs, productised services, and pricing tied to outcomes. Firms that rethink leverage, delivery, and margin discipline will have an edge.
Geopolitical risk: plan like you mean it
Seventy-seven percent expect instability to hit growth plans. That calls for scenario planning, cross-border collaboration, and tighter risk controls.
Build country risk heatmaps, diversify referral networks, and formalise sanctions/export-control checks. Strengthen local alliances and secondments to keep client coverage resilient-as highlighted at recent IBA gatherings.
Culture and DEI: strategy, not slogans
Pressure on culture is rising, yet most firms held the line on values in 2025. Even with executive-level shifts in US DEI policy under the Trump administration, 86% of firms did not review their DEI policies last year.
Sadiq Jafar put it well: culture is a differentiator in a tight talent market. Christine Braamskamp echoed the point-firms handle risk better when they are well run, live their values, and maintain a good culture.
What leaders can do in the next 90 days
- Stand up an AI governance board with clear approval gates, testing standards, and audit trails.
- Run two AI pilots: one internal (KM, research) and one client-facing (drafting, review) with defined KPIs.
- Publish an AI use policy covering confidentiality, human-in-the-loop review, and client disclosure.
- Launch an AI fundamentals program for partners, supervisors, and trainees; certify completion.
- Rebase pricing on value for at least one practice; test fixed or subscription models.
- Create a geopolitical risk dashboard and playbooks for your top five at-risk markets.
- Reaffirm culture standards: workload hygiene, flexibility, and meaningful work pathways.
The bottom line
AI and geopolitics aren't side issues-they set the terms of competition. The firms that win will pair disciplined AI governance with smart adoption, strengthen cross-border resilience, and treat culture as operating infrastructure, not PR.
As Melissa Davis noted, the profession is at a crossroads. The choice is simple: set the rules for how you work with AI and uncertainty-or let them set the rules for you.
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