2025 Predictions for Law Firms

As a law firm which focuses on the business of law, and whose client base is dominated by other law firms (along with a smaller cohort of professional service firms such as accountants and financial services businesses), we thought we would offer some predictions for 2025 to provoke some thought and debate amongst our client base.

As with all predictions there is a risk of looking foolish with the benefit of hindsight! The warning from Professor Nassim Nicholas Taleb in his seminal book The Black Swan: The Impact of The Highly Improbable springs to mind and should be borne in mind.  Taleb stated:

“The inability to predict outliers implies the inability the predict the course of history”

So, having caveated that future history is impossible to predict, here are some thoughts for 2025.

1. The National Insurance conundrum

Employers from 6 April 2025 face significantly higher National Insurance bills with both the lowering of the starting point for payment of employee National Insurance and a higher rate of employer National Insurance.

The economic impact on this will likely be very significant, particularly in professional services, because we service the wider economy. Therefore law firm clients are likely to suffer because of the increasing National Insurance burden which will place a supply-side lowering of demand for positive legal services and positive financial products.

Firms will need to adapt and evolve. Firms that are focused on technology will try and drive productivity improvements rather than to recruit more staff or replace departing employees. We recommend trying technology first in response to departing staff.

2. Technology and data

The adoption of technology and how technology can provide key performance indicator data will reemerge as a trend during the course of 2025. In part linked to the prediction above regarding people and staffing costs but also because all firms are now acutely aware of their need to focus on using technology to work smarter and more efficiently. Utilising the vast quantities of data available to manage their businesses effectively is likely to be a trend in the sector.

Over the last couple of years we have noticed a trend of management teams being increasingly data driven and we expect this trend to expand. We recommend focusing on the most important metrics in terms of those which effect bottom line of your business positively and ensure an in increasingly competitive market that you retain talent. 

3. AI adoption

Artificial Intelligence (AI) has been the story of the last couple of years and the adoption of AI talking to our client base is increasing at a significant rate. At Bennett Briegal LLP we have been utilising it for meeting minutes and action points with clients and internally for a year or so, we are utilising it to prepare better training sessions and we expect our own adoption of AI technology to evolve further and become more sophisticated during the course of 2025.

The emphasis for 2025 in our view for professional service firms should be on the productivity tools that AI can offer. By focusing on productivity it should be possible to use technology in a positive way to enhance the experience of those working in the business, whether they be partners or employees.

4. Client expectations

The professional service market is, to a large extent, saturated – there are about 9,000 law firms; there are seemingly accountancy businesses on every street of every business park; and financial services availability has never been greater. There is an expectation from clients therefore that expertise will be brought to the table and will provide solutions.

With the pressures we anticipate clients will be experiencing due to the challenging economic circumstances, the UK’s sustained period of low or no growth, the risk of recession and the National Insurance burden we think the client expectation will go up. 

We recommend focusing on exceeding your clients’ expectations. It is a cliché for a reason that the moment you forget the cliché your clients will exercise their right to vote with their £s and their loyalty to go elsewhere.

5. Billing practices and training

The billable hour has long been predicted as being almost dead; the reality is that it is alive and thriving in the professional service market, but it remains a blunt instrument tool and estimates remain in our experience from talking to clients challenging. We have long advocated pricing training, and we operate ourselves on the basis that we will offer fixed fees where possible and practical, subject to set parameters to ensure these are not misused. This trend will continue. 

We invested heavily in 2019 and 2020 in billing training and development of our own billing practices. We have continued to seek additional insight in this area and we strongly recommend all of our clients in professional services seek billing training. Understanding how to estimate better leads to a better management of client expectation and crucially for the supplying business a fair fee for a fair job. We recommend that every one of our clients should undertake similar training.

6. Hybrid working

Post-pandemic firms have continued to differing degrees offering hybrid working. We have clients who insist everybody is back in the office and we have other clients who have remained predominantly homeworking. The challenges are the same: productivity, engagement with colleagues and the benefits of teamwork. 

The increased use of technology, the increased use of AI as it is adopted, and client pressures will continue to evolve what is the right solution in terms of retaining talent through flexibility whilst remaining highly productive to ensure profitability.

Our linked tip for 2025 is to conduct a survey of your people to find out what they want and align this with your clients’ expectations so far as it is possible and practical to do so.  Where it is not practical and possible to do so the reasons for that should be explained to the workforce to ensure their needs are met to a reasonable degree to hold on to them during the course of the ongoing war for talent.

Conclusion

Our predictions may be right, or may be wide of the mark, but hopefully we have made you think and most importantly to start to prepare your thinking for the next period ahead with some parameters that will work across our core client base.

As always if you want to explore these issues we are happy to advise, equally if you disagree with us we would love to hear from you if you are a client so we can talk through the issues and support your business as effectively as possible.