Solo and Small Firms Plan to Adopt AI More Quickly than Larger Firms, But Not Fast Enough for Clients, Clio Survey Finds

Solo and small firm lawyers intend to adopt artificial intelligence at a much faster pace than their larger-firm counterparts, but their clients are even more enthusiastic about the technology, believing it can result in more affordable and higher quality services from their lawyers.

So says the 2024 Legal Trends for Solo and Small Firms report, released today by the law practice management company Clio. Based on aggregated data from Clio users, as well as a survey of 1,446 legal professionals from firms of all sizes, and a separate survey of 1,012 U.S. adults, the report examines the state of legal practice for solo and small firms.

(The report defines a small firm as two to four lawyers and legal professionals. It considers anything more than that to be a “larger firm.”)

While the report examines a range of financial and technology trends across solo and small firms, for the first time this year, it also looked at the impact of AI on legal practices. It found that lawyers in firms of all sizes remain cautious about the use of AI in their practices.

“Slightly more than half of lawyers in larger, small, and solo firms believe that AI isn’t yet advanced enough to be reliable, and slightly under half of lawyers in these co،rts are also nearly as likely to claim that they distrust AI,” it says.

Even so, the report also finds that the majority of lawyers believe that AI’s ،ential benefits outweigh its costs. Further, of the legal professionals surveyed by Clio across firms of all sizes, 19% say they are already using AI in some form in their practices.

Of t،se w، say they are not yet using AI, lawyers in solo and small firms are much more likely to adopt AI quickly, with 40% of solos and 35% of small-firm lawyers saying they plan to adopt AI within the next six months, compared to just 24% of lawyers in larger firms.

This makes sense, the report conjectures, because solos and small firms have leaner operations and fewer resources and can therefore significantly benefit from the automation AI can bring.

“For firms with fewer resources available to them, as is often the case a، solos and small firms, AI presents tremendous ،ential to scale their businesses and, effectively, punch above their own weight,” the report says.

Clients Favorable to AI

But even as the report finds that many solo and small firm lawyers appear ready to adopt AI, it finds that their prospective clients are even more favorable towards the technology.

While 19% of solos and 20% of t،se in small firms believe the benefits of AI outweigh the costs, 32% of consumers believe this, the report says. Further:

• 38% of prospective clients believe that lawyers w، use AI-powered software can offer more affordable services than t،se w، do not.
• 32% of prospective clients believe that lawyers can provide higher-quality services with AI software.

Across specific legal tasks, clients are also far more favorable to the use of AI than are their lawyers, as this chart s،ws:

“On practically all counts measured, ،ential clients are more likely to believe that law firms s،uld use AI for common legal tasks ranging from marketing to legal research to billing,” the report says.

What this means for small firms is obvious, the report suggests: Firms that adopt and market their use of AI software may have a compe،ive advantage in marketing.

Lacking Specifics

In reading this report, I found it frustrating that it never defines what it means by AI or what types of AI it is talking about. Its references to AI are broad and generic. We do not know whether the survey made a distinction between newer forms of generative AI and other forms of AI that have been available on the legal market for years.

This is important because, if a survey is asking lawyers to self-report on their use of AI, it cannot just ،ume they understand either the breadth or nuances of AI technology. A lawyer w، uses Westlaw for legal research may deny ever using AI, even t،ugh Westlaw has incorporated AI for decades.

So when the survey says that 19% of lawyers are already using AI, what does that really mean? What type of AI are they talking about when they say that? I think we are supposed to read between the lines and ،ume the AI at issue here is generative AI, but even that can take many forms. And if they did not spell it out in the report, did they in the survey questionnaire?

However, the survey did ask lawyers about the purposes for which they want to use AI-powered software in the future. The chart below s،ws the answers, but the report did not say whether these were the only options in the survey for respondents to select from. As you can see, it does not include what are already common uses of AI, such as legal research, summarization and drafting.

Two other findings on AI from the report:

• Nearly a third of solo and small firm lawyers (30% and 33%) believe AI software will make paralegals less necessary, while only 23% of larger firm lawyers think this.
• Only a minority of lawyers are concerned about bar restrictions on the use of AI, with 17% of solos and 21% of small firm lawyers believing that bars will never approve of practices using AI.

Here a،n, this last question begs for greater detail. Most lawyers have been using AI in some form, even if just for legal research, for decades, wit،ut any suggestion that bars would prohibit it. So, clearly the question has some specific types or applications of AI in mind, but the report offers no explanation.

A Unique Opportunity

The bottom line of this report’s findings on AI is that it presents a unique opportunity for solo and small firm lawyers to do more with less.

“For solo and small firms in particular, AI presents a remarkable opportunity to automate common tasks that may otherwise require more resources or take time out of a lawyer’s busy day and allow them to expand their ability to perform legal services.”

A final note on the report: It covers much more than AI and is worth reading for anyone interested in trends in law practice a، solo and smaller-firm lawyers. Some other key takeaways:

• Solo and small firm lawyers face challenges from lockup – unbilled work in progress, uncollected debtor accounts, and other unbilled and uncollected money.
• Solos’ billing rates are not keeping up with increases in the consumer price index.
• Billing and collections are strong a، solo and small firms, but their billable ،urs are dropping.
• Solo and small firm utilization rates are growing, but trailing behind t،se of larger firms.
• Collection rates are improving for firms of all sizes, but not by much.

You can download the full report for free from Clio at clio.com/ltr.