Introducing the 2024 Legal Trends for Mid-Sized Law Firms report

Since 2016, authorized consultants have turned to Clio’s yearly Legal Trends Report for an unbiased and thorough examination of traits within the authorized area. 

As probably the most complete evaluation of the authorized trade, the Legal Trends Report consolidates important data on legislation agency efficiency whereas illuminating the influential components driving modifications in authorized observe. 

For attorneys in mid-sized corporations, we offer distinctive insights with our annual Authorized Tendencies for Mid-Sized Legislation Corporations report. We’re thrilled to announce the current launch of the 2024 Legal Trends for Mid-Sized Law Firms report, which seems to be at mid-sized legislation corporations throughout a number of views—together with efficiency traits, methods for enhancing cost collections, and attitudes in direction of synthetic intelligence (AI).

Beneath, we’ll dive into the high-level takeaways from this yr’s report—however you should definitely try the 2024 Legal Trends for Mid-Sized Law Firms report for a complete overview of the traits shaping mid-sized legislation agency practices right this moment! 

Thus, this report defines mid-sized legislation corporations as these with 21 or extra workers. All through the report, we examine these corporations to “smaller corporations” (these with 20 or fewer workers). 

The place does the info come from? 

The 2024 Legal Trends for Mid-Sized Law Firms report makes use of a variety of methodological approaches and knowledge sources to ship the perfect insights concerning the state of authorized observe and methods for future progress. 

Aggregated and anonymized Clio knowledge 

We’ve analyzed aggregated and anonymized knowledge from tens of hundreds of authorized professionals in the USA, segmented primarily based on agency measurement, to look at variations in utilization patterns amongst mid-sized corporations and smaller corporations. This knowledge gives essential insights about how know-how is being utilized by authorized professionals, in addition to its influence on agency efficiency. 

Survey of authorized professionals

We surveyed 1,446 authorized professionals, segmented primarily based on agency measurement, to differentiate and examine responses between mid-sized corporations and smaller corporations, from Might 31 to July 20, 2023. The authorized professionals we surveyed included attorneys in addition to assist employees—resembling paralegals and directors—who’re engaged within the administration aspect of their observe. 

Survey of the final inhabitants

We surveyed 1,012 adults within the U.S. basic inhabitants from June 13 to June 22, 2023. This survey was designed to gauge attitudes, opinions, preferences, and behaviors concerning the authorized occupation amongst people who’ve employed attorneys previously or who might turn out to be potential authorized shoppers sooner or later. This pattern is consultant of the U.S. inhabitants by age, gender, area, revenue, and race/ethnicity primarily based on the latest U.S. census statistics. 

Mid-sized corporations are capturing extra billable hours and accumulating more cash than ever, but nonetheless battle with realization and assortment efficiency 

Regardless of typically taking over fewer new recordsdata in comparison with 2016, mid-sized corporations are capturing extra billable hours and accumulating more cash than ever. Coupled with steadily rising utilization charges, it seems that attorneys in mid-sized corporations are successfully capitalizing on current authorized work. 

A distinct story emerges after we take a look at how effectively mid-sized legislation corporations are billing and accumulating cost for his or her authorized providers. Whereas mid-sized corporations had been closing the hole between their realization charges and the main charges loved by smaller corporations, more moderen knowledge means that this efficiency could also be stalling. Likewise, whereas mid-sized corporations loved a lead on assortment charges towards smaller corporations previously, since 2020, smaller corporations have surpassed mid-sized corporations on assortment charges. 

Mid-sized corporations see higher realization lockup efficiency, however poorer assortment lockup efficiency, than smaller corporations

Legislation corporations should pay shut consideration to how shortly and persistently they’re getting paid. Far too many corporations discover their income held in “lockup”—the interval by which billable work has both not been invoiced or collected. 

Lockup consists of three elements (measured in days): 

• Realization lockup. That is the quantity of income that’s unbilled at any given time (also called “work-in-progress lockup”).
• Assortment lockup. That is the quantity of income that’s uncollected at any given time (also called “debtor lockup”).
• Complete lockup. This can be a mixture of income held in each realization and assortment lockup.  

On common, mid-sized legislation corporations seem like extra proactive at getting payments out the door than smaller corporations (realization lockup). Alternatively, smaller corporations seem like extra profitable at really accumulating excellent funds than mid-sized corporations (assortment lockup). 

We additionally see that the usage of some Clio options are related to a major discount in lockup, together with Clio Payments, bulk billing, and Clio for Clients. 

Mid-sized corporations utilizing on-line funds receives a commission greater than twice as quick

The common realization and assortment charges amongst mid-sized legislation corporations in 2023 had been 83% and 84%, respectively. 

These numbers look nice on their very own. However after we take a look at what’s lacking—the 17% of billable hours that mid-sized corporations aren’t invoicing to shoppers, or the 16% of billed quantities that aren’t collected from shoppers—it turns into clear that mid-sized corporations have super alternative to enhance their realization and assortment charges. 

For mid-sized legislation corporations, the significance of getting paid quicker will be much more pronounced than in smaller corporations. Particularly, as mid-sized legislation corporations are likely to have greater work outputs than smaller corporations (alongside greater overhead prices), failing to optimize the collections course of can lead to leaving more cash on the desk (at greatest) or being unable to satisfy payroll obligations or pay lease (at worst). 

Providing on-line funds considerably reduces the friction concerned for shoppers in paying their authorized payments whereas serving to legislation corporations receives a commission quicker. This distinction is very pronounced amongst mid-sized legislation corporations, which receives a commission greater than twice as quick when utilizing on-line funds. 

Attorneys in mid-sized and smaller corporations have related attitudes towards AI use within the authorized occupation—however smaller corporations might have extra to realize 

Attorneys in mid-sized and smaller corporations are nonetheless cautious of AI, not but believing that it’s superior sufficient to be thought-about dependable. Regardless of these reservations, the usage of AI is already nicely underway in authorized observe with practically one in 5 (19%) authorized professionals claiming that they’re already utilizing AI in some type of their practices. 

Totally different perceptions lie on the coronary heart of mid-sized and smaller corporations’ reservations about the usage of AI in authorized observe, a few of which can really emerge as alternatives—notably amongst smaller corporations. Moreover, mid-sized corporations’ attitudes about AI are at odds with shopper expectations, placing mid-sized corporations at an obstacle as AI begins to take pleasure in extra widespread use. 

Notably, potential shoppers have a way more optimistic outlook of AI getting used within the authorized occupation than attorneys in mid-sized corporations. They’re much extra more likely to consider that the advantages of attorneys utilizing AI-powered software program far outweigh the prices (32%, in comparison with 16% of attorneys in mid-sized corporations). 

2024 Authorized Tendencies for Mid-Sized Legislation Corporations: Conclusions

With fast developments in new methods and applied sciences over the previous yr, mid-sized corporations have super alternatives for progress and effectivity, creating infinite potentialities. To harness these alternatives and stay competitive, nonetheless, mid-sized corporations might want to overcome the challenges related to advanced and numerous organizational buildings to thrive in right this moment’s authorized ecosystem. 

At Clio, we’re deeply invested in understanding and addressing the distinctive wants of mid-sized and huge legislation corporations. We’re dedicated to offering the instruments and assist mandatory to your progress and success, investing in creating product performance and thought management supplies particularly designed for mid-sized legislation corporations. 

Uncover why over 1,000 profitable mid-sized corporations use Clio to assist their practices at clio.com/enterprise. 

We printed this weblog submit in February 2024. Final up to date: February 14, 2024.

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