Small firms' enthusiasm for growth through mergers has declined over the past two years, according to a regular survey of the sector published today. The latest Bellwether report from legal information business LexisNexis finds that firms and sole practitioners are focusing their ambitions on organic growth. 

Only 13% of respondents to the survey said they plan to grow through mergers or acquisitions, a drop from 16% in 2022 and 15% in 2021. A large majority, 81%, said that attracting new business is going to be one of their top challenges.

This focus on organic growth is reflected in firms’ investment priorities. In 2022, only 24% of firms planned to increase investment in their marketing. In 2023, an 81% of firms now plan to increase investment in marketing and 88% in business development. While 88% felt that their firm enabled them to offer a good service to clients, 79% of respondents said they were concerned about client retention.

Investment in business development seems to be at the cost of implementing new technologies: only 24% plan to implement new technology over the next 12 months, choosing to maintain systems rather than upgrade. Two thirds of respondents said they made use of free and paid digital legal research tools and legal practical guidance. 

The report, entitled Bold Ambitions?, is based on responses from 169 small firms and sole practitioners. 

'Organically growing revenue will be the theme of the year for many firms,' said Debbie Sumner, consultant at LexisNexis. She noted that a shift in sentiment was understandable following the post-lockdown legal boom and the cost-of-living crisis.

 

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