There was nothing typical about the past year. The only constant was change. Legal technology announcements rolled out nonstop, making it nearly impossible to stay on top of all the updates. Investment from venture capital and private equity firms was record-breaking. Artificial intelligence advanced faster than any of the technologies that preceded it, and the number of new legal tech AI startups launched in 2025 was so high that it felt like a game of whack-a-mole.

Simultaneously, there was considerable discussion about “agentic AI,” as trusted companies rapidly introduced generative AI features and integrations into their products. Others continued the trend of phasing out server-based offerings in favor of cloud-based platforms.

Meanwhile, law students, frustrated by their school’s lack of AI guidance, took matters into their own hands. Ethics committees issued updated AI guidance, individual judges crafted specific rules for technology use in their courtrooms, and AI tools continued to hallucinate, to the consternation of judges and lawyers alike. All the while, a profession far more comfortable with tradition and precedent than constant change struggled to keep up.

Money talks

Year over year, investment in the legal technology space has grown exponentially. Last year’s largest funding round, Harvey’s $100 million, was dwarfed by multiple large investments in 2025.

Once again, Harvey led the way, raising a total of $760 million across three funding rounds, the most recent of which was a $160 million Series F announced earlier this month. Other notable investments included Clio’s $500 million raise in November; Filevine’s $400 million in September; and EvenUp’s $150 million Series E round in November.

This was also a busy year for acquisitions, driven in large part by companies seeking to enhance the AI capabilities in their products. Notable deals announced included Clio’s purchase of vLex; Aderant’s acquisition of HerculesAI’s legal-tech assets; Eudia’s buys of Johnson Hana and Out-House; and Wolters Kluwer Legal & Regulatory’s deal to acquire Libra Technology GmbH.

The rise of agentic AI

All year, one topic seemed to dominate every conference stage and product announcement: agentic AI. It was the centerpiece of panels, keynotes and expo hall chatter, even as speakers disagreed on what the term actually meant in the context of legal work. Some framed it as workflow automation; others as autonomous task execution; and still others as a catchall for whatever might come next.

Despite the lack of consensus, the buzz never slowed. Vendors were eager to show controlled demos and polished previews of what they hoped these tools would eventually do, even though very few products were ready for use in real practice. The promise was everywhere, but practical execution remained limited, leaving many with the sense that agentic AI was more aspiration than reality.

Cloud first

In 2025, vendors continued the move away from server-based products, emphasizing a cloud-first approach. For example, Relativity set a sunset path for Relativity Server and is pushing customers toward its cloud platform. Similarly, Aderant released new billing and financial applications that run only on its Stridyn cloud platform, steering large firms toward cloud deployments even as it maintains support for Expert. Likewise, Thomson Reuters Elite continued to push firms to migrate from its legacy Enterprise system to 3E, which is increasingly sold and developed as a cloud-first platform.

These changes are evidence of an industry-wide transition to cloud-based software and a retreat from older on-premises tools. As part of their long-term roadmaps in cloud products, vendors emphasized the benefits of the cloud, including improved security, 24/7 availability, permission-based access, flexible new features, affordable and scalable growth for law firms, along with embedded AI capabilities.

Patchwork of regulatory reforms

State-level rule changes were another ongoing theme in 2025, with some jurisdictions moving ahead while others held back. Arizona and Utah continued to lead. Arizona’s alternative business structures list has grown to over 100 approved entities, including KPMG Law U.S. Meanwhile, Utah’s regulatory sandbox, which is authorized through 2027, has progressed to Phase 2 with a focus on models in which alternative legal providers (non-lawyers and/or software) engage in limited-scope legal practice.

Washington’s new entity-regulation pilot program opened for applications in late 2025, allowing businesses and nonprofits to deliver certain legal services, while Colorado expanded the authority of its licensed paraprofessionals, giving them a broader role in family law cases. And Illinois moved toward creating a program that would allow nonlawyers to provide limited legal advice on family law and housing issues under the supervision of a certified attorney.

Other states took a more restrictive approach. For example, Texas issued two new ethics opinions, 704 and 707, which reinforced its ban on nonlawyer ownership, even when a firm is structured legally in another state. A handful of jurisdictions, including New Hampshire, continued limited pilot programs, while others, including Minnesota and Oregon, moved ahead with permanent limited-license frameworks rather than temporary pilots. Ultimately, the year ended with a mix of approaches and no clear consensus on a path forward.

Head of the class

Law schools spent much of 2025 trying to catch up with the profession’s shifting expectations around AI. A few schools introduced new courses and research efforts, but students were often left to their own devices as firms began to expect increased AI fluency from recent graduates.

With many law schools treating AI as an optional skill set, students took matters into their own hands, forming organizations focused on AI education and its practical application to legal work.

For example, students at the University of Miami School of Law founded the Artificial Intelligence and Law Society and recently held a panel on the practical and ethical issues raised by AI’s use in law firms. Students at 16 other schools, including Harvard Law and UCLA, took a similar approach and launched student-run AI-focused groups, most of which were created within the past two years.

Ultimately, 2025 was characterized by turbulence and unpredictability, driven by technological advancements that outpaced regulatory efforts. Lawyers and law schools scrambled to keep up, but their approaches were often inconsistent and sometimes openly conflicting.

The end result? It was a year of reckoning, where a profession that preferred to look backward was, ready or not, forced to look—and move—forward.

Nicole Black is a Rochester, New York-based attorney, author and journalist. She is the principal legal insight strategist at 8am, parent company of LawPay, MyCase, CasePeer and DocketWise. She is the nationally recognized author of Cloud Computing for Lawyers and is a co-author of Social Media for Lawyers: The Next Frontier, both published by the American Bar Association. She writes regular columns for ABAJournal.com and Above the Law, has authored hundreds of articles for other publications, and she regularly speaks at conferences regarding the intersection of law and emerging technologies. Follow her on LinkedIn, or she can be reached at [email protected].