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Innovation

A client-first digital transformation

Image Credit: REUTERS/Tatyana Makeyeva

Back in 2011, Silicon Valley-based venture capitalist Marc Andreessen, co-author of the first web browser, Mosaic, and cofounder of Netscape and venture capital firm Andreessen Horowitz, wrote an op-ed in the Wall Street Journal about how software is eating the world. At the time, Andreessen predicted that over the next 10 years, more and more industries would be disrupted by software and delivered as online services.

Now, almost a decade later, digital transformation is everywhere. Even in the legal sector, which has a reputation for being slower to embrace change than other industries, law firm leaders are starting to shift gear.

Almost three-quarters of United Kingdom (UK) law firms indicate digital transformation is a primary or secondary focus for their organisation, according to Hays’ 2019 ‘What Workers Want’ report.

“The pace of change within the legal sector has definitely been accelerating over the last five years”, says Eric McCashey, Director of Product Marketing at Thomson Reuters. “There have been more and more business-minded people coming into law firms and bringing in new ideas. And clients are perhaps ahead of where law firms are in the use of technology, so they’re asking them to work differently. As a result, that is forcing law firms to find ways of working smarter because they need to utilise technology to remain competitive, but also to address their clients’ needs.”

Driving better value for clients

Whilst digital transformation is partly about providing clients with the sort of technology they use in their everyday lives, digital tools can also help firms become more efficient, helping deliver better value for clients.

“One of the problems that we try to resolve for clients is that they clearly demand more cost-efficient service delivery from law firms and one of the solutions to that is greater adoption of legal technology”, says Bas Boris Visser, the Amsterdam-based Global Head of Innovation and Business Change at Magic Circle law firm, Clifford Chance. “Legal tech can help firms not only deliver services in a more efficient way, but it will also improve the quality of the service delivery and the quality of the content that we can deliver.”

Another way digital transformation can improve the client experience is by providing more transparency around billing. At international law firm Simmons & Simmons, for instance, it uses tech to better scope and cost matters, enabling it to flag potential price changes to clients in advance.

“Clients like the ability to see how costs are being calculated and what could happen down the line to cause it to change”, says Ben McGuire, Innovation and Business Change Director at Simmons & Simmons. “That puts them in a position of strength in their own organisation because they are not having to explain later why they have gone significantly over budget on a particular matter with their external law firm—they’re able to warn their finance director upfront.”

The commercial law firm, RPC, has ditched billable hour targets in favour of driving behaviours that put clients first, all of its digital transformation efforts are designed to create better client experiences.

“There are lots of systems that help drive operational efficiencies: we’ve automated our billing function, and we’ve taken some of the operational activities away from [fee earners] so they can focus on the bits that they are best at and provide the most value”, says Alistair Johnson, Chief Operating Officer at RPC. “It’s all to do with client experience to make sure that clients really get the value from us that they are paying for.”

Efficiency through technology

Other firms now use artificial intelligence (AI) to carry out document reviews, freeing up lawyers to spend more time digging deeper into client issues. Embracing advanced tools such as AI, offer obvious efficiency benefits, enabling fee-earners to spend more time actively engaging with their work by analysing results and less time ploughing through a box checking exercise.

Some firms have recognised that a top down approach to digital transformation where management articulates its strategic goals needs to be balanced with a bottom up mentality to change and innovation. In recognition of the value of team input, Allen & Overy has created an online portal where lawyers can submit suggestions for how tech could improve the way they do their jobs.

“The people who know best about what they’re doing inefficiently are the lawyers at the coalface, so we’ve worked really hard to unleash grassroots idea generation”, says Jonathan Brayne, a Partner at Allen & Overy and chairman of Fuse, the firm’s tech innovation space.

“Anyone can log an idea for how they might do something differently—it might be an efficiency drive; it might be about productivity or it might also be to improve the user experience for the client. So, it’s a process of trying to unlock the fantastic ideas that everybody has when they are sitting there thinking I wish I could do this routine task in a better way.”

Favour is shifting to the benefits of legal technology

Whilst there is a growing push for firms to go digital, some concerns still linger about the potential impact of some technologies, notably AI. Only 28 percent of finance directors at the UK’s top 100 law firms cite AI and machine learning as a profitability risk, according to 2019 research from Thomson Reuters. And other firms report using AI enhanced technology to create more efficiencies with repetitive tasks and reduce risk.

Of the UK firms reporting, 58 percent say they are investing in automation or have plans to do so—according to Hays’ 2019 ‘What Workers Want’ report. Other firms, however, have put aside any doubts about the negative impact of technology.

“We got over the fear of cannibalising our services for the purposes of developing digital products a long time ago, and as a result it’s provided a steadier income stream and given us the ability to differentiate ourselves,” says McGuire.

COIVD-19 is also forcing firms to accelerate their digital transformation plans as the industry adjusts to new ways of working to comply with social distancing measures and lockdowns.

“Lawyers are not famous for their tech savviness or willingness to change their way of working but what we see now is where quite a lot of people within law firms would normally be quite cynical or sceptical of the ability to use legal tech solutions, this period has shown that it is absolutely possible to work remotely and use technology, and it actually improves the way that we work,” says Visser. “Now there is more willingness to embrace digital transformation, the next challenge for legal technology providers is to support greater standardisation across products.”

“The reality for clients is that they are confronted with one tech solution from one firm and then a different one from another”, Visser says. “If clients need to install a different application for every transaction or there are a variety of applications in the same transaction, that isn’t very efficient. As we go into the next phase of legal tech, clients will expect a more seamless experience.”

Dithering over implementing digital transformation strategies is also likely to result in lost market share, creating an even bigger incentive for firms to innovate and keep pace with technological change.

As markets continue to change rapidly due to COVID-19 and Brexit, legal tech is becoming increasingly important for law firms. And the firms that fail to engage and build some sort of digital legal delivery capability will—without doubt—be left behind.

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