Embroker, a digital insurance company, has released its Legal Industry 2025 Risk Index, revealing notable shifts in business priorities and risk management strategies within the legal profession, including increased confidence in insurance protections and a more deliberate approach to AI integration.
The report indicates rising confidence among law firms, with a more strategic approach to risk management and an expanded risk appetite. A significant finding is the increased awareness and confidence attorneys have regarding their insurance protections; 45% plan to expand their coverage, a substantial increase from 14% in 2024. Additionally, 77% believe their current policies cover their greatest business risks, and more professionals are securing dedicated cyber insurance, recognizing its importance.
The legal industry has reached an inflection point concerning AI adoption, with reported AI usage jumping from 22% in 2024 to 80% in 2025. Professionals are strategically leveraging AI for enhanced services, automated client support, and strengthened cybersecurity. However, concerns persist, with respondents highlighting risks such as professional liability due to over-reliance (43%), data privacy breaches (38%), and legal/ethical issues from misuse (37%). Amidst this rapid adoption, a critical challenge emerging is the rise of malpractice suits linked to the wrongful or undisclosed use of AI tools.
Andy Lea, Chief Insurance Officer at Embroker, stated, “Legal professionals are rapidly integrating AI into their workflows, but this surge in adoption introduces novel professional liability risks that firms must proactively manage. As the industry continues to embrace AI, it’s critical for firms to ensure they have guidelines in place to govern their AI use to minimize the potential for malpractice claims.” Lea added, “The increased confidence we’re seeing stems directly from firms becoming more strategic about risk, using insurance not just as a safeguard but as a strategic asset enabling them to innovate and adapt securely in this evolving landscape.”
Internal challenges for law firms have shifted, with “reputational risks stemming from public controversies, client disputes, or social issues” and “employment-related claims (e.g., harassment, wrongful termination, discrimination)” tying as top issues at 47% each, a change from 2024 when the “rising cost of business” was primary. Externally, the top threat is “challenges adapting to disruptive technologies (e.g., AI tools, LLMs)” at 53%, followed by “professional liability claims, legal malpractice threats, or other litigation suits” at 51%, and “cybersecurity breaches, attacks, or threats” at 40%. This data suggests legal professionals view failure to adapt to new technologies as a significant threat. While inflation concerns remain, they have decreased from 52% in 2024 to 28% in 2025, indicating increased comfort with economic volatility compared to emerging technological risks.
Despite a slight decrease in overall business optimism (65% in 2025 vs. 70% in 2024), legal professionals are demonstrating a more strategic approach to operations and risk management. The top three business priorities for 2025 are infrastructure (IT, equipment, office space, etc.), technological advancement/support, and sales/revenue growth. This marks a shift from 2024’s focus on employee hiring/retention, networking, and sales growth, emphasizing technology and operational resilience.
Furthermore, the legal field is increasingly embracing risk. Year-over-year data shows a significant increase in firms describing their approach to risk as an opportunity to drive growth (37% in 2025 vs. 18% in 2024) or fully embracing risk (23% in 2025 vs. 8% in 2024). This indicates growing confidence in navigating potential pitfalls and leveraging risk for business advancement.
The 2025 Legal Industry Risk Index underscores an industry at a pivotal moment, characterized by a proactive stance towards technological innovation, strengthened insurance protections, and a bolder strategic approach to risk. The report methodology involved a survey of 245 US-based full-time legal professionals in June 2025. Embroker, founded in 2015 and headquartered in San Francisco, aims to simplify commercial insurance through its end-to-end digital platform and has raised over $140M in funding. Its Embroker Access program extends its products to partner agencies and wholesalers.
