Smith & Williamson have recently released their 8th Annual Survey of Irish Law Firms, providing key insights into the attitudes, performance, challenges and opportunities facing the Irish legal sector as it moves into 2020. The national survey considered feedback from managing and senior partners across 120 law firms.
Below is commentary on the key survey findings in relation to some of the current technology issues and planned investments in 2020.
Although the law survey points to a sector performing well, with revenues rising and the market for good solicitors optimistic, there are plenty of challenges that leave the sector concerned.
In the report, Smith & Williamson state that “Salaries are rising in response to competitive pressures and firms increasingly recognise that they need to invest in technology to remain competitive. There is also continuing downward pressure on fees – one in three firms said this had a significant impact this year. Clients want more for less and maintaining profitability levels continues to be a key challenge.”
Law firm technology issues and planned investments are well aligned
In the attempt to address some of these challenges, firms are focused on internal responses to improve performance and working practices, with 68% looking to change business processes to become more efficient. Part of the strategy is increased investment and utilisation of legal tech.
This fast-moving digital age has produced tech-savvy clients who are more discerning and far more demanding of their legal service providers. To improve their efficiency and competitive edge, law firms have no choice but to turn towards current and emerging legal tech in an attempt to service the clients’ demands for ‘more for less’.
Larger firms in particular recognise the challenges, risks and opportunities inherent in technology, with around a quarter (27%) of top 20 firms indicating that adopting new technologies is among their most pressing challenges over the next three years, compared to 11% of all firms.
Over the last few years, a significant portion of content on legal tech has been focused on Artificial Intelligence (AI) as the solution to process enhancement and a way to drive service and cost efficiencies in legal departments.
However, at the 5th Annual ‘Future of Law & Technology’ Forum hosted by LexTech in Microsoft Ireland, Professor Theo Lynn, Professor of Digital Business at DCU Business School, educated the audience on exactly what AI is, and how it differs from Deep Learning and Machine Learning. During his talk, he stated that AI is likely ten to fifteen years away from having any meaningful impact on the operations of legal firms.
This view corroborates the survey findings, as despite the robust ongoing discussions, AI ranked as the lowest technology priority for the legal sector with just 4% of respondents rating it as top of areas to invest.
In its place, what should be a critical consideration for firms today is how they are harvesting and managing the data which currently sits on their networks. Every day, new data is being added to internal databases and file structures, and firms should be conscious of how they are categorising and saving this data. AI will only ever be effective if built on a strong foundation of meaningful data.
The survey goes on to highlight that, many firms are instead looking to take a more pragmatic approach and commit resources to investments in operational improvements such as practice management systems and customer relationship management software.
Across the board, document management (67%), enhancing the client experience (59%) and managing workflows (56%) were ranked among the top five investment priorities for 2020.
Document Management and Managing Workflows
Document management and workflow technology is being recognised by the legal sector as the solution to competitive, cost and resource issues.
According to the survey, document management is a priority for two-thirds of Irish law firms, with 67% indicating they will make an investment in document management in the next 12 months. Managing workflow (56%), process automation (44%) and new service models (27%) are also identified as areas where investment is set to increase.
A typical law firm processes thousands of physical documents every year and most of that information is handled through inefficient manual processes. Historically, the legal industry has been guilty of repetition, continuously re-entering the same data in documents, which has already been stored in their practice management system back-end database.
Similarly, manual creation of briefs for court is still an issue for many firms today. The hours of labour that go into creating a paper-based brief, including printing, scanning, manually paginating, indexing and, creating a cover-page, puts a significant drain on resources that could otherwise be diverted to billable-tasks and can have a notable effect on profitability in the long-term.
Fortunately, law firms are increasingly recognising the benefit of legal practice management technology that offers a variety of options designed to streamline document management and operational processes, saving the firm both time and money.
The proper use of practice management tools can have a tangible effect on driving down operational costs by ensuring workflow templates and document templates are properly set up and configured, so automation is enabled.
Detailed process documentation in the form of automated workflows can help improve law firm efficiency and productivity, while ensuring that legal procedures and process controls are designed to benefit the firm in terms of risk management, compliance and better allocation of resources.
With a well-designed workflow, firms benefit from automatic assignment of tasks and approvals, reduced time spent on non-billable administrative tasks and improved productivity among staff members. Without law firms feeling the need to keep increasing headcount, practice management software can ensure more work is taken on in an efficient manner with the existing resources available to the firm.
By embedding legal tech into their core business operations and offering their clients more technology-enabled solutions, law firms can drive down operating costs and meet the growing client expectations all while competing on equal or more favourable terms with their competitors.
Enhancing the client experience
The success and longevity of any business is dependent on how well it attracts and retains customers.
Forward-thinking law firms direct their investment to customer-focused resources, such as people, technology, infrastructure, data and customer relations to forge lasting relationships with their clients.
The annual survey found that nearly two in three (59%) of Irish firms plan to increase investment in enhancing the client experience and one in three plan to invest in online service provisions, with Smith & Williamson stating that, “Clients are becoming more sensitive to areas such as efficiency and value for money, while the arrival of UK and global firms also brings demand for enhanced client service models, efficiencies and digital interaction.”
Increasingly, cost-conscious clients are putting pressure on law firms to do things more cheaply and, in some cases, have progressed to requesting that law firms incorporate certain technology solutions within their services.
Another area where client pressure is directly translating into legal tech adoption is in the space of legal cost transparency and open communication and collaboration. There is a growing demand for law firms to provide their clients with predictability and transparency on timelines and fees, as well as ensure proactive and collaborative legal service delivery.
For firms to be distinctive and relevant to their clients, they must ensure they have a client-centric approach to the development and delivery of future products and services. Growing consumer demands, combined with rampant competition in the legal sector, are challenging law firms to incorporate digital tools as part of their service delivery models in order to survive.
In fact, two-thirds of the Top 20 firms aim to enhance their digital brand through technology, including 24/7 access to case-related information, document management, collaboration platforms and customer relationship management systems.
The use of client portals is just one example of how law firms are innovating in their clients’ interests. Client portals are extremely valuable tools for law firms because they can directly enhance client service through increased efficiency and streamlined communication.
Legal practice management software with a built-in client portal simplifies client communication and provides clients with secure, instantaneous access to information about their case. Clients who have access to this level of service and communication with their solicitor, will be customers whom the legal firm easily retain.
Effective utilisation of technology is key
Those firms with practice management systems already in place need to consider how they are currently using their software packages, the data security these systems provide and whether they offer sufficient functionality to enable efficiency in a competitive industry where resources are expensive and in high demand.
Firms need to take care not just to ‘tick the box’ and hope for the best when making new technology investments. Without a proper implementation and adoption plan firms can compromise the long-term value of the new system and waste what resources were spend on the tech due to poor user adoption and underutilised functionality.
Firms that can deliver actionable solutions on a consistent, cost-effective and scalable basis will achieve customer satisfaction and loyalty. Thus, careful consideration and investment in a comprehensive practice management software should form a significant part of the overall service delivery strategy.
During the system selection process, firms need to consider providers that offer a tailored solution where functionality can be customised according to the specific operational needs of the business and can be used as a platform on which customer-centric delivery models are built.
PracticeEvolve offers a comprehensive legal practice management solution, combining document management, case management and legal accounting functionality into one, easy-to-use system. Speak to one of our experts today to find out how your firm, and ultimately your clients, can benefit from our tailored technology offering.