Remember the movie Dodgeball? That ridiculous scene where the coach makes his team run across a busy highway? The logic: “If you can dodge traffic, you can dodge a ball.”

Europe’s approach to AI feels similar: if you can survive our labyrinth of rules, you can survive anywhere. 

Conversations with European companies about AI rarely begin with “What can it do?” Instead, they open with a sigh and ask, “Are we allowed to use this?” 

For most industries, that’s a creativity-killer, but legal professionals thrive in regulatory swamps. Europe’s swamp is about to become its competitive moat.

The paradox: red tape as rocket fuel

Regulatory complexity around AI hasn’t slowed legal tech down. AI law tech startups attracted nearly $2.2bn in 2024 alone, accounting for around 79% of all funding for legal-related startups.

Prevailing wisdom says regulation strangles innovation. In European legal AI, it’s the opposite, partly because the industry is already marinated in compliance, and partly because no one outside Europe wants to deal with this mess.

Love it or hate it, the General Data Protection Regulation (GDPR) has become the de facto blueprint for privacy legislation and shaped European laws, business practices, and digital trade norms since 2018. It’s influenced data privacy policies further afield, from Brazil’s LGPD and China’s PIPL to frameworks in Japan and India and even legislation in US states like California, Virginia, and Colorado. The more the EU sets global norms, the more legal AI systems built here will seem “export-ready.” 

In this context, regulation becomes the product, as European lawyers sell their advice on the very rules everyone else dreads. If your AI tools can review contracts, undertake due diligence, or identify data protection risks under GDPR, they can do it anywhere. Legal professional standards, confidentiality and privilege are therefore protected by the red tape.

Beyond LLMs

The market is also learning. According to a 2025 Axiom report, 66% of law organisations are in the “developing” stage of AI maturity: teams testing proof of concept amid growing active use. Only 21% claim to be at a “mature” stage, actively using AI on client work and aggressively expanding its scope and use. 

Firms are beginning to figure out that general-use LLMs aren’t enough to reach AI maturity, and products tailored to specific, well-worn internal processes are essential. For simple tasks like personal organisation and general fact-finding, generic LLMs function well. Under compliance pressure, having to navigate complex workstreams while keeping data completely private, they collapse. How could lawyers justify to clients their billable hours, the backbone of firms’ earnings that range between $500 and $1,500 per hour, if they use ineffective generic LLMs?

The legal industry thrives on curated datasets, guardrails, and mind-numbing precision. Robust, “compliance-by-design” legal AI, moulded by strict governance, is the only way to operate. Regulatory hoops ensure companies never take a shortcut, even if the shortcut was just walking in a straight line.

Battle-hardened tech

So, what advantages does Europe have over its competitors in developing legal AI? 

One: trust in the technology exists because it is built in a giant playground fenced by over 6,000 pages of legislative text. Beyond the AI Act, the EU’s General Product Safety Regulation (GPSR), which came into effect in December 2024, brought many AI-powered products within its remit, despite focusing on physical goods. Ensuring comprehensive user safety is paramount in the EU. 

Noble as they might sound, high standards are maintained because EU law and regulation often scare off unserious startups (and some serious ones), or nefarious actors in the field. Clients valuing compliance will pay extra for tools that have the “We survived Brussels!” badge of honour.

Two: the EU’s AI Act forces businesses to prioritise their competitive moats from day one, making them heavily armoured. The Act moves to establish regulations, identify high-risk AI systems, and create special provisions for general-purpose AI models. It distinguishes between AI systems that merely assist lawyers (limited risk) and those impacting the delivery of justice (higher risk). 

Three: data rules, though a daily migraine for AI engineers, turn privacy into a selling point. GDPR’s “privacy by design” principle is intimidating for companies building outside the EU. But inside, businesses have already waded through the quagmire by the time the product reaches the market. 

Europe’s regulation-first model could become the global template, or a cautionary tale. Only time will tell whether the Dodgeball logic of crossing the busy highway was the reason for victory or just an absurd rite of passage. In the end, the US and Asia might just let Europe do the exhausting norm-setting and then copy the good bits without the headaches.

Yet while the rest of the world sees red tape as a nuisance, Europe’s legal sector sees it as a competitive track. In the global race, Europe’s advantage may not come from having the best tech. It could lie in having tech that can withstand the EU’s unique brand of “if you die in training, you live in competition.”