pricing

Report: Clio’s 2025 Legal Trends Report For Mid-Sized Law Firms

Clio’s 2025 Legal Trends Report for Mid-Sized Law Firms provides a comprehensive look at how mid-sized law firms in the US are adapting to industry changes; particularly as it relates to AI adoption, billing models, client acquisition, and technology investments.

Although the results are based on data from US-based firms, the results are arguably applicable here in Australia and more broadly so here’s a summary of the key takeaways:

🚀 AI Adoption & Transformation

Mid-sized firms (20+ employees) are now leading AI adoption in legal tech, surpassing smaller firms.
93% of surveyed professionals in these firms use AI, with 51% using it widely or universally.
Common AI tools include legal research platforms, document automation, eDiscovery, and predictive legal analytics.
AI is viewed as a way to increase efficiency, reduce costs, and improve client engagement.

💰 Billing Models & Pricing Trends

Flat fees are now the most common billing method among mid-sized firms, outpacing hourly rates.
Firms are shifting away from hourly billing due to AI’s impact on time-based work and client preference for predictable pricing.
Subscription models are also gaining traction, especially for ongoing legal services to business clients.
Despite the shift, hourly billing remains prevalent, particularly with highly varied rates by role and experience.

📈 Client Acquisition & Marketing Strategies

Mid-sized firms use multiple marketing channels: websites, SEO consultants, social media, online reviews, and referrals.
They’re less reliant on referrals than smaller firms, but invest more in digital marketing.
Tools like e-signatures, intake forms, and online scheduling directly improve conversion rates and revenue (up to 20% higher).
Chatbots are underused despite 51% of clients finding them helpful—a missed opportunity.

💸 Spending & Technology Investments

Staff salaries dominate expenses (41%), followed by rent, marketing, and office costs.
Mid-sized firms spend less on office expenses (5%) than solo and smaller firms, due to economies of scale and flexible work arrangements.
Spending on software and professional fees is rising rapidly—showing a strong focus on tech and professional development.

☁️ Cloud Technology Adoption

Mid-sized firms lag behind smaller firms in cloud adoption (only 38% vs. 71%).
Firms with 20–49 employees are more likely to use cloud tools than larger mid-sized firms.
Hesitation around switching legacy systems or internal decision-making bottlenecks may be holding back adoption.

🧭 Strategic Takeaways

Mid-sized firms embracing AI + modern billing models + tech investments are poised to outpace competitors.
The real threat isn’t automation—it’s firms that adapt faster.
Cloud-based tools, client intake tech, and AI are critical for efficiency, growth, and client satisfaction.

You can download the full report here.

Get in touch if you want to discuss the outcomes of this Report or need assistance with your strategy.

📩 richard@gsjconsulting.com.au

Key Takeaways from the 2025 Law Society Financial Benchmarking Survey

The latest Law Society (England and Wales) Financial Benchmarking Survey has sparked significant discussion on social media today. The findings highlight some critical financial challenges for mid-sized law firms, particularly in terms of profitability, chargeable hours and cash flow management.

📊 Top 3 Key Findings:

1️⃣ Fee Earners’ Costs vs. Fees Charged

The median hourly cost of a fee earner (based on 1,100 chargeable hours) was £123.40, while the median hourly fees per fee earner stood at £133.01.
🔴 93% of fees earned are being used to cover costs, leaving minimal margin for profitability.

2️⃣ Shortfall in Chargeable Hours

The average recorded chargeable hours per fee earner increased slightly to 773 hours (up from 765 in 2023).
⚠️ However, this is still well below the 1,100-hour target—a shortfall of over 300 hours per year per lawyer.

3️⃣ Increase in Lock-Up Days

Year-end lock-up days (including work in progress and debtors) rose from 143 to 146 days.
This trend indicates longer cash flow cycles, which can put pressure on a firm’s financial stability.

🚨 What Should Law Firms Do?

These figures underscore the urgent need for better financial planning, sustainable profitability strategies, and operational efficiency. Some key focus areas include:

✔️ Improving revenue streams—exploring retainer-based models for better income predictability.
✔️ Enhancing productivity—have a robust and actionable business development plan for all lawyers!
✔️ Optimise cash flow—reduce lock-up days by streamlining billing and collections processes.

🔗 Full Report: Read the Law Society Financial Benchmarking Survey 2025

📢 Looking to bridge the 300+ hour gap per lawyer? Or interested in strategies for growing a profitable legal practice sustainably? Let’s talk! Get in touch today.

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richard@gsjconsulting.com.au

Billable Hours Per Week at Mid-Sized Law Firms: What the Data Reveals

A recent report, “Strategic Sector Insights for the Legal Profession 2025: Mid-Sized Firms”, published by The Law Society and MHA, reveals a striking trend:

👉 More than 50% of mid-sized law firms report that their lawyers bill less than 25 hours per week on average.
👉 Less than 3% of lawyers at these firms bill anywhere close to the full 40-hour workweek.

While it’s unrealistic to expect lawyers to bill every hour they work, these numbers highlight why alternative pricing models are a key priority for firm leaders in 2025.

⚖️ What does the future of legal pricing look like? If you’re exploring value-based pricing, subscription models, or hybrid fee structures, let’s talk!

📩 DM me to discuss innovative pricing strategies for law firms.

Billable hour expectation for Associate Attorneys

I recently posted about the ‘Billable hours target for first-year lawyers at selected [Australian] law firms‘ and one of the most read posts on this blog is from way back in August 2016 – ‘Why asking someone to work 2,000 billable hours a year will kill their spirit‘, so when the Managing Partner Forum recently published the above results (admittedly from mostly American Managing Partners) from an audience polling question at one of its webinars on the issue of billable hour expectation for Associate Attorneys, I thought I would share it.

It’s interesting to note that nearly 70% of respondents expect their Associate Attorneys to bill over 1700 hours a year, with almost 10% expecting over 1900 billable hours per year.

That’s a lot of billable hours! And if we consider the ‘10-20-30-40 Leverage Rule‘, then the implication is very bleak for junior lawyers!

And as I say to those entering the legal profession who need some understanding of how many hours they need to work to meet their billable hour target, take a look at Yale Law School’s ‘The Truth About The Billable Hour‘.

While I am all for the profit motive, I maintain that if owners and managers of law firms want to understand why they have a high attrition / burnout rate in their teams, take a close look at what expecting someone to bill 1700 hours a year is actually doing to them!

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𝐁𝐢𝐥𝐥𝐚𝐛𝐥𝐞 𝐡𝐨𝐮𝐫𝐬 𝐭𝐚𝐫𝐠𝐞𝐭𝐬 𝐟𝐨𝐫 𝐟𝐢𝐫𝐬𝐭-𝐲𝐞𝐚𝐫 𝐥𝐚𝐰𝐲𝐞𝐫𝐬 𝐚𝐭 𝐬𝐞𝐥𝐞𝐜𝐭𝐞𝐝 [Australian] 𝐥𝐚𝐰 𝐟𝐢𝐫𝐦𝐬

As we start out on 2025, the 𝑨𝒖𝒔𝒕𝒓𝒂𝒍𝒊𝒂𝒏 𝑭𝒊𝒏𝒂𝒏𝒄𝒊𝒂𝒍 𝑹𝒆𝒗𝒊𝒆𝒘 (AFR) has helpfully published a table today (14.01.2025) – ‘𝐁𝐢𝐥𝐥𝐚𝐛𝐥𝐞 𝐡𝐨𝐮𝐫𝐬 𝐭𝐚𝐫𝐠𝐞𝐭𝐬 𝐟𝐨𝐫 𝐟𝐢𝐫𝐬𝐭-𝐲𝐞𝐚𝐫 𝐥𝐚𝐰𝐲𝐞𝐫𝐬 𝐚𝐭 𝐬𝐞𝐥𝐞𝐜𝐭𝐞𝐝 𝐥𝐚𝐰 𝐟𝐢𝐫𝐦𝐬’ – that makes for very interesting reading.

Other than the expected billable hour targets for first year lawyers and comments on alleged “under-billing” practices at major Australian law firms, what caught my attention in the article was this comment:

“𝘖𝘯𝘭𝘺 𝘰𝘯𝘦 𝘧𝘪𝘳𝘮 – 𝘏𝘢𝘮𝘪𝘭𝘵𝘰𝘯 𝘓𝘰𝘤𝘬𝘦 – 𝘤𝘢𝘭𝘤𝘶𝘭𝘢𝘵𝘦𝘥 𝘪𝘵𝘴 𝘵𝘢𝘳𝘨𝘦𝘵𝘴 𝘥𝘪𝘧𝘧𝘦𝘳𝘦𝘯𝘵𝘭𝘺, 𝘸𝘪𝘵𝘩 𝘢𝘯 𝘦𝘲𝘶𝘢𝘵𝘪𝘰𝘯 𝘣𝘢𝘴𝘦𝘥 𝘰𝘯 𝘳𝘦𝘷𝘦𝘯𝘶𝘦 𝘳𝘢𝘵𝘩𝘦𝘳 𝘵𝘩𝘢𝘯 𝘩𝘰𝘶𝘳𝘴 𝘣𝘪𝘭𝘭𝘦𝘥. 𝘓𝘢𝘸𝘺𝘦𝘳𝘴 𝘢𝘵 𝘵𝘩𝘢𝘵 𝘧𝘪𝘳𝘮 𝘢𝘳𝘦 𝘦𝘹𝘱𝘦𝘤𝘵𝘦𝘥 𝘵𝘰 𝘣𝘳𝘪𝘯𝘨 𝘪𝘯 𝘧𝘰𝘶𝘳 𝘵𝘪𝘮𝘦𝘴 𝘵𝘩𝘦𝘪𝘳 𝘴𝘢𝘭𝘢𝘳𝘺 𝘪𝘯 𝘤𝘭𝘪𝘦𝘯𝘵 𝘧𝘦𝘦𝘴.”

I might be wrong, but in the event that Hamilton Locke charges clients by the billable hour, then I highly suspect this also translates into a yearly hourly target…

…In the event that HL charges clients fixed fees or some other type of fee arrangement, then I accept this calculation probably sets it apart.

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’12 Days of Pricing’ by ChatGPT

As we roll into the holiday season, I thought I would share with you the ‘12 Days of Pricing‘ presentation as authored by ChatGPT.

12 Days of Pricing Download

As always, get in touch if you need help with your business development strategy and activities.

Richard & GSJ

📩 richard@gsjconsulting.com.au

10 Key Findings from the ACC CLO Survey 2024

The Association of Corporate Council (ACC) – the worldwide association that promotes the interests of in-house counsel – recently published its ‘10 Key Findings from the ACC CLO Survey 2024‘.

While I have not read the full report, there are some very interesting take-outs from the Executive Summary, including:

58 percent of [in-house] departments have been impacted by law firm rate hikes
42 percent of CLOs say their legal department received a cost cutting mandate over the past year
23 percent of in-house say that rate increases have been difficult to manage
only 9 percent are “very confident” in their organization’s ability to mitigate emerging data risks
The top 3 issues that keep CLOs up at night are not what you would think [well, maybe one of them!]
The importance of ESG would appear to be a little over cooked – but…
…I’ll leave you with this one: 63 percent of CLOs say they are seeking to develop greater business acumen among the lawyers in their department – Good luck with that one!

Check out the link above to read more and as always if need any help feel free to get in touch.

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Where do AFAs rank in the cost savings pyramid?

If you have been wondering where Alternative Fee Arrangements (AFAs) sit on the ladder of cost-saving for in-house counsel, wonder no more. This post [By-the-Hour Billing Torments Legal Departments. So Why Aren’t More Demanding Alternatives?] by Hugo Guzman on law.com yesterday (14/11/2023) will answer all your queries:

66% of respondents said they plan to bring more work in-house as a cost-control strategy
39% plan to shift work from big law firms to smaller ones,
33% plan to leverage the use of technology and AI.

And, drum-roll

Expanding AFAs ranked fourth, at 28%.

Not sure how everyone else interprets that data, but it looks like a very sad state of affairs to me.

Feel free to reach out to me if you want to discuss what this might mean to your business or law firm.

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#FridayFun Why everybody should be billing by the hour!

In the 1980s it took Concord a little under 3 hours to fly New York to London.

Today [2023], 40 years later, the quickest you can travel that exact same route (New York City – London) is a little over 5 hours.

…And this is why you should always bill by the hour – it ensures your clients get the best possible experience (after all, why would you want to fly Concord!) and it incentives innovation!

Photo credit to Nick Fewings

A lesson in pricing from Tesla

Tesla, Elon Musk’s EV carmaker, published its Q3 results earlier today (Australia time). Profits plunged 44 per cent. But, from my perspective this was the interesting part: “after it cuts prices to boost sales“.

Let’s unpack that for a second: Tesla “slashed prices by around 25 per cent in the United States during the last year” – “putting the priority on sales rather than profit“.

As it happens, this is also a common trait of professional services firms: prioritizing getting the deal done over making an actual profit – including agreeing to heavy “volume discounts”.

As the Tesla results show though, any price discount you give comes directly from profit – not sales revenue.

So the price discount you offer your clients is essentially compounded on your bottom line – 10% is not 10%, it’s more like 30%.

Or in the case of Tesla: a 25% price discount has resulted in a 44% plunge in profit.

Something to think about when you are next thinking about what pricing options you have available to you.

And please, don’t follow this advice:

“I view it as a way to defend market share at the expense of margin” .
Kevin Roberts, director of industry insights and analytics at CarGurus, an online auto sales site

In professional services firms, market share should never Trump (pun intended) profit.

As usual, if you need any help with any of this, feel free to reach out.

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