Private client law, including wills, probate, tax, trust and estate-related advice is the most profitable area of law for small law firms, alongside litigation and dispute resolution, according to the latest Bellwether Report from LexisNexis.
These types of work were cited as the most profitable by 42% of respondents in the Bellwether Report 2026: Lean, focused, profitable. However, the report also found firms are struggling to protect their margins amid capacity constraints, talent pressures and inefficient delivery models.
Commenting in the report, Fiona O’Mahony, head of sales and partnerships at the Law Society said many firms are reassessing traditional operating and pricing models as a result of AI. She explained: “While hourly billing remains common, more firms are exploring alternative fee structures and value-based pricing that better reflect client expectations and outcomes.”
Talent is also becoming a more serious constraint, the report suggests. Difficulty attracting or retaining talent rose to27% from from 20% last year, while 25% of respondents cited capacity or resources as constraints to growth, with the same number blaming pressure on profit margins as blockers.
When asked about delivery, inefficiencies in administrative tasks were cited as the biggest workflow issue by 52% of respondents, followed by case management (41%) and document drafting and review (28%). Low overheads also emerged as a weak point, with only 9% rating their firm as excellent in this area.
In response, firms are planning more disciplined and technology enabled growth. The top planned changes over the next 12 to 18 months were reported to be increasing the use of AI in research, drafting and review (41%) and standardising documents and workflows (40%). Two thirds (67%) of firms plan to grow organically, while appetite for mergers and acquisitions has increased from 5% to 8%.
Small firms are more confident in their growth plans than a year ago: 62% of respondents said their firms are growing compared to 58% in 2025 and 48% in 2024. The proportion reporting a decline in revenue fell from 5% to 4%.
Growth across practice areas is evenly spread, with firms offering employment or commercial and corporate services most likely to report growth, both at 66%, followed by property (63%), litigation (63%), private client (63%), personal injury (62%) and family practices (61%). With a very small range across practice areas, LexisNexis suggests growth is not confined to one area of the market.
Firms attribute their success to confidence and client-focused delivery, with 84% rating their client experience as good or excellent. Small firms also point to one point of contact for clients as being a factor, and key strengths were reported as a diversity of skill sets within the firm to solve client issues, a strong culture, and offering a healthy work life balance.
“Growth isn’t just about taking on more work anymore,” Sophia Ramzan, partner and head of residential conveyancing at Watkins Solicitors, told the authors of the report. “It’s more about doing things properly and building trust so clients come back and refer others.”
Only 13% of small firms said they considered retaining current clients as being a challenge for their firm, and none said client retention or repeat work was holding their firm back.
Attracting new business, pressure on price and meeting compliance regulations made up the top three challenges facing SME law firms, followed by cybersecurity and staff burnout.
“Firms have done an excellent job at remaining relevant in a highly competitive and heavily disrupted legal market,” the report notes. “Yet more needs to be done to ensure profitability behind the scenes.”
Editor of the report Dylan Brown said: “Small law firms are going to great lengths to deliver a smooth, sophisticated client experience. The challenge is that too much of that service still depends on stretched teams, manual processes and inefficient workflows behind the scenes.
“The data shows that client service is not the problem. Firms are confident in the relationships they have built and the quality of advice they provide. The bigger issue is whether they can deliver that work consistently, profitably and without adding unnecessary strain.
“The firms best placed to grow will be those that protect what makes them valuable to clients, while becoming leaner, more focused and more disciplined in how work gets done.”
