Graphic courtesy of Thomson Reuters

The latest Thomson Reuters survey on small U.S. law firms reveals a notable shift in how they allocate their time, with a decreased focus on administrative tasks and an increased emphasis on practicing law. After years of stagnation, the 2023 edition of the State of U.S. Small Law Firms report indicates that lawyers in small firms (29 or fewer attorneys) are now spending 61% of their time on legal work, up from 56% in previous years.

This shift is seen as a breakthrough, as small firm lawyers have historically struggled to balance practicing law with administrative duties. The increase in time dedicated to legal work is also linked to a rise in the perception of firm success, with 30% of lawyers now viewing their firms as “very successful,” a growth from last year’s 26%.

However, the survey also reveals new challenges, particularly in controlling costs and expenses, which 72% of firms now cite as a significant concern. This is up from 56% two years ago and has become the second-highest challenge after administrative tasks.

Key findings from the survey include an uptick in billing rates among small firms, with 64% reporting increased rates this year. Additionally, adoption of new technology, especially in case management, legal research, and billing software, is on the rise, with 42% of firms integrating new tech solutions.

Interestingly, generative AI has not yet gained significant traction among small law firms. The majority of lawyers (72%) are aware of generative AI but haven't used it, and only a small percentage view AI as a current threat to their practice. Despite this, about 40% recognize the potential of AI to automate processes in their practice.

The survey also highlights a significant increase in marketing efforts, with 93% of firms now engaged in marketing or advertising campaigns, up from 84% in 2021. The focus of these campaigns ranges from networking to social media marketing and search engine optimization.

The report concludes with a cautionary note, urging small law firms to maintain their recent gains in reducing administrative tasks and to stay vigilant in the face of rapid technological advancements and evolving client expectations. The key is to avoid backsliding into old habits and to keep a sharp focus on practicing law.