The year 2025 was a banner one for legal tech. We’ve seen Harvey, a company that didn’t even exist four years ago, achieve an $8 billion valuation. Filevine raised $400 million, and we saw a giant acquisition by legal tech standards when Clio acquired vLex. Agentic AI solutions are the big new thing. There is much to be excited about, even as many question valuations and the lofty promises of AI solutions in the market.
Rather than reprise 2025, I’m focusing on 2026 and the market’s physics. Rather than bold predictions, I want to share insights on market forces and, in part 2, cover the pressure points where the legal ecosystem will bend.
Here are six macro trends to watch that will help legal innovators at law firms, in law departments, and at legal tech companies discern and interpret market signals, especially as chatter about an AI bubble creates distracting noise.
Here’s to a great holiday season and Happy New Year for legal tech!
1. Geo-Politics and the AI Industrial Revolution
We are entering an AI Industrial Revolution, which is creating a rallying point for U.S. policy. The United States believes it must win the AI race. The prior administration passed the CHIPS and Science Act of 2022 to provide incentives to reduce the reliance on China and Taiwan for semiconductor manufacturing, intending to move more production onshore. The Biden administration also approved the reopening of the Three Mile Island nuclear facility to increase power generation to support Microsoft’s data center expansion. Reliable energy and water for cooling are required for expanding AI compute power.
The current administration is building on these moves to pursue infrastructure investment to scale compute power. Actions are informed by U.S. foreign policy and also influence policies for investment, cybersecurity, energy, and water. The impact of AI on the American workforce may even influence immigration and education policies.
Legal innovators should watch for U.S. policy changes that may be early indicators of fits and starts in the AI Industrial Revolution, which can ripple into legal tech.
2. The Magnificent 7
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