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The Solicitors Regulation Authority issued a warning notice on Aug. 17, 2026, reminding solicitors and law firms of their professional obligations when using artificial intelligence, according to the regulator’s announcement. The SRA highlighted two main concerns, AI-generated inaccuracies known as hallucinations that can produce fictitious cases or references and the risk of entering confidential client information into tools lacking proper safeguards. A total of 42 reports of potential AI misuse reached the SRA between July 2025 and July 2026, covering inaccurate citations, supervision issues and confidentiality, the regulator’s data shows. SRA Executive Director Strategy and Policy Aileen Armstrong stated that AI offers benefits but does not alter expected professional standards.
An analysis published by Law360 on Sept. 30, 2026, under the title AI Guardrail Considerations For Legal Transaction Teams examined practical steps for transaction teams to address these risks. The piece, authored by Michal Berkner, Alexander Gee and Nikki Bradford, stressed the need for robust frameworks to maintain client confidentiality and ensure accuracy in legal work. Transaction teams must verify all AI outputs against authoritative sources rather than relying on the technology alone, the Law360 analysis advised. Such measures align with existing SRA principles on competence, supervision and service delivery.
UK legal professionals have rapidly adopted AI, with usage reaching 94 percent in 2026 compared with 41 percent two years earlier, a LexisNexis survey of more than 500 respondents found. One in 10 lawyers now describe themselves as dependent on AI to perform their roles, rising to 15 percent at large law firms, according to the same survey data. Drafting, legal research and document review represent the top use cases, LexisNexis figures show. Concerns about hallucinations have grown alongside adoption, with 83 percent of respondents expressing worry over fabricated information, up from 57 percent in the prior survey.
In-house legal departments have followed a similar trajectory, with 85 percent now deploying AI compared with 53 percent a year ago, the Association of Corporate Counsel’s 2026 survey of 576 professionals reported. Governance frameworks have not kept pace with this rollout, leaving gaps in evaluation metrics and risk controls, the ACC assessment found. For transaction teams handling deals, this lag increases exposure when AI assists with contract drafting or due diligence reviews. The Law360 analysis recommended integrating guardrails such as approved tool lists and mandatory human oversight into daily workflows.
The SRA supplemented its guidance with updates to effective supervision rules in June 2026, reinforcing that supervising solicitors remain accountable for AI-assisted work, the regulator’s materials state. Firms should prohibit use of public AI tools for confidential data unless safeguards including no-training agreements and encryption are confirmed, according to related assessments from legal industry observers. Transaction teams in particular must address data flows in cross-border deals where AI tools may process sensitive information. Clear contractual provisions allocating AI-related risks have become standard practice in such arrangements.
Broader industry reports indicate that while AI improves efficiency, with 78 percent of users handling higher work volumes, integration challenges persist for more than one-third of firms, Clio’s UK and Ireland Legal Insights Report 2026 found. Only 27 percent of firms have embedded AI widely across operations, the survey data places. Legal transaction teams can mitigate this by developing internal playbooks that define permitted AI uses and verification protocols, consistent with the considerations raised in the Law360 publication. Ongoing monitoring and training remain essential as regulatory expectations evolve.
