It’s a struggle to think of an industry that hasn’t been disrupted by advances in technology – marketing, finance and retail, to name a few.
The legal industry, however, has typically been seen as late to the party. But as we know from our latest report, firms in the sector are now taking tech adoption seriously in a bid to become the “law firm of the future.” In fact, the industry is taking technologies such as artificial intelligence (AI) and machine learning more seriously than other industries, with 55% of IT staff in the legal sector currently using predictive coding and 48% using machine-learning technologies. That’s compared to only about a third of CIOs in non-legal sectors (30% and 38%, respectively).
Steeped in tradition, there is no denying that some firms are more hesitant when it comes to technology – those that are “set in their ways” regarding the structure of the business. However, they need to realise that it’s sink or swim if they choose not to adapt to the digital age.
Competition from start-ups
The new kids on the block are causing senior executives at law firms to think seriously about the way they do business. Now experiencing what legacy banks have been struggling with for almost seven years, law firms are facing fresh competition from start-ups that have a vast knowledge of technology and a huge set of IT skills, enabling them to operate new business models.
Working with four of the five Magic Circle firms, we know that by operationalising IT systems, law firms have the opportunity to work more efficiently and increase their billable hours. If every episode of The Good Wife, Suits or Law & Order were to show the true amount of time spent shuffling paper, they wouldn’t make it to air!
However, a law firm’s ability to increase billable hours is limited when they fail to adopt an IT system that allows them to benefit from new technology in a safe way.
With the help of new technologies, less time will be spent on tedious administrative tasks and employees will no longer need to refer to the “files cupboard” when researching past cases, as so many still do. Luminance is an example of beneficial technology for the sector. Its AI software understands language at speeds no human could, providing an immediate and global overview of any company and picking out warning signs without needing any instruction. Firms using analytics tool Brainspace, for example, are able to better understand unstructured data faster than ever before.
Due to security fears, it’s understandable that firms have been slow to utilise cloud technologies, despite the fact that moving to a cloud platform could make them easily accessible from many different offices across the world. However, what firms need to understand is that with the right platform and security offering they could increase billable hours and grant global access. After all, every hour spent searching through the files cupboard or scanning documents is an hour that can’t be billed to a client.
In order to keep up with the competition, we will no doubt see many of the “traditional” firms take on the characteristics of legal start-ups that not only enable firms to increase billable hours but also aid and improve client interaction. For example, AI chatbots, like DoNotPay’s, could offer standard legal advice via a mobile phone or tablet, giving the enquirer an answer immediately, or direct them to the best solution/department. The result would be a seamless and quality customer experience, while freeing up time for lawyers to work on more bespoke cases.
Competitive salaries aren’t everything
As a way to enhance their services, many industries, like financial services, are recognising the importance of attracting top tech talent. Those who have been slow to provide roles focused on innovation have fallen victim to global tech corporations, like Facebook and Google, which are a larger cultural draw for millennials.
Top law firms with tough entry requirements but competitive salaries have previously been an attractive option for law students. However, those entering the industry want more from a job than just a chunky wage packet at the end of the month – they want to be sold a lifestyle.
According to PwC (2011), millennials crave a better work/life balance ahead of wanting more money, and would like technology to be better incorporated into their job. Many industries have answered these desires – plenty of financial corporations have opened innovation labs as a response, whilst other industries offer employees the option of working remotely or on the move, supplying them with smartphones or tablets to access databases. But law firms have a long way to go in attracting top tech talent who will be the key to bringing fresh and innovative ideas to challenge the archaic business model. Law firms also need change at the top of the partnership to allow tech experts in the firm to drive the changes needed.
In-house isn’t necessarily best
Previously, law firms have been confident in deciding which IT network their firm requires. Understandably, as guardians of highly sensitive documents, firms tended to keep everything in- house. However, as the competitive threat from start-ups increases and more and more firms look to adopt technology to keep up, organisations are recognising that they simply don’t have the resources to consult on the best possible IT strategy for their needs. In addition to this, General Data Protection Regulation (GDPR), which comes into force in May 2018, will put pressure on firms from a data control/processing standpoint. Ahead of this date, to get their “data house in order,” firms must partner with reputable third parties who are focused on meeting compliance regulations.
In response to industry challenges, we will undoubtedly see an increased number of mergers and consolidations, as firms look to expand globally. That being said, the lack of IT knowledge within firms will only become more problematic. Without a scalable and robust network, these transitions will be next to impossible, take far longer than needed and will be a risk to a firm’s security.
There needs to be a cultural shift in educating firms around the need for digital transformation. It’s understandable that the industry is cautious of “handing over” its data – news stories like the Panama Papers scandal and the increasing threat of cyber-attacks being reported daily in the media have made law firms wary of outsourcing solutions and services. However, if data protection regulations aren’t met, a firm’s clients are at risk, and its own finances and reputation could also suffer. Outsourcing this responsibility to an organisation that is dedicated to ensuring data is stored securely, and that complies with regulation, means one less worry for the corporate team.
Legal firms are at a crossroads – they either digitally transform and adapt to the needs of their employees and customers, or face the consequences. However, it’s not just about adopting tech for the sake of it. Consideration as to how workloads can be eased, billable hours increased and how the quality of client interaction can be improved will put such firms in a good position to survive, and thrive, in the digital age.