The annual LexisNexis report into the small and mid-sized law firm sector, published this week, found only 5% of firms are considering mergers (down from 10% last year and 13% in 2023), while 72% plan to grow organically (up from 40% in 2023). The main reason for this switch is financial uncertainty (53%) and difficulty finding the right partner.
‘Firms are seeking full control over their operations, signalling a careful rebalancing rather than a race to scale,’ said Tim Rayner, small law market lead at LexisNexis UK.
The firms cited a tough economic climate as the main obstacle to achieving their business goals, followed by time pressures and ‘fear of change’. Despite this, however, 58% of lawyers reported revenue growth (up 10% on last year).
Moreover, the report found firms are ‘ready to spend’. Legal recruitment is on the rise, with 39% of firms planning to hire in the next 12 months. Tech investment remains ‘steady and strategic’, while nearly two out of five lawyers said their firm has been encouraged by the success of artificial intelligence (AI) tools to increase their tech investment.
Clients expect a fast response with information they can easily pass on to their superiors, and clear, upfront pricing. According to the report, ‘accessibility and flexibility are also becoming non-negotiable. A third of firms (33%) said clients now expect more options in how and when they engage’.
Rayner said: ‘This year’s findings show that small firms aren’t standing still. They’re moving forward with purpose. Growth, investment and innovation are happening, not through radical change, but through smart, sustainable decisions that protect profit margins and deepen client relationships.’
View the full report: ‘Marginal gains: the hidden levers of growth’.
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