The firms shaping 2026 successfully won’t be those making the most dramatic changes. They’ll be the ones making the most deliberate ones, writes Denise Farmer.
The Australian legal sector is heading towards $35.8 billion in revenue by 2026, but growth alone won’t determine which firms thrive. Success will belong to practices that can see around corners, anticipate change before it arrives, and build the infrastructure to support how lawyers actually work, not how they worked a decade ago.
According to The State of Legal Tech Data Insights, over 1,000 Australian legal professionals reveal a profession at a turning point. The patterns in this data aren’t predictions. They’re early indicators of changes already underway, each one requiring firms to act with intention.
The satisfaction myth will collapse
For years, firms have measured technology success through satisfaction surveys. The problem? Satisfaction and performance aren’t the same thing. While 78 per cent of lawyers surveyed report being satisfied with their current tools, those same professionals are losing an entire working day each week to inefficient systems. That’s not a minor productivity gap. It’s 52 days per year, per lawyer.
In 2026, this disconnect will become impossible to ignore. Firms will stop asking whether lawyers are satisfied and start asking whether technology is actually enabling the work that needs to happen. Does it support current workflows or legacy processes? Does it create capacity or consume it? Does it reduce friction or introduce new barriers?
The shift will be cultural as much as technical. Leadership teams will need to treat technology decisions with the same rigour applied to strategic hires and major client relationships. Tools that genuinely reduce administrative load, improve communication, and support flexible working arrangements will become non-negotiable, not because they’re trendy but because the alternative is too costly to sustain.
Data control will become a deal breaker
Many lawyers we interact with believe they understand data portability. In fact, just over half surveyed said they feel confident they own their data once it enters a legal software platform. On the surface, that confidence sounds reassuring. In reality, it often does not match how data access works in practice.
That disconnect is already becoming clear. Seven in 10 firms surveyed have faced providers restricting or delaying data access during contract changes. Among those who paid to extract their own information, 92 per cent reported costs averaging nearly $25,000, with delays routinely exceeding four weeks. These aren’t edge cases. They’re evidence of a structural problem in how legal technology contracts are written and enforced.
In 2026, data ownership will move from legal fine print to front-page concern. Firms will evaluate vendors differently, demanding transparent offboarding processes, clearly articulated data rights, and straightforward export mechanisms before signing anything. The questions will be direct. What happens to our data if we leave? How long does extraction take? What does it cost? Who owns what?
Practices that secure these terms now will have options later. Those that don’t may find themselves locked into systems that no longer serve them, with limited recourse and extraction fees that can reach tens of thousands of dollars. Data mobility isn’t a technical nice-to-have anymore. It’s a strategic imperative that determines whether firms can innovate or remain trapped by vendor decisions.
AI will move from experimentation to expectation
AI adoption in legal practice has been marked by enthusiasm and caution in equal measure. The enthusiasm is justified. Faster drafting, more efficient research, streamlined client intake and improved matter visibility all deliver genuine productivity gains, particularly for firms managing intense workloads with limited capacity.
But 2026 will be the year AI moves from being something “nice to try” to necessary to govern. Only about a third of firms currently have strong AI policies in place. Most operate with informal guidance or no framework at all. Meanwhile, two-thirds of lawyers surveyed expressed concern about cyber security and confidentiality risks. That tension between potential and preparation can’t hold much longer.
The question is no longer whether firms will adopt AI. It is whether they are prepared to take a documented position on how it is used. That means being clear about where AI is appropriate and where it is not. It requires checks on AI-generated outputs. Client confidentiality must be protected at every step. Teams also need training on understanding what AI can do and where its limits lie.
The firms that lead won’t necessarily be the ones using AI most aggressively. They’ll be the ones using it most responsibly. Structured adoption frameworks will become standard practice, not because regulation demands it (though that may come), but because the alternative creates unacceptable risk for clients and practitioners alike.
Talent retention will force technology upgrades
The relationship between technology and talent has fundamentally changed. What used to be sequential decisions, such as hiring people, then providing them with tools, are now inseparable. Flexibility, modern systems, autonomy, and clear career pathways aren’t perks that might attract younger lawyers. They’re baseline expectations determining where talented people choose to work.
The data confirms this shift. Seventy-two per cent of surveyed lawyers have watched colleagues leave for freelance work, boutique practices or alternative legal paths seeking better balance and control. Four in five lawyers surveyed identify attracting and retaining next-generation talent as a major challenge.
In 2026, firms offering outdated technology, rigid structures and limited flexibility will lose talent to competitors willing to invest differently. This isn’t speculation. Technology that reduces administrative burden, enables hybrid work and provides visibility into workload and career development will become essential to recruitment and retention strategies.
This creates pressure, particularly for practices operating with legacy systems or limited budgets. But it also creates opportunity. Firms that move quickly to modernise tools and workflows will compete more effectively for skilled lawyers in an increasingly tight market.
What needs to happen now
The firms best positioned for 2026 will be those taking three concrete steps in the months ahead.
First, conduct an honest technology audit. Identify where systems create friction, where satisfaction masks inefficiency, and where capabilities no longer match actual needs. Second, review vendor contracts for data portability terms, offboarding procedures and ownership rights. If the answers aren’t clear, renegotiate or plan an exit. Third, establish AI governance frameworks that define appropriate use cases, verification requirements, and confidentiality protections.
None of these steps alone will transform a practice. Together, they create the foundation for competing effectively as client expectations rise, talent requirements evolve, and technology capabilities expand. The firms shaping 2026 successfully won’t be those making the most dramatic changes. They’ll be the ones making the most deliberate ones.
Denise Farmer is the general manager in APAC at Clio Software.
