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The Disruption: How Tech Is Helping Fuel the Rise of the Mid-Market

Since 2022, the demand for the quality and value midsize law firms can provide has been on the rise. Now, in 2024, firms whose names would once never have been uttered in the same conversation as their Big Law counterparts are establishing themselves as forces to be reckoned with.

The fact that the mid-market is increasingly turning heads can be attributed to a wide range of factors. A number of them, though, can be traced back—directly or indirectly—to technology. From the meteoric rise of generative AI and its attendant ability to empower firms to handle large matters with smaller teams, to attorneys' growing preference for a quality of life that only tech-powered flexibility can offer, technology is leveling the law firm playing field to a degree not previously seen.

The Conversation

For midsize firms to make a viable run at Big Law, they had to find a way to meaningfully compete—namely, by solving the ever-elusive "do more with less" riddle and handling the same caliber of work as large firms, but with a fraction of the resources. Historically, the problem seemed unsolvable. While technology has offered the possibility to make inroads for a while now, many firms didn't realize its full potential. Then generative AI came along.

While lawyers at large firms were suddenly, if wrongly, panicking that AI would eliminate their jobs overnight, midsize firms didn't have that problem, because they didn't have lawyers to spare. Instead, generative AI presented the possibility of exponentially expanding the capacity of the small workforces they had, allowing them to take on more, and more complex, work without increasing headcount. Such increased capacity could open the door to a caliber of clients that was once well out of their reach.

Additionally, implementing new generative AI tools, or even overhauling entire systems, was theoretically a less daunting prospect for midsize firms than large firms with massive infrastructures—imagine if changing a tech stack was like steering a motor boat rather than trying to turn a cruise ship. Of course, the theoretical ease of adoption was counterbalanced for many smaller firms by the high price tags that came with generative AI. But those who could find a way to fund the upfront investment are now positioning themselves as powerful competitors in the market and set to reap the rewards for years to come.

Of course, generative AI isn't the only catalyst in play. Midsize firms are increasingly unlocking the power of other modern technologies at lower price points that are helping them to punch above their weight class. It doesn't take the shiniest bells and loudest whistles to have systems in place that allow a mid-market firm to land Big Law-caliber work and clients. A large part of the equation involves flexible, efficient tools that foster security, increased productivity and efficiency, and personalized client service—and that doesn't necessarily mean generative AI. Often it might mean automation, cloud computing, or "traditional" AI, which are far more affordable than the current, buzzy generative AI tools, and put capabilities that once were the sole purview of Big Law squarely in the hands of midsize firms.

It's also important to remember that the mid-market started making notable strides before the generative AI boom (ChatGPT wasn't released to the public until Nov. 30, 2022). It's no coincidence that this came on the heels of the pandemic-driven focus on technology. Firms of all sizes implemented new technologies and leaned into the capabilities of the tools they already had. Workers discovered new abilities to be productive any time, anywhere.

And given their increased agility and flexibility as compared to their larger counterparts, midsize firms were in the best position to benefit from these new, technological, post-pandemic realities of practicing law.

The Significance

While we may not yet be at a full David vs. Goliath final battle, Big Law should start viewing their mid-market counterparts as viable competitors, if they're not already.

The more midsize firms explore generative AI and other technologies and realize the tangible benefits—and not just hype—they bring, the more they'll start to implement them, and the more competitive they'll become. And it's not just the clients who are noticing. Tech-enabled midsize firms are positioning themselves as attractive employers for top talent as well.

In decades past, the move from Big Law to midsize firms often meant choosing between quality of work or quality of life. Now, midsize firms are competing for complex cases and major clients, while also offering the same quality of life they were always known for, if not better. Big Law, on the other hand, is still stuck on one side of the equation. They offer the quality of work—a pie that the mid-market is consistently eating into—but they're not coming around on the quality of life.

If anything, many are obstinately swimming upstream against it. The pandemic brought with it remote work, and, as it turns out, a lot of attorneys liked it. Now, law firms are implementing ever-stricter return to office policies, continually increasing the required number of in-office days, despite the demonstrated effectiveness of technology and remote work during the pandemic. And they're doing it in the face of survey after survey that shows that associates detest firms that prioritize profits over people, are unhappy with return to office policies, and would leave their jobs for better work-life balance.

The time for midsize firms to make a play for these unhappy yet talented associates is now, when they can offer the perfect storm of top work and ideal lifestyle, both enabled by technology.

The Information

Want to know more? Here's what we've discovered in the ALM Global Newsroom:

The Forecast

The mid-market will likely be seen as even more of a competitive threat in the coming year and beyond. As generative AI tools become more widespread, and as the prices of those tools come down, the capacity of these firms to do more with less staff and fewer resources, and to court top clients, will only increase, allowing them to gain even more of a competitive advantage against their Big Law counterparts.

As the mid-market strengthens, more Big Law talent who only previously considered jumping ship will start to turn thought into action, unless their employers make a concerted effort to retain them. While a few firms have started to decrease office size in favor of more modern, flexible work environments, plenty of firms are holding steady on a course set for traditional offices with five-day, in-office work weeks, relying on pedigree to attract talent, as it long has. If they refuse to deviate and consider new paths, they risk losing attorneys who want more modern careers.

David may not win the battle this year, but technology has opened the doors to Goliath's arena.

Stephanie Wilkins is the Editor-in-Chief of Legal Technology and Legaltech News at ALM. Contact her at [email protected] and follow her on LinkedIn.