The 2024 ³ÉÈËÓ°Òô Bellwether report, Lessons on law firm growth, explores all the vital ingredients that have led to growth among independent firms, including plans for scaling up, investment strategies, employee-employer relations, and so much more.
Growth has become a core priority. The Bellwether report, built on a survey of more than 250 leaders and associates at small- and medium-sized legal practices, found that 63% of firms plan to grow through organic means, up from 40% in 2023.
A key route to growth, according to the report, stems from tech investment. In this article, we explore the growing appeal of tech investment for small law firms, discuss some of the barriers to investment, and explore the revolutionising impact of artificial intelligence. (AI)
Firms placed tech firmly at the top of their priorities for investment. More than a third (35%) will increase spending in the next 12–18 months, while one-fifth (21%) have already done so. A mere quarter (26%) of firms suggest no plans to increase investment.
The appeal of tech stems from its ability to save time. The right platforms and the right tech can reduce the time spent on drafting legal documents, conducting legal research, sourcing relevant precedents or citations, improving day-to-day operations, and so much more.
Tech also strengthens existing client relationships. Anthony Earl, Chair of the Law Society’s Committee, says tech reduces time spent on admin, which ‘means staff can concentrate on actually practicing law and improving the client experience’.
Tech does not simply strengthen existing relationships. Stephen Roper, professor at Warwick Business School, claims that tech investment, when effectively deployed and integrated, can bring in new clients and boost revenue: ‘Digital technologies can yield significant productivity benefits, most notably by making non-billable activities more efficient.’
It is no surprise that small firms are aiming to increase investment in tech, especially as they need to meet evolving client expectations and grow in a competitive environment.
The biggest difficulty around tech investment, according to the Bellwether report, stems from sourcing the right tech. Tech is not by necessity a virtue. Tech investment will not necessarily lead to positive results. Success depends on identifying the best possible tech.
It’s a particular challenge for smaller firms. Small firms, unlike their larger counterparts, cannot afford to get it wrong and start again. That’s why Earl suggests that smaller firms maximise the potential of existing tech, rather than constantly investing in new systems.
Cost concerns remain another barrier for small firms. It’s a point that’s been made year after year. Small firms do not possess the same investment capacity as larger firms, as mentioned above, but investment in the right tech will save money, not lose money. Small firms need to and instead priortise the longer-term cost-saving potential.
Another barrier is buy-in from above. Lawyers at small firms need to make the case to leaders to show the specific benefits of legal tech investment. They should take an evidence-based approach, address any opposition or objections, and showcase the long-term value of tech.
And leaders at small firms need to be more receptive to change, more aware of the extended benefits of tech investment, more open to addressing the needs of lawyers and their clients.
Generative AI revolutionised the practice of law. AI has boosted the general appeal of tech investment across the sector. Just under a third of lawyers in the report, for example, said firms would invest more due to AI and 29% suggested it will make firms more profitable.
Rachita Maker, Global Head of Legal Ops, Tech, and Consulting at , says generative AI will prove a reliable assistant for lawyers over the next few years. ‘AI can be used for legal research…It can also be used for regulatory compliance, highlighting regulatory changes and the potential impact it could have on an organisation's policies and processes.’ The majority of small firms, according to the report, are eager to take advantage of AI.
The time-saving benefits of AI are well known. A US Lexis+ AI Commercial Preview Study from November 2023 found that three-quarters (74%) of a group of legal professionals using Lexis+ AI said the tech saved them up to seven hours a week for legal research, and four-fifths (84%) anticipated saving up to six hours a week for legal drafting.
And lawyers are excited to use AI for various reasons. Main priorities in small firms, as explored in Lawyers cross into the new era of generative AI, are the drafting of legal documents (90% of lawyers using AI), legal research (88%), and writing emails and other forms of communication (78%).
The power and potential of AI boosts the appeal of tech investment. But it also draws attention to the problem of not investing. Firms that fail to realise the potential of AI, especially in the ability to improve legal research and automate tedious processes, will likely fall behind the competition. AI will lead to reductions in costs. It will save firms time and money. It will free up resources. And the firms embracing AI will be able to pass such savings onto clients and will improve the results they provide clients. In terms of AI, perhaps more so than any recent tech, the small firms that fail to invest will struggle to remain competitive.
Download the full report here.
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