The percentage of legal professionals using AI has soared from 22 percent in 2024 to 80 percent in 2025, according to the Legal Industry 2025 Risk Index released by digital insurance company Embroker.
Professionals are utilizing AI tools in automating client support, boosting cybersecurity, and improving professional services. Nonetheless, 43 percent of respondents indicated that overreliance on AI could result in professional liability risks, while 38 percent were concerned about data privacy violations. Thirty-seven percent highlighted how AI misuse could lead to legal/ethical issues; malpractice suits have increasingly been connected to the wrongful or secret use of AI tools.
“Legal professionals are rapidly integrating AI into their workflows, but this surge in adoption introduces novel professional liability risks that firms must proactively manage. As the industry continues to embrace AI, it’s critical for firms to ensure they have guidelines in place to govern their AI use to minimize the potential for malpractice claims,” said Andy Lea, Embroker’s chief insurance officer, in a statement.
The challenge of adapting to disruptive technologies like AI and large language models was the top external risk for legal professionals, having been cited by 53 percent of respondents. Fifty-one percent pointed to the risk of professional liability claims, legal malpractice threats, or other litigation suits; 40 percent highlighted cybersecurity breaches, attacks, or threats.
The leading internal challenges for law firms were “reputational risks stemming from public controversies, client disputes, or social issues” and “employment-related claims (e.g., harassment, wrongful termination, discrimination),” according to Embroker.
Legal professionals taking more risks
This year, 37 percent of law firms said that they were approaching risk as a chance to spur growth compared to 18 percent last year. Twenty-three percent reported fully embracing risk in 2025 compared to 8 percent in 2024.
Infrastructure like IT, equipment, and office space leads the list of priorities for businesses in 2025, along with technological advancement/support and sales/revenue growth.
“The increased confidence we’re seeing stems directly from firms becoming more strategic about risk, using insurance not just as a safeguard but as a strategic asset enabling them to innovate and adapt securely in this evolving landscape,” Lea said in a statement.
Forty-five percent of respondents said they intend to expand their insurance coverage – up from 2024’s 14 percent – while 77 percent said their current policies could handle their top business risks. Professionals are also increasingly adopting dedicated cyber insurance policies.
The 2025 Legal Industry Risk Index drew its findings from a survey conducted with 245 full-time legal professionals based in the US. The survey was commissioned in June.