Report: Small Law Firms Lag Larger Peers on Using AI to Grow Revenue

Clio’s Legal Trends for Solo and Small Law Firms report offers the first real-time look at how AI is reshaping the economics of legal work

Clio, the global leader in legal AI, today released Legal Trends for Solo and Small Law Firms, a new report that reveals a disconnect between AI adoption and financial growth for solo and small law firms, despite widespread adoption.

According to the report, 71% of solo practitioners and 75% of small firms are now using AI to complete legal work. Those firms are experiencing tangible benefits: higher-quality work, faster turnaround times, reduced stress, and the ability to take on more complex matters. 

However, fewer than 33% of solo and small firms have increased revenues with AI, compared to nearly 60% of enterprise firms. That disparity highlights the critical gap between working more efficiently and actually growing a practice. 

“The firms seeing the strongest returns from AI aren’t just adopting it,” said Joshua Lenon, Lawyer in Residence at Clio. “They’re rethinking their business model to optimize for the current moment. They’re integrating AI across operations and using the time it saves to attract and serve more clients. They’re using specialized legal AI that understands the law.”

Key finding: flat-fee billing is preferred by clients, can drive revenue growth

The new report also reveals that the vast majority of solo and small firms haven’t adjusted pricing in response to AI. 

While hourly billing is declining across the industry, 86% of solo firms and 78% of small firms have made no pricing changes, compared to 51% of mid-market firms and 46% of enterprise firms. 

The opportunity is significant. Seventy-one percent of clients prefer fixed or flat fees, meaning firms that move away from hourly billing aren’t just protecting their own margins, they’re delivering the pricing experience clients want. 

Firms that pair AI-driven efficiency with flat-fee models can take on higher volumes of work, bring in more clients, and capture the full value of their expertise rather than discounting it every time technology makes them faster.

Integrated legal AI has the edge over general tools

The report also found that, despite high overall AI adoption, most solo and small firms are relying on consumer-grade, general-purpose tools rather than AI built for legal work. 

While these tools offer basic time savings, they come with meaningful limitations: they require constant re-prompting, lack the legal context needed for nuanced analysis, and create real confidentiality risks when sensitive client information is entered into a public platform.

The problem is compounded by fragmentation. Many small firms already manage a patchwork of disconnected software systems. Adding generic AI tools creates more logins, more context-switching, and more opportunity for error, consuming the very time firms are trying to save.

By contrast, larger firms are significantly more likely to use specialized legal AI tools for document drafting, e-discovery, analytics, and contract review. 

The Legal Trends Report for Solo and Small Law Firms is available for download today here.