Small law firms face a number of challenges and the 2023 State of U.S. Small Law Firms: A Year of Change report provides some insights into both the scope of these challenges and how firms are responding to them. A major headache continues to be finding the right balance between practicing law and handling administrative tasks. Small firm lawyers have consistently said this is their number-one challenge. But this year’s report shows that they’re finally making some headway.

Small firms have increased the amount of time they spend practicing law while spending less time on administrative tasks, with a five percentage point gain in time doing legal work. After being mired in a narrow range for several years, the percentage of time spent practicing law went up to 61% this year, compared to 56% last year. Simultaneously, time spent on administrative tasks declined slightly to 9% from 11% during the same time period.

This equates to roughly 150 additional potentially billable hours or more over the course of a year and is the equivalent of several weeks’ worth of time for each lawyer. At the end of the day, billable time is how lawyers and firms make their money, and streamlining their processes and using efficiency-boosting technologies is producing significant benefits for small firms.

Small law firms are showing increased willingness to tackle other pressing challenges as well. Getting paid by clients is of increasing concern and seen as one of the top threats to profitability going forward. With it weighing prominently on their minds, the majority of small firms (51%) now report that they are actively addressing the issue. Similarly, 37% say they are taking steps to deal with the increasing complexity of technology, compared with only 29% last year. Other key challenges include keeping costs in check, acquiring new client business, and improving efficiency.

In the final post in this series, we’ll take a look at trends in small law firms leveraging the use of technology.

This is the second post in a three-part series. 

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