The AI Legal Services Gold Rush Is Over: Formation Collapses, Brands Unprotected, and Companies House Is Watching

31 July 2026: Your confirmation statement accuracy window closes

The numbers arrived this week, and they are not flattering. AIBD analysis of Companies House and UK IPO data shows just 99 new companies registered under SIC 69.10 (activities of law firms and legal services providers) in Q3 2026 to date, an 86% collapse against the equivalent period last year. Class 45 trademark filings at the UK IPO, the class covering legal services, have fallen to 336 for the same quarter, down 78.8%. And the most arresting figure of all: 96.8% of currently active SIC 69.10 companies hold no Class 45 trademark whatsoever.

Three data points. One very uncomfortable picture.

The peg: Companies House has found religion on SIC codes

The timing is not coincidental. On 28 May 2026, Companies House published guidance reminding directors that SIC codes are no longer the administrative afterthought they have historically been. The Compliance and Enforcement Service was unambiguous: under powers introduced by the Economic Crime and Corporate Transparency Act (ECCTA), Companies House can now challenge, reject, or remove information that appears incorrect, inconsistent, or misleading. SIC codes are explicitly in scope. The guidance notes that using a dormant or non-trading code for an active company "is one of the most common discrepancies we see."

Gowling WLG, writing for The Lawyer this week, observed that Companies House has assumed a new "gatekeeper" role and that SIC codes, previously seen as serving mainly to provide statistical data on industry trends, now carry genuine regulatory weight. That piece published four days ago. Consider this your Monday morning warning.

The practical consequence for SIC 69.10 companies using AI to deliver legal-adjacent services is that the code choice is not merely an administrative box. It determines how regulators, lenders, and counterparties read your entity. HMRC uses SIC codes to risk-profile claims, including R&D tax credit submissions. Lenders assess eligibility by them. And Companies House now has statutory authority to demand accuracy.

Why the formation crash matters

The 86% formation decline is striking because it runs counter to the broader AI adoption story. Some 70% of UK businesses are now using or piloting AI solutions, according to figures cited by GDPR Local in January 2026. Legal AI has been among the fastest-growing verticals. So why are formations in the legal services SIC category falling off a table?

Several explanations suggest themselves, none of them reassuring. First, the early cohort of AI-legal incorporations, many registered in 2024 and early 2025 riding a formation wave, may have exhausted the addressable pool of founders who moved quickly. Second, and more concerning: the ECCTA identity verification regime, which introduced mandatory verification for directors and PSCs from November 2025, has added friction that deters low-commitment incorporators. Keystone Law noted in May that the transition period ends by year-end 2026, with active enforcement activity commencing against those who have failed to complete verification. The fly-by-night company is having a harder time of it. This is, broadly, the point.

Third possibility, less charitable: some who intended to operate AI legal services businesses have discovered that the compliance overhead is larger than the pitch deck suggested.

The trademark gap is the quieter scandal

The formation numbers are dramatic. The trademark gap is structural.

That 96.8% of active SIC 69.10 companies hold no Class 45 trademark registration is not an anomaly. It is the industry's baseline condition. Class 45 covers legal services and personal and social services; it is the natural home for any business providing AI-assisted legal research, document review, contract management, or regulatory compliance tools that shade into legal advice. As Pitch Law notes in its Nice Classification guide, Class 41 covers education and entertainment and Class 45 covers legal services, and technology companies often overlook the latter in favour of Class 9 (software) or Class 42 (technology services).

The distinction matters legally. The UK trademark register operates on a first-to-file system. A registration in one class does not cover others. File only in Class 42 and a competitor can register your brand name in Class 45 the following week and begin providing services that directly compete with yours under an identical mark. This is not a theoretical risk: Tidman Legal documented exactly this pattern in February 2026, describing a UK legal AI trademark dispute between a law firm and a legal AI startup that had tested the boundaries of the Trade Marks Act 1994.

With Class 45 filings down 78.8% in Q3 2026, the gap between existing active companies and newly protected entrants is widening, not narrowing. The companies operating in this space are not becoming better protected. They are, collectively, falling further behind.

What this means for your Monday morning

If you act for SIC 69.10 companies, whether as company secretary, accountant, or solicitor, there are three concrete actions to run before the end of July.

Check the SIC code. Companies House has been explicit: the Economic Crime and Corporate Transparency Act has introduced stronger requirements for all information on the register to be accurate, and a SIC code that does not reflect actual activity may produce filing rejections or trigger investigation. Companies House's own blog notes that directors can select up to four codes if the business spans multiple activities. AI-legal businesses that are genuinely providing technology services alongside legal content should consider whether 69.10 alone is sufficient, or whether codes such as 62012 (software development) or 82990 (other business support services) should appear alongside it.

Review the trademark position. The 13th edition of the Nice Classification entered force on 1 January 2026, and all applications filed from that date are examined under the updated classification. Gecić Law's analysis of the new edition notes that notarial services are now explicitly included in Class 45, an indication that the scope of that class has, if anything, expanded. AI businesses providing anything that a reasonable person might describe as legal services should take specific advice on whether Class 45 registration is warranted. UKIPO online filing fees start at £170 for the first class. Non-use revocation risk after five years is real, so file only for services you genuinely intend to provide. Not filing at all, while operating at scale, is an invitation.

Verify director identity. The ECCTA identity verification regime is in force. By the end of 2026, active enforcement against those who have not completed verification commences. That deadline is closer than it appears.

Step-by-step: the SIC 69.10 compliance audit

1. Pull the company's current SIC codes from the Companies House register via Find and Update Company Information.
2. Map actual revenue-generating activities against the SIC description. If the business provides technology and legal content, a single 69.10 code may under-describe it.
3. Check whether any amendment is due at the next Confirmation Statement (CS01). Online filing costs £50; do not miss the window.
4. Run a Class 45 trademark clearance search on the UKIPO database before filing. The UK register contains approximately 3 million records, of which around 43% are dead, expired, or withdrawn; do not mistake volume for current risk.
5. Instruct a trademark attorney if the clearance search returns close matches in Class 45 or the overlapping Class 35 (business services). A clearance report costs from £9.99 commercially; a contested opposition costs rather more.
6. Document everything. Under ECCTA, accountability for false or misleading filings extends to directors personally.

The horizon: SIC 2026 transition

One further complication on the horizon, though not yet an immediate deadline. The ONS finalised the SIC 2026 framework in April 2026, but Companies House confirmed in June that no final framework has been agreed or implemented at the register level. A future SIC code transition will require legislative change. Ellis Davies, Digital Engagement Lead at Companies House, responding to a user query on 10 June 2026, stated that the matter is "under active discussion between Companies House and ONS" and that the condensed list of current codes remains the operative reference for filings.

When SIC 2026 does arrive, it will introduce 132 new codes covering activities that had no dedicated classification under SIC 2007, including data centre operations, digital platform services, and cyber security services. AI-specific classifications will follow. At that point, companies that have been operating under catch-all codes will face reclassification decisions. The 2.9% of businesses that update their SIC code in any given year suggests that most will not update proactively. Those with accurate, specific codes today will be better placed.

For now, the deadline that matters is the next Confirmation Statement. Get the code right. File the trademark. Verify the director. Companies House is watching, and unlike its previous incarnation, it now has the statutory tools to act on what it sees.