2025 will be a year of continued change, growth, and challenges for the legal industry. As we look forward, I want to offer some predictions and opportunities for firms to consider in the coming year. How can you take advantage of emerging opportunities and avoid falling behind.
“Firms will continue to push for double-digit growth, seeking to maximize their revenue streams, streamline operations, and leverage investments in people and technology.”
The key question is: how will they get there?
As others are predicting (and I agree with), demand may soften in 2025. If that happens, how will firms achieve the expected growth? Firms cannot create ‘new business’ out of thin air, so what will they do?
Prediction 1: Expansion of the Business Professional
Matters with budgets often achieve a 6–10% increase in realization, and pricing teams have proven to be a crucial lever for driving these improvements. In 2025, not only will firms continue to deploy these talented professionals with greater impact, but their roles will also expand.
This expanded remit is a key opportunity for firms in 2025. Enabling business professionals to work more holistically across departments will be a driver for financial success. For example, integrating pricing teams with client relationship management efforts could foster deeper insights into client needs and priorities, enhancing satisfaction and retention. Imagine a pricing team collaborating with client managers to design tailored alternative fee arrangements (AFAs) based on a client’s unique business goals. Aligning pricing teams with client managers can lead to tailored solutions that improve client outcomes and foster partnerships rooted in mutual success. Additionally, business professionals armed with the right data can help firms identify and target the most profitable clients and practice areas, ensuring resources are allocated where they will have the greatest impact.
Matter setup, rate structuring, negotiation of AFAs, and matter management are deeply interconnected, and pricing teams are increasingly at the center of these processes. Firms are starting to leverage their business professionals to streamline and integrate these activities, driving more consistent and efficient outcomes. Tracking realization rates across matters enables firms to proactively identify profitability gaps, ensuring financial performance aligns with firm goals. This shift reflects the broader industry trend of applying business rigor to operational processes within law firms, a necessity as client expectations for value and transparency continue to rise.
The expansion of their remit will elevate their role in achieving firm-wide goals such as profitability, client value, and operational efficiency. Firms that empower their business professionals with advanced analytics tools, foster cross-functional collaboration, and embed them into strategic decision-making processes will see outsized benefits. Those who prioritize these efforts will find themselves not only meeting client expectations but setting new standards for operational excellence and financial performance.
Prediction 2: Operational Efficiency
Operational efficiency will be a top priority as firms look to do more with less. This isn’t just about cutting costs—it’s about working smarter. Firms will need to closely examine their processes to identify bottlenecks and areas for improvement. Automating routine tasks, such as moving work between front and back offices or better managing associate utilization, will be key. Overutilizing certain associates while others remain underutilized can lead to inefficiencies and burnout. Replacing an associate who leaves can cost a firm as much as $900,000 and the latest data from BigHand reveals one in five firms believe poor lawyer utilization is a key contributor to profit leakage, so retention through balanced workloads and streamlined workflows is crucial.
Firms must also ensure they are fully leveraging investments in technology. Tools designed to increase efficiency are only valuable if they are being effectively utilized. Rethinking workflows and aligning them more closely with client needs will help firms reduce redundancies and deliver better value.
2025 also presents an opportunity for firms to rethink traditional metrics. For years, firms have relied on "tried and true" measures of productivity and performance, but the time is right to evolve. BigHand, for example, has championed the categorization and ranking of metrics—not as a "name and shame" exercise, but as a way to provide visibility into areas for improvement. This approach not only highlights where operational efficiencies can be gained but also provides actionable insights to inform strategic decision-making. For instance, ranking practice areas by profitability or assessing client engagement levels enables firms to prioritize initiatives that drive the most value across the organization.
Firms should look at clients across a range of metrics—operational, financial, and even behavioral, such as engagement or usage patterns. Not all business is good business. Unprofitable clients can drain resources and distract from high-value opportunities, ultimately impacting firm profitability and employee satisfaction. By identifying high-value clients and areas where relationships can be improved, firms can make smarter decisions about resource allocation. This can help them focus on building long-term, mutually beneficial partnerships and avoid expending effort on clients that are unprofitable or misaligned with the firm’s goals.
The firms that succeed in 2025 will be those that turn operational efficiency into a competitive advantage. This requires embedding efficiency into the firm’s daily practices—not relying on one-off initiatives but building a culture and strategy that prioritizes smarter working at every level.
Prediction 3: Leveraging Technology for Meaningful Change
Technology will play a central role in how firms operate in 2025. Clients are increasingly sophisticated and expect firms to use tools that deliver measurable results.
Artificial intelligence (AI) continues to gain traction across the industry. According to the International Legal Technology Association (ILTA) 2024 Technology Survey, many firms are implementing AI for tasks like document management and case analysis. These tools have the potential to improve efficiency and client outcomes significantly, but firms must carefully weigh the costs and risks of adoption. AI solutions often require substantial investment in setup and maintenance, and their success depends on proper training and oversight.
The risks of misusing AI are equally important to address. Overreliance or poor implementation can lead to errors and undermine client trust. Firms must ensure they are using AI responsibly, with the right controls and checks in place to avoid missteps.
One opportunity in 2025 is leveraging AI in conjunction with the massive data sets firms already possess. From timecard analysis to staffing models, firms sit on a wealth of information that can be analyzed to uncover trends, make better budgets, upskill and resource more effectively, and provide clients with data-driven insights. AI enables firms to deliver the data-driven insights clients increasingly expect, transforming decision-making into a competitive advantage. By moving beyond anecdotal decision-making, firms can use AI to enable more strategic planning and better client service.
Ultimately, AI should support and enhance the work of legal professionals rather than replace it. Firms that strategically adopt AI, focusing on areas where it adds the most value, will be better positioned to meet client expectations and remain competitive.
A Special Note on the Billable Hour
No prediction piece would be complete without addressing the billable hour. Let’s be clear: 2025 is not the year the billable hour will disappear. However, it will come under renewed and sustained pressure from clients. Increasingly sophisticated clients are pushing for savings, driven in part by advancements in AI (even if some expectations are misplaced) and ever-growing law firm profits. Firms will need to be prepared to justify their value and explore alternative fee arrangements to stay competitive.
Conclusion
The challenges of 2025 will be significant, but so will the opportunities. By expanding the role of business professionals, embedding operational efficiency, and leveraging technology for meaningful change, firms can position themselves not just to weather the year but to thrive.
The firms that succeed in 2025 will be those that embrace change, act decisively, and focus relentlessly on delivering value. By aligning people, processes, and technology, firms can transform challenges into opportunities and lead the industry into the future.
Rob Stote is BigHand’s Chief Product Officer and leads with over 20 years of industry experience. Stay tuned for more predictions from BigHand's team of experts in the coming weeks. Sign up now and be the first to read when they're released!
