Why are law firms increasingly turning to technology? Technology takes care of the firm so lawyers can focus on high-value legal advice.
The legal industry faces an unprecedented need to adapt to remote work arrangements, reduce costs to increase competitiveness, improve client service through better communication, and manage data securely and effectively. Law firms today are adopting technology to stay competitive: legal technology is no longer a good-to-have, but a necessity to business survival.
(1) Legal technology reduces costs.
Remote working is here to stay for the foreseeable future. Without access to physical documentation and ill-equipped remote working facilities for frequent access to data on internal servers in the office, many law firms have adopted digital productivity solutions such as Document Management Systems (DMS), Content Management Systems (CMS) and File Synchronization and Sharing solutions (FSS solutions) to enable lawyers and support staff to work from home.
On top of facilitating the digital creation and management of documents, remote productivity solutions improve efficiency and reduce costs by automating workflows and integrating business functions like emails, calendars, and time-keeping. Thomson Reuters’ 2017 survey on solo and boutique law firms found that 40% of an attorney’s time is spent on activities other than the practice of law. Digitizing information and digitalizing processes can significantly reduce the time spent on tedious but necessary administrative tasks in running a business of law, freeing up more time and resources for the practice of law.
(2) Legal technology helps law firms serve the new economy.
Small and medium-size enterprises (SMEs) and startups are a promising but under-served market to legal service providers. SMEs make up 99.9% of the UK’s 5.4 million private sector businesses, but a large proportion of them do not actively involve legal service providers in their businesses until it is too late: the United Kingdom’s Legal Services Board (LSB) found that in 2018, legal problems caused total annual losses of £9.79 billion to SMEs. Legal technology allows law firms to increase the cost-efficiency of their services to capture the under-served SME market ahead of competitors.
(3) Legal technology gives law firms control over cyber-security and data management which are integral for compliance.
The transition to technology-enabled alternative working arrangements is a good opportunity for law firms to revise their data management strategies for security and long-term optimization.
How many sensitive documents are sent over email or instant messaging applications such as Whatsapp or WeChat? How do you ensure that clients don’t get access to internal documents by mistake? Data management is a central issue in cyber-security, encompassing how any information is received, stored, processed, transferred, shared, or deleted. Having a good data management strategy enforced with the appropriate technology reduces security incidents and ensures that the right people are able to access information at the right time.
Strong data management not only brings operational enhancement, but also leads to business benefits. The cost of a data breach includes expenses on breach detection and incident escalation, revenue loss from business disruption and damaged reputation, resource spending on notifying parties such as data subjects and regulators, and regulatory fines; this accumulates into a formidable amount. IBM Security’s Global Cost of a Data Breach Report determined that in 2020, the average total cost of a data breach was $3.86 million USD.
This is not to say that lawyers must all become experts in cyber-security, but high-level decisions on data management and governance are critical to identifying legal technology providers who offer data management and cyber-security strategies that fulfill compliance requirements. For example, the location that data is stored (e.g. on-premise, off-premise) affects the type and extent of protection required. If cloud storage is preferred, the choice of a a public cloud, private cloud, or hybrid cloud solution each comes with different privacy and security considerations.
Good data management not only strengthens cyber-security, but also safeguards business continuity and preempts liabilities that may be detrimental to a modern enterprise.
(4) Legal technology enables law firms to leverage on existing data, and derive insightful new data for work and management.
Technology enhances the accuracy and depth of research by enabling professionals to reach into details of past cases via top search and visualization technologies. Intelligent search based on Natural Language Processing (NLP) is a branch of artificial intelligence (AI) which uses machine-learned statistical models to increase the depth, accuracy, and relevance of search results. NLP technology could be applied to publicly available data such as public company disclosures, or implemented privately to internal data such as past precedents, cases or standard contractual terms. Technology increases the value added by legal services in the same amount of billable time by enabling lawyers to drive additional business value.
Valuable data in a legal firm is not limited to facts and figures, but also extends to the individual expertise of its team members. Lawyers could collaborate with their colleagues, clients and expert consultants to build workflows with input from their respective domain experience, refining the final product over time and application. The ability to collect working processes honed by collective intelligence goes beyond risk and resource management to the preservation of valuable intangible assets that could vastly improve the quality of service over time.
(5) Clients perceive technology as a key measure of service quality and brand image
Clients are more willing to pay for the value they perceive in long-term relationships with trusted legal service providers rather than one-off contract drafting or legal representation, and legal technology makes it easy to maintain and manage mutually-beneficial businesses relationships of understanding and trust. In Australia, 58% of SMEs rely on legal service providers in the course of their business, but turnover rates are surprisingly high: in a span of 12 months, 32% of SMEs had changed their lawyers at least once. Cost was still the principal issue, with 40% citing this as the principal reason for switching legal providers, but 26% and 23% of SMEs did so because they felt that the previous lawyer did not understand their business or were poor at responding.
Internationally, law firms that integrate technology in their service provision receive significantly greater customer satisfaction levels: a Thomson Reuters survey recorded 100% satisfaction with client portals, 96% satisfaction with online document review/mark-up, and 97% satisfaction with e-signatures. Modern clients expect technological engagement from their lawyers, and lawyers who meet these expectations will benefit from the increase in perceived personal connection.
Technology solutions that provide workflow and communication functions enable team collaboration and clear timelines so that legal teams can keep each other and their clients up to date on all significant developments in each project. New methods of secure multi-channel communication also contribute to improved communication and closer client-firm relationships. Productivity solutions and work management tools now offer integrated email, instant messaging, voice call and video conference functions. All information shared, however it is shared - as plain text, email attachments, audio recordings - should be securely protected and accessible to all authorized team members and clients.
In times when lawyers are under growing pressure to deliver more with less, technology makes legal work smarter, enabling lawyers to gain more control over their volumes of work and increasingly fast-paced commercial needs. Traditional models of working are making way for technology-enabled solutions that bring lower cost, higher efficiency, enhanced quantity and quality of work, as well as increased scalability to drive long-term value and growth. Legal technology paired with human intelligence, intuition, and interaction will empower lawyers with new ways of working that will drive the entire legal industry onwards and upwards.