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Investment in tech on the rise in midsize firms, report says
Midsize firms in 2024 face a myriad of challenges and opportunities around technology, non-billable tasks and burnout, a new report has revealed.
Lawyers Weekly
Following the release of its 2024 Australian Midsize Law Firm Priorities Report late last year, Actionstep has unveiled its 2024 US Midsize Law Firm Priorities Report, revealing a number of interesting trends Australian firms can learn from.
Motivators for a firm’s investment in technology over the past year include consistent quality of work (33 per cent) and access to client files from anywhere (32 per cent), which were most frequently reported. Other drivers reported include increased data security needs (30 per cent), reliance on technology to reduce overall costs (30 per cent), data consolidation into one system (29 per cent), team and/or client collaboration (28 per cent), meeting changing client expectations (27 per cent), visibility into firm activity to inform business decisions (26 per cent), and automating manual administrative processes (25 per cent).
“Investing in technology is imperative for almost every type of modern business, and law firms are no exception. Law firms are looking to technology that aligns with their business priorities. The desire for new or better technology at midsize firms is on the rise, and leadership is responding,” the report stated.
In terms of the specific technology midsize firms are exploring, artificial intelligence (AI) is already being widely used in a variety of forms, including AI assistants built into business applications (46 per cent), and both generic generative AI such as ChatGPT (44 per cent) and generative AI built specifically for legal usage (41 per cent).
Further, 98 per cent of firms said they offer online capabilities to clients, with online payments being the most common, followed by client portal and document signing, document review, appointment setting, document storage, automatic updates or reminders, and two-way text messaging to improve efficiencies and workloads.
Despite this, stress remains a “fact of life” for many legal professionals in the midsize space, with 72 per cent experiencing stress, burnout, or feeling overwhelmed from work.
“Stress at work isn’t just a personal burden, but can have significant effects for law firms. A stressed workforce can cause employees to make unnecessary errors, be disengaged, or even affect client interactions and, ultimately, the bottom line,” the report stated.
“Baby Boomers are much more likely to say they have felt burnout at work in the past year (88 per cent) versus Gen X (69 per cent) and Millennials (72 per cent). Gen Z is the least likely to report that they have been stressed by their work (63 per cent).”
Mental health resources were revealed to be the best reliever of this stress, according to 78 per cent of respondents, most of whom were Gen Z and Millennials. Gen X participants benefited from supportive leadership, with Baby Boomers benefiting most from having clear processes to follow.
“Interestingly, there is a very strong correlation between law firm professionals who feel they spend too much time on non-billable tasks and those who have experienced stress, felt burnout, or been overwhelmed by work in the past year. Eight in 10 (80 per cent) of those who say they spend too much time on non-billable tasks have felt stress from their work. That is far higher than the 58 per cent reported by those who feel they don’t spend too much time on non-billable tasks,” the report added.
Sixty-two per cent of respondents said they spent a disproportionate amount of time on non-billable tasks, up from 52 per cent in 2023.
“It would be hard to find a law firm professional who doesn’t feel bogged down by non-billable tasks at least occasionally. Often, these administrative tasks take away from other skilled tasks but are still crucial to the firm’s business. Managers and staff are constantly being urged to streamline the administrative process to be able to focus time directly on revenue-generating work,” the report stated.
“There is a clear link between the rise in non-billable tasks and elevated stress levels among legal professionals. Those that spend too much time on non-billable tasks are 23 per cent more likely to suffer from stress, burnout, or feel overwhelmed by work.”
