Robert Ambrogi Blog
The adoption of generative artificial intelligence in small law firms has almost doubled over the past year, with 53% of small firms and solo practitioners now integrating gen AI into their workflows, up from 27% in 2023, according to the 2025 State of Law Report released today by law practice management company Smokeball.
The survey of 310 legal professionals across the United States reveals a profession increasingly embracing technology to overcome challenges while striving for better work-life balance in a competitive landscape.
“AI is no longer a buzzword in legal circles, but a competitive necessity,” said Hunter Steele, CEO of Smokeball. “What’s most encouraging is seeing small firms and solo practitioners leading this technological step forward.”
AI Integration Accelerates Despite Concerns
Familiarity with AI has grown to 80% among legal professionals, up from 74% in 2023, with 69% of respondents expressing willingness to invest time in learning AI tools. Legal research, document creation, and e-discovery were identified as the three areas most likely to be significantly impacted by AI in the next one to five years.
Despite the growing adoption, significant challenges remain. The report found that 53% of respondents still harbor ethical concerns about AI, a slight decrease from 56% in 2023. Nearly half of all respondents remain uncertain about AI regulations, underscoring the need for clearer guidance from bar associations, the report says.
The report also highlights a shift in thinking about AI’s impact on the profession. Fear of job displacement has decreased slightly, with only 12% of respondents viewing AI as a threat to their jobs in 2024, down from 13% in 2023.
Work-Life Balance Remains Critical Challenge
If given extra time in their day, 50% of surveyed lawyers said they would prioritize family time, followed by leisure activities, highlighting work-life balance as a top priority. This finding comes as burnout continues to be a significant factor in talent attrition.
“Despite flexible work options, burnout remains a persistent issue, affecting retention and overall job satisfaction,” the report states. One in three respondents said they would use extra time for skill development, signaling a strong desire to enhance capabilities and stay adaptable.
The report also noted a 10% year-on-year increase in firms operating fully in-office, reflecting a growing preference for in-person collaboration. While hybrid and remote work remain viable options, many firms recognize that face-to-face interaction fosters stronger teamwork and streamlined workflows.
Marketing Strategies Evolve While Referrals Remain Dominant
Traditional referral networks continue to be the backbone of client acquisition, with 85% of firms citing referrals as their primary growth channel. However, digital marketing is gaining significant traction, with 43% of firms now identifying it as key to client acquisition.
The survey reveals that one in five firms (21%) struggle with various aspects of digital marketing, including SEO, Google advertising, website design, and content creation. Additionally, 20% of firms report not engaging in any marketing at all.
SEO and Google advertising emerged as the top two concerns among firms attempting to implement digital marketing strategies, likely due to their technical complexity and constantly changing algorithms.
Cybersecurity Threats on the Rise
The percentage of firms experiencing a cybersecurity incident doubled from 5% in 2023 to 10% in 2024, signaling a need for stronger security protocols. Despite this increase, 32% of respondents remain unsure whether their document-sharing processes are secure.
While 37% of firms increased their cybersecurity spending in 2024, many still underestimate risks or lack the resources to implement necessary safeguards. Larger firms are leading the way with encryption, two-factor authentication, and advanced security protocols, while smaller firms risk falling behind.
“Without prioritizing cybersecurity, firms face not just financial risks but also potential reputational damage,” the report warns.
Operational Efficiency and Revenue Growth
The report found that 29% of firms now use automated tools for billing, reducing errors and ensuring timely invoicing. However, one in three firms still delay invoices due to incomplete timesheets, a challenge most prominent among larger firms due to workflow complexity.
Billable hours remain stable, with 50% of lawyers billing between 5-8 hours per day, but only 10% exceeding 9-10 hours—suggesting firms could improve time management and revenue optimization.
Looking toward future growth, 33% of firms expect revenue to grow over 10% in the coming year, while 25% anticipate growth between 5-10%. Only about 10% of firms foresee no change in revenue.
Looking Ahead to Practice Evolution
The report concludes with four key trends expected to shape legal practice in 2025:
- AI and advanced analytics will continue to drive innovation through predictive insights and automated research
- Cloud-based solutions will remain central to operational efficiency
- Data security and compliance will take center stage as firms face evolving cybersecurity threats
- Client-centric services will transform how firms operate, with digital-first approaches strengthening client relationships
It also offers three recommendations of actions firms should take to remain competitive and achieve sustainable growth:
- Leverage technology for efficiency.
- Implement scalable growth strategies.
- Strengthen organizational practices.
“Success isn’t about working harder—it’s about working smarter,” the report concludes. “By prioritizing operational efficiency, cybersecurity, talent cultivation, and client relationships, firms can set themselves up to thrive.”