In this final of a three-part series on the 2023 State of U.S. Small Law Firms: A Year of Change report, we look at how law firms are increasingly turning to technology to help them tackle challenges they face in today’s legal landscape. From improving efficiency to reducing costs, technology is playing an increasingly important role in the operations of small law firms. However, there are also challenges associated with the use of technology in this context.

Over half of small firms are planning to utilize technology to reduce costs, manage the increasing complexity of technology, and enhance client-payment processes. This strategic focus on technology underscores firms’ commitment to innovation and efficiency, positioning them for sustained success in a dynamic and competitive market.

At the same time, technology can be challenging for small firms, which usually lack dedicated IT staff. And because small firm lawyers often play a dual role as practicing lawyers and small business owners, investments in technology are closely scrutinized for how they will impact cost, workflow efficiency, and ROI.

There is a growing recognition among small firms of the need to leverage technology. The report notes that 37% of small firms are taking steps to deal with the increasing complexity of technology – one of their top challenges – compared with only 29% last year.

As is the case throughout the legal industry, small law firms are exploring the potential of generative artificial intelligence (AI) to enhance their operations. The report finds an open-minded and generally optimistic approach to this rapidly emerging technology.

When this survey was conducted in August 2023, nearly three-quarters (72%) of small firm lawyers said they had heard of generative AI but had not yet used it. More than a quarter (26%) said they didn’t fully understand generative AI – not surprising given the newness of the technology – while 40% said they believe it will create opportunities for lawyers, such as new skills and service offerings. An additional 26% said they were unsure or didn’t know enough yet about generative AI to make a determination. These results are consistent with the recent Thomson Reuters Future of Professionals Report, which surveyed professionals globally.

In the meantime, small firm lawyers are increasingly focusing on how they leverage legal technology in general to increase efficiency, reduce costs, and improve operations.

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

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