Small law firms across the United Kingdom are increasingly integrating artificial intelligence (AI) into their operations, heralding a move away from traditional hourly billing practices.
Recent research has highlighted a growing trend among UK small law firms to embrace AI, with a significant portion of these firms utilising this technology primarily for document drafting and automation. Such advancements not only streamline operations but are also aligning with a broader shift towards fixed-fee billing, replacing the conventional hourly billing method.
The study, commissioned by a legal technology provider and conducted by Censuswide, involved 500 solicitors, the majority of whom were from firms with 20 lawyers or fewer. An overwhelming 96% reported integration of AI in their practices, out of which over half indicated that its use was either widespread or universal. Moreover, 62% anticipated further adoption of AI in the next year.
Financial commitments towards technology are also on the rise, with one-third of the firms planning to invest over £100,000 in the coming year, alongside parallel investments in marketing to enhance client acquisition. This strategic move reflects the necessity to meet evolving client needs and engagement strategies.
AI applications within these firms extend beyond document management to include tasks such as contract review and analysis (29%), e-disclosure (20%), and legal research (17%). The benefits observed have been substantial, with 43% of solicitors noting improvements in work quality and productivity, while 41% recognised contributions to business expansion. Notably, AI has also been cited as beneficial to mental wellbeing and achieving a work-life balance by some respondents.
Despite these advantages, less than 30% of the solicitors highlighted cost savings as a direct benefit of AI adoption. However, the broader impact on daily operations and client billing processes remains evident. As Clio’s EMEA general manager Sarah Murphy stated, AI and strategic technological investments are not mere trends but are reshaping legal practice in the UK, offering enhanced productivity and improved work-life balance.
This shift is also influencing billing practices, with a notable push towards fixed fees. According to the research, 54% of solicitors expect an increased use of fixed fees driven by client demands and competitive pressures. Clio’s CEO, Jack Newton, emphasised that AI could signal a pivotal change for the billable hour, forecasting a disconnect between the value delivered by law firms and the traditional billing model. He suggested that fixed-fee billing, already adopted by many firms, would gain popularity as AI optimises workflows, diminishing reliance on hourly charges.
In a related development, client communication preferences are evolving with technology. The survey indicated that while 45% of clients prefer telephone communication, digital means are gaining traction, with 43% using a firm’s website and 42% engaging via chatbots. Mobile apps and email also remain popular with 40% and 38% respectively, showing a diversification in communication methods driven by client convenience.
Additionally, concerns regarding the regulation of AI usage in law are being addressed. Separate research by Thomson Reuters revealed that two-thirds of UK lawyers support oversight by professional regulators. The 2024 Future of Professionals report showed that many lawyers believe these bodies should audit AI algorithms and ensure AI tools meet specific standards to maintain ethical and accurate use of technology in legal practice.
The integration of AI among small law firms signifies a transformative phase in the legal industry. As firms pivot from hourly billing to more client-friendly structures like fixed fees, AI continues to shape the landscape by improving efficiency and client satisfaction. Concurrently, regulatory oversight remains crucial to ensure ethical and effective use of AI, fostering trust across the legal ecosystem.
