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Firm Performance
For decades, profitability in law firms was measured by billable hours and partner equity. Today, that equation is being rewritten. SurePoint Chief Brand & Market Strategy Officer Olivia Mockel explores how technology, talent expectations, and client demands are converging to create a new model—one that rewards efficiency, transparency, and strategic alignment.
By Olivia Mockel, Chief Brand & Market Strategy Officer, SurePoint Technologies
Part of SurePoint’s Beyond Practice Management: The Future of Firm Performance series
In the last article in SurePoint’s Beyond Practice Management series, Chief Product Officer Jamie Nawrocki explored how legacy systems quietly erode law firm performance. Now, we turn our attention to the next frontier: how automation and AI are reshaping the very definition of profitability.
For decades, profitability in law firms was measured by billable hours and partner equity. Today, that equation is being rewritten. Technology, talent expectations, and client demands are converging to create a new model—one that rewards efficiency, transparency, and strategic alignment.
Artificial intelligence is no longer a novelty—it’s a necessity. According to SurePoint Legal Insights survey data, more than one-third of firms report using AI tools in their daily work. But usage alone isn’t the story. Expectations are rising. Firms are exploring generative AI for contract drafting, automating redundant tasks, and enhancing compliance—all within secure, closed environments.
Yet adoption remains uneven. Some respondents stressed that access to current technology is still “extremely challenging,” while others noted that their departments fall significantly behind peer organizations. This creates a troubling paradox: the firms that most need AI to remain competitive are often the least equipped to implement it effectively. Many continue to struggle with access, integration, and strategy—despite rising expectations and clear operational advantages.
Firms that lead in AI adoption are gaining operational advantages. Those that lag risk falling behind—not just in efficiency, but in relevance.
Client pressure is reshaping profitability just as aggressively. Alternative fee arrangements (AFAs) are no longer “alternative.” Nearly 54% of respondents confirmed their organizations use AFAs, with fixed and flat fees leading the way at 95% adoption among those who offer them. Capped and blended structures follow closely behind.
Corporate legal departments are under mounting pressure to do more with less. They are bringing work in-house, shifting engagements to smaller firms, and using AI themselves to manage legal spend. In this environment, traditional hourly billing is becoming increasingly unsustainable—particularly for routine or commoditized legal services.
As one general counsel put it bluntly, “The business does not understand how limiting our lack of document management software is… and we are not paying for lawyers to spend hours doing what software can do in seconds.”
Firms that fail to adapt risk shrinking margins—or losing clients altogether.
Internally, the definition of profitability is also shifting. While income generation remains closely tied to partner status, the traditional path to partnership is unraveling. According to SurePoint Legal Insights survey data, nearly 60% of partners said they received no formal training in firm financials, team leadership, or business development when they were promoted.
Titles such as senior partner, special counsel, and profit-sharing partner reflect growing flexibility—but also growing uncertainty. Firms are experimenting with contract roles, consulting arrangements for post-retirement partners, and other alternative structures, yet there is little consensus on what a sustainable partner track should look like today. More than 26% of respondents anticipate reductions in equity status in 2025, while nearly 47% reject the concept of a two-tiered non-equity partner system altogether.
This lack of clarity matters. If firms cannot clearly define how profitability links to performance—and if high-value, non-billable contributions such as mentoring and recruiting (which 66% say are recognized but often uncompensated) remain unmeasured—retention and morale may suffer.
Where, then, will firms find future profits? In a SurePoint Legal Insights survey focused on lateral hiring, more than half (54%) of respondents pointed to lateral hiring as the primary source of growth, with another 39% citing a combination of lateral moves and acquisitions. Litigation, in particular, is expected to see the most expansion, with nearly 57% anticipating lateral growth in that practice area in 2025.
Yet the infrastructure supporting this growth often falls short. Many firms lack basic project management tools to support lateral integration. As one recruiter noted, “We need better technology to track the integration process.” Another cited the absence of a dashboard or candidate tracking system that would allow leadership to see all relevant data in one place.
Technology, once again, emerges as both the missing link and the potential unlock. With a mean lateral hiring budget exceeding $4 million, the issue is not investment—but whether that investment translates into ROI. Without the right systems in place, even aggressive growth strategies can underperform.
The clearest takeaway from the data is that profitability is no longer a simple equation of billable hours versus expenses. It is now a multidimensional model shaped by technology, talent, and evolving client expectations.
Today, that equation includes:
As one survey respondent summed it up: “I need a system that is easy to use, a market intelligence resource, and someone to analyze the data.” That is not a traditional request from a law firm—but then again, law firms are not traditional anymore.
The firms that succeed will be those that align technology adoption, talent strategy, and client-focused pricing within a unified approach. For those that do not, the cost will not only be financial—it may be existential.
Next in the Series:
In Transformation in Action: How Forward-Thinking Law Firms Are Redefining Success, Olivia continues this discussion by exploring how leading firms are embracing innovation, empowering internal change agents, and redefining success through agility, culture, and strategic reinvention.
Follow the full series: Beyond Practice Management: The Future of Firm Performance
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