Brace yourself. As 2025 approaches, corporate America may be on the verge of a litigation boom. And the surge in demand may present unique opportunities for midsize and smaller firms.

BTI Consulting Group recently released its annual litigation outlook, which surveys law firm clients and analyzes potential spending and trends for the year ahead. The report posits that disputes are becoming more aggressive and complex and increasingly involve bet-the-company matters. In response to BTI’s survey, 57 percent of clients said they plan to boost their litigation budgets next year—an increase compared to 2024. And those increases are likely to be large, with more than two-thirds expecting to expand their spending by 10 percent or more.

While clients said they are becoming more selective in choosing their legal counsel, they are also looking beyond established relationships with outside counsel to find law firms that can offer fresh perspectives and innovative strategies. “More new matters and more complexity translate to new demands,” BTI wrote. “Clients are on the prowl for law firms comfortable breaking new ground — and quick to act.”

For midsize and smaller firms, this shift in perspective presents another opportunity to step into the spotlight—particularly as larger firms struggle to contain costs. Many clients, especially those facing budget constraints, are actively seeking out firms that can offer specialized services at a lower price. And by some estimates, switching from a large to midsize firm can mean a 30 percent cost saving for corporations.

Novel Legal Issues

According to the BTI report, five areas of litigation—class actions, labor and employment, complex commercial, cybersecurity, and bet-the-company matters—are showing “acute demand.” Clients are facing an unprecedented number of novel legal issues in areas such as cryptocurrency, social media and online disputes, which is driving demand for firms with specialized knowledge. For midsize and smaller firms, this is an opportunity to carve out a niche in these evolving sectors.

In its 2024 litigation trends report, Norton Rose Fulbright noted that 40 percent of organizations in its survey saw their litigation exposure over cybersecurity issues increase, driven by cyberattacks and increasingly complex data protection regulations. Artificial intelligence, the report said, “is a leading contributor to both cybersecurity exposure and IP vulnerabilities, with roughly half of respondents saying that the increased use of AI technology will grow their exposure in both areas.”

The ability to offer niche services may allow midsize and smaller firms to differentiate themselves in a crowded market. And those firms may have the flexibility to adapt more quickly to changes in the legal landscape compared to their Big Law counterparts. This agility enables them to offer clients more personalized, creative solutions—something that larger, more bureaucratic firms may struggle to provide. In a rapidly evolving litigation market, the ability to think creatively is a significant competitive advantage.

Focusing on the Value Proposition

While the growth in litigation demand presents opportunities, it also introduces new challenges. As clients become more selective in choosing law firms, midsize and smaller firms must focus on refining their value propositions. According to the BTI report, many clients are looking for firms that can offer more than traditional legal services; they are seeking partners that provide strategic guidance and risk management​.

This means that firms must demonstrate their ability to help clients manage risks, foresee potential legal challenges, and navigate complex regulatory environments.

The clients surveyed by BTI also appear less reliant on formal requests for proposals (RFPs), relying instead on personal referrals and referral networks. For midsize and smaller firms, this emphasizes the importance of maintaining strong client relationships and actively participating in industry networks. Thought leadership on emerging litigation issues can help firms stay top-of-mind with potential clients and demonstrate their expertise.

Preparing the Way

If the rosy litigation outlook holds, firm leaders may wish to:

1. Invest in Specialization: To stay competitive in 2025, midsize and smaller firms may want to focus on developing expertise in emerging areas like cybersecurity, cryptocurrency, and intellectual property, as well as more traditional class action, labor and employment and complex commercial disputes.

2. Prioritizing Referrals and Thought Leadership: If RFPs are indeed declining, firms would do well to prioritize networks and peer referrals and boost thought leadership to enhance relationships with current and potential clients.

Increased litigation demand in 2025 presents midsize and smaller firms with an opportunity to set themselves apart from the competition. Firms that are most likely to thrive are those that can pivot quickly, adapt to evolving client needs, and showcase deep expertise—particularly in emerging areas.

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