More law firms are relying on artificial intelligence (AI) to improve efficiency, according to a new report from Clio, a provider of cloud-based technology for the legal industry. The ninth edition Clio’s Legal Trends Report explores how AI adoption is shaping the direction of the legal industry. 

New data shows that 79 percent of legal professionals now incorporate AI tools into their daily work, compared with 19 percent in 2023. Clients are also on board with this shift, with 70 percent reporting they either prefer its use or are neutral toward firms that utilize AI.

"AI has reached the level of adoption the cloud took a decade to obtain, with 79 percent of lawyers now using AI daily," said Jack Newton, CEO, and founder of Clio. "This increased efficiency is pushing firms to adopt more flexible billing options, like flat fees, that better align with the value they deliver. 

Newton continued, “While the appetite for AI is promising, our report reveals that many firms still miss crucial growth opportunities by failing to respond to client inquiries promptly. A real advantage lies in improving client engagement, which will help firms stay competitive, deliver superior service and secure long-term success in the evolving legal market."

This adoption also affects how law firms bill for their time. Data shows that up to 74 percent of hourly billable tasks, such as information gathering and data analysis, could be automated with AI. Something, Newton noted, should be prompting law firms to move away from hourly billing in favor of more flexible options like flat fees to preserve profitability while benefiting from the increased efficiencies AI brings to legal workflows. 

The survey found that 81 percent of legal secretaries and administrative assistants' tasks could be made automatable, compared with 57 percent of lawyers' tasks.

As a result, 34 percent of law firms are charging a flat fee for most of their cases, something 71 percent of clients are in favor of for their entire case. Meanwhile, 51 percent of respondents said they prefer a flat fee for individual activities performed by legal guidance. 

Newton noted that by adopting flat fees, law firms not only put themselves more in line with client expectations, but also improve cash flow and service delivery, positioning themselves to handle more cases efficiently without compromising on quality.

"Clients today expect timely responses and clear communication from their law firms, and those firms that prioritize this are seeing outsized gains in both new clients and revenue," added Joshua Lenon, lawyer-in-residence at Clio. "By incorporating an online intake process and using technology thoughtfully, law firms can address these challenges head-on, creating a more seamless experience from the very first client interaction."

Additionally, Lenon noted that using technology like chatbots to enhance client engagement offers promising potential. More than 51 percent of respondents said their clients find chatbots useful for exploring legal options, however, 67 percent still prefer having the ability to speak with a human when needed. 

This balance of technological efficiency with personal connection, presents a valuable opportunity for law firms to refine their client intake processes and better meet their expectations,” he noted.