Small Law Firms Overwhelmingly View Themselves as Successful
Small firm lawyers face unique challenges, as they often function as both practicing attorneys and small business owners. Despite these challenges, the 2023 State of U.S. Small Law Firms: A Year of Change report finds that an overwhelming 87% of lawyers across small firms view their firms as either successful or very successful; 30% of small firm lawyers consider their firm to be very successful – a multi-year high.
This reflects belief in their effectiveness in delivering legal services and meeting client needs, as well as their resilience and adaptability in navigating the challenges of the past few years. Those headwinds have given way to a sense of optimism for further growth opportunities.
A majority of small firm lawyers anticipate moderate-to-high growth across various financial performance measures over the next year and the next three years. This includes expectations for increased demand for services, overall revenues, attorney compensation, profits per lawyer, and profits per equity partner. Notably, practice areas such as bankruptcy, taxation, and intellectual property are anticipated to experience significant growth in the coming year.
In addition, more than two-thirds of small firms (68%) expect to continue increasing billing rates over the next year, reflecting their confidence in implementing strategies to enhance firm performance. This emphasis on raising rates aligns with a broader industry trend, underscoring the proactive stance of small law firms in driving revenue growth and improving financial outcomes.
The highest risks to profitability going forward include general economic pressures, late payments by clients, and sluggish local economies.
In future posts, we’ll look at how small firms view their challenges and the steps they are taking to address them.
This post is the first in a three-part series.