A market in flux: New York legal market grapples with AI impact, talent pressures, and client mandates

In a year like no other, Sandpiper Partners’ 19^th Annual New York Legal Market Conference brought together law firm leaders, sector experts, and clients to discuss the transformative and unprecedented legal market. The candid panel discussions revealed an industry at a turning point, where technology, talent, culture, and client expectations are all in flux, and the relentless pressure to deliver value remains.

Here are the key takeaways from the event:

AI steps out of the pilot phase straight into institutional embrace

A few years ago, AI in law was merely a curiosity. Now it’s become a strategic necessity. Law firm leaders on the AI panel recounted their journeys from tentative pilots to firmwide implementation. One panelist described how AI usage at their firm grew from a handful of early adopters to hundreds of users in under a year. “When it [the pilot] was launched in September, we were at about 200 [users]; by May, we were just under 800,” they shared. “We were committed to training all of our associates.”

But this is not just about blind adoption. The most successful law firms are deeply intentional: Embedding ethical guardrails, requiring robust education before tool access, and asking, “How are we enabling our people to use AI responsibly, at scale, and in alignment with firm strategy?” The panelists also agreed that the real value of AI is not in automating the routine, but freeing lawyers to focus on “higher-value, more nuanced work where human expertise is irreplaceable.”

Mike Raposa, Williams Lea by RRD’s Chief Revenue Officer, offered a unique lens, highlighting how AI is transforming not just legal work but the very infrastructure that supports law firms. “At some firms, you’ve got about 50% of admin staff retiring or leaving the business and that’s a major challenge, because those individuals are supporting senior partners,” he said. “We’re not going to disrupt that particular scenario, but there’s change coming on how to support either associates or other attorneys throughout the firm.”

Raposa continued: “With agentic AI and automation already reshaping the back office, it’s really a race to be involved on the technology side, and there will be fewer administrative resources, but we [Williams Lea] always combine people, process, and technology.”

Clients are also accelerating the pace of adoption. In-house legal teams, especially in highly regulated sectors, are not only demanding AI adoption, but are sometimes mandating the use of their own tools, leveling the playing field and ensuring data security. Law firms that are unable to articulate a clear AI strategy risk being left behind.

Talent: New models, new mindsets

Technology and generational differences are actively changing talent management. With AI and automation in the equation, law firms are rethinking recruitment, onboarding, and professional development strategies. The traditional law firm pyramid is slowly flattening with fewer junior lawyers performing repetitive tasks.

Instead, firms are now on the hunt for more tech-savvy lawyers who can deliver value in new ways. Gen Z lawyers, who seek more purposeful work and expect rapid growth, are accelerating this shift. One law firm panelist shared, “Tomorrow’s lawyers are technologists as much as lawyers.”

Firms are also rethinking the once-overlooked role of business professionals, who are now seen as essential to firm strategy and innovation. “For a long time, we just focused on lawyers, right? And these other people were just sort of there, doing what they were doing,” said one panelist. “That’s changed, the business of law has changed. We now invest in a lot of time and money in these people who are critical to our business.”

Despite the widespread use of AI in law, the panelists agreed that it is unlikely that AI will replace lawyers. “That’s a debatable proposition,” one lawyer said. “But it will definitely replace lawyers who don’t use AI, and that’s what we have to impress upon our people, including our partners, no matter what generation you may be. Clients expect it.”

The client mandate: A law firm that’s efficient and transparent

Clients are under as much pressure as their outside counsel, if not more. General counsel panelists from major financial and insurance institutions described a world of shrinking budgets, rising complexity, and relentless demand for efficiency.

One general counsel described, “I see law firms going up and asking for higher rates, and I’m looking at my budget, trying to figure out how to do more with less.” They continued, “This is changing the way I’m working with firms – I’m talking retainers, flat fees, budgets with caps… I need more certainty around what it’s going to cost to do matters, and I need to be able to budget for that.”

More clients also expect their law firms to use AI, especially for commoditized work. Some firms are even building their own tools and requiring outside counsel to use them to ensure data protection and consistency. However, clients are wary when it’s the other way around and prefer their law firms partner with established technology vendors instead of building proprietary tools. Their message: Don’t reinvent the wheel and don’t pass the costs of experimentation onto clients. As one client panelist pointed out, “I’m not looking for law firms to become technology providers. I want to know who you’re partnering with, what tools you’re using, and how you’re deploying those tools.”

For the New York legal market, the forecast continues to be one of rapid change and that’s showing no sign of slowing. The traditional models of pricing, talent, and technology are being rewritten all the time, and law firms need to keep up. One panelist sums it up nicely, “Law is not a spectator sport. Get engaged.”

As law firms steer through market uncertainty, shifting client expectations, and rapid technological change, it’s more important than ever to understand client needs, establish strong AI policies, and cultivate a culture of innovation. Discover how law firm leaders are strengthening their operational infrastructures to meet the demands of the evolving legal landscape. Download our 2025 Trends and Opportunities in Business Services report, The Technology Revolution in Legal Support: Redefining Roles and Enhancing Value in Modern Law Operations.