Law firms are spending more on technology than ever before, but most still lack a mature framework for measuring whether AI investments actually pay off, according to a new report from legal consulting firm Harbor released on the eve of this week's ILTA conference.
The report found that average technology spending increased 41% from 2021 to 2025 and now represents 5% to 6% of overall firm revenue. Yet none of the firms in Harbor's 2026 legal lab reported having a mature framework for measuring AI's business impact.
The timing is pointed. ILTA attendees will gather to discuss AI adoption while confronting a central paradox: firms are buying AI tools at record levels without knowing whether those tools produce value.
Questions about the data
The report's conclusions should be weighed against some methodological concerns. Harbor says it combined a "sounding board" of law firm CIOs, CTOs, and chief knowledge and innovation officers, but it does not disclose how many people were involved, which firms participated, or whether the 2021 and 2025 spending figures came from the same firms.
There is also no indication whether the 41% spending increase is inflation-adjusted. And the report does not define what counts as software technology spending.
"Technology alone is no longer a sustainable differentiator. Legal expertise alone is no longer sufficient. These are both table stakes," the report states. That passage, among others, reads as if it could have been drafted with AI assistance - which matters because without the underlying methodology, readers cannot verify whether the conclusions are data-driven or generated.
Harbor's four-point framework
Harbor offers an Enterprising and Operating Model with four components. They are standard innovation practices, but the fact that law firms struggle with them is telling.
Measure what matters. Harbor argues that firms are measuring AI activity more effectively than AI impact. Without determining how AI contributes to profitability, efficiency, productivity, and outcomes, there is no way to know whether an investment is succeeding.
Invest with intention. Under most firms' decision-making processes, technology assessment ends once a purchase is approved. Harbor says the question is not just whether a project needs approval, but whether it is the "right investment based on strategic value, risk, organizational capacity and long-term ownership."
Change behavior, not just technology. The key is making lawyers see how AI improves their day-to-day work, not running rote training sessions where professionals check email while someone reviews features. Otherwise, AI tools will not gain traction.
Build trust at the speed of innovation. Many firms have AI acceptable-use policies but fail to turn them into practical guardrails. Harbor cautions that lawyers are experimenting with AI on their own and practice groups are developing independent workflows, which creates risk.
Why adoption lags
Harbor's conclusions align with other industry observations. At Legal Geek in Chicago, Gina Passarella offered similar findings: law firms are buying AI but have not figured out how to use it to benefit clients.
The billable hour model creates a structural obstacle. AI saves time, and lawyers sell time. Thomson Reuters announced last week that its new AI platform can perform at the level of a senior associate - a development that threatens the leverage model that drives law firm profitability.
Consensus-based governance compounds the problem. "For decades, firms optimized for delegation and consensus, quality, and risk mitigation," Harbor says. "Decision cycles can no longer be measured in quarters or years, yet many governance processes have not changed to keep pace with the continuously changing environment."
Firms also react to the loudest voices rather than investing strategically. A partner with a $5 million book of business who demands a specific tool will likely get it, since they can leave the firm easily. Siloed practice groups evaluate technology through their own needs, not the firm's overall strategy.
Clients could break the cycle. Harbor says clients are demanding better use of AI, but the report's findings suggest clients are not insisting on measurable results - yet.
Why this matters for legal professionals
For lawyers and legal staff, the gap between AI spending and measurable impact creates both risk and opportunity. Those who develop skills that tie AI use to concrete outcomes - faster research, more efficient document review, better matter management - will be positioned to define what value looks like in their firms. Legal professionals who wait for firm leadership to figure out AI strategy may find themselves subject to decisions made without their input.
The AI for Legal resources and the AI Learning Path for Paralegals offer practical starting points for legal professionals who want to build AI competence now rather than wait for their firms to catch up.
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