Five Questions to Keep Big Law Leaders Up at Night in 2026

Big Law leaders who faced unexpected political and economic turmoil this year hope to leave at least some of it in the rearview mirror in 2026.

President Donald Trump’s war on law firms has receded, at least for the time being. But four firms are still fighting executive orders against them, and questions about Trump’s deals with nine others linger.

Meanwhile, artificial intelligence and outside investment pose opportunities and challenges that could reshape the legal services industry. And the stakes for partner recruiting have never been higher, forcing firms to constantly re-evaluate strategies.

Here are some of the most consequential questions weighing on firm leaders’ minds heading into the new year.

What’s in Store for Year Two of Trump 2.0?

Trump spent the early months of his second term punishing law firms that he said took advantage of the legal system to favor of the political left. The president has since moved on to other targets, but many firms are still proceeding with caution.

It didn’t take much to get on Trump’s bad side. Firms with ties to Robert Mueller, the former special counsel who investigated the Trump campaign’s ties to Russia, and other lawyers perceived as enemies were tagged as national security risks. The Equal Employment Opportunity Commission launched inquiries into diversity recruiting programs and 20 Big Law firms, following a directive from the president.

Firms split on how they responded to attention from the White House. Four of the firms hit with executive orders went to court and won rulings striking them down as unconstitutional—decisions now on appeal. Paul Weiss and eight other firms reached deals with the White House, pledging a collective $940 million in free legal services for Trump-aligned causes.

A few Big Law firms not directly attacked by Trump joined the fight against the orders, representing the targeted firms in court or signing on to briefs. The rest largely looked to stay out of the administration’s crosshairs, with some firms much more skittish about taking on work that could be viewed as politically volatile.

The “fight or settle” question posed risks and rewards for firms, regardless of the paths they chose. Firm leaders who did not have “war with the president” on their Bingo cards heading into 2025 are left to wonder about the consequences of their decisions—just in case Trump’s attention returns to Big Law in the new year.

Should Firms Take the (Private Equity) Money and Run?

US law firms have few levers they can pull to tap new capital for financial growth. They can take on debt, for instance, or they can accept investment from their lawyers.

Some firms are now looking to broaden their choices.

Private equity, litigation funders, and a certain global accounting firm have flooded Arizona’s legal market in the four years since the state began allowing non-lawyers to own law firms. Lawyers throughout the country also are forming management services organizations, businesses backed by private equity or other investment and designed to take over firms’ administrative functions.

Most of the early movers are small firms with high-volume, consumer-facing practices, such as personal injury and mass tort firms. Asset manager Fortress owns a 20% stake of Arizona personal injury firm Esquire Law. Conditor Equity closed a deal to invest in NetLaw, the digital platform used exclusively by estate planning shop Hargrove Firm, for undisclosed terms.

One notable exception to that trend is accounting giant KPMG, which opened a law firm using Arizona’s new program. The new firm plans to take on corporate work and have a national reach from its office in Tempe.

Ira Coleman, McDermott Will & Schulte’s chairman, is the first US Big Law leader to acknowledge that he’s at least mulling outside investment from private equity. His comments boosted the MSO structure, already used in accounting and medical offices, for an industry concerned about the risks to lawyer independence and regulatory scrutiny.

It remains to be seen whether Big Law will take the plunge.

Will AI Blunders Continue?

For anyone fearing artificial intelligence will replace lawyers, 2025 offered several examples of how the technology still falls short. Missteps by judges and lawyers showed there’s still an important human element to the work, including distinguishing authentic legal arguments from AI-generated hallucinations.

Two federal judges admitted to Congress they issued rulings containing such hallucinations. Lawyers in Texas, California, and Oregon were sanctioned after they faced allegations of similarly misusing tech tools on the job. Even some attorneys at prestigious Latham & Watkins copped to letting AI-invented citations infect an expert report for their client, AI start-up Anthropic.

Legal leaders need to be certain in 2026 that they have safeguards in place to ensure their firm doesn’t show up in the next headline about an AI screwup.

Should Firms Be Talking About Mergers?

Firms chasing wider reach have made mergers central to their growth strategies. Just take Troutman Pepper Locke, which six years ago was three different firms: Troutman Sanders, Pepper Hamilton, and Locke Lord.

That’s not to mention Taft Stettinius & Hollister, which has merged eight different times since 2008.

Law firm combinations have generated mixed results, according to a Bloomberg Law analysis. About two-thirds of the 18 largest mergers within the past 15 years saw the combined firms increase profits per partner, and revenue per lawyer, at a slower rate than competitors. Mergers are often viewed as a cure-all for a firm on a downward trajectory, but they can alienate key revenue drivers whose departures weaken the combined platform.

That’s not stopping firms from continuing to pursue deals. McDermott finalized its merger with Schulte Roth & Zabel ahead of announcements of two transatlantic tie-ups: Perkins Coie and Ashurst plan to combine in 2026, as do Winston & Strawn and Taylor Wessing.

Cadwalader, Wall Street’s oldest firm, is set to tie up with Hogan Lovells next year.

Law firm tie-ups have increased every year since 2021, according to data aggregated by Fairfax Associates.

Firms are drawn to mergers as a defense against client attrition to large competitors, expanding the services they can provide and jurisdictions in which they can work. Anemic demand—less than a 2% uptick through the first nine months of this year, according to Citi’s law firm group—is another motivator.

“The way to outperform your peers is to take market share from others,” said Gretta Rusanow, managing director and head of advisory services for the group.

Mergers are likely to remain on law firm leaders’ minds in 2026.

How Are Law Firm Competitors Paying Their Partners?

Partners at Debevoise & Plimpton, one of New York’s premiere white shoe law firms, take pride in resisting the “eat-what-you-kill” compensation scheme that is now ubiquitous across Big Law. But even they acknowledged this year that the firm needed to make some tweaks to its model to remain competitive.

Debevoise in June joined most of its rivals in adopting a two-tier partnership structure, adding a group of non-equity partners paid largely by salary. The move leaves only a handful of firms among the country’s 200 largest that are sticking with the single-partnership approach.

Loading up on “partners in name only” is not the only move that firms are making to recruit and retain top talent. Many are adding more cash to discretionary bonus pools and widening the spread of shares equity partners can attain.

Top firms are constantly reassessing their pay schemes to keep and attract talent, according to recruiter Sabina Lippman, firmwide managing partner at CenterPeak. They’re particularly focused on poaching mid-career partners with promising books of business—“people in their 40s and early 50s, or late 30s, who are the top of their game,” Lippman said—and who are being held back by their current firms’ compensation models.

Lippman said savvy recruiting strategies identify candidates by asking a simple question: “Which firms have top talent and their model isn’t as successful as ours?”

We likely haven’t seen the last of changing pay models in Big Law.