November 4, 2021

Small Law Firms Have Largely Recovered from Pandemic Impacts, Says New Thomson Reuters Report

Time spent practicing law drops to new low; strong work-life balance now considered a sign of success

MINNEAPOLIS-ST. PAUL, November 4, 2021 – Small law firms have “largely recovered from the downturn” caused by the effects of the pandemic, concludes the 2021 State of U.S. Small Law Firms report from Thomson Reuters. The report also discusses how lawyers’ attitudes have shifted over the past year regarding the importance of work-life balance, the challenges their firms are facing, and what they need to do for continued success.

Small law firms are optimistic about the prospects for continued growth, with a majority expecting increased demand for services, revenues, and profits over both the coming year and next three years. An overwhelming 88% of small firm lawyers currently consider their firms to be either successful or very successful, with work-life balance becoming one of the most important metrics of a firm’s success.

Time Spent Practicing Law Drops, Work-Life Balance Importance Rises

The proportion of lawyers’ time spent practicing law has dropped to a new low of only 56%, barely half of their time, and down from 60% just a few years ago. Firms are increasingly concerned about how managing administrative tasks is impacting their ability to practice law. They now rate it as their top challenge, up from number two last year, surpassing client acquisition.

But perhaps more concerning is that nearly half of firms have not yet determined how to address the problem of spending too much time on administrative tasks.

Also, lawyers say they are increasingly looking at work-life balance as a measure of success; 84% of small firm lawyers say work-life balance is now part of how they rate their success, the highest percentage ever reported. Thomson Reuters research has found that lawyers across firms of all sizes have reacted positively to many of the new ways of working over the past year and now desire greater flexibility in remote working options and setting working hours.

Other top concerns are acquiring new clients and competition from other firms of similar size, while other primary measures of success this year are firm profits, client satisfaction ratings, and repeat business.

Challenges Remain

Previous editions of the report frequently discussed how small firms were largely failing to take action to address major challenges, such as acquiring new clients or reducing administrative burdens. However, small firms responded swiftly in addressing one of last year’s top concerns – getting paid by clients – given the importance of maintaining cashflow during the depths of the pandemic. Those concerns have been significantly reduced this year, and the report raises the question of “whether the same type of results could be achieved if firms dedicated the same sort of all-hands effort” to addressing the challenges from administrative burdens and business development.

Meanwhile, small law firms are increasingly concerned about competition, not only from firms of similar size, but also from significantly larger firms as well as DIY legal websites and services.

“Small firms occupy a unique position in the legal market, functioning as both practitioners and small businesses, subject to the same economic buffeting that has affected nearly all small businesses over the last year,” said Mike Abbott, vice president, Market Insights and Thought Leadership, Thomson Reuters. “With hard work, flexibility and innovation, small firms have largely managed to weather the turbulence and are now positioned for further growth. At the same time, they continue to face unique challenges, such as high administrative burdens in managing their businesses, and a myriad of competitors from all sides – above, below, and alongside them in the market.”

For a copy of the 2021 State of U.S. Small Law Firms, visit

Thomson Reuters

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Jeff McCoy