People, prices, problems: The key risks lawyers face in 2024

The legal industry is facing a ton of pressures and challenges in 2024. Economic uncertainty, technological disruption, political unknowns, and workforce retention issues are reshaping how law firms operate, what they prioritize and what’s keeping them up at night. 

A 2024 survey commissioned by Embroker gathered insights from 200 legal professionals on the top risks they face — and how they’re adapting to stay ahead. Despite ongoing challenges, we found that the legal sector remains largely hopeful for the future. 

Optimism amid uncertainty

Similar to the tech industry, in which 82% are optimistic for the future, the professional sector is experiencing a flood of optimism. An impressive 70% expressed optimism about the health of their business in 2024, with many pointing to successes in brand recognition (46%), industry partnerships (46%), and strong financial performance in the front half of the year (42%) as key reasons.

However, external pressures still cast a shadow, with 52% of lawyers citing future economic uncertainty and 47% pointing to political uncertainties as key risks. 

The price of business: Inflation concerns reign supreme

Rising costs continue to plague lawyers. This persistent financial pressure is expected to remain for some time, prompting law firms to seek ways to counter them in 2024. 

• 50% of attorneys view inflation as the biggest threat to their business this year.
• 35% are focusing on sales and revenue growth to counter inflationary pressures.

A people problem: Recruitment and retention woes

While the U.S. job market remains relatively strong — USA Today reports average job growth of 170,000 per month since April 2024 — it’s not all sunshine for law firms. They face an uphill battle when it comes to hiring and retaining talent, citing continued struggles to find and keep experienced attorneys both last year and this year.

• 50% of law firms faced employee retention challenges in 2023.
• 52% of legal professionals are making employee retention and hiring a top priority in 2024.
• 46% are focusing on networking to help expand their talent pools.

A recent compensation report by Law360 Pulse found that only 52% of surveyed lawyers are satisfied with their total compensation. Given the reality of remote and hybrid work’s growing popularity, law firms may need to rethink traditional models to stay competitive in their war for talent.

AI hesitation: Lawyers are slow to adopt

AI might be transforming industries around the globe, but the legal sector is still treading carefully. While the technology offers enormous potential for improving efficiency, 76% of legal professionals remain wary about AI adoption, pointing to concerns about data privacy, misuse and cybersecurity risks — even while some cite using AI to enhance their cyber risk measures. 

• Only 22% of lawyers report using AI internally or externally at work, with 48% of this subset using it for content drafting and 39% for analyzing large datasets.
• 33% use AI to enhance cybersecurity, but 39% report being hesitant due to concerns about cyberattacks or other security vulnerabilities tied to AI systems.

And there’s good reason to be hesitant given the lack of well-established industry standards. The American Bar Association (ABA) just recently issued its first ethics guidance on the use of AI, highlighting obligations in ensuring competency, informed consent, and confidentiality. 

More than half of lawyers (51%) expect government oversight of AI to increase soon. Potential policy and litigation changes present additional challenges for law firms, with 44% citing these shifts as significant risks going forward. What remains to be seen is whether law professionals will lean into AI tools more so once further guardrails and industry standards are established.

Risk management: The need for change

Perhaps the most surprising finding of all is that lawyers don’t feel adequately insured, yet many have no plans to fill this gap. Only 14% of attorneys surveyed plan to enact new or higher-limit insurance policies, despite recognizing their vulnerability. 

• Only 36% have plans to adapt their overall risk management approach this year.
• 58% are relying on training programs to improve employee risk awareness, while 39% are improving crisis management protocols to better respond to unexpected events.
• 52% believe their current insurance policies would either only partially cover their firm in the event of a data breach, or not at all.

In a world where data breaches and cyberattacks can spell disaster for any business, this reluctance to fully invest in comprehensive insurance coverage is a risk in and of itself.

Staying ahead of risks with the right coverage

As law firms face unknowns surrounding inflation, workforce challenges, and technological disruption, staying prepared is more important than ever. 

Embroker’s Law Program, including Professional Liability (LPL), Cyber Liability, Business Owners Policy and Workers Compensation, is designed to help law firms manage these risks, covering everything from employment disputes to data breaches to financial fallout from technology failures. 

To view the full 2024 Law Risk Index, go to www.embroker.com/2024-legal-risk-index/. To learn more about Embroker’s customized coverage developed specifically for legal professionals, visit https://www.embroker.com/law/.