Professional services firms have demonstrated remarkable adaptability as they evolved to meet the fluctuating business environment over the past few years. Now, as firms settle into today’s new paradigm, they are bracing for fresh challenges in an unpredictable economy, while simultaneously seeking opportunities to leverage them to their advantage. Here are six challenges professional services firms are likely to face in 2024 and potential actions that could help them navigate this next evolution.

Challenge 1: Navigating artificial intelligence (AI)

The question every professional services firm has is this: “What part of AI is help and what is hype?” As this technology swept the working world in 2023, many firms are now determining practical goals and expectations to realize productivity gains without over investing. While a McKinsey report predicts that 30% of U.S. working hours could be automated via AI, they also acknowledge that while “A.I. is likely to change work activities substantially, particularly in healthcare, STEM and professional services, its biggest effect will be in changing how workers allocate their time, ideally making their roles more rewarding.[1]


Whether your firm has started to deploy these technologies or not, now is the time consider refining your use cases to discover the processes where this innovation will most likely drive tangible business outcomes. AI can be used for a host of tasks, from analyzing large amounts of data to drafting initial reports to helping with compliance and risk management. Yet, initial capital investment will need to be weighed, and human-in-the-loop engagement is key to mitigating risks. All of this comes with a price tag. As you determine where AI could help streamline processes and improve decision making, it’s vital to be ready to invest in related infrastructure with small business loans or lines of credit that can provide for short- and long-term financing needs.

Challenge 2: Pricing pressures

Clients are increasingly watching their budgets, which leads to increased fee scrutiny. For example, The Annual Law Firm Finance Report: Global Trend Analysis 2024 finds that more than three-quarters of respondents report “increasing demand for financial transparency, reporting and additional discounting,” while nearly 60% said they increased their write-offs from the previous year.[2]


As clients press for lower fees and more value, professional services firms might elevate their service and verify fees are in line with market rates. However, to avoid the commoditization that contributes to pricing pressures, professional services firms should consider distinguishing themselves by developing new offerings and revenue streams. Consider services such as strategic consulting or training and development programs for client teams, as appropriate. Survey your clients to see what complementary services they would appreciate and seek to offer options that help differentiate your firm from competitors.

Challenge 3: Succession planning

Retirements are reaching a crescendo as 2024 will see the largest surge of Americans turning 65. More than 4 million will reach that milestone every year from 2024 through 2027.[3] That means countless professional services firms may be facing a changing of the guard.


When founding partners retire, it can create a cascade of ripple effects—from client uncertainty to staff departures. By proactively identifying and developing future leaders within the organization, firms can often mitigate risks associated with unexpected departures or retirements of key personnel. Succession planning allows firms to retain institutional knowledge, maintain client relationships, and preserve the firm's culture during leadership transitions. Having a clear succession plan in place long before the time comes provides stability and consistency.

Challenge 4: Uncertain regulatory environment

An election year historically yields instability, given competing regulatory priorities of new administrations. Additionally, rapidly evolving technologies like AI and biometrics are outpacing existing legal and ethical frameworks. Managing risk in this type of environment requires businesses to be forward thinking, possibly imposing their own strict policies on oversight and consumer protection, while maintaining the agility to make the dramatic shifts needed to adapt to changing conditions.[4]


Adapting to this kind of rapidly changing environment is best achieved by accurately forecasting and anticipating political and regulatory shifts. Consider dedicating resources to monitoring evolving regulations by attending seminars and conferences or staying active in professional associations that keep you informed so you can stay ahead of regulatory changes relevant to your industry. If you haven't already, you may also want to foster a risk-aware culture that deters workers from acting unethically. Create an environment where employees feel empowered to raise concerns and create clear policies outlining consequences for non-compliance.

Challenge 5: Fraud prevention

Cyber attacks continue to plague all industries and drain companies of valuable time, resources and customer trust. Statista reports that the "professional, business and consumer services" category ranks third among all industries, experiencing 15.4% of reported cyber attacks. For small businesses in particular, this can serve as an existential threat.[5]


Robust cybersecurity measures are necessary to secure confidential information and reduce the likelihood of a data breach or leak. For businesses across all industries, it is not a case of “if;” it’s a case of “when” it will happen. Preparation is key. Dedicating resources to employee training on cybersecurity best practices and platforms and technology that can encrypt sensitive data is good business. Consider working with a cybersecurity firm to monitor systems and establish an incident response plan to quickly mitigate and recover from any incident. It’s also critical to align with a banking partner like PNC that prioritizes fraud detection and prevention measures to establish alerts and safeguard against fraudulent activities.

Challenge 6: Cash flow struggles

Professional services firms routinely face cash flow difficulties due to the typical “time-based” model that can make revenue streams unpredictable. New projects and clients may get underway slowly, while fixed costs remain the same. Firms may also experience cyclical shifts, such as during the summer months.


To minimize cash flow constraints, carefully manage accounts receivable and expenses, while tapping credit lines as needed. PNC’s solutions for professional services businesses can help optimize cash flow, including leveraging digital tools for access and reporting. And when you do have excess cash, PNC can help explore options for investing so your money is working hard for you.

Building resilience by adapting to shifting conditions 

As client-centered businesses, professional services firms know that an agile mindset is crucial to staying ahead of the curve while delivering exceptional value. By proactively addressing challenges with innovative solutions and a spirit of initiative, your firm can flourish amid uncertainty.

Are you looking for personalized banking solutions that meet your professional services firm’s needs? Talk to PNC’s professional services experts today.