AI-native law firms incorporating artificial intelligence into their legal work from their inception are on the rise in the legal industry, but face a balancing act between the technology powering them and their obligations as legal service providers, according to panel discussions Wednesday at an industry event.

AI-native firms need to keep in mind the more traditional requirements for law firms, like accountability and client relationships, even as they use tech to compete in new ways against more established legal players, speakers at the 2026 AI Native Law Conference in New York said.

"When I sit down with some folks who are creating native AI law firms, the native AI part they get, [but] the law firm part is sometimes ignored," said Elliott Portnoy, global CEO emeritus of Dentons.

Portnoy spoke along with other panelists from BigLaw and smaller firms and in-house departments at the event Wednesday hosted by LegalTech Connect, a legal technology event company launched last year.

Speakers stressed the importance of the human side of law that even AI-native firms must take into account beyond perfecting the tech.

"I don't think you're ever going to get away from that human element of the practice of law," said Joshua Porte, a partner with Holland & Knight LLP in Nashville, Tennessee, and co-leader of the firm's legal services transactions team.

Porte emphasized that law remains a "human capital" business. Clients consider factors including a firm's insurance and the attorneys supervising and reviewing legal work before retaining outside counsel, and AI-native firms have to take that into account when structuring their firms, he said.

Porte also noted the talent wars for attorneys and the need to align interests between lawyers and employees on the tech side within AI-native firms

"If you lose sight of the human relationships between the technologists and lawyers, or between the lawyers and the end clients, then I think you have a high potential to veer off in the wrong direction," Porte said.

Portnoy said he's seen firms make missteps along the way by focusing on tech at the expense of the traditional functions and features of a law firm. Advising one AI-native firm recently, Portnoy said, he saw that the firm's founders did not include cybersecurity anywhere among their priorities.

"There's a long list of what makes a law firm a law firm, but at least some of that infrastructure really is critical to have in place," Portnoy said.

Portnoy said the path to success for AI-native firms looking to get off the ground in the near future is to focus less on the tech and more on finding a particular practice area with standardized, high-volume and repeatable legal work to focus on.

Panelists at other points on Wednesday also discussed the strategic considerations for AI-native firms looking to compete with BigLaw and the legal industry in general.

Liz Paisner, managing partner of the AI-native firm General Legal, said firms like hers that are not attached to the billable hour format are flexible enough in terms of hours and compensation to draw high-powered attorneys away from large firms and be more cost-effective for clients. They can meet the demand among clients for legal services that can keep pace with the modern pace of business, she said.

"What they're looking for is someone who is going to speed up," Paisner said.

Sanjay Kamlani, co-founder of the AI-native firm FairPlay Law, noted that AI adoption across the legal world as a whole is not uniform. Individual partners within firms may be using AI and their firm's proprietary data to compete with and possibly stay ahead of small firms like his.

Rather than consider the question as a battle between firms of different sizes, Kamlani said, the deeper question is how effectively individual attorneys will be able to adapt to the new technology.

"How can you utilize AI and data to be successful as a lawyer and deliver clients a really powerful result?" Kamlani said.

--Editing by Alanna Weissman.

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