With AI-powered tools promising efficiency gains and cost savings, AI is fundamentally changing the practice of law. But as AI adoption accelerates, major questions arise: Will AI replace lawyers? What does AI adoption mean for the billable hour? And can hallucinations ever be fully eliminated?

To explore these issues, we surveyed 16 tech leaders who are at the forefront of AI-driven transformation. They provided unfiltered insights on the biggest AI adoption challenges, AI’s effect on billing models, the potential for AI to replace lawyers, and the persistent problem of hallucinations in legal AI tools. Here’s what they had to say:

Why Are Law Firms Hesitant to Adopt AI Tools?

According to our survey of tech leaders, law firms’ hesitation in adopting AI is driven by several key factors, primarily concerns about accuracy, risk, and economic incentives. Many firms worry that AI tools can generate incorrect or misleading information while presenting it with unjustified confidence, making mistakes hard to detect. Additionally, larger firms that rely on the billable hour see efficiency-driven AI as a potential threat to their revenue models. Other firms lack a clear AI strategy, making AI adoption and integration difficult. Trust, data privacy, and liability remain major concerns.

More specifically, here’s what tech leaders had to say about law firm hesitancy in adopting AI:

Scott Stevenson, CEO, Spellbook:

Where Does AI Excel, and Where Is It Still Overhyped?

Legal AI tools have made significant strides in the past two years, particularly in automating routine tasks that involve large volumes of data and well-defined processes. However, AI still struggles with more nuanced legal work that requires contextual understanding and strategic reasoning. Most legal tech leaders identified clear areas where AI is proving effective, alongside areas where expectations may still outpace reality.

Currently, AI excels in contract review, where it can analyze and summarize contracts with high accuracy. It is also highly effective in document review and due diligence, flagging inconsistencies, and surfacing relevant documents. Additionally, AI has reliably streamlined e-discovery, significantly reducing the time spent reviewing electronic documents. Another strength is its ability to summarize and extract data from documents. 

However, AI remains less reliable in legal brief writing, as it struggles with complex legal arguments and strategic reasoning. Similarly, while it can return results for case law research, it often fails to grasp legal context, hierarchy, and nuances—though some legal tech leaders hold differing views on its efficacy in this area. 

Legal tech leaders shared their insights into this “jagged frontier” of AI’s capabilities:

Will “Hallucinations” in Legal AI Tools Ever Be Eliminated?

AI hallucinations—when a model generates incorrect or fabricated information—remain one of the biggest concerns for lawyers when using AI-powered legal tools. While advancements in AI continue to mitigate these issues, experts largely agree that hallucinations will likely persist to some degree due to the probabilistic nature of LLMs. 

Nonetheless, some legal tech leaders believe that hallucinations can be eliminated completely.

Legal tech companies are taking different approaches to address the “hallucination challenge,” from refining training data to improving AI oversight and validation systems. Many companies focus on “grounding” AI models in authoritative legal content, ensuring they pull from verified sources rather than relying solely on predictive algorithms. Others are developing fact-checking layers and human-in-the-loop review processes to minimize errors before outputs reach end users.

Here’s what the heads of these companies had to say about hallucinations: 

Will AI Change the Billable Hour Model?

AI’s increasing role in legal workflows may be putting pressure on the billable hour model. While some firms have already transitioned to flat-fee and subscription-based billing structures, others remain hesitant to abandon traditional hourly billing. 

Most legal tech leaders agree that AI will drive efficiency and encourage alternative pricing models, but the complete demise of the billable hour remains unlikely in the near future:

Will AI Replace Lawyers?

As AI continues to improve, the question of whether it will replace lawyers remains a topic of debate. While AI excels at automating routine legal tasks, legal tech leaders largely agree that it lacks the judgment, strategic thinking, and interpersonal skills necessary to fully replace attorneys. Instead, AI is largely expected to augment legal professionals, allowing them to focus on higher-value work while automating administrative and repetitive processes.

Here’s what legal tech leaders had to say about whether AI will replace lawyers: 

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As legal tech companies continue to improve their offerings, the legal profession may continue to undergo fundamental changes to the practice of law— reshaping workflows, redefining the billable hour, and transforming the role of lawyers in ways we are only just beginning to understand. 

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