AI in legal sector wins first UK court case as firms navigate technology adoption challenges

Legal sector can use psychology to beat fear of AI

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. When we think about the adoption of AI in the law industry, Justin North says we must think about fear. The founder of Pickering Pearce, a legal industry consultancy that specialises in behavioural science, believes the changes already under way for lawyers are so profound that it is important to think about further ramifications. "A lawyer might be thinking: it took me eight years to learn how to do that and it used to take me about eight days to do the work for which I billed my client, but [thanks to AI] that work now takes me eight minutes," North says. "Firms often talk about AI in terms of productivity, but far less time is spent talking about the psychological impact," he adds. This could manifest not only in fear of redundancy, but also in feelings such as self-doubt, imposter syndrome and uncertainty about how to demonstrate their value to clients and colleagues. Yet AI can boost productivity -- especially iterations such as generative AI, which produces new content in response to simple prompts. Add in its potential to cut costs, and it is easy to see how both law firms and in-house legal teams have become locked in a competition to integrate AI tools as fast as they can. Clara Garfield, head of legal operations advisory (UK and Emea) at global law firm Herbert Smith Freehills Kramer, points out that the forces driving AI use by lawyers are both top-down, from the leadership, and bottom-up, in that significant numbers of lawyers are independently experimenting with AI. "In the middle are the people who risk being left behind," she says. That "uneven" adoption of AI prompted her team to develop the GenAI Persona Builder, designed to help in-house legal teams assess attitudes among staff to using generative AI. The interactive digital tool poses a number of questions on use of and feelings about generative AI, and uses the information to designate them an "AI personality". The eight personas developed range from AI Champion -- the kind of person who is so curious they are putting it to constant new uses -- to the AI Cautious personality who instinctively focuses more on ethical, legal and reputational factors. The underlying premise is that involving all personality types is essential for successful AI adoption -- a champion, for example, could benefit from pausing occasionally to reflect. GenAI Persona Builder provides leaders with an anonymised dashboard of results allowing them to assess the teams where engagement is strong and where tailored support might be helpful. Will Marien, co-founder of Positive Group, a consultancy that works closely with law firms to provide insights based on behavioural science, agrees that their leaders should try to clarify the value people bring when they work alongside AI. At the same time, they should also acknowledge the uncertainty being felt. "Without this, AI is triggering significant anxiety," he says. Marien points to recent findings from a Positive Group-led project focusing on interviews with 16 senior leaders in prominent law firms. The research found that the firms progressing most confidently with AI were not necessarily those with the most advanced technology. Instead, progress was greatest when leaders had: clarified where AI or a human creates value; encouraged role-modelling to build confidence among lawyers to engage with new tools; and applied disciplined experimentation in order to test, learn and refine how AI is applied within professional standards. Law firms, Marien says, do better if they understand the resistance to AI and engage with it. "Meaning and purpose [are] so important in this," he says. "The risk is that you keep anxiety and fear in the system." Christina Demetriades, global client experience lead at professional services group Accenture, decided to meet anxiety head-on in her previous role as group operating officer at Accenture Legal. "I had my own set of fears," she says, explaining that the rollout of AI within the 3,300-strong team of legal professionals at Accenture required a rethink on the nature of work. "AI gives the potential to do more work and do it better," she says, and Accenture had in 2023 announced a commitment to invest $3bn in AI. But she was faced with bringing along teams with different levels of insight. While some were digital natives, she points out, they also feared what AI might mean for their careers. Demetriades called on expertise from within the consultancy and, working with its behavioural science unit, created the Legal Learning Labs training programme. "We taught them how to prompt and how to build an [AI] agent, but that was secondary," she says, explaining that she and her colleagues devised a special session that took place "globally, all on the same day". Ian Robertson, neuroscientist and author of a book called How Confidence Works, helped to host the day, which included lectures, active participation and encouraged personal reflections on fears around AI from all levels of staff. AI use took off almost too fast, she says: "I don't think we anticipated at the time how quickly things would move." As North at Pickering Pearce puts it: "We forget that it is completely natural during periods of revolutionary change for some of us to focus on what we believe we are losing before we can see what we are gaining."

How AI is powering new law firm structures

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. An innovative financial structure for US law firms is turbocharging the growth of challengers to the incumbents and creating a wave of experimental new business models in the world's largest legal market. New models have generated new terms. From "AI-native" firms, built using revolutionary technology at their core, to "platform" businesses that enable qualified lawyers to work more flexibly, law firm start-ups are increasingly using a "management services organisation", or MSO, structure to set up their businesses. MSOs can bring in capital from sources historically barred from US law firms, including private equity, venture funds and entrepreneurs who believe the legal market is ripe for disruption. "With the never-ending spiral of rates constantly climbing, law firms -- unless they change their model -- are pricing themselves out of the market," says Peter Sacripanti. Former longtime co-chair of law firm McDermott Will & Emery, Sacripanti is now chair of Broadfield, which he is building with funding from the founders of private equity-focused US consulting group Alvarez & Marsal. "When you combine that with the increase in the capabilities of AI, and what that should do to deliver value to clients, it's time for a change." There's a lot of folks trying to figure out how to transition legacy businesses US law firms are banned from having non-lawyer shareholders under professional ethics rules designed to stop commercial considerations affecting legal advice. However, an MSO can be wholly or partly owned by outside investors because the structure in effect splits a law firm into two parts. One, a lawyer-owned business, focuses strictly on legal casework, while the MSO houses intellectual property, including the technology, and runs all the back-office functions. Alvarez & Marsal shares a parent company with Broadfield's MSO, SHP Legal Services. The affiliation is helping Sacripanti build a challenger to bigger and more expensive corporate law firms. "It is a client relationship-building opportunity for Broadfield," he says, and provides the chance to work alongside the consulting firm on certain projects. The MSO structure is based on a model used by private equity to buy medical practices and accounting firms -- also professional businesses with strict ethical rules -- and was pioneered in the US legal market by personal injury law firms. Its latest use has been by new law firms built by technologists who believe cutting-edge AI can give them an advantage over incumbents Norm Law may have an address in New York's One World Trade Center, as befits a law firm catering to asset managers and other financial services clients, but it shares few other characteristics with them. Less than a year old, it is one of a wave of AI-native firms, so-called for using AI agents in place of junior lawyers. It is an offshoot of legal tech company Norm AI, which has been building such agents for the past three years. Norm AI houses the technology, including due diligence and compliance processes developed by legal engineers hired from Big Law firms, who combine legal and tech skills. Meanwhile, Norm Law is run by lawyers who use the technology in their work for financial services clients' legal departments. "People understand that AI isn't magic and it isn't free", says Norm Law chair Mike Schmidtberger. But it is different from the Big Law model of "hiring vast numbers of young lawyers and then winnowing them all the time". The power of AI means Norm Law promises to meet or beat the cost of a traditional law firm doing routine corporate work, he adds. Schmidtberger took up the Norm Law role in January 2026 after 35 years at Sidley Austin, including seven as chair of its executive committee, in a bet on disruption from AI-native start-ups. "There's a lot of energy around all the new possibilities, and a lot of folks trying to figure out how to transition legacy businesses," he says. "All I know is that standing still is a very bad strategy." Josh Porte, partner at US-based law firm Holland & Knight, who has advised on more than a dozen MSO deals, says it is no coincidence that interest in the structure exploded in 2025, around the same time as generative AI. "The model is precision-engineered" for AI-native firms, he says. "It contemplates this really strong relationship between the business people, and the software and the technologists, with the lawyers -- and you can design that environment from the ground up." Not that Big Law is standing still. Kirkland & Ellis, the world's highest-grossing law firm, recently announced that it had set aside $500mn to create its own AI platform and had agreed a multiyear deal with US tech company Palantir to develop technology to advise private equity on fundraising. Sacripanti's former law firm -- now McDermott Will & Schulte, one of the world's biggest by revenue -- is among a number of firms considering converting to an MSO structure, in part to raise capital for technology investment. Executives across Big Law also expect they will increasingly charge for AI-assisted legal advice based on the value it provides to a client, rather than billing by the hour, bringing them into line with start-ups already pricing that way. Unpredictable litigation and complex deal work may forever be resistant to fixed pricing, but routine tasks such as setting up new businesses or funds or making patent applications could be sold per project. John Budetti, a former veteran private funds lawyer at Kirkland & Ellis who now runs a consultancy, M37 LegalTech Strategies, sees an intensifying battle between Big Law and AI-native firms that are layering lawyers on to their technology. "Both models are challenging. It is hard to change the Big Law hourly business model, and it is hard for newcomers to win business," he says. "But clients are urgently signalling a desire for competition."

Artificial intelligence law firm wins court case in England for first time

Company hails victory for freelancer over unpaid debt as 'landmark moment' for access to justice An artificial intelligence law firm has won a case in an English court, in what is believed to be the first time a trial has been won using an AI lawyer. A freelance HR consultant, Tamires Camal Taquidir, paid the firm, called Garfield AI, about £400 to send a legal letter and then issue court proceedings over an unpaid debt of £7,000. The co-founder of Garfield, Philip Young, called it a "landmark moment" for access to justice and said many small businesses have had to write off debts because the cost of litigation outweighed the money they could hope to win. Garfield - which was authorised by the Solicitors Regulation Authority (SRA) in April last year and can be used to make claims from £30 to up to £10,000 - prepared the case and then hired a human barrister to advocate for the client in court. The AI conducted all the legal work preceding the trial, which involved disputing a counterclaim launched by the defendant, who instructed solicitors. It prepared four witness statements and a bundle of documents for the three-hour trial at Wandsworth county court on 14 May. The court found in favour of Taquidir and awarded her the money owed. Taquidir said: "I was owed money for work I had done, but it felt like the process of recovering it could be too stressful, expensive and time-consuming. Garfield made it possible for me to pursue the claim and keep going. "When the counterclaim was brought, it was intended to intimidate me, but I knew I had accessible, cost-effective and competent support. I'm delighted by the result." Dominic Li, the barrister who represented Taquidir in court, said Garfield presented the client's case "clearly and efficiently", but added: "The advocacy at trial remained essential and a fundamentally human exercise." The British legal profession has been shaken by a number of high-profile AI blunders. Last month, an international law firm, Pinsent Masons, referred itself to the SRA after twice misleading a court based on search results from an internal AI system.

In-house lawyers aim to shed the grind, not the people

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Aine Lyons is not interested in using AI to cut legal jobs. As deputy general counsel of HR software company Workday, people are her business. Instead, says Lyons, in-house legal teams should be using AI to get more work done. "I am an AI optimist, but we must be careful not to trade human wisdom for technology," says Lyons. "AI should build on our existing legal teams, helping them do more of their best work. The ultimate return-on-investment of AI isn't a lower headcount." Lawyers across the world are wrestling with how to use AI, as white-collar workers come under pressure to show how the technology is making life more efficient, without introducing errors or putting themselves out of a job. While much of the focus has been on law firms and the debate over whether they should buy or build the tech, in-house teams are also feeling the heat. We now always ask ourselves whether a process could be automated or whether an agent could handle repetitive elements The legal department in any company is almost always seen as a cost centre rather than a revenue generator, and must constantly try to do more with less. With AI, in-house lawyers can now potentially shoulder more work without the trade-offs, according to legal team leaders. "Team size has not changed, but our capacity has expanded significantly," says Gitte Groenewold-Wong, head of group legal at Prosus, the Dutch ecommerce investor and owner of delivery food group Just Eat Takeaway. She adds: "There has been a mindset shift. We now always ask ourselves whether a process could be automated or whether an agent could handle repetitive elements, freeing our team for higher-judgment work." The potential for higher "deflection" rates -- the number of queries that can be resolved using AI rather than human input -- is the starting point for many. Legal departments can spend more than half their time responding to repeat queries, according to in-house lawyers and consultants. Lyons says her team at Workday aims to resolve three-quarters of the 25,000 sales queries they get a year at least partly using AI. "The most [common use] we're seeing is a 'deflection' of work," says Varun Mehta, chief executive at Factor, a legal AI consultancy. "Part of [legal departments'] job is operating as a 'legal Q&A' to the business on a variety of things." He adds that legal teams will probably have answered "50 to 80 per cent of those things" before, which means "there's a lot of value in [removing] that". In-house teams are also examining how they can partner with external law firms on AI. Prosus, which has a large intellectual property footprint thanks to the number of companies it owns, has been working with UK-based DLA Piper and South Africa's Von Seidels on creating a central IP hub for its data. Thanks to the law firms' efforts, the company now has nearly 50,000 IP records from more than 300 jurisdictions in one place, rather than going to different vendors for each piece of information. "Our IP team can combine globally fragmented Prosus IP information into one single agent and dashboard and query it in natural language. That is a truly innovative collaboration between law firm and client," says Groenewold-Wong. Such initiatives are pushing legal departments to the forefront of companies' AI plans, says Winston Weinberg, chief executive of US-based legal-AI company Harvey. The fact that general counsel are so aware of the privacy and security risks means that "you're actually seeing the scope and impact of a lot of GCs increase [inside companies] alongside the demand for higher AI adoption," he says. Max Junestrand, chief executive of European legal-AI business Legora, says that while in-house teams "took a little bit longer to get to the starting line", their take-up of AI is now growing much faster and they are focused on seeing a return from their investments in the technology. Both Harvey and its rival Legora are working with in-house legal departments spanning banking, private equity and insurance. For all the touted benefits, AI is costly. Platforms such as Harvey and Legora can cost a company hundreds of thousands of dollars a year. Some businesses, such as Workday, have chosen to obtain software wholesale. The company bought AI start-up Sana in November 2025. "AI technology is expensive. We must look closely at the maths behind the models and judiciously select AI tools that have a real return-on-investment," says Lyons. General counsel are also concerned about junior lawyers, both in-house and at their external law firms, losing skills and relying too heavily on AI. UK law firm Pinsent Masons was reprimanded by London's High Court in May after a junior lawyer misled the court twice by citing a statute that was inaccurately produced by AI. US elite firm Sullivan & Cromwell recently suffered a similar embarrassment. A survey of in-house counsel and law firm leaders by Factor this year found that more than 80 per cent of respondents were now using AI, compared with just over 61 per cent the previous year. But only 22 per cent said they had high trust in the outputs. Mehta says the first thing legal teams must do to see a return from AI is review the work they are already doing. There is little point in adopting AI for work that does not need to be done in the first place. "Lawyers are probably just finding for the first time ever that they have technology that can help them do their work better," he says. He adds: "[However], our general thesis is that you can't put an electric car engine into a combustible car and it works. This requires a complete reimagination of work . . . and that rewiring is the only way you're going to see measurable impact."

AI and the law (1/3) - preparing the brief for technology working alongside legal professionals

When we think about AI and the law, perhaps we first think in terms of laws relating to AI and thus to the thorny, and resolutely unresolved, issue of regulation. The other side of this though is the question of what the impact of AI tech on the legal profession itself will play out in practice. Is the sector on a par with others when it comes to facing the risk of the value proposition of its practitioners becoming commoditized in the face of competition from Large Language Models (LLMs)? There have already been some high-profile examples of AI being used unwisely by the legal profession. Recently in the UK international law firm Pinsent Masons was roasted for misleading a court twice - once by providing references which featured AI hallucinations, then compounding this faux pas by using AI to produce an explanatory letter into what had happened that itself used AI and was still wrong. According to High Court Judge Mullen in the case of Cork & Anor v Smith, an unnamed junior lawyer "almost entirely outsourced the thinking process" to AI program, while solicitor Samantha Poulton and law firm partner Steven Cottee had failed to supervise properly. Mullen said he was concerned that "a cavalier attitude" had been taken to the accuracy of the material Pinsent Mason put before the court: It struck me as likely to be an AI hallucination, which had not been checked. The attempt to explain it away in what appeared to be an untruthful manner in the [second] Letter only heightened my concerns. Pinsent Masons has referred itself to the Solicitors Regulation Authority, which will also look into whether any of the parties involved have breached the code of conduct. For Judge Mullen, there are lessons to be learned here: AI has the potential to be wholly unreliable. AI may of course provide a jumping off point for research and legal reasoning but it does not, at least at present, do away with the need for proper research and thought on the part of a legal professional, even a very junior legal professional. Over-reliance danger But this seems unlikely to be the only example of such poor practice if new research from Positive Group is any indicator. This points to high chance of more crises of judgement if lawyers become too reliant on AI. The firm based its conclusions on 16 in-depth interviews with law firm leaders in the US, US, Singapore, Australia, Hong Kong and Spain, and exposes "a profound and growing tension at the heart of the law firm-client relationship" as clients look to AI to cut costs and increase efficiency, but also want to know that there is a lot of human oversight taking place. Positive Group's data suggests that more than 60% of lawyers now actively use AI for tasks such as drafting, research, and client delivery, which does free up time. But it warns of a risk if time-pressured lawyers being uncritically accepting of AI outputs and recommendations without applying the necessary scrutiny they demand. Tasks such as research, drafting and due diligence are increasingly being handed over to AI. More controversially perhaps, AI is playing a growing role in more complex legal work, such as litigation strategy and risk analysis identifying patterns, stress-testing arguments and surfacing alternative perspectives, the sort of thing that legal professionals would bring their expertise and experience to bear on. These are also the highest-value tasks, points out Positive Group. What this suggests, according to Will Marien, CEO, Positive Group, is that the fundamentals of legal practice remain constant. Clients continue to value judgement, trust and accountability. As AI becomes more capable, these qualities become more, not less, important. Some firms will adapt and succeed in the AI era, according to Positive Group, but this will require leadership from senior partners to make sure the correct culture is in place and the necessary guardrails are in action: Negotiating the boundary between AI input and human judgement is critical in a sector defined by risk, accountability and professional standards. Leaders must ensure that AI enhances, rather than undermines, the quality of legal reasoning while also moving quickly enough to remain competitive in a rapidly evolving market. Positive Group's research identifies three consistent leadership qualities successful firms will need to achieve a mature AI strategy that maintains professional judgement while adapting to rapidly-evolving tech capabilities - strategic framing, role modelling and disciplined experimentation. Court victory Meanwhile, given the fast moving nature of the AI hype cycle, clearly this is all a highly-evolving sector, one in which new capabilities will emerge pretty rapidly. In England, one AI law firm - Garfield AI - has just won a case in the courts in a first for the country's legal system and possibly the world. The firm won a claim over unpaid fees for a freelancer following a three-hour trial at Wandsworth County Court last month, winning the client £7,000. All of the documents for the trial, including drafting witness statements, were created and delivered into the court by AI, with the client charged only £400. According to Dominic Li, the Barrister who represented the client in court on the day: Garfield AI's preparation helped ensure the case was presented clearly and efficiently, while the advocacy at trial remained essential and a fundamentally human exercise. Approved in 2025 by the Solicitors Regulation Authority, the watchdog for solicitors in England and Wales, Garfield AI offers services to help pursue debt claims, more than 600 to date. Co-founder and CEO Philip Young, a former City litigator, said after the recent case: This is a landmark moment, not just for Garfield AI, but for access to justice. For too long, businesses have been forced to write off debts because the cost, time and stress of litigation made pursuing them uneconomic. AI did not replace the judge, the barrister or the legal system; what it did was make the process more accessible, more efficient and more affordable. And it's precedent-setting added his co-founder and Chief Technology Officer Daniel Long: This case shows what legal AI can do in the real world. It is not about gimmicks or replacing lawyers. It is about giving people and businesses the tools to enforce their rights when the traditional route would be too slow, too costly or too complex. We are still at the beginning of this journey, but the momentum is already clear. This trial win is an important proof point - regulated, AI-powered legal services can help real people recover real money through the courts.

Law firms look for clear gains from AI

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Debate over the impact of AI and other technologies has become a top preoccupation of law firm leaders and their in-house counterparts. But while many consider how best and when to embrace what the latest in legal tech has to offer, others are pressing ahead in the race to exploit its potential. Among them is Ashurst, which as early as 2013 first established Ashurst Advance, as an alternative legal services business, to improve efficiency. "We talk about it being like a shared service centre for law," says Hilary Goodier, partner and global head of Ashurst Advance. She estimates that the division supports two-thirds of the law firm's legal work. Now Ashurst's digital delivery arm, with its mix of lawyers, technologists, paralegals and project managers in Australia, the Middle East and Europe, is using the latest technologies, including from legal AI start-up Harvey, Microsoft and Relativity, another AI-powered legal data intelligence company, to help its lawyers and their customers organise work. It also advises Ashurst's lawyers on broader and longer-term goals of its digital transformation. Last year, Ashurst Advance used generative AI to help a multinational retailer, which it declined to name, to contribute to a regulatory review of market competition in Australia. It helped lawyers sift through about 100,000 documents in 48 hours, categorising and formatting them to decide which to submit to the regulator, says Goodier. The task would have previously taken about two weeks, she estimates. With such efficiency gains on offer, it is no surprise that software suppliers are targeting the legal sector, alongside other professional services, with bold promises of transformational outcomes by using the latest versions of their AI-powered platforms. A handful of suppliers dominate. Newcomers include Harvey of the US and Sweden's Legora, valued at $11bn and $5.6bn respectively, alongside established legal software and data providers, including LexisNexis, owned by Relx, and Thomson Reuters. AI rival Anthropic joined the fray by explicitly targeting the legal sector early this year when it released a range of tools promising to automate routine legal work. OpenAI, the maker of ChatGPT, also plans to release AI software targeting legal work, according to reports. In addition, a wave of freely accessible "open source" legal AI tools, including some developed on Anthropic's Claude coding platform, is also disrupting the market by broadening choice for lawyers wanting to develop their own IT systems. Alternative free legal AI platforms are emerging. One is Mike OSS, created by Will Chen, former Latham & Watkins lawyer, based in Singapore. Chen built his legal software using Claude AI from Anthropic. He says it has features similar to Legora's and Harvey's legal software, plus some of its own. Brian Tang is executive director of the University of Hong Kong's LITE Lab@HKU, which tracks the interaction of law, innovation, technology and entrepreneurship. He is aware of two big law firms in Singapore and Hong Kong that are developing their own large language models to power AI systems. But the rapid emergence of competing proprietary, in-house and open-source systems raises its own anxieties, he warns. "[If] you're relying on somebody else's technology and if the tap gets turned off, do you have a problem?" Tang says. "Some of it has to do with confidentiality, so the clients are concerned." Regardless of how good any AI is, it will still rely on lawyers to use it and check its accuracy. Another challenge lies in convincing often-reluctant legal staff to embrace the AI tools that are now at their fingertips. At Australian law firm Mallesons, chief innovation officer Michelle Mahoney leads a team of data scientists, lawyers and change managers. "AI isn't a technology issue to solve; it's a people issue to solve," she says. "The tech's a whole lot of lifting, but the way to really get the leverage [from AI] is in the hands of your people." The law firm has a three-tier AI training system for employees, says Mahoney. "As you work through . . . you build your knowledge and capability. It's meant to be progressively more complicated." Calculating the firm's overall payback on AI is proving tricky, however. Mahoney says she uses several metrics, including the development of new AI-based legal services, the automation of legal tasks that "people hate", and any significant role the tech has in the law firm winning new business. "I haven't yet found one magic ROI [return on investment] data point," Mahoney says. Australian rival MinterEllison is also expanding its AI training. Virginia Briggs, chief executive and managing partner, says: "The way we're thinking about [using AI] is in three buckets . . . It's the how do you do things for efficiency that I think is just a given. How do you produce great quality work? And then how are you creative with the tools?" And despite the increasing expenditure on developing and adopting AI systems in the sector, a reluctance to embrace it remains. Chris DeConti, co-founder of legal services group Factor, suggests that although 83 per cent of lawyers working in house and at law firms have access to AI, only 22 per cent say they have high trust in its outputs, according to data it published this year. Spending on legal tech is forecast to continue to grow -- with corporate legal departments predicted to double their legal tech spending by 2028, according to research company Gartner. But both law firms and in-house departments will be under pressure to demonstrate the gains from this investment. And there are signs that more work is moving in-house, thanks to new tech including AI. "It's one of the first times that the same technologies [are] being offered both to law firms and their clients," Tang says. "Imagine what's happening. The [law firm's] client now says, 'Hey, I have Harvey too, I can do this myself. So, what am I using you for?' How does the relationship change?"

For $500, an AI Beat 2 Lawyers in UK Court | PYMNTS.com

In May, a judge at Wandsworth County Court ruled in her favor, the Financial Times (FT) reported Monday (June 22). Camal Taquidir, who provides freelance HR services, had tried to resolve the matter directly before turning to Garfield AI. She paid the company roughly 400 pounds (about $529) in fees, the FT reported. The AI handled the pretrial work traditionally performed by a solicitor, including drafting witness statements, preparing court filings and managing correspondence. Under Garfield's instructions, a human barrister then argued the case in the three-hour hearing, per the report. Garfield Founder Philip Young, a former London litigator, told the FT that the outcome was the first trial won by an AI law firm anywhere in the world. Garfield received regulatory approval from the Solicitors Regulation Authority in 2025, becoming the first AI law firm in the United Kingdom, the FT said. "For too long, businesses have been forced to write off debts because the cost, time and stress of litigation made pursuing them uneconomic," Young said in a Monday post about the case on Garfield's website. "AI did not replace the judge, the barrister or the legal system. What it did was make the process more accessible, more efficient and more affordable." In the same post, Camal Taquidir said she was "delighted by the result." "I was owed money for work I had done, but it felt like the process of recovering it could be too stressful, expensive and time-consuming," Camal Taquidir said. "Garfield made it possible for me to pursue the claim and keep going." The Growth of Legal AI Until now, most AI legal tools have functioned as research and drafting aids for human lawyers. Garfield's model goes further. As PYMNTS reported in October, AI has moved from pilot-scale experimentation into embedded infrastructure across law firms, with funding to legal technology startups surpassing $2.4 billion in 2025. Garfield's AI acts as a solicitor in routine debt recovery and small claims disputes. According to the FT, the firm said it has processed more than 600 claims and recovered approximately 500,000 pounds (about $662,000) for clients. Most cases settled before reaching a court ruling. Claim values have ranged from £30 to £10,000 (about $40 to $13,241). Garfield offers debt-chaser letters starting at 2 pounds (about $2.65) and claim form filings from 50 pounds (about $66). The Wandsworth case pushed past the settlement stage only after the defendant filed a counterclaim, forcing the matter to trial. Hallucinations Cloud Legal Industry's Push Into AI The legal industry has been slower than other professional services sectors to absorb AI disruption. Confidentiality concerns and jurisdictional variation in court procedures have complicated adoption. That is changing as more legal firms invest in the technology. Kirkland & Ellis said in May it was committing $500 million to build its own AI platform. As PYMNTS reported in April, Manifest OS raised $60 million at a $750 million valuation in what it called the largest Series A for a legal tech company. Harvey has raised more than $800 million and now serves eight of the ten highest-grossing U.S. law firms. However, AI hallucinations continue to present a risk. According to a June 11 report from Business Insider, U.S. District Judge Sharion Aycock sanctioned and removed all four lawyers on both sides of a contract dispute case when filings from both parties contained AI-fabricated legal citations. Aycock also fined the lawyers were also fined a total of $8,000 and barred two of them from practicing before the court for two years. The issue isn't contained to the U.S. More than 1,600 court decisions worldwide have involved AI hallucinations in legal filings, according to a database maintained by legal researcher Damien Charlotin. The Garfield outcome illustrates both the potential and the limits of the technology. The case involved a straightforward debt dispute, the type of routine, well-defined matter for which AI document preparation may be well suited. However, complex litigation and areas requiring interpretive legal judgment remain largely outside the scope of current AI law tools. For all PYMNTS AI and digital transformation coverage, subscribe to the daily AI and Digital Transformation Newsletters.