Posted by Rachel Ho Mar 16, 2023 2:00:00 PM

In today's age of digitalisation, law firms face a variety of challenges, from adapting to new technologies and staying ahead of the competition, to dealing with regulatory compliance and maintaining client relationships. These challenges can make it difficult for law firms to operate efficiently and effectively. Read on to find out about the top challenges law firms face today. 

Economic Pressures 

Countries globally are facing high inflation, which may affect law firm billing rates as they may not be able to keep up. According to Thomson Reuters, some firms have increased their billing rates by 5.8% in 2022, and billing rates have historically been higher than inflation for the past decade. 

A recent industry survey of 200 partners in the legal industry found that 44% of them are under pressure from clients to reduce fees due to rising costs. 46% of the respondents reported that clients are opting for less expensive competitors.

Given the rising costs for both businesses and clients, law firms are under more pressure to increase efficiency and reduce costs. While technology expenses have increased with inflation, firms should view them as infrastructure investments to streamline processes and improve productivity. Technology will be critical for improving the client-driven experience, allowing more hands-on time with clients while automating routine procedures. 

Integrating a case management system like Tessaract with various internal departments like legal accounting, online payments, and digital signing can bring significant benefits to both law firms and their clients.

The continued war for talent

The legal industry is facing challenges in attracting and retaining top talent, as the competition for skilled professionals increases. This requires law firms to offer competitive salaries, positive work environments, and opportunities for growth and development.

Legal leaders are increasingly concerned about recruitment and talent retention, according to a report by professional services consultancy MD Communications.  The tighter recruitment market has made it easier for lawyers to leave, putting pressure on firms to retain talent through compensation and promotion. 

Additionally, firms must address the challenge of attracting young people to the legal profession, which requires showcasing the attractiveness of the industry as a long-term career path.

Legal tech solutions like Tessaract can help law firms address the challenge of attracting and retaining top talent. By leveraging technology, law firms can offer more flexible working arrangements, enhance collaboration, and improve work-life balance, which can be attractive to younger professionals. Legal tech can also help firms streamline processes and reduce repetitive tasks, allowing lawyers to focus on more high-value work and increasing job satisfaction.


With the increasing use of technology, law firms are also becoming more vulnerable to cyber threats. Data security is crucial for law firms, as they deal with a vast amount of confidential information on a daily basis. This information includes sensitive personal data, financial records, and legal documents, among others. According to ABA’s 2022 Legal Technology Survey, 27% of the survey’s respondents reported their law firm had been breached before.  

What are the most common type of cyber attacks law firm encounter?

Phishing attacks: A common form of cyber security incidents where cybercriminals masquerade as a trusted source via email to obtain sensitive information or gain access to client funds. This presents a significant internal threat as untrained staff may inadvertently click on malicious links.

Spear-phishing: A more targeted form of phishing, where attackers use email spoofing to make messages appear relevant to their targets.

Ransomware: A type of attack that encrypts devices until a ransom is paid, often spread via unsolicited emails with genuine-looking links.

It is critical that firms take steps to protect their data and client information, including implementing robust security measures, training employees on cybersecurity best practices, and having an incident response plan in place.

Driving New Business

The legal sector is experiencing an influx of new law firms every day, all vying for a share of the same market. For example, the rising popularity of doing-it-yourself (DIY) legal services is based on its low cost; making clients expect legal entities to charge them low prices. Besides, legal entities are presenting transparent online pricing models, lowering costs to remain competitive.

Pricing and billing pressures are some of the biggest challenges facing law firms today. For instance, a report by Artificial Lawyer found that 86% of law firms are facing pricing and billing pressure, and many are turning to legal technology to help address these issues. Leading law firms are adopting various strategies to stay competitive, including investing in technology and embracing innovation. By staying ahead of the curve and offering flexible pricing options, law firms can maintain profitability and continue to thrive in a crowded legal landscape.

Unlock Your Law Firm's Potential

Legal tech solutions are becoming increasingly vital for law firms seeking to stay competitive in today's crowded legal landscape. Whether it's managing pricing and billing pressures, enhancing operational efficiency, or fostering innovation, technology can provide invaluable support to legal entities of all sizes. Tessaract's innovative and user-friendly solutions can help you streamline your operations, improve your bottom line, and position your firm for success. Don't wait - sign up for a demo today and take the first step towards transforming your law firm with cutting-edge legal tech solutions.

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Rachel Ho

Written by Rachel Ho