November 5, 2026, (Inside AI) — Global law firm A&O Shearman announced Thursday it will commit $1.1 billion to its artificial intelligence strategy over the next five years. The plan includes allocating thousands of lawyer hours to building AI tools and services, marking one of the largest financial commitments to AI by a law firm to date.
The firm, formed by the 2024 merger of London's Allen & Overy and New York's Shearman & Sterling, employs nearly 4,000 lawyers globally. Most of the investment will come from legal practice teams contributing at least 3% of their time to AI development, after the firm found that AI delivers the most client impact when combined with deep legal expertise.
This move places A&O Shearman among a growing group of elite law firms racing to integrate AI into their operations. The firm's global managing partner, Hervé Ekué, framed the investment as a competitive necessity.
"The firm that leads will combine exceptional legal judgment with the speed and scale to apply it consistently, anywhere in the world," Ekué said in a statement. "We intend to be that firm and that is what this investment accelerates."
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The legal industry is witnessing an arms race in AI spending. In May, Kirkland & Ellis said it would devote $500 million of its revenue to developing a custom AI platform over the next three to four years. Latham & Watkins has purchased Nvidia servers to support its AI workloads. Morgan & Morgan, the largest U.S. personal injury law firm, committed at least $1 billion to AI and technology over the next decade in September and plans to market its own AI platform to other firms next year.
Some firms are also changing how they credit lawyers for AI-related work. Ropes & Gray now allows lawyers to earn billable credit for time spent learning and experimenting with AI, a shift that acknowledges the growing importance of technological fluency.
Law firms are blending off-the-shelf AI tools from vendors with in-house development. A&O Shearman was the first major law firm to partner with legal AI startup Harvey in 2023. Together with Microsoft, they built an AI-powered contract tool called ContractMatrix, which the firm says has seen increased client uptake. Other firms are forging similar alliances: London-based Freshfields announced in April a collaboration with Anthropic, the maker of Claude, to develop AI applications for legal services. Thomson Reuters also sells AI-assisted tools for the legal industry.
The scale of these investments reflects a broader recognition that AI will reshape legal practice, from contract review to legal research. Firms are not only buying technology but also retraining their workforce and rethinking billing models. The move toward contributing lawyer time to AI development signals that the firms view AI as a core competency rather than a back-office efficiency tool.
As law firms pour billions into AI, the competitive landscape is likely to favor those that can effectively combine human expertise with machine speed. A&O Shearman's bet is that its global footprint and deep legal knowledge, augmented by AI, will set it apart. The firm's early partnership with Harvey and its development of ContractMatrix suggest a strategy of building proprietary tools on top of third-party platforms.
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With AI spending now measured in hundreds of millions and billions, the legal industry is undergoing a structural shift. How firms bill for AI-assisted work, how they measure productivity, and how they train the next generation of lawyers are all questions that will shape the coming decade. A&O Shearman's commitment, while the largest announced so far, is part of a wave that shows no signs of slowing.
Shamil has a low tolerance for AI that only works in controlled demos. He covers agentic systems and generative AI with the skepticism of someone who has seen too many “revolutionary” tools quietly disappear six months after launch.
