Legal teams expand automation as investors favor execution tools

Legal technology investment is shifting beyond research toward AI-powered execution. A handful of companies attracted an outsized share of the more than $1 billion in funding in the third quarter of 2026. Compliance software startup Leela launched with $4.6 million, while a newly launched legal services venture raised $60 million in seed funding without disclosing its specific practice area or key executives.

Goodwin Procter expanded its Microsoft partnership to support its internal Regina OS tool, Goodwin Builders innovation program and broader adoption across legal workflows. Cooley is collaborating with Google Cloud on a tool to identify confidential information in court filings and prepare proposed redactions. AT&T’s legal department is partnering with OpenAI, while employment compliance platform SixFifty launched an agentic HR compliance specialist.

Security and professional accountability remain concerns. Nelson Mullins and Sheppard Mullin face proposed class actions over data breaches, while Squire Patton Boggs and Holland & Knight disclosed cyberattacks exposing sensitive information. Separately, a U.S. Court of International Trade judge declined to sanction attorneys after accepting that errors in their brief were editing mistakes rather than AI hallucinations, while criticizing their overall sloppiness.