Small US law firms still rate time spent on admin as number one challenge 

Small US law firms are increasingly optimistic about their growth outlook, according to the 2022 Report on the State of U.S. Small Law Firms from Thomson Reuters, however the majority still rate administrative tasks that take time away from practicing law as their number-one challenge. 

Despite – and in some cases because of – the global economic uncertainty, nearly six in 10 lawyers say they expect growth over the next 12 months in revenues per lawyer, billable hours, and profits per lawyer, representing a more positive outlook than in the previous year’s report. Small firm lawyers also expect high-to-moderate growth to continue over the next three years. 

However the small firm lawyers surveyed said that they spend just 56% of their time practicing law, down slightly from two years ago. Other top challenges are acquiring new client business and cost controls. 

While getting paid by clients remains a challenge, there has been some improvement thanks to the number of firms that have increased retainers and now accept electronic payments such as ACH payments and debit or credit cards. In 2022, 54% of small firm lawyers rated getting paid by clients as a significant or moderate challenge compared to 64% in 2020. 

Small firm lawyers consider their primary competition to be law firms of similar size. Significantly larger law firms competing for the same clients are the second-most commonly mentioned competitive threat. In addition, competition remains strong from “do-it-yourself” legal websites that provide legal information and forms. Thomson Reuters notes that small law firms will be challenged to improve efficiency and customer service to compete with these offerings. 

“Small law firms are increasingly positive about their ability to maintain or even accelerate growth,” said Mark Haddad, general manager, small law firm business at Thomson Reuters. “The firms have emerged from the difficulties of the last few years stronger than ever. They are also aware that significant challenges remain, as market conditions are fluid and dynamic. But many of those challenges may also present opportunities for small firms to win additional market share from larger firms as they emphasize their cost-effectiveness and ability to provide high-quality legal services affordably, paired with excellent client service.” 

Small law firms are defined by Thomson Reuters as those with 10 or fewer lawyers and it is estimated there are more than 175,000 small law firms in the U.S.

The 2022 Report on the State of U.S. Small Law Firms can be downloaded here.