BC-based legal tech company polled 1,134 legal professionals, compared solo, non-solo practitioners
Solo lawyers work longer hours but bill a lower percentage of their time, said a new report from Clio, which analysed financial data comparing solo and non-solo practitioners.
The company released “Legal Trends for Solo Law Firms 2023” on April 18. The report is based on a survey of 1,134 legal professionals, whom Clio segmented based on firm size to compare responses from solos and non-solos. The report showed that sole practitioners are billing less than their larger firm counterparts, and while they value their freedom and live more of a nomadic work lifestyle, they are also putting in lots of evening and weekend hours.
“While the last couple of years have been a fairly heady time for law firms and their finances, solos have not seen the same amount of revenue growth that the larger firms have. In fact, it's about half,” says Joshua Lenon, lawyer in residence and data protection officer at Clio.
He says the growth gap largely boils down to the utilization rate, the proportion of working hours a lawyer bills to a client.
According to the report, utilization rates for solos are roughly 11 percent lower than non-solos. In 2022, the average utilization rate for lawyers surveyed was 25 percent, which amounts to two hours out of an eight-hour day. These numbers indicate that larger firms billed for 211 more hours in 2022. The report suggests that the disparity is either rooted in a difficulty balancing non-billable administrative work or a difficulty in bringing in new clients.
“We know that lawyers and larger firms, even though they still are doing a lot of the same non-billable tasks, like business development, firm administration, billing, and collections, they're still able to bill close to one additional hour per day compared to solo law firms,” says Lenon.
The report found that solos and non-solos have steadily increased hourly rates over the last two years but have not done so in pace with inflation. By the end of 2022, hourly rates for solos were 11 percent higher than in 2019. Hourly rates for non-solos were 12 percent higher. But during that time, inflation ballooned by 16 percent.
The report also showed that the benefits of solo practice go beyond billable hours and revenue – nearly 100 percent of solos wanted the flexibility to choose their own hours and where to spend them. Sixty-two percent of lawyers surveyed said they preferred working from home over a commercial office.
Along with the survey data, Clio also analyzed aggregated and anonymized data from tens of thousands of its products’ users in the US. The data showed that solo practitioners typically work in five different locations each month. This number was between three and four prior to 2020.
“That freedom may be balancing out what we're seeing in that lack of revenue, comparatively,” says Lenon.
Solo lawyers are also working “a little bit more than is probably healthy for them,” he says. The data shows that hours per day and days per week are higher than lawyers at larger firms.
Lenon says there is a connection between the hours worked, the utilization rate, and the report’s finding that many solo lawyers are “underinvested” in technology that could “delegate some of the drudgery of practice.” While 85 percent of solos used cloud-based practice management, only 36 percent used client-intake software.
A previous legal-trends report had found that lawyers reported getting interrupted 10 times per day, and the proper investment in technology can minimize those distractions, he says.
“While solo lawyers are heavily invested in technology, they may not be always investing in the technology that eases their burden to the same degree that we're seeing larger law firms invest in technology.”
According to Law Society of Ontario data, more than 73 percent of the province’s law firms only have one lawyer. “Getting an understanding of where they struggle and where they excel is actually really important, not just for the individual practitioners, but for the law societies,” he says.
