September 2, 2020

Small Law Firms Still Struggling to Manage Administrative Tasks, Says Thomson Reuters Survey

Opportunities for firms to compete by streamlining processes, adopting technology

MINNEAPOLIS-ST. PAUL, September 2, 2020 While most small law firms consider themselves to be successful, they continue to face challenges acquiring new clients and are spending too much time on administrative tasks, providing opportunities for competitors who are willing to explore innovative new delivery models and productivity-enhancing technologies.

The Thomson Reuters 2020 State of U.S. Small Law Firms report interviewed more than 400 solo and small firm lawyers in April and May.

Ninety-five percent of small law firms consider themselves to be either “successful” or “very successful.” But at the same time, they continue to face significant challenges. Seventy-six percent say that acquiring new client business is a significant or moderate challenge. A similar percentage (74%) say the same about spending too much time on administrative tasks instead of practicing law. As a result of those management and administrative burdens, the study found that small firm lawyers, on average, spend only 60 percent of their time doing client work.

One in five small firms (19%) say that getting paid by clients is now a significant challenge, up from 14 percent in the previous survey. The report noted this could be a result of pressure on firms stemming from the COVID-19 outbreak, as well as lack of financial backend and payment systems at many firms. At this point, it remains unclear when billing pressures on small firms might abate.  

Despite the acknowledged challenges, only 29 percent of firms have actually implemented plans to address client acquisition. An even smaller number – 20 percent – have implemented plans to reduce their administrative workload.

According to the report, this relative inaction on the part of many firms in addressing their challenges presents “a real opportunity for those firms willing to make the first move … to innovate their service delivery models,” whether optimizing internal efficiencies or adopting technology to streamline their practices.

“Small firm lawyers have unique challenges, as they are oftentimes not only lawyers but also small business owners and managers in running their practices,” said Mark Haddad, general manager of the Small Law Firm business for Thomson Reuters. “Juggling those roles reduces the amount of time spent practicing law. At the same time, the lack of action by many firms in addressing those challenges means opportunities for competing firms to gain ‘first mover’ advantage by streamlining processes and adopting new technologies to improve efficiency.”

Technology remains a top spend priority for firms; 30 percent say they plan to increase their investment in technology and infrastructure. However, they are not necessarily investing in areas that would address major challenges, such as acquiring clients and reducing administrative burdens. Their planned investments are primarily in technologies such as case management, document management and electronic signatures, rather than front- and back-office functions, such as financial management and accounting, or client-intake software.

The 2020 State of U.S. Small Law Firms report can be downloaded here.

Thomson Reuters

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Jeff McCoy