The latest LexisNexis Bellwether report into the SME legal market, entitled “Marginal Gains”, paints a picture of targeted, strategic investment. The Brief explores the highlights and hears the reaction of a selection of law firm leaders.
According to the latest Bellwether report from LexisNexis exploring the SME end of the legal market, 2025 has so far been characterised by firms investing “better” rather than bigger.
Overall, the picture is positive, with 58 per cent of respondents saying their firms had grown compared to three or four years ago. This was up from 48 per cent in 2024.
However, while law firm mergers might still be making headlines, the report found that 72 per cent of SME law firms now plan to expand organically rather than by acquisition, up from 63% in 2024 and just 40% in 2023.
M&A can be time-consuming, expensive and risky. For lean management teams, it’s often a distraction.
Responding to this finding, Ed Simpson, co-founder of The Legal Director, a law firm that provides part-time in-house lawyers for companies, tells The Brief, “Across the legal sector, especially among firms under £10 million turnover, we’re seeing a strong lean toward organic growth – and it makes sense.
“M&A can be time-consuming, expensive and risky. For lean management teams, it’s often a distraction. Matching cultures is difficult, and the return isn’t always there.”
Florence Brocklesby, Founder & CEO of Bellevue Law, echoes this point. She says, “Smaller firms often have a natural advantage when it comes to culture and collaboration. It’s much easier to build trust, shared purpose and a strong team dynamic in an environment where people genuinely know each other.
“That’s not to say growth isn’t a goal – many smaller firms are thriving and expanding – but putting two businesses together comes with significant cultural and logistical risks. This is particularly true in people businesses such as professional services firms - while mergers can offer financial gain on paper, unless executed with great care they can damage what makes a firm successful in the first place.”
Targeted recruitment
In terms of recruitment, the headline figure from the report is that 23 per cent of firms reported having hired new lawyers during the past year. This was an increase on 16 per cent of firms the previous year.
A further 39 per cent of firms expect to hire in the coming 12-to-18 months.
There is something to be said for a gradual, steady and strategic approach to growth for small law firms
However, according to the report’s authors, this recruitment has been highly targeted at specific needs, such as maintaining service quality and easing pressure on senior lawyers, rather than gearing up for rapid expansion.
Tim Rayner, head of sales (legal and tax) at LexisNexis, says, "This trend reflects a carefully balanced approach to talent management, prioritising capacity without overextending."
Robert Marcus, managing partner at SME law firm Jurit, comments, “The results of the survey are heartening and reflect our own journey over the past decade. There is something to be said for a gradual, steady and strategic approach to growth for small law firms and it is reassuring to see this echoed in the report.
“Growth with purpose not only ensures you can maintain quality of service for clients, it also allows you to invest in an appropriate way – from technology to taking the time to attract the right personalities for your culture.”
Technology
A “strategic not shiny” is being taken to technology investment, according to the report. Seventeen per cent of firms surveyed have already increased their tech spend in 2025, while a further 43 per cent have plans to do so, up from 35 per cent in 2024.
AI, inevitably, is a major focus. Thirty-nine per cent of respondents said artificial intelligence was a driver in their decision to invest in technology, compared to 33 per cent a year ago.
Smaller firms typically don’t have the budget to build bespoke solutions, and many off-the-shelf tools are priced and designed with larger firms in mind.
Most firms, though, have yet to fully integrate AI into their workflows, with the majority still trialling it for uses including document drafting, legal research and administrative support. One point made by the report is that supporting teams to use AI effectively is as important as the choice of tools itself.
Marcus says this chimes with Jurit’s experience. He explains, “We’ve invested more in technology over the past year, and would describe our approach to AI as cautious. Having trialled various specialist legal AI applications, we recognised that we don’t need to be trailblazers – it would be better for our clients if we waited for a proven technology to emerge.”
This builds on a point made by the Bellwether Report – that poor technology choices can, as Rayner puts it, “be worse than no tech at all”. Firms are, the report says, pacing their technology investment to avoid costly missteps.
Brocklesby, meanwhile, points to another challenge for smaller firms: “AI brings real opportunities to enhance efficiency, client service and internal workflows.
“But smaller firms typically don’t have the budget to build bespoke solutions, and many off-the-shelf tools are priced and designed with larger firms in mind.
“Conversely, the advantage of being small is the ability to move quickly. Smaller firms can identify a need, trial a tool and adapt their ways of working without layers of internal bureaucracy.”
Visit
Connect with Florence Brocklesby via LinkedIn
Connect with Robert Marcus via LinkedIn
Connect with Ed Simpson via LinkedIn
