Highlights from the Legal Trends Report: the Legal Industry in 2024

Because the authorized trade’s most in-depth examination into the state of authorized follow, our most up-to-date Authorized Developments Report brings collectively essential insights on an important points going through the authorized occupation—together with the proliferation of AI, the way forward for pricing fashions, levers to enhance shopper consumption, and the way regulation companies are spending for development.

Throughout the board, we see a disconnect between the place regulation companies are focusing their vitality and the place they may have the best impression. Authorized professionals—from legal professionals to paralegals and administrative assistants—are devoting a good portion of their time to duties that might not be bringing worth to their companies. In the meantime, potential purchasers are ready on emails and cellphone calls that go unanswered, whereas present purchasers need to work together utilizing communication and fee choices that the majority regulation companies don’t supply.

Learn the newest Authorized Developments Report immediately.

Our knowledge gives a priceless start line for addressing these issues. Understanding which investments are serving to companies enhance productiveness and develop their companies, the great impression of AI and automation, and what their purchasers are searching for, will assist companies make knowledgeable, data-driven choices and assist their lasting success. 

Change doesn’t occur in a single day, although. Constructing new habits—whether or not it’s integrating automation into your regulation agency’s every day operations, bettering shopper consumption, or increasing your fee choices—requires dedication. However, in bettering their regulation companies one course of at a time, authorized professionals will place themselves on a path to achievement, and with time, these new habits will grow to be ingrained within the background of their agency. 

In regards to the Authorized Developments Report

Now in its ninth yr, the Authorized Developments Report consists of aggregated and anonymized knowledge from tens of 1000’s of Clio customers and survey responses from greater than 1,000 authorized professionals and over 1,000 customers within the U.S. common inhabitants. 

Highlights from our most up-to-date Authorized Developments Report 

Under, we’ll spotlight the important thing insights lined within the Authorized Developments Report, and discover how companies can leverage these insights to enhance efficiency. 

AI adoption is accelerating quickly 

After we final researched AI in 2023, 19% of regulation companies have been utilizing AI of their follow. 

During the last yr, that quantity has skyrocketed: a whopping 79% of surveyed authorized professionals are actually utilizing AI in some capability of their follow, whereas 25% have adopted AI extensively or universally. 

AI adoption is now not restricted to authorized trailblazers—it’s the brand new regular in regulation companies. No matter the place companies stand on AI adoption, it’s time to start out pondering critically concerning the impression of AI on regulation agency operations and authorized companies. 

Purchasers need to work with companies that use AI

Almost half of purchasers would like to work with regulation companies that use AI, which means that they see AI as a way of providing higher, extra environment friendly authorized companies than companies not utilizing AI. 

This quantity is prone to improve once we take into account how rapidly client attitudes surrounding AI use have shifted. Within the 2023 Authorized Developments Report, solely 46% of customers mentioned they have been open to working with regulation companies that used AI-powered software program. 

There’s a rising monetary danger for hourly billing

Seventy-four p.c of billable work that’s billed by the hour may very well be automated by generative AI. The kinds of work which have the very best automation potential embody documenting and recording info, getting info, and analyzing knowledge or info—all of which make up a median of 66% of hourly work that the common regulation agency takes on. 

In consequence, agency leaders could must rethink their billing frameworks. If AI can cut back the time authorized professionals spend on billable work, this is able to end in much less income when billing by the hour. If charging based mostly on fastened or flat charges, nonetheless, companies may have time to work extra circumstances whereas nonetheless largely retaining what they cost for particular person circumstances. 

Flat payment billing is rising

Companies are billing 34% extra of their circumstances on a flat payment foundation in comparison with 2016. Companies have additionally been charging 20% extra for flat payment circumstances since then. Since AI automation has the potential to scale back the worth of hourly billable work, companies that shift to flat payment billing fashions stand to retain the worth of their casework whereas opening up capability to assist extra purchasers by larger effectivity. In actual fact, companies utilizing AI usually tend to invoice solely with flat charges. 

Purchasers choose flat payment billing

Because it seems, providing flat charges is also useful for shopper satisfaction. Seventy-one p.c of purchasers would like to pay a flat payment for his or her total case and 51% would like to pay a flat payment for particular person actions inside their case. Nonetheless, hourly billing is the most typical, with 71% of companies providing it to purchasers. 

Flat payment work will get billed out and paid quicker

Authorized professionals billing with flat charges are practically twice as seemingly as these billing hourly to gather funds virtually instantly. 

Companies aren’t simply billing and getting paid for flat payment issues quicker—because it seems, issues which can be billed on an hourly foundation take roughly 2.6 instances longer to shut in comparison with flat payment issues. 

Extra productive companies spend extra on expertise and advertising and marketing

Since 2013, companies have elevated their spend on software program by a median of 20% annually—at a larger tempo than development in income. 

Based mostly on latest knowledge, companies that make investments extra in software program and advertising and marketing have utilization charges above the trade common of 37%—which quantities to simply underneath three hours of billable hours per day—they usually additionally earn a lot greater revenue margins. 

Companies with above-average productiveness: 

Spend 12% extra on software program 
Spend 41% extra on advertising and marketing
Earn 21% extra in profitability

It’s powerful for potential purchasers to get in contact with a lawyer

We employed a third-party analysis firm to conduct a secret store for perception into the expertise of discovering a lawyer in 2024—this was a follow-up of an analogous research in 2019. The research concerned emailing and phoning 500 regulation companies with a shopper inquiry. 

Simply 33% responded to our emails (lower than the 40% in 2019)
Solely 40% of companies answered our cellphone calls (a big drop from 56% in 2019). In whole, 52% of companies both answered our cellphone calls or phoned us again, which means 48% have been basically unreachable by cellphone. 

Consumption options may help enhance shopper expertise

To additional assist regulation companies in offering higher shopper companies, we checked out a number of applied sciences designed to boost a agency’s skill to reply to purchasers after they attain out—and the way these capabilities can enhance key areas of enterprise efficiency. 

This yr, we’ve seemed deeper into how sure capabilities inside Clio Develop can assist regulation companies throughout a number of necessary enterprise metrics, together with: 

Income technology 
Lead quantity 
Time to rent
Conversion 

We discovered that companies utilizing these client-facing capabilities noticed 51% extra shopper leads—which means they have been in a position to join with extra potential purchasers total—and 52% greater revenues.

The place does the info come from? 

The Authorized Developments Report makes use of a spread of methodological approaches and knowledge sources to ship one of the best insights concerning the state of authorized follow and techniques for future development. 

Clio knowledge

We’ve analyzed aggregated and anonymized knowledge from tens of 1000’s of authorized professionals within the U.S. This knowledge gives necessary insights about how expertise is at present being utilized by authorized professionals, in addition to its impression on agency efficiency.

Survey of authorized professionals

We surveyed 1,028 U.S. authorized professionals from June 5 to June 23, 2024. The authorized professionals we surveyed included legal professionals in addition to assist employees—corresponding to paralegals and directors—who’re engaged within the administration aspect of their follow.

Survey of the final inhabitants 

We surveyed 1,003 adults within the U.S. common inhabitants from June 28 to July 2, 2024. This survey was designed to gauge attitudes, opinions, preferences, and behaviors concerning the authorized occupation amongst people who’ve employed legal professionals prior to now or who could grow to be potential authorized purchasers sooner or later. This pattern is consultant of the U.S. inhabitants by age, gender, area, earnings, and race/ethnicity based mostly on the latest U.S. census statistics.

Automation evaluation 

We utilized an internally hosted giant language mannequin (LLM) to map Clio Handle work actions to actions within the Occupational Info Community (O*NET) Database which can be relevant to the follow of regulation. We then used ChatGPT-4 to find out to what extent every O*NET work exercise may very well be automated with AI. The LLM assigned an automation rating between 0 (no potential for automation) and 100% (utterly automatable) and supplied a justification, which we used to judge and refine our research. From this evaluation, we decided to what diploma every sort of labor may very well be taken on by AI. 

Subsequent, we used a dataset of over 7 million time entries from anonymized and aggregated billing knowledge from tens of 1000’s of legal professionals and categorized them in response to the standardized work actions supplied within the O*NET Database. In doing so, we’ve in contrast the automation potential for sure kinds of work with respect to how a lot that work contributes to agency revenues within the type of hourly work. 

Regulation agency monetary statements

We partnered with Clio-Licensed Advisor, CPN Authorized, to supply historic, anonymized revenue and loss experiences and steadiness statements from 122 regulation companies. The historic statements cowl many years of regulation agency funds from solo, small, and medium-sized regulation companies.

Secret store

Clio partnered with market analysis company Lux to conduct the Secret Procuring research, which aimed to judge regulation agency efficiency on digital and conventional channels. Lux performed secret outlets of 500 regulation companies from June 20 to July 5, 2024.

Uncover extra insights on the state of authorized follow—learn the newest Authorized Developments Report immediately. 

We printed this weblog put up in October 2024. Final up to date: October 10, 2024.

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