In light of this, Denise Farmer, Clio APAC general manager, discussed the tech provider’s latest findings on revenue data for solo and small firms – and the kind of tech these firms should be implementing into their daily practices.

“In the past, BigLaw firms held the upper hand with large servers, hierarchical structures, and IT solutions tailored to traditional office set-ups,” she said.

“However, the legal landscape has shifted, allowing boutique firms to leverage innovative tools, cloud-based solutions, and agile platforms to meet the evolving needs of today’s market and compete more effectively with BigLaw.”

A surprising takeaway from Clio’s Legal Trends for Solo and Small Firms report, according to Farmer, is that despite significant growth in revenue and case volume, solo and small law firms are currently struggling with billing efficiency.

“For instance, solo firms have seen a 42 per cent increase in revenue over the past eight years, yet their growth in billable hours has been modest, rising just over 1 per cent. This contrast highlights that while solo and small firms are experiencing financial growth, they still face substantial challenges in managing billing and collections effectively, underscoring the need for improved operational tools to handle this growth efficiently,” she said.

“Despite growth in case numbers and revenue, solo and small firms continue to face hurdles in balancing administrative tasks with legal work. For instance, while solo firms have increased their revenue by 42 per cent over the past eight years, their billing hours have only risen marginally.

“Tools like bulk billing and invoicing are helping address these issues by streamlining billing processes and reducing lock-up durations, ultimately supporting the sustained growth and success of these smaller practices.”

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Following revenue increases, it’s important for smaller firms to be abreast of new trends and opportunities – particularly around legal tech.

This includes everything from artificial intelligence to cloud technology, which Farmer said has “transformed how legal professionals manage their practices, offering unparalleled flexibility, remote access, and cost-effectiveness” – small firms being no exception.

“Small firms now have the ability to manage matters, billing, and document storage from anywhere, making it easier to adapt to the evolving needs of their clients and the industry at large. This shift toward cloud-based solutions provides access to powerful tools but also allows for smaller practices to operate with the agility and responsiveness once reserved for larger firms,” she said.

“AI is an emerging trend with the potential to revolutionise the legal industry, particularly for small practices. AI tools are increasingly capable of reducing the burden of routine tasks, offering significant advantages in terms of efficiency and cost savings. These advancements allow small firms to better allocate their time and resources, enabling them to compete more effectively in a rapidly changing market.”

In fact, the Legal Trends for Solo and Small Firms report noted that within small firms, AI adoption is rising, with 21 per cent of solo lawyers using AI compared to 19 per cent across all firms. Notably, 40 per cent of solo and 35 per cent of small firms planned to adopt AI within the next six months, a higher rate than the 24 per cent of larger firms.

“This proactive approach is enhancing efficiency, reducing billing lock-up periods, and improving cash flow. However, as AI continues to develop, it’s crucial for firms to ensure that they are using these tools in a way that is compliant with legal and ethical standards,” Farmer said.

“The integration of AI into legal workflows should be approached with a focus on maintaining client confidentiality, data security, and adherence to regulatory requirements. By balancing the opportunities AI presents with a strong commitment to compliance, small legal practices can harness the power of these technologies while safeguarding their clients and their reputation.”

AI integration is a key trend identified in Clio’s report, with 58 per cent of legal professionals believing AI isn’t yet advanced enough to be reliable and 39 per cent not trusting it.

“Despite any scepticism, the barriers to AI adoption are perceived as low – only 8 per cent of legal professionals and 28 per cent of clients find AI software difficult to learn. This suggests that while trust needs to be built, the potential for AI integration in boutique practices is strong. Notably, 42 per cent of lawyers believe AI can improve efficiency, and 31 per cent think it will make legal services more affordable,” Farmer said.

“Boutique practices are well positioned to capitalise on these trends. By gradually integrating AI, they can boost efficiency and make their services more affordable – all while addressing concerns around trust and reliability through clear communication with clients. Staying ahead in AI adoption isn’t just about keeping up; it’s about standing out and meeting the evolving expectations of today’s clients.”

As such, boutique law firms and sole practitioners can thrive by prioritising professional development and actively adopting new technologies, added Farmer.

“To stay competitive, [firms] can invest in continuous learning, ensuring they’re updated on the latest legal tech tools like AI-powered research platforms, cloud-based practice management systems like Clio, and automated document drafting software,” she said.

“By attending industry conferences, webinars, and pursuing certifications, practitioners can integrate these technologies effectively into their workflows, enhancing efficiency and client service. Leaning into technology adoption and fostering a culture of innovation within the firm will position your firm as adaptable and forward-thinking, driving growth and success in a competitive market.”