The Welsh Legal Sector Transformation Report, launched by Legal News Wales and Osprey Approach today, reveals an ambitious profession preparing for growth while facing significant challenges around profitability, recruitment, succession, technology and access to legal services.

A major new study of Welsh law firms has revealed a legal sector optimistic about growth and increasingly confident in its use of technology – but facing persistent challenges around recruitment, succession, profitability and the long-term sustainability of legal services.

The Welsh Legal Sector Transformation Report 2026, published by Legal News Wales in partnership with Osprey Approach Legal Software, draws on responses from over 50 Welsh SME law firms and in-house teams, ranging from sole practitioners to organisations with more than 150 fee earners.

The research asked 46 questions spanning financial performance, pricing, technology, people, succession and the future of legal services, with follow-up interviews providing further insight from those working across the sector.

Ambitions are high but growth stalling

Almost half of respondents expect to grow during the next 12 months. Yet beneath that optimism is one of the report’s most revealing findings: 67% of firms anticipating growth are currently flat or have declined slightly during the past year.

It means much of the sector’s growth expectation is based not on existing momentum, but on firms successfully changing their trajectory.

Emma Waddingham, Editor of Legal News Wales, said this tension between ambition and the foundations needed to deliver it runs throughout the findings:

“There is serious and justified ambition within the Welsh legal sector, but the next challenge is turning that ambition into sustainable, profitable and resilient growth.

“That means looking beyond turnover or headcount and asking harder questions about how our legal businesses operate, where value is being lost, whether firms have the right people and future leaders, how effectively technology is being deployed and whether the underlying business models are equipped for what comes next.”

£150,000 a year potentially ‘left on the table’

Among the most striking commercial findings is the level of billing written off by firms.

The average proportion of annual billing written off across respondents sits at just under 14%. Applied to a firm turning over £1 million, the report estimates that could represent as much as £150,000 a year.

Rather than treating write-offs simply as a pricing issue, the report points towards factors including time not being captured promptly, scope creep and processes that make writing off work easier than accurately capturing and billing it.

Emma said the finding should prompt firms to consider whether some of their next growth opportunity may already exist inside their businesses.

“We understandably spend a great deal of time talking about winning more work, attracting new clients, lateral hires, entering new markets, opening offices, mergers and acquisitions.

“But how much value is already being created inside our firms and not converted into revenue? Why is it being written off? Is it pricing, scoping, productivity, time recording or process – and are firms measuring it closely enough to know?

“Increasing turnover is one measure of success. Building a business that understands its margins, improves productivity and converts more of the value it creates into revenue is another.”

Pricing itself also produced one of the report’s most notable correlations.

Fixed fees remain the dominant primary pricing model, used by 56% of respondents, followed by hybrid models at 22% and the billable hour at 18%.

No firm primarily operating a billable-hour model reported improved financial performance during the year, while 36% of those using hybrid pricing reported significant improvement. The report cautions against treating the finding as an argument for abandoning time-based billing, instead suggesting pricing should be treated as a strategic business decision rather than an inherited default.

Recruitment & succession create a ‘thin pipeline’

As expected, recruitment presents another significant challenge. Every respondent described recruiting qualified solicitors as at least moderately difficult, with recruitment, retention and talent loss identified as the biggest threat to the sector. Private client and family practices reported particularly acute pressure.

The concern becomes more pronounced when recruitment is considered alongside succession.

The report finds 42% of firms have no succession plan currently in place, including those planning to develop one, while a third identify a lack of suitable internal candidates as a barrier.

The finding was unaffected by firm size, number of technology tools or reported digital maturity, suggesting succession is a shared sector-wide challenge rather than one confined to particular types of practice.

Emma added:

“For many years we’ve talked about attracting and retaining legal talent in Wales. We now need to think just as seriously about how we develop the next generation of leaders and owners of Welsh legal businesses.

“Recruitment becomes a business resilience issue when it sits alongside succession, leadership development and questions about whether the traditional routes into ownership remain attractive to the next generation.”

Almost half – 48% – of respondents also either do not believe, or are unsure, that their firm’s existing business model will remain sustainable over the next ten years. Just 8% believe the traditional partnership model will still dominate in a decade.

Welsh firms have the technology but are they getting enough from it?

Technology produces a more nuanced picture. Despite the challenges reported elsewhere, the study found strong digital foundations across Welsh firms. More than 94% have document management, practice or case management and e-signature technology in place.

The report states that 42% have no dedicated IT or technology role, while a further 24% rely on someone such as a practice manager or operations lead to manage technology alongside their principal role.

Intriguingly, firms with dedicated technology roles reported the lowest confidence in adopting new technology, despite having more tools and recording stronger financial performance.

No respondent with a dedicated technology role described their firm as “extremely confident” in adopting new technology, compared with 58% of firms operating a dual-role approach. Yet 47% of firms with a dedicated technology resource had improved financially, compared with 33% of dual-role firms and 14% of those with no dedicated role.

Amy Bruce, Osprey Approach said the finding reflected something it sees regularly among SME firms.

“You don’t need a large in-house team or a five-figure tech budget to make good, confident decisions about technology. You need clarity on the problem you’re actually trying to solve, and a partner who’ll help you get there without needing you to become a specialist yourself.”

The report also raises questions about whether the next stage of digital transformation requires more software at all.

Only 8% of respondents use business intelligence or dashboarding tools, despite reporting and performance data being identified as an inefficient process by 30%.

Meanwhile, 59% of firms describing billing as inefficient already have dedicated billing software, with between 70% and 95% of those highlighting problems with time recording and document drafting also already owning the relevant technology.

Emma said this reinforced conversations Legal News Wales has been having with firms as the pace of AI adoption accelerates.

“The pace of change has led even some firms that have been leading on transformation to pause, reflect on developments so far and scrutinise more closely the data underpinning their technology decisions.

“For me, that’s not a loss of momentum or fear. It suggests the conversation is becoming more mature and decisions more evidence-based.

“The next stage shouldn’t simply be about having more technology or adopting AI faster. It should be about understanding the business problem, getting the underlying data right and investing where technology can deliver measurable value.”

AI nevertheless represents a major opportunity in the eyes of respondents. Technology and AI adoption was the most frequently identified opportunity for the Welsh legal sector over the next decade, cited by 27%.

Firms are approaching it cautiously, however: 46% identified accuracy and reliability as a leading concern, followed by confidentiality at 38%.

An opportunity hiding in existing client relationships

The data challenge also extends to client relationships.

More than a quarter of respondents are unsure what proportion of their clients use their firm for more than one service. Among mixed-practice firms, that rises to 53% – meaning the businesses with the greatest number of services to cross-refer between have the least visibility of whether that is happening. Emma suggested that:

“Growth doesn’t always require finding another client. It can come from understanding existing relationships better, identifying where clients require additional expertise and making it easier for them to access the breadth of services already available within the firm.

“Perhaps one of the broader messages from this research is very simple: before deciding where the business goes next, understand the business you have now.”

Access to justice presents a very different growth picture

While much of the research points to opportunity, some of its starkest findings concern the future availability of legal advice.

Only 24% of respondents believe individuals and small businesses in their area have adequate access to affordable legal advice.

Among respondents for whom legal aid was relevant, 74% described provision as increasingly difficult and 21% said it was not viable in the long term. Just 5% regarded it as sustainable.

Legal aid firms performed broadly in line with the wider sector during the previous year, but their outlook was markedly different: only 17% expect growth, compared with 56% of firms undertaking no legal aid work.

Commercial resilience and access to justice could not be considered entirely separately, as Emma explained:

“A strong Welsh legal sector cannot simply mean that our largest or most commercially successful firms become larger and more profitable.

“It must also mean maintaining sustainable access to legal expertise across Wales – geographically and across the areas of law individuals, families and businesses need.

“Otherwise, we risk an uncomfortable contradiction: a Welsh legal sector that becomes commercially stronger overall while some communities find it increasingly difficult to access legal advice.”

‘Wales already has the ingredients to lead rather than follow’

For Osprey Approach, one of the reasons for optimism extends beyond the numbers. The legal technology provider said its experience of working with firms and running events in Wales had revealed an unusually collaborative market, with firms willing to discuss their experiences and learn from one another. Amy said:

“There’s something else this research can’t quite capture: the willingness of firms in Wales to compare notes with each other.

“We run roundtables and events across the country, and the openness in the room is unlike almost anywhere else we work in the UK. Firms swap what’s worked, what hasn’t, and what they’d do differently, in a way that would be unthinkable between competitors in most other markets.”

That collaborative culture could become an important advantage as firms navigate the next phase of transformation, said Amy, who added:

“Across dozens of conversations with people running firms of every size, one pattern comes up more than any other: the firms that are successful aren’t the ones chasing every new tool or every new headline about AI. They’re the ones with a genuinely clear idea of what they’re trying to build, and the discipline to make decisions in service of that rather than in reaction to whatever’s loudest that month.

“Put those things together – firms confident enough to make their own calls, a sector willing to learn from each other in the open, and leaders who know what they’re building rather than chasing the next headline – and it’s hard not to feel genuinely optimistic about where this is heading. “Wales already has the ingredients to lead rather than follow.”

That sentiment is reflected in the report’s conclusion. Rather than benchmarking Welsh firms against London or generic UK-wide data, the research is intended to give Welsh legal businesses a picture against which they can assess themselves – and identify the one or two findings worth taking back to their own leadership teams. Legal News Wales and Osprey Approach intend the research to form the start of an ongoing conversation rather than a one-off study.

For Emma, the ambition now is to turn evidence into action:

“I hope this report benefits many across the Welsh legal community – whether by providing useful benchmarking, prompting a different conversation around a leadership table, informing an investment decision or simply encouraging a firm to ask a question about its business that it had not considered before.

“The Welsh legal sector isn’t short of ambition. Our challenge now is to turn that ambition into sustainable, profitable and resilient legal businesses – while ensuring the legal services Wales needs remain accessible for the future.”

The Welsh Legal Sector Transformation Report 2026 is published in partnership by Legal News Wales and Osprey Approach. The research surveyed 51 organisations across the Welsh legal sector and was conducted during 2026.

The report also features commentary from experts in the business of law, including:

• Jeff Wright, Chief Experience Officer, Redkite Solicitors
• John Cullen, Insolvency Partner, Menzies LLP
• Ryan Pryce, Associate Director, TSR Legal Recruitment
• Chelsea Goldsby, Operations Director, Osprey Approach
• Shaun Jardine, CEO, Big Yellow Penguin

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