Growth

AI’s impact on legal work – for now – is all good news!

The most recent Wells Fargo report on the state of the US market has just been published. While obviously US centric, I’m sure many of the trends are being reflected elsewhere, so worth a look.

𝗦𝘁𝗿𝗼𝗻𝗴 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗱𝗲𝘀𝗽𝗶𝘁𝗲 𝘂𝗻𝗰𝗲𝗿𝘁𝗮𝗶𝗻𝘁𝘆

Global economic and geopolitical volatility has not slowed Big Law growth (so far)
Firms remain resilient with broad-based demand

𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗮𝗻𝗱 𝗱𝗲𝗺𝗮𝗻𝗱 𝗴𝗿𝗼𝘄𝘁𝗵

Industry-wide revenue is up 𝟭𝟯.𝟭% 𝗶𝗻 𝗤𝟭 [Jan-Mar]
Demand increased 𝟰.𝟱%
Top-tier firms (AmLaw 50/100) outperforming mid-tier firms

𝗕𝗶𝗹𝗹𝗶𝗻𝗴 𝗿𝗮𝘁𝗲𝘀 𝗱𝗿𝗶𝘃𝗶𝗻𝗴 𝗴𝗿𝗼𝘄𝘁𝗵

Rates increased ~𝟭𝟭–𝟭𝟮%, the primary contributor to revenue growth
So far, minimal client pushback despite sustained increases

𝗖𝗼𝗹𝗹𝗲𝗰𝘁𝗶𝗼𝗻𝘀 𝗮𝗻𝗱 𝗰𝗮𝘀𝗵 𝗳𝗹𝗼𝘄 𝗲𝗺𝗲𝗿𝗴𝗶𝗻𝗴 𝗮𝘀 𝗮 𝗿𝗶𝘀𝗸

Collection cycle have slowed (~6.5 days longer)
Inventory (unbilled/uncleared work) is rising faster than revenue
End-of-year performance will depend on converting work to cash

𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝘁𝗿𝗲𝗻𝗱𝘀

Productivity is up modestly (+1.2%)
Headcount growth is steady (~3.3%)
Expenses are rising (especially in senior staff and technology)

𝗠𝘆 𝘁𝗵𝗿𝗲𝗲 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀

𝟭. The impact AI is having on demand is still minimal (actually, it is increasing work on the demand side!). On the productivity side, this may change, but increase demand is, so far, taking up any excess capacity. This (as well as the other indicators in the report) most likely means the Billable Hour will still be with us for some time to come.

𝟮. Realisation rates and increased collections times should be a real concern. No point charging $1,000 an hour if you never get paid!

𝟯. Amen to this!! – many firms have figured that rates are part of their branding, “and it’s very short-term thinking to try and manipulate rates downward to offset a decrease in demand.”

Get in touch if you need a Business Development or Pricing audit

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Actionstep Survey: 2025 Roadmap for Australian Midsize Law Firms: Priorities, Challenges & Opportunities

As we navigate 2025, Australian midsize law firms find themselves at a pivotal crossroads—balancing client expectations, talent retention and the promise (and pitfalls) of technology. The recently released 2025 Australian Midsize Law Firm Priorities Report by Actionstep offers a deep dive into what’s shaping the future for these firms.

Here’s s summary of what you need to know from the Report—and how your firm can stay ahead.

🎯 Client Satisfaction: The Cornerstone of Growth

It’s clear—client satisfaction is king.
71% of midsize firms rank it as their top priority for protecting and growing revenue. But it’s not just about delivering legal outcomes; it’s about building trust-based relationships, offering personalised service and consistently exceeding expectations.

Interestingly, firms are focusing more on deepening relationships with existing clients rather than chasing new business. In fact, 37% see expanding existing client accounts as their primary growth strategy for 2025.

✅ Takeaway: If your firm isn’t investing in client experience, you’re leaving growth on the table.

👥 Talent Retention: Your Secret Weapon

While technology grabs headlines, midsize firms know that people drive performance.

59% of firms highlight attracting and retaining talent as a top strategic priority.
Engaging work, leadership and firm culture outrank pay as key reasons employees stay.

However, when employees consider leaving, pay and remuneration become the decisive factor. This signals a clear message: while meaningful work keeps people engaged, competitive compensation keeps them committed.

✅ Takeaway: Create a workplace where talent thrives—offer challenging work, clear career paths and ensure your pay structures remain competitive.

💻 Technology & Automation: The Untapped Advantage

Despite recognising efficiency challenges, midsize firms remain cautious adopters of automation and AI:

Only 38% are actively using automation tools.
Just 5% have reached AI maturity.
Cybersecurity concerns and data privacy remain top barriers.

There’s also a noticeable gap in digital client experience. While firms excel in personalised, human-centric service, only 41% feel confident in their digital touchpoints like client portals and automated communications.

✅ Takeaway: Embrace technology—not to replace people, but to empower them. Automation can reduce workloads, freeing your team to focus on high-value client interactions.

🔐 Cybersecurity: More Than Just IT’s Problem

With client trust on the line, cybersecurity is non-negotiable. Yet, the biggest risk isn’t technology—it’s human error. Over 63% of firms cite staff behaviour (think password sharing, weak authentication practices) as their top vulnerability.

✅ Takeaway: Build a security-first culture. Regular training, robust protocols, and smart tools like multi-factor authentication are essential to protect both your firm and your clients.

🏆 5 Strategies for Midsize Law Firm Success in 2025

Acknowledge Tech Scepticism: Start small, demonstrate wins, and build confidence in automation.
Prioritise Efficiency: Use automation to tackle time constraints and free up your team for strategic work.
Enhance the Client Experience: Leverage digital tools to complement your personal service.
Strengthen Cybersecurity: Focus on both technology and employee awareness.
Put People First: Foster engaging work environments and ensure competitive compensation.

Final Thoughts

2025 presents both challenges and opportunities for Australia’s midsize law firms. Those that blend human expertise with smart technology, prioritise client relationships, and invest in their people will be best positioned to thrive in an increasingly competitive market.

Is your firm ready to seize the moment?

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Report: Do high growth firms share common traits?

This month saw publication of the 2016 High Growth Study by Hinge Research Institute. Although not limited to law firms, law firms (along with “Healthcare & Other”) made up 12.9% of the 968 respondents who answered Hinge’s survey and, therefore, the Study’s findings help provide some insight into whether or not “High-Growth” firms share common traits.

First, “High-Growth” was defined as being a firm with:

“Over $1 million in revenue and had an average yearly growth rate of at least 20%”.

Not exceptional. Having said that, of the firms surveyed:-

30% generated over 88% of new revenue growth and were 45% more profitable than their No-Growth counterparts

so most definitely desirable.

So, did these High-Growth firms share any traits? In short, “yes”; and these included:

Target Clients: High-Growth firms are 75% more likely to have a highly specialized practice – i.e., not all things to all people or full services firms
Client base: High-Growth firms are more likely to target the larger clients (over $10 million in revenue)
Research: High-Growth firms are 2X more likely to conduct research on their target client
Differentiation: differentiators favoured by High-Growth firms are twice as likely to be easier to prove and are more relevant to clients. Importantly, these don’t include “reputation” and “awards won” (favour of No-Growth firms) and do include “culture” and “people”
Marketing investment: High-Growth firms invest 23% less in traditional marketing than No-Growth firms. This is because what marketing High-Growth firms do is targeted and measured

While some of these may surprise, they reinforce that in order to grow in today’s market firms need to have a clear understanding of who they are, who they work for, who they would like to work for, and the value/benefits they provide. In short, they’re focused.

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Growth is not a strategy

I read with interest yesterday‘s news item in the UK’s The Lawyer that Jones Day intends to double in size in Australia – with a particular focus on its Corporate practice following the recent lateral hire of ex-Herbert Smith Freehills (HSF) deputy senior partner Mark Crean.

I am increasingly coming to the opinion that headlines like the one in yesterday’s The Lawyer represent as close as we will get to ‘clickbate’ in the legal industry.

Why do I think this? – because it is now well established that “growth isn’t a strategy, it’s a result“.

So, aside from being potentially good media exposure for the firm – in which case I do wonder why none of the Australian legal press picked up on this story – all this article does is highlight the misnomer that “growth is always good”, when all research around lateral hiring and aggressive purchasing of market share points to the opposite (think Dewey & LeBoeuf).

Going a step further, in a recent (23 November 2015) article in the Am Law Daily, Felix Oberholzer-Gee, professor of business development in the strategy unit at Harvard Business School, argues:

“If you start by saying that we want to grow our market share, or we want to be a particular size, as a strategic goal that is a terrible choice for a number of reasons”…

… “First, and most important, is that market share is not that correlated with profitability. The second is that the most natural way to gain market share is by charging lower fees, which is what we see throughout the industry in this misguided effort to gain size and market share.”

Have to say that I agree with Professor Oberholzer-Gee: – market share [ie, size] doesn’t matter, what matters is if your firm is profitable.

And therein lies the problem: I have yet to be convinced that any firm on an aggressive growth trajectory in Australia – and there are a few out there who are taking the same approach as Jones Day – are any more profitable for it. Conversely, I think that while being larger in partner numbers and office outlets many are probably less profitable with a lot more administrative headaches to boot.

So, while I feel for law firm partners who are continuously being told post-GFC that mergers and market growth are safe haven ways to continue their existence post-2020, I would caution this approach and recommend, at an absolute minimum, that the firm:

take an audit of their client base to see who they do profitable work for;
ask your most profitable client if your firm’s growth plans will have any impact on them giving you greater levels of profitable work and, if so, who you need to bring on board to do that work;
analysis what your increased cost-base (and there will very likely be an increased cost-base) is going to mean in the medium and long term;

and to share this information as widely as you feel comfortable doing with your top clients so there is transparency around your strategic growth plans.

Otherwise you could always remember the idiom:

“Marry in haste, repent at leisure…”