March 25, 2019

“Persistent Lack of Action” by Small Law Firms in Addressing Challenges Creates New Opportunities for First Movers: Thomson Reuters Survey

Only 60 percent of a small-firm lawyer’s day is spent practicing law

MINNEAPOLIS-ST. PAUL, March 25, 2019 – Small law firms are still struggling to address the major challenges they face, such as trying to balance practicing law while running a small business and competing against much larger firms. The 2019 State of U.S. Small Law Firms report from Thomson Reuters found that while many small law firms are not taking steps to address challenges that stand in the way of growing their practices, this inertia is creating new opportunities for firms that are more willing to take action and stand out from their competitors.

This third edition of the report — which covered law firms ranging in size from solo practitioners to up to 29 lawyers — found that little progress has been made since the first survey two years earlier.

Small firms cite many significant challenges, such as spending too much time on administrative tasks, lack of internal efficiency, controlling costs and not enough time practicing law. But the report found that for any given challenge, less than half of firms have taken steps to address it. For example, three-quarters of firms (73 percent) say acquiring new business is a moderate or serious challenge, up from 69 percent two years earlier. But less than a third of firms (31 percent) have implemented plans to address the issue — that figure stands virtually unchanged over the last two years.

At the same time, firms willing to take steps such as investing in technology or focusing on client relationships can enjoy a “first mover” advantage over competitors in realizing greater efficiency and delivering greater value to clients.

One of the top challenges remains the fact that small-firm lawyers say only about half of their day (60 percent) is spent practicing law. Seventy-two percent say spending too much time on administrative tasks instead of doing lawyering work is a challenge.

As a result, when firms do make changes, the most common action has been adopting new technology. Forty-five percent of firms say they have implemented technologies such as case/matter management, time and billing, and document drafting tools in the last two years. And firms identified focus on efficiency and increased investment in technology as being key drivers of improved performance.

“Small firms face unique challenges, competing against larger firms on one end and online do-it-yourself resources on the other end, as well as other small firms,” said Mark Haddad, general manager, Small Law Segment, Thomson Reuters. “The report shows that while most small firms acknowledge the challenges they face, too few are taking solid action to address those challenges.”

Haddad continued, “At the same time, small firms also provide unique opportunities such as different work-life balances and the ability to specialize. New workflow technologies and other resources can help small firms maximize those opportunities, by operating more efficiently and enabling them to compete even against much larger firms. For example, our recent report on alternative legal service providers found that nearly a quarter of small firms are making use of such services to supplement their in-house capabilities.”

 The 2019 State of U.S. Small Law Firms report can be downloaded here.

Thomson Reuters

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Jeff McCoy