7 BigLaw firm heads’ predictions for FY26–27

But what do the leaders of some of Australia’s largest law firms see as the headline challenges for firms like theirs to overcome? Here, seven BigLaw firm heads gaze into their crystal balls to identify what’s coming for the big end of town in the next 12 months.

‘Law firms will spend more on AI than people’

Gadens chief executive and managing partner Mark Pistilli told Lawyers Weekly he can “see a future where law firms will spend more money on AI and technology than on people”.

Historically, he said, about 60–70 per cent of law firm costs have been on people. In the law firm of the future, and for some in FY26–27, more money will be spent on AI and technology than on headcount.

“This will favour firms with capital and scale – either funding these initiatives through revenue or through investment (from partners and/or external providers),” he said.

“This will be happening at the same time as many law firm costs are increasing (due to things like increased regulatory compliance, client demands, higher inflation, etc.) – which may see the big firms get bigger, concentrating capability among larger players while squeezing the smaller firms.”

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Leaders, Pistilli said, will need to think about growth and consolidation options, and they should not lose sight of the fact that they will remain people businesses.

“Spending more on AI and tech does not make law firms tech businesses. They will remain people businesses, and those who put people at the centre of everything they do will be the winners,” he said.

AI becomes business as usual

For global firms like Herbert Smith Freehills Kramer (HSF Kramer), Kristin Stammer, executive partner in Asia and Australia, said: “AI is quickly becoming business as usual, and we expect our working day across our firm to soon consist of moving seamlessly between a number of AI capabilities.”

This is already underway at HSF Kramer, she said, with more than 6,000 of its employees globally having access to tools for everyday use and some of the bespoke AI tools it has built.

“Firms will be differentiated by how well they use AI capabilities to deliver better outcomes and innovative solutions and insights for clients, while maintaining our exceptional legal judgement and quality of service. The opportunity of AI will be measured by how it is used to meaningfully augment client service and delivery, rather than to simply enhance productivity,” she said.

“Importantly, this will require investment in people and process as much as technology, building strong capability, training, and governance. And, if not already, every firm will have dedicated leadership and multidisciplinary teams with specific technical skills and exceptional judgement to deliver on this outstanding client service.”

Uncertainty to dominate

Dentons Australia chair and Australasian region chief executive Amber Warren predicted that, in FY26–27, “uncertainty itself will be the defining force” shaping the Australian legal profession.

“A confluence of factors impacting the Australian economy – rising interest rates, geopolitical instability making Australia attractive for foreign investors, and recent budget changes impacting the property sector – is creating multiple, overlapping sources of volatility. This uncertainty is already driving a cyclical shift away from transaction-led work toward insolvency, recoveries, and dispute resolution,” she said.

Law firms are easier to operate when client needs are clear, she continued, and the significance of this uncertainty is that clients may lack clarity on their own direction, making demand for legal services harder to predict.

In order to succeed, she advised, “lawyers and law firm leaders need to develop a deep understanding of the economic pressures facing their clients, drawing on insights from CFOs, economists and global peers”.

“Across our international network, we are seeing similar conditions emerge, reinforcing that those who anticipate and interpret uncertainty early will be best placed to support clients.”

Baker McKenzie national managing partner Anne-Marie Allgrove offered similar sentiments, noting that geopolitical uncertainty, rising regulatory pressure, and more complex risk will continue to dominate this financial year.

“Supporting clients in managing that complexity and risk in ways that address the uncertainty, provide insights, enable consistency and predictability both as to solutions and cost will be critical for law firms,” she said, adding that the use of AI will be “integral” to this.

“AI will move decisively from experimentation to embedded, real‑world application across legal services. What will differentiate firms is not the technology itself but how effectively it is used – combining it with top talent and proprietary knowledge to deliver meaningful outcomes, all the while enabling lawyers to focus on high‑value work,” she said.

“To prepare, firms and leaders must invest not just in technology, but in capability: embedding AI into workflows, upskilling their people, and aligning innovation closely to client outcomes.”

Better client outcomes where lawyers do not ‘deskill’

On the back of such technological trends, Slater and Gordon chief executive Dina Tutungi said, the critical challenge in FY26–27 will be ensuring that lawyers “do not deskill”.

Legal professionals must continue to exercise independent judgement, law firms must maintain rigorous supervision of AI tools, and the accuracy of advice and protection of client data must remain paramount, she stressed.

“The legal profession is at an inflection point,” she said.

“AI has the potential to make legal services more accessible for Australians, giving people new ways to engage with the profession and better understand and maximise their legal rights. By easing administrative friction, it can help legal professionals spend more time on their craft and on client care. If we get this right, it can genuinely open up access to justice for all.”

Firms that deploy AI without solving real client problems will create risk and inefficiency, Tutungi continued, while “those that take a client‑centred, people‑led approach, with the right governance and ethical guardrails, will deliver better outcomes for clients and their people”.

The areas that will see a ‘significant wave’ of work

According to Clayton Utz chief executive partner Emma Covacevich, financial services regulatory enforcement and consumer class actions will converge “to produce the most significant wave of disputes and compliance work the profession has seen in years”.

This matters, she said, because multiple forces are hitting at once: “ASIC has doubled new investigations and nearly doubled court filings in 12 months, targeting misleading pricing, private credit practices, and financial reporting misconduct. The world-first Scams Prevention Framework has now entered its implementation phase, imposing mandatory obligations on banks, telcos, and digital platforms, with a consumer complaints window opening in March 2027.”

“At the same time, class action filings are accelerating across consumer, greenwashing, and privacy claims, with a new statutory privacy tort opening fresh pathways for data breach litigation. Add rising US cross-border disputes, and the volume is substantial.”

Clayton Utz is preparing for this wave, Covacevich said, by deepening its financial services enforcement capability, strengthening class action defence across consumer law, privacy, and ESG, and investing in its cross-border disputes capacity to meet the expected rise in US-linked litigation.

What clients will value

Piper Alderman managing partner James Macdonald expects that clients will “place even greater value on sector depth and commercial judgement, rather than general legal capability alone”.

As economic conditions become clearer, and investment flows into areas such as energy transition, infrastructure, data centres, tax, disputes, and regulatory work, he said, “clients will look for advisers who understand not only the law, but the commercial and policy settings shaping their industries”.

“This will be significant, because it will accelerate the divide between firms that can offer genuine specialist insight and those competing primarily on capacity or price. It will also change how firms develop their people, with future leaders needing stronger sector knowledge, client empathy, and strategic judgement earlier in their careers,” Macdonald said.

His firm, he said, will be investing deliberately in capability, succession, and home-grown talent, while aligning teams around the sectors and client issues that will shape Australia’s next phase of growth.

External providers as tech and transformation partners

Pistilli added another headline prediction: that law firms will “run” in-house adoption of AI.

Many in-house teams, he said, are being told by their CEOs that they need to transform and heavily use AI, but many won’t have the expertise, nor are they being given the resources or budget to do so.

They will, therefore, “look to their external legal providers to help lead their AI transformation as a ‘strategic partner’ – designing tools and workflows, setting governance and training lawyers, not just delivering legal advice”, he suggested.

“This will redefine the law firm's role from external adviser to a strategically embedded technology and transformation partner – delivering a true ‘value add’ to the relationship,” he said.

Firm leaders thus should prepare by building genuine AI and change-management capability in-house, productising their own successful tools, and clarifying the professional, liability, and confidentiality boundaries that come with advising clients on systems the firm itself helped implement, Pistilli said. “Oh, and they will still need to ensure that they retain genuine market-leading lawyers to drive it all,” he said.