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Study Digs Into Changes and Challenges for Small Firms
Justin L. Sylvan

Few areas of life are going unaffected by the COVID-19 pandemic and its economic fallout. But according to research from Thomson Reuters, one thing has remained nearly constant: The challenges confronting small law firms and firms’ response, or lack thereof. Although these top-line findings may seem discouraging, the 2020 Report on the State of U.S. Small Law Firms also emphasizes opportunities available for proactive firms.

Related Read: Law Firm Planning in the Midst of a Pandemic

Consistent challenges

The study notes that the significant challenges facing small firms have changed little in recent years. The most frequently cited challenge reported by the survey’s 400 respondents (all firms with fewer than 30 attorneys) was acquiring new client business. That was followed by spending too much time on administrative tasks and not enough time practicing law. The average attorney respondents spend at most 60% of their time on the practice of law. The rest goes to managing the firm or recruiting or retaining clients.

Respondents also feel increasing pressure related to collections. This is especially relevant for firms with fewer than ten attorneys, whose size makes them unlikely to employ staff dedicated to billing and collections. As for the competition, respondents said most of the competition comes from other law firms, rather than do-it-yourself legal websites or alternative legal service providers (ALSPs).

Related Read: State of the Legal Industry Market: A New Legal Model is Emerging

Lack of action

Despite the recognition of clear challenges, most small firms have not taken meaningful steps to surmount them. Of all of the problems plaguing these firms, getting paid is the one respondents are most likely to have acted on.

Related Read: How to Handle Collections Reasonably and Compassionately

Less than one-third of firms had addressed new client acquisition or the management of administrative tasks. Most respondents have not boosted their marketing budgets in the past three years and do not plan to increase them going forward. This finding is consistent with the results of the ABA TechReport 2019, which concluded that small firms are not taking an “intentional” approach to marketing and instead may engage in “random acts of marketing.”

Opportunities for “first movers”

The Thomson Reuters report describes the current state as an opportunity for so-called “first movers” — that is, the first to offer something new to the market. Those law firms that are willing to take action have plenty of fertile ground to become innovators, whether by developing internal efficiencies, honing their expertise in business development or adopting technologies to streamline their practices. Although the survey was conducted at the onset of the pandemic, its results suggest ways for small firms to improve their odds of survival in both the long and short terms.

Leaders of small law firms understand the challenges that business development and a lack of internal efficiency can create for their firms. However, they are not certain about how to best meet those challenges.

Related Read: What Is Your Firm Waiting For? Study Spotlights Opportunities for Small Law Firms

The 2020 Report on the State of U.S. Small Law Firms details a good news/bad news situation for small firm leaders. The bad news is that today’s challenges will likely only increase and few firms have taken steps to confront them. But, the good news is that there is plenty of opportunities for small firms to take meaningful action that will rapidly accelerate their chances for long-term success. Small law firms that move the fastest toward meaningful action will stand the best chance of getting the most beneficial results.

For more information, contact Justin Sylvan at [email protected] or 312.670.7444. Visit to learn more about our Law Firm Group.

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