Actionstep Report: 78% of Midsize Law Firms Expect AI to Drive Demands for Lower Fees and Faster Results. Nearly Half Aren't Ready to Govern It.

Fourth Annual Report Finds Midsize Firms Betting on Growth and Accelerating AI Adoption as Fragmented Systems and Governance Gaps Leave Them Exposed

DENVER, May 19, 2026 /PRNewswire/ -- Actionstep, the leading provider of cloud-based law firm operations software for midsize law firms, has released its fourth annual US Midsize Law Firm Priorities Report. The data reveals midsize firms are in their most growth-oriented posture in four years, prioritizing practice diversification and digital transformation over cost containment for the first time, even as a growing AI governance gap leaves them exposed to professional and reputational risks.

The report finds that nearly all (95%) of midsize law firms now use AI, and 78% expect clients to demand lower fees and faster results because of it. Yet, 46% of law firm professionals lack confidence that their firm has adequate policies and safeguards to govern that use. Most are running AI across fragmented, multi-tool stacks, with no clear picture of which tools have been vetted, which outputs are being reviewed, or what clients have been told.

"AI is shifting what clients expect from their law firms, and faster results and lower fees are just the start," said Early Stephens, CEO at Actionstep. "The firms who have built connected systems and consistent processes are better positioned to understand where AI can add value and where risks lie. The ones that have layered AI on top of fragmented operations are in a much tougher position. You can't govern what you can't see, and most firms don't have full visibility into how AI is being used across their organization. That's the problem firms need to solve before anything else. Not which AI tools to use, but whether they have the foundation to use them well."

The 2026 US Midsize Law Firm Priorities Report is based on a survey of 274 law firm professionals, conducted in partnership with Hanover Research. Additional key findings include:

• Growth is back on the agenda. For the first time in four years of this research, practice diversification tops the priority list (47%, up from 39% in 2025), while cost containment dropped from second to fourth. Eighty-one percent plan to grow headcount in 2026, and 42% expect to grow by more than 10%, compounding pressure on existing staff expected to absorb new work, adapt to new technology, and maintain service quality while the firm scales.
   
• Client satisfaction is undervalued. Fifty-four percent of firms describe client satisfaction as easy or very easy to achieve, yet only 17% prioritize it above profitability. Client-facing tools like intake, billing, and automated updates rank among the lowest areas of recent technology investment.
   
• AI overreliance is one of the profession's biggest self-identified risks. Sixty-two percent of law firm professionals say over-reliance on AI will erode lawyers' critical thinking over time. Thirty-six percent cite over-reliance by less experienced staff as a top firm-level concern. Non-billable staff are most worried, flagging this concern at a rate 12 points higher than their billable colleagues.
   
• Digital maturity is a retention problem. Eighty percent of professionals spending too much time on non-billable tasks report stress or burnout. The top time drain in 2026 is searching for information across disconnected systems (40%), a problem that worsens as firms add tools without integrating them. Only 19% of firms rate themselves as digitally advanced.
   
• Technology fragmentation is a security and continuity risk. Practice management software is now the clear primary tool for managing the client matter lifecycle, cited by 50% of respondents. However, 83% of firms still use three or more tools to manage a matter and one in three (34%) use six or more. This fragmentation has resulted in higher licensing costs (38%), duplicate records (35%), increased error potential (34%), and time lost switching between systems (34%).

Download the full 2026 US Midsize Law Firm Priorities Report here. To learn more about Actionstep, visit www.actionstep.com.

ABOUT THE RESEARCH

The 2026 US Midsize Law Firm Priorities Report is based on a quantitative survey of 274 qualified law firm professionals at US midsize law firms (50–250 employees), conducted in December 2025 in partnership with Hanover Research. Respondents included lawyers, paralegals, practice managers, firm administrators and managing partners.

About Actionstep
Actionstep is the leading law firm management platform for midsize firms around the world. Built to adapt to a firm's unique strengths and goals, Actionstep empowers more than 5,500 firms globally to modernize operations and build lasting advantages in the legal marketplace. Connected capabilities like client intake, matter management, document management and automation, time tracking, billing, legal accounting, and business reporting, support nearly 50,000 users globally. Learn more and request a demo at www.actionstep.com.

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SOURCE Actionstep