FLAGSHIP REPORT REVEALS WELSH LAW FIRMS ARE OPTIMISTIC ABOUT GROWTH, BUT FACING A TRANSFORMATION CROSSROADS

Law firms in Wales are optimistic about growth but face significant challenges around recruitment, succession, technology and the future law firm model, according to a flagship report pubished today and drawing on the views of more than 50 firms across Wales.

With 96% of respondents in senior leadership, management or operational roles, the Welsh Legal Sector Transformation Report 2026, produced jointly by Legal News Wales and independent legal software provider Osprey Approach, shares the views of those directly responsible for running and managing Welsh legal practices, and what they believe needs to change for the sector to thrive over the next decade.

Key findings

47% of Welsh law firms expect to grow over the next 12 months, although two thirds (67%) of those firms are currently flat or declining.
Recruitment, retention and talent loss are the biggest threat facing the sector, with 100% of firms saying recruiting qualified solicitors is at least moderately difficult.
42% of firms have no succession plan in place, with 33% identifying a lack of suitable internal candidates as a barrier.
Technology and AI are seen as the biggest opportunity for Welsh law firms, cited by 27% of respondents, while 46% identify accuracy and reliability as their biggest concern about AI adoption.
66% believe technology investment would be the most strategically beneficial investment area, ahead of training and staff recruitment.
48% of firms are either unsure or do not believe their current business model will be sustainable over the next 10 years.
Not a single firm primarily using the billable hour reported improved performance this year, while hybrid pricing firms recorded the strongest performance.

Optimism meets reality

The research reveals a sector that is holding its nerve despite challenging conditions. Almost half of firms expect to grow next year, but two thirds of those currently report flat or declining performance, suggesting that much of this optimism is based on the expectation of a turnaround rather than existing momentum.

For firms looking to achieve that growth, the findings highlight some fundamental questions around how they recruit, price and operate.

Recruitment, retention and talent loss emerged as the biggest threat to the sector, with every firm reporting that recruiting qualified solicitors is at least moderately difficult. The challenge extends into succession, with 42% of firms having no succession plan and a lack of suitable internal candidates the biggest barrier cited.

There is also a gap between what firms would like to see from the sector and what they currently adopt themselves. Training, apprenticeships and qualification routes were the second most requested change, yet 82% of firms rely on traditional training contracts to recruit junior lawyers, compared with just 24% using legal apprenticeships.

Pricing also emerges as a potential strategic lever. While fixed fee remains the dominant model, not a single firm primarily using the billable hour reported improved performance this year. Hybrid pricing firms were the least likely to report declining performance and the most likely to have improved.

Technology offers an opportunity to lead

Technology and AI emerged as the biggest opportunity for Welsh law firms, but the findings suggest firms want to adopt them responsibly rather than simply pursue new technology for its own sake.

Accuracy and reliability is the biggest concern about AI, while firms with dedicated technology roles are more likely to be focused on risks such as confidentiality and staff misuse. Meanwhile, only 8% of firms have dashboarding or business intelligence tools, suggesting there are still significant opportunities to improve how firms use the technology they already have.

Emma Waddingham, founder of Legal News Wales, said: “It’s our mission to use this report to understand better the evolving ambitions and challenges facing the legal sector in Wales, particularly in the context of wider social and economic pressures, and potential political change ahead. By doing so, we can help structure meaningful collaboration, signpost relevant support, and shape future events that genuinely empower the sector.”

Amy Bruce, marketing director at Osprey Approach, added: “Digital maturity isn’t just an efficiency question for Welsh law firms anymore, it’s a question about who gets to shape the next decade of this sector, rather than simply adapt to it. Something that struck us most in this research is how many firms are sitting on more capable technology than they give themselves credit for. The gap we kept seeing wasn’t capability, it was clarity.”

The findings suggest that while Welsh law firms are confident about their ability to grow, turning that ambition into reality will require deliberate choices around talent, technology, pricing and the future structure of their businesses.

Kindly shared by Osprey Approach