Bloomberg Law Survey Finds 40% of Law Firms Do Not Disclose AI Use on Client Bills, as Half of Large-Firm Respondents Report Deals Paused by Geopolitical Risk

Bloomberg Law's 2026 State of Practice Report — based on a survey of more than 750 legal professionals — has identified three structural shifts reshaping the legal industry this year, each with direct implications for how City and US law firms price, staff, and govern their AI (artificial intelligence) deployments. The most striking finding: four in ten law firm respondents say their firm does not disclose attorney AI use on client bills at all. As AI tools become embedded in routine legal work — from due diligence to document review — the absence of billing transparency raises questions about professional conduct obligations, fee arrangements, and whether clients are effectively subsidising the firm's technology investment without receiving a corresponding cost reduction. A second finding with transactional significance: half of respondents from the largest law firms with knowledge of client transactions report that deals have been put on hold due to geopolitical risk, with a quarter saying clients have exited or are expected to exit deals altogether. This signals that the volume of live M&A mandates is more fragile than headline deal counts suggest. Third, approximately a third of mid-sized firm respondents say their firm has created specialised, cross-functional teams dedicated to data centre matters — a practice area that sits at the intersection of real estate, energy, planning, and technology law. The proportion grows with firm size, reflecting the capital intensity of AI infrastructure buildout and the legal complexity it generates. The two corroborating Bloomberg Law sources report consistent findings across the same survey, treating the key statistics as confirmed.

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