Embroker, a digital insurance company, has released its Legal Industry 2025 Risk Index, indicating notable shifts in business priorities and risk management strategies within the legal profession. The report highlights increased confidence among law firms, a more thoughtful integration of artificial intelligence (AI), and an expanded risk appetite.
The findings show a significant rise in law firms’ confidence and awareness regarding their insurance protections. Nearly half (45%) of firms plan to expand their coverage, a substantial increase from 14% in 2024. Furthermore, 77% believe their current insurance policies would cover their greatest business risks, with more legal professionals securing dedicated cyber insurance, reflecting its growing recognition as an essential protection.
AI adoption within the legal industry has surged, with reported usage jumping from 22% in 2024 to 80% in 2025. Professionals are leveraging AI to enhance services, automate client support, and strengthen cybersecurity. Despite this rapid adoption, concerns about AI 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%). A new challenge identified is the rise of malpractice suits linked to the wrongful or undisclosed use of AI tools, introducing increased professional liability risks if AI is not used responsibly.
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. 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)” both ranking as top internal issues at 47% in 2024, a change from the previous year’s focus on the “rising cost of business.” Externally, the top threat identified was “challenges adapting to disruptive technologies (e.g., AI tools, LLMs)” at 53%, closely followed by “professional liability claims, legal malpractice threats, or other litigation suits” at 51%. “Cybersecurity breaches, attacks, or threats” ranked third at 40%. The data suggests that legal professionals are increasingly recognizing that failing to adapt to AI and other technologies poses a significant threat. Inflation concerns have also decreased from 52% in 2024 to 28% in 2025.
Despite a slight decrease in overall business optimism (65% in 2025 compared to 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 indicates a shift from 2024’s priorities of employee hiring/retention, networking, and sales growth, emphasizing technology and operational resilience.
Furthermore, the legal field is increasingly embracing risk, with year-over-year data showing a significant increase in firms describing their approach to risk as an opportunity for 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, aiming for resilience and sustained growth. The report is based on a June 2025 survey of 245 US-based full-time legal professionals. Embroker, founded in 2015 and headquartered in San Francisco, aims to simplify the commercial insurance buying experience for businesses through its digital platform.
