The legal sector faces up to its digital future

In many economic sectors, digital and data-driven systems are transforming customer service. Law firms are yet to be radically upended by tech, but this is changing

Technology in law firms has been devoted to automation rather than transformation at the core. Yet, large law firms are now starting to embark on a more comprehensive digitalisation programme. They’re rethinking what can be achieved when business is underpinned by the cloud, digital operations and data; a shift that is also being driven by clients who are demanding more.

In other sectors, from retail to banking, digital systems have disrupted every aspect of how business functions. Even though legal tech has been making significant gains, law firms themselves have historically been slow to evolve. Tradition, culture, conservative attitudes and billing structures are some of the reasons for inertia. “Why change if we’re profitable and successful?” is a common response, yet an evolution is happening at pace.

“Change in law firms can be like rerouting an oil tanker and can be very hard. But there’s been a massive mindset change in our lawyers. If there is any positive in the horrible situation we are in with Covid is that people are ready for change. If you aren’t digitally transforming now as a law firm, you need to,” says Karen Jacks, chief technology officer at Bird & Bird.

The average spend as a percentage of fee income on legal technologies continues to be low, at 0.5-0.9 per cent, according to PwC’s annual UK law firms survey, even though improving the use of tech is seen as a top priority. Spend is still focused on services such as e-signatures (with 88 per cent investment across the top 100 firms), document management at 84 per cent, and the most common, virtual data rooms at 81 per cent.

Some companies in other sectors invest up to 10 per cent of turnover, indicating that law firms have a long way to go. However, some law firms are recalibrating how they deliver legal services to clients deploying digital services and data at the core. The Covid pandemic has squeezed margins, pressured lawyers to do more with fewer resources, with demands for faster turnaround times, as well as greater innovation. If law firms don’t evolve digitally to keep up, clients could go elsewhere.

“It is not a spectator sport. Partners need to participate. And we are seeing a lot more of this and its very positive. I always say if I have a passionate partner participating we can change the world. One equated work in this field to being like a startup founder, with an entrepreneurial spirit. That’s what we’re looking for, that’s the magic,” says Haig Tyler, chief information officer at Herbert Smith Freehills.

Clients and staff are key to driving change

Clients are key drivers of change, as they increasingly see themselves as tech and data-driven companies, who expect digital fluency from their law firms. Some clients are now coming out of seven to ten-year digital transformation programmes themselves. They demand service capabilities that reflect this, from real-time strategic advice to multifunctional teams, collaborating virtually across multiple jurisdictions.

“Every law firm, it doesn’t matter what size they are, now perceives the competitive threat will come from an organisation that is better at leveraging technology than they are,” says Ben Wild, enterprise sales at Coveo.

Yet the challenge is the speed of change within the profession. For some it’s about an internal cultural revolution. If “people, processes and platforms” is the new mantra, it is ordered in this way for a reason, with employees coming first.

“The good thing is that there is a desire and an engagement from people that I’ve not seen before. We are seeing more lawyers wanting to be involved in this space. The challenge is the time we can get from them. We have a chargeable model, but we know that an investment of time from a lawyer dedicated to tech and innovation can make a huge difference,” says James Craddock, head of business and service delivery at DLA Piper.

Many law firms also need to accelerate process and platform adoption, including migration to the cloud, getting rid of siloed data and rationalising digital systems. For the last three to five years, major law firms have been automating processes at speed. Some have been adopting legal tech and creating service excellence standards, which take into account the use of tech married with best practice.

We really need to move the dial on how we deliver legal services

“The last year was a strong driver for change because a lot of people who may not have had the confidence in technology do have it now. But the opportunity does not always manifest itself as a technology issue. From my experience, it comes from listening well – whether that’s with our clients or internally – so we are better able to tailor the solution, which will include technology,” says Sean Twomey, director of business development and marketing at HFW.

Anthony Vigneron, director for legal technology solutions at Clifford Chance, says: “There are clearly some great opportunities to get closer to our existing clients, with new experiences for different products and services. This is an exciting time. It is all about the opportunities.”

A holistic approach to change

There is also an increasing realisation that a lot of the change that needs to be delivered is not about the IT department adopting the latest technology or platforms and rolling them out to partners and associates. “It is way more than that,” points out Philip Tate, account director for legal at Salesforce. “It is not just about digital teams or business and marketing development. It is about including everybody. When you start getting everybody involved, that’s when we see true transformation both in the business and digitally.”

It’s critical to articulate change management with partners and leaders in law firms. “Engagement and communication are vital. It is about the business as a whole driving tech adoption and innovation more broadly. But it is not always an easy sell, as change can be hard within any large corporation. Having sponsorship within the business, having leadership buy in at the board level is imperative. Having grassroots involvement and enthusiasm is also vital,” says Kate Stonestreet, global chief operating officer for Baker McKenzie.

Law firms and their technology-delivery departments are now facilitating this, whether it’s through seminars, fireside chats, partners who champion tech with published videos on the corporate intranet or in the case of Eversheds Sutherland, holding their own Techtober event, in which 2,000 employees took part across the globe.

“It is a hugely interesting time to be in this space. Ultimately, I believe this is the future of our profession. We really need to move the dial on how we deliver legal services. With clients, the growth of the legal operations side within in-house teams is also really helping us, as law firms, rethink how we deliver services in a better way,” says Rachel Broquard, service excellence partner at Eversheds Sutherland.

Pivoting to greater client-centricity

This rethink also involves shifting to a more client-centric approach, law firms are already re-evaluating the client experience. Taking a leaf out of the playbook of other more client-friendly sectors is an increasingly popular approach. It is allowing law firms to reimagine what “good” looks like in terms of what clients want from legal services; therein lies a big opportunity.

“It is quite exciting to think about what that client experience should be like. What are we ultimately selling? Starting with the end and working back is the exciting bit. Everyone is looking for experiences whether it’s for a holiday or buying consumer products, we have to mirror what is going on in other industries,” says Nick Roberts, head of legal delivery and Innovation at Clyde & Co.

“Other sectors are looking at what kind of client experience they are trying to build and reverse engineering that. They’ve had to build the processes, the technology, the knowledge, the people skills back from an experience. We can learn from this process and as an industry we have a real opportunity to create a new level of client experience.”

Law firm clients are also a lot savvier than in the past, they understand and scrutinise their legal spend a lot more now, they expect more transparency and have higher expectations. This is driving new momentum.

“If we are brutally honest, there aren’t many differences between a lot of law firms in solving a client’s legal problem. We are all looking to give good legal advice, but there is a huge bell curve of differentiation around how we service our client’s needs,” says Darren Mitchell, former chief operating officer at Hogan Lovells.

We are talking about digital DNA right now. How do we make it flow throughout the entirety of the organisation?

He adds: “What clients want is a good value proposition. We have to really demonstrate that we are a valued supplier who is going to bring something that will add demonstrable value to their business. The more we embrace new technologies, think about data in different ways and be proactive with that; this is a way of showing value.”

What does the future look like? It is likely to be driven by a younger generation of lawyers coming through who are enthused by technology. A law firm in the coming decades is likely to be augmented by more standardised technology, combining the power of human expertise, data insights, productisation and digitalisation. It is also likely to involve more collaboration across law firms, clients and tech providers.

“We are talking about digital DNA right now. How do we make it flow throughout the entirety of the organisation and in every single function with everyone’s roles and responsibilities? Everyone needs to feel some accountability for it. Rather than say go and talk to that IT person about it,” says Tara Waters, head of Ashurst Advance Digital at Ashurst.

She adds: “My utopia would be talking myself out of a job. Where you don’t need a special team because these new ways of working, these new skill sets, these new roles are just embedded within a law firm. The technology and the tools should be below the surface, where no one is talking about it. Digital is about business, it’s not about technology.”

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