The legal sector faces up to its digital future

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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