A recent study, The 2020 Wolters Kluwer Future Ready Lawyer, examined trends that might affect the future of law as the legal market overall faces significant changes. The study analyzed both law firms and legal in-house departments in order to find out how well-prepared they are to deliver a higher performance.
Less than one third of the legal sector is ready
The results of the study only confirm what is already common knowledge: There is a significant gap between trends and the ability to address them. The study shows that less than one third of lawyers are prepared to keep up with the transformation of the legal market. However, for legal organizations it is more important than ever to be able to use technology to optimize performance. Disruption caused by various factors and accelerated by the COVID-19 pandemic will demand legal professionals to increase productivity and efficiency. As there is no doubt that eventually all legal professionals must be ready to meet the demands ahead, it should be law firms that must strive for a proactive change.
No need for a change?
Time and money are probably the biggest constraints to change the status quo. Lawyers do not have the time to become acquainted with new complex matters when clients expect them to provide the legal advice for which they are paying . Besides that, most of the new solutions will not have an immediate significant impact on profits. This is particularly difficult as the current business model does not yearn for a change. As a matter of fact, why would you change a running system if it is still highly profitable?
The risk for law firms of falling behind
An important reason is that in any event legal in-house teams will completely move towards technology sooner or later. Legal departments work under extreme pressure from executives to support the business’s operations whilst minimizing overhead spend. It will become inevitable for legal departments to make use of solutions supported by technology in order to meet the cost-cutting and value maximizing demands from executives and shareholders. The study underlines this hypothesis as it concludes that technology leading firms are more profitable. As a consequence, businesses are forced to implement technology solutions that will improve efficiency and productivity. This will also play an important role when choosing an external legal counsel. Technology is therefore becoming more critical to how well law firms meet client expectations. If both are not able to communicate on the same level, it will make either external legal advice less relevant or other players will step in between. On the contrary, law firms that have the ability to both make use of technology and to understand the importance of client satisfaction will gain advantages.
Two small changes to start with
It will be the small changes that will already make a huge difference. The study points out that commonly law firm lawyers expect a significant impact from certain transformational technologies, yet one fifth of them believe to understand it very well. In order to improve understanding, law firms should first develop an increased emphasis on innovation by generally making a greater use of technology to improve productivity. Secondly, they need to shift towards automation as it increases efficiency, enables new revenue streams and creates greater value.
The low hanging fruit
Legal professionals may start their automation journey by automating small, repetitive tasks that do not require much effort to implement, referred to as low hanging fruit. While low hanging fruit have often been disregarded when speaking of automation, they can have essential advantages. Having started early will only be beneficial for the following three reasons:
- Low hanging fruit can be used for introducing the organization to automation, therefore, serving as a learning option before more complex and impactful processes are being automized. Although law firms should not spend too much time with low hanging fruit, which sum up to very low returns, it is clear that the legal sector is only at the beginning of a transitional period.
- A law firm and its dedicated tech team can first move up the learning curve before moving on to a first quick win. This will be a huge advantage in the long run, ideally being one step ahead of competitors.
- In addition, using low hanging fruit will also make a huge impression on the client, proving willingness to meet their expectations.
It is a long process and it is therefore more important than ever to start as soon as possible, as it will enable law firms to be prepared when the transition of the legal sector is no longer referred to as a transition.