The 2024 Legal Trends for Solo and Small Firms report highlights a significant finding: lawyers in solo and small firms intend to embrace artificial intelligence adoption at a considerably quicker pace than those in larger firms. This readiness, however, still trails client enthusiasm for the technology, as consumers anticipate that AI can lead to more affordable and higher quality legal services.
Report Scope and AI Caution
The report, which examines the state of legal practice for solo and small firms, utilizes aggregated data from practice management software users alongside a survey of 1,446 legal professionals from firms of all sizes and a separate survey of 1,012 US adults. For the purposes of this study, a small firm is defined as having two to four lawyers and legal professionals, with anything greater considered a “larger firm”.
While the report covers various financial and technology trends, it introduced an analysis of AI’s impact this year. It found that lawyers across all firm sizes remain cautious about integrating AI into their practices. Specifically, just over half of lawyers in larger, small, and solo firms believe that AI is not yet advanced enough to be reliable. Similarly, nearly half of the lawyers in these same groups also expressed distrust of AI technology.
Despite this hesitation, the report notes that a majority of lawyers view the potential benefits of AI as outweighing its costs. Nineteen percent of legal professionals surveyed across firms of all sizes reported that they are already utilizing some form of AI in their practices.
Adoption Rates and Firm Size
Among those not currently using AI, solo and small firm lawyers expressed a significantly higher likelihood of rapid adoption. Forty percent of solo practitioners and thirty five percent of small firm lawyers plan to adopt AI within the next six months. This contrasts sharply with the twenty four percent of lawyers in larger firms who indicated the same timeline.
The report suggests this disparity is logical, as solo and small firms often operate with leaner structures and fewer resources. This context means they stand to benefit substantially from the automation potential AI offers. The report states: “For firms with fewer resources available to them, as is often the case among solos and small firms, AI presents tremendous potential to scale their businesses and, effectively, punch above their own weight.”
Client Favorability Towards AI
Even as solo and small firm lawyers show a readiness for adoption, prospective clients exhibit even greater favorability toward the technology. While nineteen percent of solos and twenty percent of small firm professionals believe AI benefits outweigh the costs, thirty two percent of consumers share this view. Furthermore:
- Thirty eight percent of prospective clients believe that lawyers who use AI powered software can offer more affordable services than those who do not.
- Thirty two percent of prospective clients believe that lawyers can provide higher quality services with AI software.
In nearly all measured common legal tasks, potential clients are more likely to believe law firms should employ AI than their lawyers are. This client perspective suggests an obvious implication for smaller firms: firms that successfully adopt and market their use of AI software may gain a competitive edge in attracting new business.
Ambiguity and Future Use
The report’s use of the term “AI” remains broad and generic, lacking a clear distinction between older forms of AI that have long existed in the legal market, such as those embedded in tools like Westlaw, and newer forms of generative AI. This ambiguity makes it challenging to interpret the reported figure that nineteen percent of lawyers are already using AI, as a lack of specific definition may skew lawyers’ self reported usage.
When lawyers were asked about the intended purposes for future use of AI powered software, the results did not include some already common applications of AI, such as legal research, summarization, and drafting.
Two additional findings from the report regarding AI include:
- Nearly a third of solo and small firm lawyers (thirty percent and thirty three percent respectively) believe AI software will diminish the need for paralegals, compared to only twenty three percent of larger firm lawyers.
- Only a minority of lawyers express concern about bar restrictions on the use of AI, with seventeen percent of solos and twenty one percent of small firm lawyers believing that bars will never approve of practices using AI.
A Unique Opportunity for Solo and Small Firms
The overall message of the report’s findings on AI is that it presents a unique opportunity for solo and small firm lawyers to achieve more with limited resources. “For solo and small firms in particular, AI presents a remarkable opportunity to automate common tasks that may otherwise require more resources or take time out of a lawyer’s busy day and allow them to expand their ability to perform legal services,” the report concludes.
Other Key Trends
The report covers much more than AI and is a valuable resource for anyone interested in law practice trends among solo and smaller firm lawyers. Other key takeaways include:
- Solo and small firm lawyers face challenges related to lockup, which includes unbilled work in progress, uncollected debtor accounts, and other unbilled and uncollected money.
- Solos’ billing rates are not keeping pace with increases in the consumer price index.
- While billing and collections remain strong among solo and small firms, their billable hours are declining.
- Solo and small firm utilization rates are increasing but still trail behind those of larger firms.
- Collection rates are improving for firms of all sizes, though only slightly.
The full report, 2024 Legal Trends for Solo and Small Firms, is available for free download.
