A few months ago, a business owner told me something that stuck with me. He had to choose between two firms to handle his company's tax matters: one with 40 professionals, offices in three cities, and a well-known brand; the other with one lead partner and two associates working from a coworking space.
He chose the small one.
Not because of price. Not because of personal connection, though that helped. He chose them because when he sent his first urgent query on a Friday at six in the evening, the small firm responded within twenty minutes with a preliminary analysis. The large one took until Tuesday.
That story captures something that's shifting in the industry and that many still haven't fully processed: a firm's size has stopped being, on its own, a competitive advantage. In some cases, it's become the opposite.
What size used to buy
For decades, being a large firm meant being able to offer things that small ones simply couldn't match.
You had response capacity because there were enough people to absorb peaks in workload. You could keep specialists in niche areas that a small firm couldn't afford. Your technology infrastructure was better because you could invest in systems that cost a fortune. And there was a perception of solidity: if you're big, there must be a reason.
Clients paid a premium for that peace of mind. A firm with fifty people seemed more capable of handling the tax complexity of a growing business than one with three.
And for a long time, that perception was fairly accurate.
The rules changed
What's happened in recent years is that the tools that once required massive investments are now within reach of virtually any firm.
A document management system that ten years ago cost tens of thousands in licenses and implementation can now be subscribed to for a fraction of that monthly. Automation of repetitive tasks, which used to demand a dedicated IT department, can now be configured with tools that don't require knowing how to code. Access to complete legal and tax databases is no longer the privilege of those who can afford physical libraries and corporate subscriptions.
But the deepest change isn't just about access to tools. It's about what those tools make possible.
A three-person firm with the right systems can process the same volume of quarterly filings as a fifteen-person one could five years ago. Not because they work longer hours, but because the manual work that used to consume eighty percent of their time now gets done by a system in minutes.
That frees up something that used to be the scarcest resource: the senior professional's attention.
What a boutique firm can do today
Let's think about concrete situations.
A small firm with a good tax alert system can monitor all their clients' deadlines without anyone having to manually check calendars. The system notifies, the professional acts. There are no oversights because you're not depending on anyone's memory.
That same firm can offer clients a portal where they upload documentation, check the status of their filings, and access historical records without having to call or send emails. Something that ten years ago only firms with resources to develop their own software could offer.
When client documentation arrives, automatic extraction tools can read invoices, identify key data, and feed it into the accounting system without human intervention. The professional reviews and validates instead of typing for hours.
And for research queries that used to require reviewing case law for an entire afternoon, there are now assistants that locate relevant precedents in minutes.
None of this is science fiction or requires extraordinary budgets. These are tools that exist today and that any firm can implement progressively.
The burden of size
Here's where things get interesting for small firms.
Large ones have something that often works against them: inertia.
Changing processes in a fifty-person structure is exponentially more complex than doing it in a five-person one. There are more layers of approval, more resistance to change, more legacy systems that have "always been done this way" and that nobody wants to touch because they work (even if they work poorly).
A small firm can decide today to implement a new system and have it operational within weeks. A large firm might take months just to get all the partners to agree that something needs to be done.
That agility is a huge asset that many small firms don't value enough. They can iterate, test, adjust. If something doesn't work, they pivot. They don't have to convince anyone but themselves.
The new differentiator
If size no longer determines capacity, what does?
Speed of response, for starters. Today's client expects immediacy. Not because they're impatient, but because they're used to almost everything in their life working that way. When your bank responds in real time and your firm takes three days, the comparison is inevitable.
Depth of attention is another. In a small firm, the client talks to whoever is actually handling their case. There are no intermediate layers, no rotating contacts, no "let me check with the partner and we'll call you back." The relationship is direct, and that has enormous value for clients who want to feel attended to, not managed.
And there's real specialization. A small firm can decide to be extraordinarily good at a specific niche instead of trying to cover everything. That specialization, combined with the right tools, creates a value proposition that a large generalist firm can hardly match.
The question you should be asking
If you have a small firm, the question isn't how to compete with the large ones.
The question is why you would keep operating as if you were one of them when you have advantages they can't replicate.
Agility to change. Real closeness with your clients. The ability to specialize deeply. And now, access to tools that eliminate the gap in operational capacity.
Size was an advantage when scale was the only way to achieve efficiency. Today, technology democratized efficiency. What remains is everything else: judgment, relationship, trust, specialization.
And in those areas, the small ones could always compete.
If you have a small tax firm and you are thinking of integrating automations to optimize your processes and scale faster, this is your sign.
At Lexflow Studio, we help tax firms like yours integrate automations in their processes, to increase their productivity.