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.
Why this matters
The billing transparency gap — 40% of firms not disclosing AI use on client bills — is likely to become a professional conduct and regulatory flashpoint. The Solicitors Regulation Authority (SRA) in England and Wales has already flagged transparency obligations around AI in legal practice, and client pressure for cost clarity is intensifying. For trainees and junior associates, this is directly relevant: if AI tools are compressing time on routine tasks, the traditional billable hours model faces structural pressure that firms are currently managing through non-disclosure rather than fee redesign. The geopolitical deal-pause data is also notable — it confirms that M&A transaction volumes are materially lower than the pipeline of announced deals suggests, which affects staffing, resourcing, and the viability of large transactional practices at current scale. Data centre legal work emerging as a specialist area is a clear hiring signal for firms building energy, real estate, and technology regulatory capability.
On the Ground
A trainee on an AI governance or legal tech team would assist with AI governance policy drafting for clients seeking to formalise their internal AI use policies, prepare vendor due diligence questionnaires for new AI tooling procurement, and draft a regulatory impact assessment memo on the SRA's current guidance on AI transparency obligations.
Interview prep
Soundbite
40% non-disclosure on AI billing means firms are absorbing efficiency gains rather than passing them to clients — that's unsustainable at scale.
Question you might get
“What professional conduct or regulatory obligations might apply to a law firm that uses AI to assist with client work but does not disclose this on the client's bill, and how might the SRA's existing guidance apply?”
Full answer
Bloomberg Law's 2026 survey of over 750 legal professionals finds that four in ten law firms do not tell clients when AI has been used on their matters — a transparency gap that sits uneasily against growing regulatory and professional conduct expectations around AI disclosure. The finding matters commercially because clients who are paying hourly rates for work that AI is completing in a fraction of the traditional time are effectively cross-subsidising the firm's technology investment. Half of large-firm respondents also report deals paused by geopolitical risk, suggesting M&A deal flow is more vulnerable than headline announcement volumes imply. Taken together, the data points to a legal market under pressure on two fronts simultaneously: a technology-driven fee model disruption and a geopolitics-driven volume reduction.
Sources
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