A reverberating phrase for law firms, both small and medium size, is that the last 18 months have been a tumultuous time. As firms look to the post-pandemic future, it’s clear that there remain challenges ahead.

Yet, despite considerable disruption to how they operate, the majority of small and medium UK firms have successfully overcome the many obstacles posed by the pandemic, not least the sudden shift to remote working.

In this article, we will look at what decision-makers in the small and medium law firm market say are their biggest challenges, how the competitive landscape has changed and attitudes towards technology.

Dealing with higher expectations from clients

The results of our 2021 UK Small and Medium-Sized Law Firm Market survey* showed that as a result of the pandemic, over a third of respondents said that their clients’ expectations have been higher over the last year. Corporate clients have relied heavily on their legal advisers to help them navigate uncharted territory, such as the furlough scheme and other government support programmes.

Respondents also said that remote working has blurred boundaries between personal and professional time. Clients now expect faster responses to their queries, believing that lawyers should be available online out of hours.

With the financial impact of the pandemic putting pressure on budgets, small and medium firms have reported that clients are expecting the same levels or even greater levels of service for less.

Unsurprisingly, the greatest current concern for law firms is the impact of the pandemic on delivering their services and their overall working practices. Other top areas of concern include cost control and expense growth, getting paid by clients, acquisition of new client business, and managing, hiring and retaining talent.

Our report showed small law firms see online legal service providers as their number one threat (53%), while medium law firms rank them as their second biggest threat (38%). Other threats include competing firms and 'do-it-yourself' legal services providers.

Small and medium law firms turning to technology

In many cases, law firms have responded to these challenges by adapting their practices and leveraging their technology capabilities.

Nearly half of firms (44%) reported investing in tools that automate processes to improve productivity, and 46% say they have a high level of technological expertise within their firm – an increase of 6% from last year’s survey.

However, barriers such as a lack of effective change management approaches can make adopting new technology challenging. While the use of technology to automate and collaborate has increased, many firms are proceeding cautiously. Only 41% of the firms surveyed intend to invest in tech solutions in the next year.

The survey also showed that while over 60% of firms said their systems can easily provide insights into financial and performance metrics, only 30% of firms collaborate with their clients using technology to improve the clients’ experience.

These gaps may provide opportunities for firms that are willing to invest in new technologies to gain greater efficiencies and thus a competitive advantage in the marketplace.

Other future objectives for law firms

The two key objectives for both small and medium law firms in the coming months are controlling costs and general growth. Notably, 36% of medium law firms said that improving their technology infrastructure and security is key, making it their third most important objective, compared to just 18% of small law firms.

Despite the hindrances that have arisen due to the pandemic, respondents remain cautiously optimistic about the future, as shown by their growth plans. Law firms expect demand to increase for the practice areas of employment, litigation/dispute resolution, private client, residential property and commercial transactions. 

What can firms do to overcome these challenges?

As challenges including Covid and competition continue, technology may be a key to achieving greater efficiency of work, better communication and an improved responsiveness from the law firm. Greater investment in technology can make processes more efficient thereby freeing up time for lawyers to focus on delivering solutions to their clients’ more complex issues.

Three-quarters (75%) of respondents believe that technology will be key in helping to address the challenges they face.

Entrepreneurial-minded firms that will thrive in spite of the challenges thrown at them by the market will go further than simply automating processes. They will identify opportunities to penetrate new market segments through technology and will adapt the technology underpinning their operations to deliver a better and faster service.


Gilly Grant is director of market development at Legal Europe, Thomson Reuters