Clio Releases 2025 Legal Trends for Solo and Small Law Firms Report

 Solo and small law firms signal readiness for substantial AI and alternative fees transformation

• Clio equips solo and small law firms with benchmarking insights to compare performance against firms of similar size and across the broader legal market

• AI use, flat fees, and tech-enabled client intake strategies point to a future of leaner, more client-centric law firms

• Solo and small firms still face critical decisions around where to invest limited resources, from billing models to tech infrastructure

Clio, the world’s leading provider of cloud-based legal technology, today published its 2025 Legal Trends for Solo and Small Law Firms report. A key addition to Clio’s Legal Trends series, this report delivers exclusive benchmarks, insights, and performance indicators tailored to the needs of solo practitioners and small firms. Drawing from proprietary usage data and survey responses, the report explores how smaller law firms are navigating shifts in technology adoption, pricing models, and client expectations.

“Solo and small law firms make up a large part of legal services in North America, yet face unique constraints,” said Joshua Lenon, Lawyer-in-Residence at Clio. “Our latest report helps solo and small firm lawyers understand where they stand in today’s rapidly evolving market, and how they can move forward with confidence. Whether it’s adopting AI, rethinking billing, or investing in intake tools, data-driven decisions are key to building a more sustainable practice.”

AI adoption: high interest, targeted investment
While the legal industry overall has accelerated its use of AI, solo and small firms are proceeding more cautiously. Only 8% of solo practitioners and 4% of small law firms have adopted AI widely or universally. Instead, most are opting for low barrier tools like ChatGPT or AI-powered legal research, while strategically experimenting with document automation and virtual receptionist services.

“Solo and small firms are being deliberate,” said Lenon. “They’re not ignoring AI, they’re simply prioritizing tools that make sense for their practice models. This targeted adoption strategy reflects both a resourceful mindset and a clear-eyed approach to technology.”

Despite the measured rollout, momentum is building: over 80% of legal professionals expect AI usage to increase in the next year.

Flat fees take hold, but hourly billing still dominates

The 2025 Legal Trends Report for Solo and Small Firms shows solo and small firms are expanding their billing methods, with 75% of solo firms and 65% of small firms offering flat fees alongside traditional hourly rates. Notably, 80% of solo firms use flat fees for entire matters, reflecting a growing desire to deliver pricing transparency to clients while retaining predictable revenue models.

“As automation reduces time spent on administrative tasks, lawyers should be rethinking how they price their services,” said Lenon. “Flat fees offer a competitive edge, but they must be applied strategically to protect revenue while meeting client expectations.”

The report notes that lawyers who stick to traditional billing models risk revenue erosion – potentially up to $27,000 per year per lawyer.

Referrals still dominate but digital client intake tools offer a growth edge

Referrals remain the most effective client acquisition channel for solo and small law firms, with 59% reporting them as their top source of leads. Many of these firms operate with limited marketing budgets and focus on word of mouth and established networks. However, firms that combine referrals with digital client intake tools are seeing stronger results across key business metrics, including revenue growth, lead generation, and conversion rates.

• Solo firms using tools like e-signatures, intake forms, and schedulers reported 53% higher revenue, while small firms saw a 28% increase.
• Solo firms experienced a 48% increase in client leads, while small firms saw a 6% increase using the same digital tools.
• Conversion rates improved by 10% with e-signatures, 7% with text messaging, and up to 5% with online intake forms.

Cloud-based practice management software continues to power small law firm success but solo law firms are underinvesting

Solo and small law firms are outpacing their larger counterparts in the adoption of cloud-based legal technology. With 79% of solo firms and 81% of small firms using cloud-based practice management software – compared to just 47% of larger firms – they’ve clearly prioritized tools that support flexibility, efficiency, and remote collaboration. Technologies like cloud storage, video conferencing, and e-signatures are now essential parts of their day-to-day operations.

However, a gap remains between usage and investment, particularly among solo law firms. While small law firms spend around 2% of their total expenses on software, aligning with broader industry averages, solo law firms are spending just 1%. This underinvestment raises questions about long term scalability and whether law firms are fully capitalizing on the return these tools can offer.

The data reinforces this point:

• Cloud-based data storage is used by 81% of solo law firms and 85% of small law firms. 
• Video conferencing adoption is consistent at 80% for both, while e-signature tools are used by 72% of solo law firms and 78% of small law firms. 

These adoption rates signal that solo and small law firms are embracing digital operations but a more intentional investment strategy could help unlock even greater performance and growth.

What the future holds

The 2025 Legal Trends Report for Solo and Small Law Firms presents a legal market in transition, where evolving client expectations, increased competition, and rapid technological change are prompting solo and small law firms to adapt. These firms are well positioned to respond with agility, but success will depend on making informed, strategic decisions. Those that embrace new technologies, adopt more transparent pricing models, and streamline their client intake processes will be better equipped to compete and grow in the years ahead.

The full report is available for download at clio.com/ltr.