AI Act Compliance: Can Law Firms Keep Up with AI Literacy?

The legal industry is standing at a critical crossroads. With the AI Act officially in effect as of February 2nd, law firms across Europe, like all legal entities, must ensure compliance with AI literacy requirements. The message from the EU is clear—AI literacy is no longer optional. 

However, this expectation arrives at a time when many law firms are still struggling with digital transformation. According to the PwC Law Firms’ Survey 2024, firms are operating in an environment of macroeconomic and geopolitical volatility, while facing cost pressures and a rapidly evolving technological landscape. As a result, innovation will be key to unlocking growth and creating long-term value.

AI adoption is rapidly increasing across the legal sector. The ELTA Legal Professionals & Generative AI Global Survey 2024 highlights key trends:

• 21% of firms plan AI investments exceeding €100,000, indicating a strong strategic focus.

• 24% expect to invest within the next 6-12 months, showing growing momentum in AI adoption.

At the same time, privacy and security remain top concerns. ELTA’s survey reveals that 50% of firms cite data privacy and security as a high-priority concern. 

While law firms are already stretched thin managing traditional cybersecurity threats—from phishing attacks to cloud security risks—AI introduces an additional layer of complexity. AI-powered cyber threats, such as deepfake phishing and automated data breaches, are rapidly evolving, creating new vulnerabilities for legal professionals handling sensitive client data.

As cyber risks grow, having a reliable LegalTech provider is no longer just an advantage—it’s a necessity. Firms need trusted technology partners who not only offer cutting-edge AI solutions but also prioritize security, compliance, and risk mitigation. 

Law firms are recognizing the competitive advantage AI can provide. According to the PwC Law Firms’ Survey 2024, nearly 90% of the Top 100 firms have now implemented or trialled GenAI tools, a dramatic increase from only 55% in 2023.

Organizations are making targeted investments in technology, training, and governance to ensure responsible AI adoption. According to ELTA: 

• 19% are investing in AI tools to enhance efficiency.
• 16% are focusing on AI training to build internal expertise.
• 14% are launching pilot projects to explore AI’s potential.
• Only 7% have hired dedicated AI specialists, highlighting a gap in in-house expertise.
• 16% prefer hands-on experimentation, while 14% rely on webinars for AI learning.

Law firm leaders are focused on driving innovation while addressing structural and cultural barriers. The legal sector has traditionally been slow to change, but firms that embrace digital transformation with clear AI strategies and governance frameworks will position themselves for long-term success. 

As AI literacy becomes an essential skill, firms that invest in training, responsible implementation, and strong cybersecurity practices—alongside trusted LegalTech providers—will be the ones shaping the future of legal practice.

According to PwC’s survey, concerns over the speed of technological change remain significant (52%), and technology adoption in law firms has historically been slow and cautious. While other industries have rapidly digitized, legal professionals often operate under traditional, risk-averse mindsets, making them reluctant to embrace disruptive technologies. Several factors contribute to this hesitation:

• Legacy Systems: Many law firms are still using outdated practice management and document storage systems, making any technological upgrade a complicated and expensive process.
• Lack of Technical Expertise: Lawyers are trained in law, not technology. Most firms rely on outsourced IT support, adding both cost and inefficiencies.
• Security Concerns: With sensitive client data at stake, firms are wary of AI’s implications for privacy and security.
• Billable Hour Model: Any time spent learning AI is time not billed.

If adopting basic legal tech has been a challenge, then AI education presents an even steeper learning curve.

The AI Act sets out strict guidelines for AI usage, compliance, and risk mitigation in business and legal settings. However, there is a significant gap between the EU’s expectations and law firms’ readiness to comply. According to the ELTA Legal Professionals & Generative AI Global Survey 2024, less than half (38%) of organizations have an AI policy. 

Key AI Act Compliance Requirements for Law Firms: 

• Understanding AI Decision-Making: Lawyers must comprehend how AI algorithms make decisions to ensure fair and ethical application.
• Risk Categorization: The AI Act classifies AI applications into unacceptable risk, high risk, limited risk, and minimal risk categories. Legal professionals must determine how AI is used within their practice areas and legal services.
• Transparency & Explainability: Any AI tool used in legal practice must provide explainable and transparent decision-making processes.
• Data Protection & Privacy: Law firms must ensure AI tools comply with GDPR and other data protection laws.

Yet, many law firms are still unclear on how AI fits into their operations. Are you, dear reader, aware of your firm’s AI governance policy? Do you know where to find it?

The good news? Lawyers don’t need to become AI engineers. Instead, firms can take practical steps to bridge the AI literacy gap.

1. Make AI training practical, not theoretical

• Offer bite-sized AI training focused on real-world legal applications rather than abstract theory. We all know that lawyers could talk hours about the ethical implications of using AI but what if they just learnt how to prompt?
• Introduce AI compliance workshops tailored for legal professionals.
• Incorporate AI training into continuing professional development (CPD), continuing legal education (CLE) requirements or consult your local Bar Association.

2. Implement AI Compliance Guidelines & Policies

• Conduct internal AI risk assessments to determine where AI is already being used within the firm.
• Develop a clear AI governance policy that outlines how AI tools should be vetted and monitored for compliance.
• Assign an AI compliance officer or designate a legal tech team to oversee AI-related risks.

3. Partner with Legal Tech Experts

Law firms do not need to navigate AI compliance alone. Collaboration with legal tech providers and AI consultants can:

• Offer custom AI compliance solutions and needed trainings tailored to specific legal services.
• Implement secure AI systems that align with EU compliance regulations.
• Support you in implementing next-gen solutions that are already AI-native.

The AI Act is here, and AI literacy is no longer optional. Law firms must recognize that AI is not just another tech trend but a fundamental shift in how the law is practised and regulated. 

By taking proactive steps to integrate AI literacy training, implement compliance frameworks, and leverage AI for risk management, law firms can stay ahead of regulatory requirements while improving efficiency and client trust. 

The question is not if law firms should adapt but how quickly they can. Those who embrace AI compliance today will define the future of legal practice tomorrow.

Crespect is a next generation AI-native cloud software built to help law firms operate and grow. Unlike traditional, clunky practice management software, Crespect streamlines operations with built-in CRM and business development tools—boosting revenue by up to 30%. As a cloud-based software, all information security, including AI security compliance, is ensured by Crespect.

Want to see how AI can elevate your firm’s operations? Get in touch and discover how Crespect Intelligence is redefining legal practice management.