City law firms ‘sleepwalking into a crisis’ over AI overreliance

TL;DR:

• A Positive Group report warns City law firms risk a “crisis of judgment” by treating AI as a definitive authority rather than a tool.
• More than 60% of lawyers now use AI for drafting, research and client work, often without interrogating the outputs.
• The report says AI is dismantling the apprenticeship model that trains juniors to scrutinise sources.

City law firms have been warned they are “sleepwalking into a crisis of judgment” by leaning on AI as an authority rather than a collaborative tool, according to a Positive Group report shared exclusively with City AM. With more than 60% of lawyers now using AI in everyday tasks, the report argues the tools are being layered onto old ways of working — and that billable-hour pressure is driving time-poor lawyers to accept outputs uncritically.

Eroding the apprenticeship model

The behavioural risk is compounded, the report says, by AI automating the high-volume document review and basic research where junior lawyers traditionally built their judgment. With “less requirement to go and interrogate sources”, firms become more vulnerable to over-trusting AI — a danger underscored by a run of hallucination cases on both sides of the Atlantic, including fabricated evidence reaching the courts. Will Marien, chief executive of Positive Group, warned firms must equip staff with “the behavioural skills to overcome automation bias”.

Yet firms are caught in a bind: clients demand the best AI tools while insisting everything be “human validated, cheaper, and with full liability”. Competitive pressure is intense, with US firm Kirkland & Ellis reported to have spent around £395m ($500m) building its own system. The warning echoes wider UK concern, from banks “sleepwalking” into AI governance failures to a KPMG report found riddled with fake AI citations, and contrasts with firms like Shoosmiths tying bonuses to AI fluency.

Looking forward

The report’s framing matters for UK professional services well beyond law: the same automation-bias risk applies to accountancy, consultancy and any sector where junior staff learn by checking work. As A&O Shearman partner Francesca Bennetts put it, the skills of a good lawyer — critical thinking, attention to detail — are exactly those needed to be “an AI-augmented lawyer”. The challenge is keeping human judgment as the final line of defence while the economics push relentlessly toward speed.