What do growing law firms in 2025 have in common? They use AI in their practices, according to a 2025 report on technology use in law firms from legal software provider Clio.
The report found that growing law firms have nearly doubled their revenue over the past four years, with only a 50% increase in clients and matters. Shrinking law firms, in comparison, were less likely to use AI and have seen a 50% decline in revenue over the past four years.
Clio’s annual Legal Trends Report highlights the tools, workflows, and characteristics that distinguish growing firms from their peers and explores how legal professionals and clients are using technology and adapting to an AI-driven legal landscape.
The report is based on data from tens of thousands of legal professionals in the U.S. who use Clio’s practice management software as well as surveys of over 1,700 legal professionals and 1,000 adult consumers in the U.S.
How growing firms differ from stable or shrinking firms
The report analyzed three categories of law firms based on their revenue over the past four years:
- Growing firms: revenue up 20% or more
- Stable firms: revenue steady near 20%
- Shrinking firms: revenue down 20% or more
The report found “striking” revenue growth in growing firms, nearly doubling since 2020. In traditional business models, gains of this magnitude would mean these firms would have also doubled their casework and headcounts. However, Clio found these firms achieved this growth with only a 50% increase in clients and matters.
“The takeaway? The most successful firms don’t simply add people to grow. Instead, they invest in other means to support their teams at every level of operations,” the report said, adding that these firms “found ways to earn more from each case and client.”
The report said growing firms leverage technologies like time-saving automations – such as automated consultation bookings, document drafting, or AI used to summarize documents, prioritize tasks, or draft communications – twice as much as stable firms, and nearly three times more than shrinking firms.
They also focus more on the client experience. When evaluating new technologies to adopt, about a quarter of growing firms considered the client experience compared to 17% of stable firms and 11% of shrinking firms.
Considering how clients will engage with firm technology can help eliminate potential complications or friction and promote a quality experience, which can result in positive word-of-mouth referrals for the firm, the report said.
Finally, growing firms were more likely than stable or shrinking firms to evaluate new technologies by looking at client and employee satisfaction with the tools.
Which lawyers use AI?
The report found that 79% of legal professionals use AI, the same percentage as in 2024. And AI use among professionals in other industries is catching up to legal, reaching 78% in 2025. In the past, AI usage in other industries has lagged behind legal.
Not surprisingly, younger generations of legal professionals are more likely to use AI than older generations. In law firms, 28% of Millennials are likely to use AI widely in their firms compared to just 5% of Baby Boomers.
The report notes a lower percentage of AI adoption among Gen Z (13%) than among Millennials. While this may seem like an anomaly, the report says it may indicate that those in junior roles – which are typically Gen Z – have less freedom to experiment with new tools.
Legal professionals in large law firms are the most likely to adopt AI (87%). AI use declines in firms with fewer lawyers, though 71% of solo law firms still report using AI.
The report said that large firms may be more likely to use AI because they have “more resources to invest in new technologies, and even dedicated people to implement new procurements and training.”
The report also pointed to the “steady influx of younger talent who are more keen to use AI” at larger firms, versus solo and small law firms, which “typically have more seasoned and experienced lawyers who may be less interested in new technologies.”
When it comes to AI policies, more than half of legal professionals (53%) say their firm has no AI policy or that they are unaware of one.
For firms that do have an AI policy, 30% of policies say AI is allowed and encouraged, 12% say AI is allowed but not encouraged, and 5% say AI is not allowed.
Use of legal AI tools vs. generic AI tools
Clio found that only 40% of legal professionals are using legal-specific AI solutions, down from 58% in 2024.
This indicates an increasing reliance on generic tools (like ChatGPT, Gemini, Claude, or Perplexity), perhaps because free access tiers make these tools easier to adopt, the report said.
Legal-specific AI, however, offers distinct advantages for legal practice, including better case law knowledge, data privacy protection, and more accurate, comprehensive results, the report pointed out.
The Illinois Attorney Registration and Disciplinary Commission recently published a guide for Illinois lawyers on implementing AI. The guide notes that “public” tools that are operated and controlled by an entity other than the lawyer or law firm may lack the proper ethical safeguards for lawyers that some consumer, business, or enterprise legal AI tools have.
How AI impacts productivity and quality of life
More than half of legal professionals who use AI reported that AI improved their work quality (65%) and client responsiveness (63%), and increased their work capacity (54%).
Legal professionals also indicated that their AI use increased profitability, reduced operational costs, improved client satisfaction, and increased competitiveness, the report found.
In addition, legal professionals said that AI use motivates them to keep up with technology (71%) and helps them feel empowered to handle complex work (53%). AI also reduced tedious work (62%) and increased the accuracy of work (58%), legal professionals said.
From a professional development standpoint, 46% of legal professionals report that AI has had a positive impact on their job satisfaction, 38% said it helped create job development/advancement opportunities, and 36% said it increased the likelihood that they would stay in their current role.
Finally, almost half of legal professionals said AI use reduced stress (47%) and improved work/life balance (48%).
AI and revenue
Thirty-six percent of legal professionals report that AI has positively impacted revenues, the report found. The percentage increases to 69% among those who have widely adopted AI.
Most legal professionals report that improved operations are where they see the biggest revenue gains from AI (77%). Others say that AI use has boosted sales/marketing and benefited the client experience.
A third of legal professionals surveyed said that it was too early to tell how AI has impacted their revenue.
AI and billing
The adoption of AI is challenging the traditional hourly billing method, according to the report. “After all, how can a lawyer charge clients for several hours when the same work can be done by AI in minutes?” the report asked.
The report says that hourly billing can discourage efficiency and create cost uncertainty for clients. It may also penalize legal professionals who use AI to complete work faster, according to the report.
In addition, because AI automates legal tasks, firms may face growing pressure to adopt alternative pricing models focused on expertise and outcomes rather than time, the report said.
Although most law firms still use hourly billing, an increasing number now offer flat fees, with 59% using flat fees exclusively or alongside hourly rates in 2024, the report said. This shift, which began in 2020, is likely accelerating as AI adoption boosts revenue and prompts firms to adjust their pricing models, according to the report.
However, most legal professionals say AI hasn’t affected their ability to meet billable targets or are unsure of its impact. Among those who use AI widely, 20% report challenges meeting billable targets, and 45% have adjusted their pricing as a result.
Among firms that have adjusted their prices, a quarter have increased prices, 11% have reduced prices, and 8% have added AI-specific fees.
How clients are responding to AI
Clients are generally comfortable hiring a lawyer who uses AI, according to the report, with only 36% of clients saying they would be less likely to trust a lawyer who uses AI generally.
Clients said that they would be comfortable hiring a lawyer who uses AI to respond to clients if it gave them more time to work on their case (47%), made them more affordable (44%), or if they knew most lawyers did this (38%).
However, nearly half (47%) of clients said they would not be comfortable hiring a lawyer who uses AI to make decisions, and more than half (56%) would prefer their lawyer to use a paralegal over AI.
Consumers said they are also turning to AI to solve legal problems themselves, according to the report.
Fourteen percent of consumers said they have used AI to answer legal questions, while nearly half (43%) said they have not but would. Millennial (26%) and Gen Z (23%) consumers are the most likely to use AI to answer legal questions.
When lawyers use AI, most clients (78%) want them to disclose it. However, a shocking 35% of legal professionals said they rarely or never disclose use of AI.
Looking ahead
AI adoption in the legal profession is expected to grow rapidly, with 82% of legal professionals planning to increase their use of AI over the next 12 months.
While solo practitioners have been slower to adopt, 42% anticipate using AI in the future, closely followed by 35% of firms of 2-4 lawyers, and 32% of firms of 200+ lawyers.
As AI continues to evolve, its integration into legal practice is likely to accelerate, shaping how firms operate and deliver services.
Read the full 2025 Clio Legal Trends Report here.
Staying up to date on issues impacting the legal profession is vital to your success. Subscribe here to get the Commission’s weekly news delivered to your inbox.
3 Areas of ‘Friction’ Between Law Firms and Generative AI Developers
How to Stop This $475,000 Email Scam from Happening to Your Law Firm