Highlights from the report “Legal trends for medium-sized law firms 2023”.

Lawyers have relied on Clio’s annual book since 2016 Legal trends report for an objective and comprehensive analysis of trends in the legal industry.

As the most comprehensive study of the legal industry on the status of legal practice, the Legal trends report brings together critical insights into the performance of law firms. It also sheds light on the forces shaping legal practice.

This year we are pleased to offer unique insights for mid-market law firms by expanding our reporting offering Report “Legal trends for medium-sized law firms 2023”.. This report helps midsize companies meet modern challenges, differentiate themselves from smaller companies, and uncover new opportunities.

Introduction to the report “Legal trends for medium-sized law firms 2023”.

The Legal trends 2023 for medium-sized law firms The report examines what differentiates mid-sized law firms from smaller ones. Measuring success from a single perspective is challenging. That’s why this report examines key trends from multiple perspectives, including financial performance, personal and professional well-being, and customer relationships. We use these insights to find out where medium-sized law firms often face the biggest challenges and how they can overcome them.

This report defines medium-sized law firms as those with 21 or more employees. Throughout the report, we compare these companies to “smaller companies” (companies with 20 or fewer employees).

Below we will examine the key findings from the Legal trends 2023 for medium-sized law firms Report.

The performance gap between medium-sized companies and smaller companies is narrowing

The graph shows that medium-sized law firms are more affected by COVID than small law firms.

Medium-sized law firms appear to have been significantly impacted by the COVID-19 pandemic. In 2021, however, they rebounded, increasing their casework even beyond pre-pandemic levels. And while the overall increase in casework was modest, midsize companies saw a huge increase in billable amounts. They clearly outperform smaller companies in this area.

While several factors could influence the growth in billable amounts, a compelling argument is that medium-sized businesses are more likely to increase their hourly rates than smaller businesses. Mid-market companies have consistently outperformed smaller companies in increasing hourly rates, even outperforming the Consumer Price Index (CPI).

Despite this increase in the amounts billed by medium-sized law firms, the difference in performance between medium-sized and smaller law firms is narrowing.

For example, while midsize business utilization rates (the number of hours spent on billable work measured in an eight-hour workday) slowly increased from 2019 to 2021, they declined in 2022. Meanwhile, smaller business utilization rates have also remained declining relatively constant over time.

Similarly, medium-sized companies have historically lagged behind the realization rates of smaller companies (which have remained relatively stable). Still, mid-market companies are beginning to win, narrowing this gap.

Medium-sized companies are currently outperforming smaller companies when it comes to collection rates, but only just.

While mid-sized law firms are performing comparatively well, their practices could benefit from improvement, particularly across key performance indicators.

The turnover rates for lawyers in medium-sized companies are high

In the 12 months leading up to April and May 2022, many lawyers in medium-sized companies left their jobs to take on new positions. In fact, lawyers at medium-sized firms were more than twice as likely to have quit their jobs as lawyers at smaller firms. They were also more than five times more likely to plan to leave their jobs in the next six months.

These changes can mainly be traced back to dissatisfaction with companies, managers and employees. However, many lawyers have become corporate partners and owners. This suggests that a lack of career advancement or partnership opportunities could also be a driving factor for this movement.

Even more worrying is that lawyers in medium-sized companies are not satisfied. In all respects, lawyers in medium-sized law firms report less satisfaction with their private and professional lives than smaller law firms.

Lawyers in medium-sized companies work less, but not when they want to

Despite the lower level of satisfaction among lawyers in medium-sized firms, they seem to find a better work-life balance than those in smaller firms – but only in terms of the number of hours worked. Unfortunately, lawyers in medium-sized firms do not work the times or days they want, and we see that 15% of lawyers in medium-sized firms work late into the night.

At the same time, lawyers in medium-sized companies prefer to work in the office. They are less likely to prefer working from home or meeting colleagues or clients virtually – yet these preferences are at odds with modern customers who prefer virtual meetings to face-to-face meetings.

Midsize companies are falling behind when adopting cloud technology

Technology is advancing rapidly and many mid-market law firms are catching up when adopting new technologies. Only 27% of mid-sized law firms reported using cloud-based LPM (Legal Practice Management) software (compared to 73% of smaller firms surveyed). They are also less likely to use video conferencing, e-payments, e-signatures, and cloud-based data storage.

Reasons to move to the cloud

Our research suggests that moving to the cloud has obvious benefits for midsize law firms. Those who have not yet adopted these technologies are missing out on opportunities to better serve their customers and increase employee satisfaction.

Above all,

  • Attorneys at midsize law firms using cloud-based LPM software report significantly better performance on all professional and personal metrics, including relationships with colleagues and clients, productivity, and personal and professional satisfaction.
  • 53% of attorneys using cloud-based LPM software prefer working from home to going to the office (compared to 35% of mid-market attorneys who do not use cloud-based LPM software).
  • 67% of mid-market attorneys using cloud-based LPM software would like autonomy to choose their working hours (compared to 34% of those not using cloud-based LPM software).

And with one in four midsize companies already using cloud-based LPM software, the cloud is no longer a “new frontier.”

However, managing change in a larger organization ultimately requires more planning and thought than advocates in smaller companies. For this purpose, the year is 2023 Legal trends for medium-sized law firms The report offers simple but effective recommendations for technology adoption in midsize law firms.

To learn more about the benefits of cloud-based law firm management software and more insights, read the Legal trends 2023 for medium-sized law firms report today.

Where does the data come from?

The Legal trends report The program uses a range of methodological approaches and data sources. The result? The best insights into the state of legal practice and strategies for future improvement.

Clio app data

We analyzed aggregated and de-identified data from tens of thousands of legal professionals across the United States. This data provides important insights into how legal professionals are using technology and the impact it is having on business performance.

(Note: Clio only collects and reports application usage. We do not collect or report case details or identify individual law firms.)

Surveys of lawyers and consumers

For the Legal trends 2023 for medium-sized law firms In this report, we surveyed 1,134 legal professionals and 1,168 consumers in April and May 2022. Consumers included in this survey represent the US population based on the latest US Census statistics. This data offers insights into how legal professionals can better serve consumer preferences in 2023 and beyond.

Categorized in: Clio

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