In 2025, small and medium-sized law firms aren’t trying to outspend or outscale their rivals. They’re choosing to outthink them. According to The Bellwether Report 2025, the sector is cautiously optimistic and increasingly strategic about how it allocates its resources. The result is a quiet evolution: not transformation through radical change, but growth through smarter, more deliberate investment.
If 2024 was the year of holding back, 2025 is shaping up to be the year of moving forward, but only in ways that serve a clear purpose. The report reveals that firms are not investing more, necessarily, they’re investing better.
Hiring is picking up after a cautious period. Nearly a quarter of firms (23%) reported recruiting new lawyers in the past year, up from just 16% the year before. What’s striking, however, is the deliberate nature of this growth. Recruitment isn’t being driven by expansionist ambition; it’s rooted in practical needs like maintaining service quality and easing pressure on senior lawyers. Another 39% of firms expect to hire in the coming 12 to 18 months, broadly in line with last year’s forward plans.
The data signals a shift from reactive hiring to more intentional workforce planning. As Tim Rayner of UUÂãÁÄÖ±²¥ observes, this is about capacity management, not empire-building.
"This trend reflects a carefully balanced approach to talent management, prioritising capacity without overextending."
Technology spend has held relatively steady compared to 2024, but a closer look reveals a more interesting trend: firms are becoming more confident in their technology choices and more deliberate about when and how they invest. Almost one-fifth (17%) of firms have already increased tech spend this year, while 43% have plans to do so, up from 35% in the previous report. This suggests a staggered investment cycle, where firms are carefully evaluating existing systems and plugging gaps rather than buying into the latest trend.
AI is an important part of this conversation. Nearly four in ten firms (39%) say that artificial intelligence has influenced their decision to invest in technology, up from 33% last year. But this is still far from a full embrace. Most firms remain in the testing and exploration phase, actively trialling tools for document drafting, legal research, and administrative support. Adoption is growing steadily, with many seeing early wins in speed and consistency. While security, usability, and integration are still key considerations, the focus is increasingly on how to embed AI effectively into daily workflows. There’s a growing recognition that successful adoption isn’t just about choosing the right tools, it’s about supporting teams to use them with confidence and purpose.
As Rayner puts it, poor tech choices can be as damaging as no tech at all. That sentiment appears to be widely shared, with firms pacing their investment to avoid costly missteps.
Though small firms have traditionally relied heavily on referrals, there is growing awareness that even referral-led businesses need to look credible and visible in the digital age. Investment in marketing and business development remains modest but is clearly trending upward, with 16% of firms increasing their marketing spend this year and a further third plan to do so in the near future. Business development follows a similar pattern, with 11% reporting increased investment and 36% preparing to follow suit.
This gradual shift suggests firms are building their growth foundations more intentionally, recognising that marketing isn’t just about attracting new clients, it’s also about reinforcing relationships and demonstrating legitimacy. Whether it’s updating a website, producing thought leadership content, or improving social media presence, firms are beginning to treat visibility as a necessary ingredient of resilience.
Another area of understated but important investment is in legal research, guidance, and practice area specialisation. Around 10–11% of firms have already increased their spend in this area, with a further 26–27% planning to do so. These moves might not generate headlines, but they offer a clear strategic edge. In a market where clients increasingly demand speed, clarity, and subject-matter expertise, having access to reliable, up-to-date legal information is non-negotiable.
Investments here signal a move away from the idea that only the biggest firms can offer quality and towards a future where smaller practices compete through agility and depth. It’s another sign that firms are choosing to invest in infrastructure that delivers consistent client value rather than chasing size for its own sake.
The rise of generative AI is clearly influencing investment decisions, but the industry is still navigating its role in day-to-day operations. While usage of AI are increasing, 72% of lawyers now report using open-web resources regularly, the application of structured data and analytics remains underwhelming.
Nearly half of all small firms (46%) still don’t use data or analytics in any meaningful way. Even among those that do, the use is limited: 27% track team performance, 18% apply data to pricing strategies, and just 11% use it to assess risk. The potential of data as a strategic asset remains largely untapped.
There are good reasons for this caution. Many data tools are built for high-volume environments and come with significant cost, integration complexity, or long-term contracts. For smaller firms, the return on investment can be unclear. But the risk, as many experts warn, lies not just in missing out, but in misusing partial data, leading to bad decisions based on incomplete insights.
What emerges from the Bellwether data is a picture of a sector learning to say no to bad hires, unnecessary tech, expensive mergers, and high-risk experiments. Instead, firms are choosing to focus their investment where it delivers immediate operational benefit or long-term strategic value. It’s an approach that values flexibility and cultural cohesion just as much as profitability.
Crucially, this is not a story of stagnation. It’s a story of quiet evolution. Of firms that understand they don’t need to transform everything at once, but do need to keep moving. Marginal gains may not make for dramatic headlines, but in a competitive and resource-constrained environment, they are exactly what separates the firms that endure from those that don’t.
Download the full report for free here.
* denotes a required field
0330 161 1234