Client focus & AI adoption shape Australian law firms

Actionstep has released new research on the priorities and constraints facing Australian midsize law firms. It shows a continued focus on client satisfaction as firms manage workload pressure, recruitment challenges, and uneven progress in technology modernisation.

The 2026 Australian Midsize Law Firm Priorities Report draws on responses from 400 professionals at firms with 20 to 300 employees, spanning legal, administrative, operational, and leadership roles. Actionstep conducted the research with Agile Market Intelligence.

Client satisfaction emerged as the top strategic priority for 2026, with 61% of midsize firms ranking it as their main focus-continuing an upward trend over several years. The findings suggest firms are maintaining a client-centred stance despite persistent internal constraints.

Growth focus

On growth, firms expect gains to come mainly from new clients in existing markets, rather than major expansion. The research found 56% expect growth from new clients within current markets. Cross-selling and upselling to existing clients also featured strongly (47%), while 36% identified referrals as a growth driver.

This emphasis points to a preference for incremental change. The report describes the sector as resilient but constrained by capacity and systems, favouring operational alignment over radical transformation.

Talent constraints

Recruiting and retaining staff remains a persistent issue. Talent recruitment and retention was cited by 44% of respondents as the most significant challenge, with no material improvement compared with previous years.

Workload pressure is another recurring theme. Two-thirds of respondents (66%) identified workload and time pressure as the biggest barrier to delivering exceptional client experiences. The data suggests a gap between client service ambitions and the time and staffing available to meet them.

AI goes mainstream

The report points to wider use of generative AI tools across midsize firms, with 56% now using them-framed as a shift into mainstream adoption.

Respondents also flagged barriers that continue to limit broader uptake. Data privacy concerns were cited by 55%, followed by unreliable AI performance (51%). Lack of understanding was mentioned by 41%, and 38% pointed to compliance risk.

Technology investment priorities leaned towards cost control and efficiency. Cost reduction was the leading driver of technology investment for 59% of firms, indicating a focus on operational leverage rather than experimentation.

Systems and friction

Views on technology environments were mixed. Overall, 43% of firms described their environment as integrated and functional, while 18% reported having a modern and optimised ecosystem.

When asked where tools and systems most often create friction in daily work, task and workflow management topped the list (33%). Billing followed (31%), then document management (29%). Time recording was cited by 24%, document creation by 23%, and technology integrations by 22%.

These findings point to pain points across the matter lifecycle and highlight where firms may see productivity gains from standardising processes and tightening system integration.

Metrics stay traditional

Many midsize firms still judge performance through traditional financial measures rather than broader strategic indicators. Billable hours remained the most commonly used metric (61%). WIP and aged WIP followed (50%), and revenue per fee earner or matter was cited by 45%.

By contrast, only 12% reported tracking strategic indicators such as client lifetime value. Matter lifecycle efficiency was cited by 11%, while client Net Promoter Score registered at less than 8%.

The reliance on established measures may reflect both cultural norms and system limitations. It also aligns with the report's theme of incremental improvement, with firms prioritising operational alignment over major reinvention.

Actionstep said the 2026 results point to a need for closer alignment between strategy, technology, and people as firms respond to shifting client expectations and faster technology change.

"As law firms adapt to changing client expectations and grapple with the fast pace of technology advancements, our research highlights the importance of understanding what truly drives success-whether it's leveraging the right talent, optimising processes, or utilising technology in ways that align with the firm's goals. The 2026 results further underscore the importance of aligning strategy, technology, and people to deliver client-centric value, while making practical, incremental improvements rather than pursuing disruptive change," said Zahn Nel, Regional Vice President, ANZ, Actionstep.

The Australian report is the first in Actionstep's 2026 global midsize research series, with UK and US versions due in the coming months.