As businesses refocus following the festive season, leaders in the small to medium-sized enterprise (SME) legal sector are facing a blend of anticipation and apprehension as they look towards 2024. The Legal Practice Management Magazine sheds light on how advancements in technology, particularly AI, are poised to reshape the legal landscape.
In 2024, notable technological advancements are emerging not only within the legal sector but also among service providers that support it. This evolution is seen as a catalyst for many SME law firms, which have historically been hesitant to embrace technological changes. A notable shift towards a ‘digital-first’ mindset is expected to emerge, fostering the development of more affordable and tailored products for the SME legal market.
The presence of AI at various industry conferences throughout 2024 has solidified the sentiment among legal practitioners that AI is an enduring force. Speaking to the Legal Practice Management Magazine, an industry veteran reflected on how historic milestones such as the transition from typewriters to computers and the shift from manual accounts to digital platforms have created significant competitive advantages for those who adapted early. "I believe AI will be one of those milestones," they stated, emphasising that firms which swiftly integrate AI are likely to gain a substantial lead over their rivals.
The multifaceted opportunities that AI presents are enticing for SME firms. Potential applications range from conducting source of wealth checks and extracting critical legal information from documents to generating social media content. The anticipation around which firms and suppliers will effectively harness these tools in 2025 adds to the excitement within the sector.
However, leveraging these technological advancements often involves considerable financial investment. SMEs frequently find it challenging to attract external funding in the same manner as larger firms, which leads to intricate decisions regarding the management of working capital and partner succession. Individuals nearing retirement may be hesitant to invest their capital in technology that requires a medium to long-term commitment.
Moreover, leaders of SME legal firms are contending with a complex landscape marked by economic, legislative, and regulatory pressures that are anticipated to unfold in 2025. There's a recognition of rising costs as leaders adjust their budgets to factor in hikes in employer national insurance contributions and the national minimum wage, along with price increases from suppliers to offset these financial pressures. Consequently, many SME firms may be forced to implement significant price increases, all while navigating a market populated by increasingly price-sensitive clients, many of whom are transitioning off fixed-rate mortgages.
In addition, the Solicitors Regulation Authority (SRA) is expected to be under scrutiny in 2025, particularly in light of the Legal Services Board's recent decision to review its handling of the Axiom Ince situation.
With a new government potentially introducing new legislation in line with their manifesto commitments, the outlook for 2025 is anything but tranquil. As industry leaders prepare for the challenges that lie ahead, the next year promises to be a transformative period for the SME legal sector, shaping how firms operate and compete in an ever-evolving landscape.
Source: Noah Wire Services