{"id":12414,"date":"2024-10-24T14:27:38","date_gmt":"2024-10-24T13:27:38","guid":{"rendered":"https:\/\/www.clio.com\/uk\/?p=12414"},"modified":"2024-10-24T14:28:43","modified_gmt":"2024-10-24T13:28:43","slug":"highlights-from-2024-legal-trends-report","status":"publish","type":"post","link":"https:\/\/www.clio.com\/uk\/blog\/highlights-from-2024-legal-trends-report\/","title":{"rendered":"Highlights from the Legal Trends Report: The Legal Industry in 2024"},"content":{"rendered":"

As the legal industry\u2019s most in-depth examination into the state of legal practice, our most recent <\/span>Legal Trends Report<\/span><\/i><\/a> brings together crucial insights on the most important issues facing the legal profession\u2014including the proliferation of AI, the future of pricing models, levers to improve client intake, and how law firms are spending for growth.<\/span><\/p>\n

Across the board, we see a disconnect between where law firms are focusing their energy and where they could have the greatest impact. Legal professionals\u2014from lawyers to paralegals and administrative assistants\u2014are devoting a significant portion of their time to tasks that may not be bringing value to their firms. Meanwhile, prospective clients are waiting on emails and phone calls that go unanswered, while existing clients want to interact using communication and payment options that most law firms don\u2019t offer.<\/span><\/p>\n

Read the latest Legal Trends Report today<\/span><\/i><\/a>.<\/span><\/i><\/p>\n

Our data provides a valuable starting point for addressing these problems. Understanding which investments are helping firms improve productivity and grow their businesses, the tremendous impact of AI and automation, and what their clients are looking for, will help firms make informed, data-driven decisions and support their lasting success.<\/span><\/p>\n

Change doesn\u2019t happen overnight, though. Building new habits\u2014whether it\u2019s integrating automation into your law firm\u2019s daily operations, improving client intake, or expanding your payment offerings\u2014requires commitment. But, in improving their law firms one process at a time, legal professionals will position themselves on a path to success, and with time, these new habits will become ingrained in the background of their firm.<\/span><\/p>\n

Highlights from our most recent Legal Trends Report<\/b><\/h2>\n

Below, we\u2019ll highlight the key insights covered in the <\/span>Legal Trends Report<\/span><\/i><\/a>, and explore how firms can leverage these insights to improve performance.<\/span><\/p>\n

AI adoption is accelerating rapidly<\/b><\/h3>\n

When we last <\/span>researched AI<\/span><\/a> in 2023, 19% of law firms were using AI in their practice.<\/span><\/p>\n

Over the last year, that number has skyrocketed: <\/span>a whopping 79% of surveyed legal professionals are now using AI in some capacity in their practice, while 25% have adopted AI widely or universally.\u00a0<\/b><\/p>\n

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AI adoption is no longer limited to legal trailblazers\u2014it\u2019s the new normal in law firms. Regardless of where firms stand on AI adoption, it\u2019s time to start thinking critically about the impact of AI on law firm operations and legal services.<\/span><\/p>\n

Clients want to work with firms that use AI<\/b><\/h3>\n

Nearly half of clients would prefer to work with law firms that use AI, which suggests that they see AI as a means of offering better, more efficient legal services than firms not using AI.<\/span><\/p>\n

This number is likely to increase when we consider how quickly consumer attitudes surrounding AI use have shifted. In the <\/span>2023<\/span><\/i> Legal Trends Report<\/span><\/i><\/a>, only 46% of consumers said they were open to working with law firms that used AI-powered software.<\/span><\/p>\n

For more information, insights, and trends around AI and law, be sure to take a look at our <\/span>AI guide for lawyers<\/span><\/a>.<\/span><\/p>\n

There\u2019s a growing financial risk for hourly billing<\/b><\/h3>\n

Seventy-four per cent of billable work that\u2019s billed by the hour could be automated by generative AI. The types of work that have the highest automation potential include documenting and recording information, getting information, and analysing data or information\u2014all of which make up an average of 66% of the hourly work that the average law firm takes on.<\/span><\/p>\n

As a result, firm leaders may need to reconsider their <\/span>billing frameworks<\/span><\/a>. If AI can reduce the time legal professionals spend on billable work, this would result in less revenue when billing by the hour. If charging based on fixed or flat rates, however, firms could have time to work more cases while still largely retaining what they charge for individual cases.<\/span><\/p>\n

Fixed fee billing is growing<\/b><\/h3>\n

Firms are billing 34% more of their cases on a fixed fee basis compared to 2016. Firms have also been charging 20% more for fixed fee cases since then. Since AI automation has the potential to reduce the value of hourly billable work, firms that shift to fixed-fee billing models stand to retain the value of their casework while opening up capacity to help more clients through greater efficiency. In fact, firms using AI are more likely to bill exclusively with fixed fees.<\/span><\/p>\n

Clients prefer fixed-fee billing<\/b><\/h3>\n

As it turns out, offering fixed fees could also be helpful for client satisfaction. Seventy-one per cent of clients would prefer to pay a fixed fee for their entire case and 51% would prefer to pay a fixed fee for individual activities within their case. Still, hourly billing is the most common, with 71% of firms offering it to clients.<\/span><\/p>\n

Fixed fee work gets billed out and paid faster<\/b><\/h3>\n

Legal professionals billing with fixed fees are nearly <\/b>twice as likely<\/i><\/b> as those billing hourly to collect payments almost immediately.<\/b><\/p>\n

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Firms aren\u2019t just billing and getting paid for fixed fee matters faster\u2014as it turns out, matters that are billed on an hourly basis take approximately <\/span>2.6 times longer<\/span><\/i> to close compared to fixed fee matters.<\/span><\/p>\n

More productive firms spend more on technology and marketing<\/b><\/h3>\n

Since 2013, firms have increased their spending on software by an average of 20% each year\u2014at a greater pace than growth in revenue.<\/span><\/p>\n

Based on recent data, <\/span>firms that invest more in software and <\/b>marketing<\/b><\/a> have utilisation rates above the industry average of 37%<\/b>\u2014which amounts to just under three hours of billable hours per day\u2014and they also earn much higher profit margins.<\/span><\/p>\n

Firms with above-average productivity:<\/span><\/p>\n