AI-Powered Legal Practices Surge in Major Shift

AI adoption in law firms has skyrocketed from 19% to 79% in just one year, prompting firms to realign their priorities and billing strategies.

Clio, a leading provider of cloud-based legal technology, has released the ninth edition of the Legal Trends Report, offering exclusive insights into the key trends shaping the legal industry. This year’s report provides in-depth analyses of AI adoption in the legal industry, the growing use of flat fees, law firm spending priorities as they relate to technology and marketing efforts and their responsiveness to prospective clients.

“AI has reached the level of adoption the cloud took a decade to obtain, with 79% of lawyers now using AI daily,” said Jack Newton, CEO and founder of Clio. “This increased efficiency is pushing firms to adopt more flexible billing options, like flat fees, that better align with the value they deliver. While the appetite for AI is promising, our report reveals that many firms still miss crucial growth opportunities by failing to respond to client inquiries promptly. A real advantage lies in improving client engagement, which will help firms stay competitive, deliver superior service and secure long-term success in the evolving legal market.”

AI adoption is transforming legal practices
The latest report reveals that AI usage in law firms has skyrocketed, with 79% of legal professionals now incorporating AI tools into their daily work – a significant jump from just 19% in 2023. Not only are law firms embracing AI but clients are increasingly supportive, with 70% either preferring or being neutral toward firms that utilize AI. This acceptance signals a shift in client expectations as AI becomes more mainstream in legal processes.

The steep adoption of AI has the potential to disrupt how lawyers operate the business side of their firms. Clio’s analysis shows that up to 74% of hourly billable tasks – such as information gathering and data analysis – could be automated with AI. Law firms should consider moving away from hourly billing in favor of more flexible options like flat fees to preserve profitability while benefiting from the increased efficiencies AI brings to legal workflows. As AI reduces the time spent on billable work, law firms may see a decline in revenue if they continue to rely on hourly billing.

Key highlights from the report:

• AI could make law firms more effective in working with clients – as a result, they may need to invest more in marketing to attract an increased client pipeline. The ability to handle more clients will require a stronger emphasis on marketing strategies to sustain the workload and grow the business.
• The number of legal professionals using AI has surged from 19% in 2023 to 79% this year, marking a significant shift in how law firms are integrating AI into their daily operations.
• Nearly three-quarters of a law firm’s hourly billable tasks are exposed to AI automation, with 81% of legal secretaries’ and administrative assistants’ tasks being automatable, compared to 57% of lawyers’ tasks.