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The Law Firm Technology Landscape Post-lockdown: Part One

Take a step back and assess the transforming role of technology in your firm with Edge International and our expert technology partners at Lights-On Consulting.

IT has borne a substantial part of the burden of getting law firms through the constant and rapid sequence of challenges faced since the Covid-19 pandemic took hold. Along the way, impressive feats of reinvention have taken place in how (and where, and when) law firms work. Most participants in and observers of these changes, and certainly the team at Edge International, believe much of this reinvention is here to stay. The legal industry has had a catalytic shock to its system which has generated the amount of change we might normally expect to take years.

Because that explosion of activity, with technology at its core, has been so rapid, responsive and – at least initially – short-term focused, there has been little time to step back and examine where we now are, or to map out what should happen next. Such a fast-track sequence of big decisions and actions inevitably leave gaps, unresolved issues, training and communication shortfalls, and risks.

Now is the time, we believe, when all firms must begin to review where they have landed on the technology roadmap and what to do next to secure and the positive outcomes and deal with those open risks and issues.

Edge International Principal Chris Bull consults with legal businesses in the space between strategy, transformational change, and operational efficiency. Deploying and leveraging technology is at the heart of this practice, leading to Chris co-founding The Intuity Alliance, a group specifically focused on cutting-edge advice on legal industry IT, innovation, and LegalTech. Fellow founder Peter Owen leads Lights-On Consulting, one of the most experienced legal IT advisory firms in the market. Lights-On has just released an extensive and impressive multi-part overview of IT ‘considerations for the post-lockdown law firm’ and Peter and Chris have worked together to produce this condensed summary of some of the major points in their articles exclusively for our Edge audience. Links to the full Lights-On articles are provided at the end of this piece for readers who want to take a ‘deeper dive’ into this business-critical subject.

In this first of two parts, we look at the technology issues for management teams as they integrate the emerging new ways of working into their firms, at the same time as reopening offices and bringing all areas of the business back on stream. At the heart of those changes is a shift towards a hybrid, agile office and home worker model; whether as a medium-term measure or, for an increasing number of practices, a permanent one.  The underlying theme for all law firm leaders is the need to balance fast-tracked, short-term decisions and actions with an emphasis on medium-term recovery and resilience.

Technology and your people post-lockdown

The Covid-19 crisis and the disruption to lives and livelihoods that have followed have had a spectrum of affects upon individuals, including the people who make up every law firm. It will take a long time for employers to understand and then respond to all of those affects. Technology has had a crucial role to play in enabling people to keep working – and earning – through the crisis and will take a similarly heavy load in facilitating a return to the workplace, supporting a continuation of remote working or blend of remote and office locations (“bi-modal” operations). But intense use of technology has also created new issues and well-being concerns and addressing these will also need to be front-of-mind over the coming months and years.

A new operating model

To comply with social distancing, offices need to be sparsely populated initially and many firms throughout the world are planning for a sustained period where teams will be operating with a blend of office and home workers.  Many firms are planning for only 25% to 30% occupancy initially due to desk layout, circulation corridor and communal area issues. Alongside that, business continuity planning must contemplate a non-linear progression to the recovery and be prepared for further waves of lockdowns which may force a return to mandated home working.

Positive productivity benefits, potential real estate savings and the rapidly growing popularity of an agile working model are now beginning to feature prominently in firm’s medium to long term planning too. Even before lockdown has ended, we have already seen some firms of all sizes announce a permanent shift away from the office as a default location.

The hybrid agile, bi-modal model, enabling working across multiple locations and at any time, seems likely to emerge as the new standard for a majority of law firms. But making that highly unpredictable and constantly flexing approach to work successful in the long term is a different order of problem to the temporary burst of ‘best endeavours’ effort required to get the firm working from home at the start of lockdown. Even if that were the only priority your IT team had to support over the next year or so – which we will see it definitely is not – it would already represent a massive workload and change challenge.

Adapting your firm to the hybrid agile world

Ironically, health & safety compliance may have gone backwards in the short-term as firms dashed to ensure people could work from home, with very few home workstation assessments due to lockdown and an overwhelming volume of home workers to support. More prolonged home working in a more settled post-lockdown world will impose greater obligation to carry out regular audits and self-assessments that assure employee’s wellbeing. Check your capacity to handle this and tighten up your policies on equipment provision, as well as on compliant home working environments. Don’t forget that a bi-modal world will have impacts across a range of areas from insurance policies and electrical testing to expense policies (for items such as home utilities and telephony charges).

Consider home worker kits to prevent the need for transporting equipment to and from the office. This may only be affordable if firms turn to stocks of ‘second life’, pre-used equipment; which brings its own support issues. Consider a policy of retaining older equipment as spares or for home use.

It is critical to understand that working from home does not mean ‘resting’ and we can already see that home workers easily get burned out, “Teamed out” and “Zoomed out”! Many have gone the extra mile to deliver either internal or external service during a pressured time. You may have already recognised that, but it may be worth re-iterating your appreciation, as the return to office effort will also take its toll in terms of adapting to another set of physical and psychological changes. The main burden of communicating and managing this adaptation process falls on leadership, line managers and HR, but IT have a big role to play too and will often be on the ‘front line’ when it comes to dealing with the challenges people across the firm encounter.

IT support in the new world

Firm and IT leadership both now need to plan for extended hours of service and further waves of heightened IT demand. IT may be the first function needing to reverse furloughs and even considering additional staff in response to the new pressures they will face.

From an IT support perspective, lockdown has meant supporting multiple home working locations with different set-up, connectivity and risk factors. Homeworkers may be sharing parental and home-schooling care or responding to a range of other factors which have created very varied working patterns, including more evening and weekend working. As a result, firms are now also facing extended hours of demand on IT teams.  For IT support teams, it can feel like the job has changed from supporting one office 8am-6pm Monday-Friday to supporting 80 separate home offices 24×7.

IT teams have worked hard and fast to deliver home working but what will the next stage demands on the team be and how should leaders prepare? With a return to some form of office-based working your IT team will also be under pressure to resume some form of physical 2nd-line support; including physical visits required to re-install equipment that people have brought back into the office. We believe other issues, bringing both opportunity and risk to the firm, include:

  • Training – Can we use what has happened to transform how we train people? What doors to new digital training methods have been opened-up and what new approaches and technology will work? Certainly, with new applications and ways of working having been adopted very rapidly and at a distance, really embedding skills and consistency is now a priority. Many larger firms with centralised support models already utilise online conferencing tools to deliver training to their offices, but this approach is now ripe for adoption by smaller firms too.
  • Printing – It is sad to say that all wars advance technology and this war against a virus is doing the same. Widescale adoption of a range of digital tools and a more genuinely paperless way of working has been forced upon lawyers in 2020, including reviewing contracts on screen, e-signing and electronic workflows. If printer-less and paper-free working is possible, now does feel like the moment the legal world has to finally bite the bullet and severely restrict (or consider removing altogether – as we have heard of some firms doing whilst people are out of the office) local printing facilities in the office. Bold firms can benefit from such a change and not simply accept a return to the pre-crisis reflex tendency to print unnecessarily.
  • Conferencing Apps – whilst we might expect ‘peak Zoom’ to be behind us now (they have seen a 30-fold increase in users), the relative importance of virtual meeting and conferencing software in the legal IT mix has shifted forever. These tools are now set to be a critical component of client service, collaboration and the day-to-day reality of how teams work together. Internal IT knowledge and skills in this area, from 1st line service desk right up to strategic application management, needs to be ramped up, especially as the range of options extends and new functionality – such as automated translation and subtitling – promises to make a virtual meeting a more effective and sophisticated option to meeting face-to-face. The immediate post-lockdown period will put your IT services under an extended period of pressure yet again, with an even more complex range of demands than they faced during lockdown itself. It is hard to avoid the conclusion that law firm IT will never return to its pre-crisis shape, with a number of factors driving that permanent change:
  • High Tempo Expectation Management – your IT team has pulled out the stops under difficult circumstances and delivered in days or weeks all kinds of solutions that would normally take months. Has this now re-set expectations of IT going forward? That could be dangerous; IT may have been forced to cut corners to meet deadlines and now have to contend with delivering on the expectation of a high tempo forged during a crisis, whilst bringing back the governance standards partly foregone.
  • Super-user support – the normal support regime where the 1st port of call for basic IT advice is the “secretary next door” has been disrupted by social distancing and remote working. Consider granting those super-users the same sort of screen takeover tools that the service desk has (with appropriate security rights and training). In-team lawyer support can continue while stretched-IT resources can be reserved for the most technically difficult tasks.
  • Hot Desking – for now, flexible sharing of desks is against most governments’ recommendations and so the vanguard of firms which had implemented hot desking to maximise floor plate flexibility are having to reconfigure layouts, processes and technology to ensure that desks are only used by one individual. For those many firms looking to reduce their real estate footprint over the next year or so, this will restrict that opportunity for a period until government advice and individual confidence consider hot desking safe again.
  • Safe ‘at-desk’ support – difficulties are likely to result from hands-on IT work, where it is tough for IT support and the user to stay the 1 to 2 metres distance apart. Remote access and support will need to take more of the strain. All-in-all, it is probably unrealistic to expect physical 2nd line support to return to its pre-crisis format or extent, maybe ever. In a hybrid agile model, IT support is going to be principally remote and digital, providing a consistent offer to workers wherever they are sat on the day.
  • Incidents versus Service Requests – the service team may have spent the last 3 months focussed solely on fixing incidents. As the firm adjusts to post-lockdown working, it is important to use the data from the firm’s Service Desk to ensure IT resources are delivering the biggest bang for their buck – get IT back on the front-foot tackling the most important service requests and improvement projects, not continuing to just react to issues.  

Easy to overlook essentials

As offices are, even if only partially, reopened, IT teams and management have a host of tasks, large and small, to schedule and complete. Some might be easy to overlook but are, in fact, critical to get right. Here is our ‘don’t say we didn’t tell you’ list for firms to be certain they don’t overlook:

  • Re-start testing – during lockdown, with so many people working at home, there will be office equipment that has not been utilised in some time. A physical audit and test is recommended before the doors to offices are flung open again.
  • Check your supplier agreements – do your service level agreements cover support to your business if your people are working remotely or in a bi-modal set-up rather than all office-based? With remote support likely to be required for an extended period now, re-examination of commercial terms may be required. Conversely, if you are now expecting suppliers to come back and work on-site, what provisions do you and they have to put in place to ensure safety and mutual compliance with respective Covid-19 related policies?
  • Internet – examine your internet service contracts and bills and assess whether your set-up is optimal for supporting the volume of people now coming in and going out via the internet line.
  • Hack Amnesty – tech savvy lawyers will have found very innovative ways of collaborating, sharing and working remotely offline in recent months. They may have even tried the odd YouTube hack here and there to work around governance that makes remote life difficult. Face up to these grey areas head-on; you should survey your end users (and your IT staff) confidentially to find out what was good, what got in the way of working and whether they found work arounds or “hacks” to the system that you might want to adopt and share more widely.
  • The Environmental opportunity – a comment made many times in mainstream press coverage of the crisis is that some of the most important priorities which were dominating thinking and gaining momentum pre-Covid have been side-lined and are at risk of stalling. Within your own sphere of influence don’t let that be the case in terms of reducing your firm’s own carbon footprint; there are multiple ways in which technology (albeit also a primary driver of energy consumption) can help push your environmental performance to the next level, including reducing paper and energy consumption.

Thinking one step ahead: what comes after ‘what’s next’?

Over the time span of the Covid-19 crisis so far, IT capabilities have been fundamental in achieving a swift transition to remote working and maintaining client service and team working in uniquely difficult circumstances. That task, though undoubtably challenging, was unambiguous. The next phase is much less clear-cut, as lockdowns around the world ease at different paces and myriad variations on a hybrid model take hold. This feels a bit like the family vacation; the return journey may feel longer and less rewarding than the sudden adrenalin rush of the start of lockdown and those making the journey back are now tired, bored and no longer in the best of spirits.

We have tried here to provide some practical insight into how to handle the technology component of this tricky period. But we have also drawn attention to how the crisis has seeded what we believe will be permanent and significant changes to the way law firms operate.

Firstly, the emergence of a hybrid/agile operating model, with previous resistance increasingly replaced by strong support from clients and employees alike.

Secondly, the acceleration of digitisation across the firm. Your lawyers and support staff will have got used – to varying degrees of success – to getting work done both remotely and digitally. Allowing a reflex return to more conventional ways of working in your firm, even for just a few more months, risks undermining your ability to compete over the next few years. Firms reluctant to fully embrace digital working and who ramp back up their use of paper and retreat from the intensely agile model of the last few months might quickly find themselves literally years behind direct competitors in terms of efficiency, agility, client service excellence, appeal to new talent, value-for-money and, ultimately, profitability.

Those emerging trends are not without serious risks and challenges, but they also offer law firms enormous opportunity to reinvent the way they work and present themselves in a new light to existing and prospective clients and professionals. Coming soon, in the 2nd and final part of this short series, we will turn our attention to the specific digital innovations and trends we think will dominate the legal landscape over the next few years, as the implications of the crisis for the sector play out.

 

Further Reading: the full Lights-On papers summarised in this article are available to read on the Lights-On Consulting website:

https://www.lights-on.com/news/return-to-the-office-law-firm-people-and-workplaces

https://www.lights-on.com/news/return-to-the-office-law-firm-it-service

 

This article was written by:

Chris Bull is an Edge International Principal and strategy, operations and change consultant who has established himself as one of the leading advisors to legal businesses in the dynamic and innovative UK market, as well as working in the US and internationally. He has built a reputation as a legal market pioneer and innovator, having worked for all four of the Big Four accounting/consulting firms, been one of the first partner-level chief operating officers at a law firm and overseen some of the largest global legal process outsourcing deals at ALSP Integreon. Chris is one of the three founding Directors of The Intuity Alliance. Europe: chris@edge-international.com

Peter Owen, our guest author, is the Founding Director of Lights-On Consulting with over 30 years’ experience in IT. In addition to leading the Lights-On team, Peter provides high-level consultancy around future technology aspirations to many legal and professional services firms. As part of this, he regularly mentors legal IT Directors and CIOs. Peter is a founding Director of LITIG, a non-profit organisation designed to support senior professionals involved in all aspects of the implementation, use and support of Legal IT, a long-standing member of judging panels for Legal Tech awards and one of three founding members of The Intuity Alliance. Before setting up Lights-On in 2005, Peter was the Global IT Director for Eversheds for 10 years and held management and operational positions in DuPont in the energy and pharmaceuticals sectors. peter.owen@lights-on.com

Thanks also to Lights-On consultant Stephen Brown for his great contributions to this piece.

 

The Focus Challenge – Part I: Your Practice

1. Substantive Practice

Gone are the days when some level of specialization in an area could sustain a practice over a lawyer’s lifetime. Things are changing too fast and new competitors will emerge – some of them not even law firms.

In the meantime, what you can do is think about the future of both your practice area and the clients you serve.

We’ve been using this life cycle S-curve for a long time. It was borrowed from industry and the legal profession has embraced it gradually over the last number of decades. The graph applies to both your substantive practice, and the client you serve within it.

The S-curve may be applied to your practice, your firm, your practice area, your client, an industry, or all of the above. Most work gravitates to the right side of the curve where rates are low and competition is high, as opposed to the left where exciting emerging areas afford major strategic opportunities with few competitors and low resistance to fees. Therefore, it is necessary to be forward-thinking.

2. The Business of Law in a Digital World

I am asked by people at international associations of law firms, and sometimes by those at individual firms, “How is the practice of law changing? What do I need to know, and how do I keep up?”

The oldest members of your firm might remember when firms began to use computers for data-processing. All lawyers will remember the accelerating change of technology — from how word-processing is done to how documents are generated.

Today, with machine learning and what is commonly referenced as “artificial intelligence,“ the quality of documentation is ever-enhanced, while the cost of generating it decreases.

Many firms seem unaware that they now exist in a digital environment that needs to be nurtured. Firms are now rated on-line whether they like it or not, and enlightened firms are fostering more positive reviews.

This is not the place for a deep dive on the subject, but it is a caution that firms that are not making a considerable effort to learn the changing technology around them – and to embrace it – will soon be left behind.

3. The Firm

Well-managed firms outcompete poorly managed firms. Firms with a business plan outcompete firms without a business plan. Why then, at conferences where managing partners gather, do we see by the use of anonymous voting machines that the vast majority of firms don’t have a business plan? (I’m referring to a sample across a wide spectrum of firm sizes. If you’re thinking that the top 25 firms in the world likely have a plan, you are correct.) Firms that do not see the benefit of managing the business of law are being left behind.

The better firms train their leaders on how to get improved performance from their people. The better firms train their individual lawyers on client-relations skills so they can give greater satisfaction to their clients and attract more desirable work, both in traditional ways (via personal relationships) and in digital ones (through an online presence).

I’d be happy to discuss any of the component pieces of this article in greater depth as a courtesy to my readers. Contact me at edge.ai or at my blog, gerryriskin.com.

In the next two parts of this series of articles, I will be touching on:

The Focus Challenge – Part 2: Your Clients

The Focus Challenge – Part 3: Your Family

Gerry Riskin, B. Com, LLB, P. Admin, is an internationally recognized lawyer, author and management consultant and founder of Edge International. He was managing partner of a law firm in Canada and Hong Kong, and is the author of The Successful Lawyer, Creating The Marketing Mindset, Herding Cats and beyond KNOWING. Gerry resides in Anguilla BWI and serves law firm clients globally.

2018 – Australian and New Zealand Legal Profession Outlook

One of the benefits of writing an article at the end of the year is the opportunity to look over what has happened in the past 12 months and make some predictions of which trends will continue into the new year – hence the snappy title of this article.

2017 was a turnaround year in the Australian and New Zealand legal profession. Despite media predictions of doom and gloom, financially at least, most firms had their strongest year for a long time. There is no one-size-fits-all reason for this, but a number of factors are at play. On a macro level, the economies of both countries are improving, and on a micro basis, the tougher years have seen firms work hard on getting their personnel structure right, which has reduced unnecessary costs and the resultant fiscal drag.

Turning to 2018, these are my predictions regarding what the next 12 months will look like:

Improved profits

Good firms of all sizes will do well financially. Demand is increasing and so are the key drivers of profitability; namely, rates and hours.

In 2017 rack rates and realised rates for all categories of fee earner increased and the margin between rack rates and realised tightened. This was possibly helped by the ‘bigger bastard’ theory, where clients know (either through experience of osmosis) that other firms or a group of firms are charging a lot more. This applies to the total cost of matters, not just hourly rates

For the first time in about ten years, recorded hours have increased. I know mention of chargeable hours is anathema to many commentators, but it is still the predominant way of generating fees and is the best measure of utilisation within a firm.

With price and productivity increasing and a buoyant economy to operate in, 2018 should be a great year for good firms.

Personnel structure will continue to evolve

Leverage (the number of employed fee earners per equity principal) as a differentiator has almost disappeared. Clients are increasingly demanding senior lawyers do their work and they are prepared to pay for it. This coincides nicely with what senior lawyers want to do: after all, they trained to be lawyers not people managers.

I see the trend toward leaner teams continuing in 2018.  For practices which do the high-end complex legal work, these teams will be a cluster of experienced senior lawyers with very little leverage. For the more commoditised work, firms will make greater use of technology and contractors to ensure those people on the payroll are fully utilised. Gap-filling by contractors will reduce the need for firms to have a large ‘standing army’ to cope with the peaks in demand.

More merger activity

There is interest at both ends of the acquisition / merger spectrum to do a deal where possible. Firms with an expansion mindset see acquiring a firm or practice group as the fastest and cheapest way to grow their business. They will usually have a support structure that can accommodate – both physically and managerially – an additional practice or two which provides economies of scale.

At the other end, an acquisition or merger can provide a firm with a circuit breaker for some of their managerial challenges or deadlocks. This could be anything ranging from succession to disparity in contribution or a hollowing out of market share.

Cash payments for equity will become increasingly scarce

For firms of all size, a lockstep entry to equity is more common than dollars changing hands from the sale of equity between partners. Similarly a merger is more likely than a trade sale between firms. The opportunity for the partners in a firm being acquired is usually the likelihood of earning more in the merged entity, plus a one-off opportunity to realise the firm’s balance sheet.

Like most of the economy, sale of law firm equity is becoming a buyer’s market.

Genuine innovation remains on the horizon

Conferences will continue to be built around innovation, artificial intelligence and a general theme of ‘the machines are coming, so get on board now’. There is no doubt there is plenty of movement in this area but there are also limitations, least of which is widespread client acceptance. So the conference industry is safe for a few years yet.

As I write this in December, I am wishing you all the best for the Christmas break, and looking forward to what will be a prosperous 2018.

Playbooks Aren’t Just for Coaches!

For those of you who have had the patience (of Job!) to read my previous articles on law-firm differentiation and client-experience innovation, you have heard me extol the virtues of a “law-firm playbook.”

Team sports coaches create playbooks to write down on paper the tools, strategies, and methods their players will use to defeat their opposition. Similarly, a law-firm playbook can clarify for its own players – its lawyers – how they will help their clients “win.” It should be a thoughtful compilation of a firm’s own best practices, operating procedures, and way of doing business; it should emphasize the less obvious as well as the more conventional inputs that produce legal work; and it should tell a compelling story of process richness that lets the market know that good client experiences with your firm are no fluke.

So, build your own firm playbook! Below are some thought points I suggest our law firm clients keep in mind relative to playbook development.

Where to Begin? The best law-firm playbooks are comprehensive, and reveal to playbook readers (your lawyers, clients, perhaps prospects) the secret sauce of why your firm (or practice group) is different and, therefore, better. I encourage firms to start off their playbook planning by thinking about the three following firm or practice-group feature sets:

  1. Compelling sources of differentiated value that are perceptible to clients when they rely on your work product; e.g., “We have arbitrated and never lost an investment manager ‘raiding’ case in ten years . . . .”
  2. The different methods, processes, and structural attributes of your firm that, while not perceptible to your client, help you produce a better set of insights and better work product; e.g., “We are not a very leveraged firm by design, as most of our clients want our more senior lawyers to have more exposure to their matters . . . .”
  3. Areas of technology, process and structural innovation that will allow clients to consume your service differently; e.g., “We have a documented and technology-supported matter-management process on which all lawyers are trained from Day One, so that clients know that no hour will be invested in a client’s matter casually . . ..”

Identity Building Playbooks also shape and inform culture, and give your attorneys a unified sense of identity. As a result, lawyers will engage their prospects and clients with conviction.

Culture Building Playbooks don’t just reflect culture externally but rather help build it internally. When your lawyers read a cogent formulation of your firm’s way of doing business they will mobilize around it and reflect it.

Example Playbook Structure

  • Unique M&A Transaction Structuring Strategies
    • Engineer the deal structure from the earn-out backwards
    • Using an expert system to support due diligence contract review
  • Proactive Client Value Management
    • Authoring a tailored ROI model that allows clients to determine return on investment in acquired companies, and legal fees associated with structuring acquisitions
    • Aggregating multiple data sources to help client with deal sourcing, not just deal execution
  • Relationship Development & Management
    • “January meetings” – at the beginning of each year, require key clients to educate you about the priorities coming out of their annual planning process
    • Review annual departmental plans of your client to better understand the functional areas of the business (and, thereby, the legal work they likely generate) that are likely the most active internal clients of the law department
  • Practice Innovation and Management
    • New service and product development function to create a pipeline of new capabilities to address emerging client problems
    • Shadowing the non-legal thought leaders and consultants to your clients’ industry sector to gain an early warning on new business gaps that need to be addressed

One-Firm Integration

The development of the playbook should be a collaborative and internally integrating exercise for your firm and its lawyers. Clients and prospects who know about the playbook and how it was developed will give your firm a lot of credit for having a “one-firm” integrated culture from which they will benefit as clients.

So . . . make your firm’s “secret sauce” a little less secret, and develop your own playbook. After all, playbooks aren’t just for coaches!

 

 

Digitalization of Indian Legal Industry and Its Trends

Advancement in information technology (IT) has always been one of the transformational factors in any business industry, and the Indian legal industry has not been untouched by its impact – although the industry has been gentle to adopt digitalisation as part of its practice. But we have seen various law firms, be it family-run or contemporary, accepting the technology and also keeping themselves abreast of technological developments.

The introduction of technology in the legal industry is the outcome of echoes happening in the broader business ecosystem, where the convergence of new technologies and automation with business processes have created client and business advancements, along with the adoption of modern systems.

The impact of legal technology is rapidly changing the practice of legal departments and law firms as they become more aware of the cost efficiencies being shaped by IT. Recent developments in legal IT are also facilitating the development of new strategies, business processes, management structures, collaborative and conducive working arrangements, delivery-oriented systems and client relationships.

The driving forces behind the interrelationship between legal-service providers and their clients are as follows:

  • New entrants in the market
  • Strong price competition and alternative fee structures
  • Productization
  • Clients’ expectations
  • Innovative delivery approaches

These forces have encouraged legal departments and law firms to re-strategize their practice models and operations. In such an evolving ecosystem, the technology has become an epicentre of growth by ensuring the redesign of processes, client delivery, productivity, and profitability, as well as firms’ economics. IT will not only act as the enabler of the value chain but also as the value creator.

In the current scenario the following trends are emerging from the evolution of digitalisation in the legal industry:

TREND 1 – Robot Lawyers/Artificial Intelligence

Artificial intelligence (AI) has been able to adept the ecosystem of the legal industry, and has been able to minimise rote tasks. The introduction of AI to legal technology has revolutionised the industry as well as digital applications like contract management, time-sheet, research, legal analytics and more. It has been discussed that lawyers may get replaced by robots driven by artificial intelligence, and that they will play a crucial role in executing matters and transactions. Cyril Amarchand Mangaldas has taken the first step by providing a platform for the pilot artificial Intelligence project of the country. Various service providers, like Anvi Legal, have also ventured in.

TREND 2 – Client Delivery and Communication

Legal technology is defining new avenues to streamline the lawyer-client relationship. Various portals and collaborating platforms are facilitating the systems, providing faster turn around time (TAT), virtual presence and availability, transparency toward the matter status, document sharing, research and audio/video facility, along with sophisticated security technology. With advancements in communications and client interactions, which were historically driven by personal meetings, calls and letters have now taken a shift towards video conferencing, Facetime to texting, online dashboards with MIS, etc. Firms like Nishith Desai Associates have already developed systems such as data management, knowledge management and client-relationship management, along with various other in-house softwares. Hammurabi & Solomon has also adopted a system to enhance the relationship with its clients. Singh & Singh Lall & Sethi has created a benchmark by becoming India’s first paperless firm.

TREND 3 – Cloud Computing

We have seen law firms showing a significant inclination towards cloud computing. Firms are procuring cloud-based firm-management software in such areas as document management, practice management, knowledge management, client-relationship management and human-resource information systems. With the advancement of digitalisation, law firms are leaning towards virtual servers to secure and archive their data. Recognising the importance of such smart technologies and cloud computing, law firms are making huge investments not only in procuring systems, but also in adopting the sophisticated tools to secure the same. Virtual computing tools are also facilitating reductions in fixed costs, and are allowing lawyers to work remotely either from courts, clients’ offices, home or co-sharing spaces. Organisations such as Reliance Communication, Tata Capital, National Stock Exchange, Oriental Bank of Commerce, Khaitan & So, Fox Mandal, Saikrishna & Associates, etc. have procured cloud-based systems to facilitate their practices.

TREND 4  – Performance Mapping

Being a service industry, it is imperative and critical for law firms to track the productivity and profitability of the delivery. Factors like client generation, billings, billed hours, receipts, etc. have become essential for practice. Legal technology has made it clickable to create such reports and analyse the same. It has become assessable to benchmark the teams by mapping their performance and productivity. The legal industry has travelled from manual discretionary performance evaluation to automated human resource information systems (HRIS).

TREND 5 – Online Legal Services

We have have recently witnessed various online platforms that provide opportunities to potential clients to connect with lawyers for basic services ranging from trademark registration, registration and execution of wills, leases, contracts and lease agreements, to dishonouring of cheques, consumer complaints and recovering suits. Platforms like LawRato, Path Legal, MyAdvo, Legistify, Aapka Consultant, Lexcarts, SoOLEGAL, MeraVakil, etc. have initiated the trend of bringing experts from different legal fields and locations to offer comprehensive legal solutions to the client. These online legal service providers connect legal practitioners and categorise them as per their practice areas, locations and fee schedules, making it easy for the client to do the cost evaluation vis-à-vis sensitivity of the matter.

The Indian legal industry is one of the oldest professions, and it is witnessing a transformation with the development of smart technology. From the client’s perspective, the services have become cheaper and more accessible, whereas from the firm’s perspective they have become more productive and profitable. The adoption of technological approaches is not only saving time and money, but also becoming a facilitator in nourishing relationships and assisting firms to achieve the next level of growth.

Green Shoots Showing in Australia and New Zealand Legal Markets

After a number of years of patchy performance, the legal market in Australia and New Zealand appears to have found its feet and is performing strongly ­– that said, those plucky Kiwis probably climbed out of the slump a little earlier than 2016.

There is always a danger in making sweeping generalisations about an industry comprising more than 15,000 entities, so I will focus my comments on the more established firms in private practice – say those with revenue north of $2m. Even in this group, I will split it into smaller firms (revenue $2m -$20m) and the larger practices (revenue $20m+). Below are my views, or a non-exhaustive list, on what has contributed to the turnaround.

The economy

A rising tide floats all boats and both the New Zealand and Australian economies have seen business shake off the shackles and get on with it. In Australia, there appeared to be inertia in the lead up to the election but once it was over there was no longer an excuse. As a result, after a quiet couple of years, commercial and property practices have kicked into gear as have some of the more specialised practice groups.

A mindset change with staffing

I have noticed partners in smaller firms are not giving as much thought to the nebulous idea of succession. In the past it seemed many firms were carrying surplus fee earners with the vague expectation that many of this crop would be the successors of the current partners. This was despite the current partners having no interest in retiring, let alone transitioning clients.

Now we are seeing leaner staffing levels and busier partners. When the disillusioned ‘successors’ have found greener pastures, they have only been replaced after a cooling-down period if workflow demanded it.

When faced with the departure of a fee earner, a number of firms are replacing them with a contractor and in effect ‘buying an hour to sell an hour.’ This is being made significantly easier with specialist businesses offering this contracting service to the private profession. Some firms also have their own contracting arrangements in place, often with former employees.

Support levels continue to trend downward

The percentage of revenue spent on employee salaries has trended upward for the past 20 years. This is largely as a result of the inflationary increase in the dollar amount of salaries. One thing that has tempered the increased salaries margin is leaner support levels. Among larger firms the average is now 0.69 total support personnel per fee earner. Smaller practices have a much greater range – there, I am seeing some firms with no support outside of the accounts function, through to others that have one secretary for two lawyers plus a hefty complement of back-office staff.

There is no doubt that technology and the familiarity and enthusiastic adoption by the younger generations is enabling the leaner support levels.

Chargeable hours are decreasing

Hours charged to matters has been trending downward for all categories of fee earner for a long time and all indications are this will continue. There are likely a number of factors contributing here, most of which revolve around a view that clients have the upper hand and fee earners are juggling a well-understood client expectation in terms of price and quality with the realities of delivering on the job in a competitive market. Estimates have become quotes, and there is little enthusiasm from clients for an estimate to be revised when the matter is underway.

Price rides to the rescue

The key metrics of hours and profit margin have continued their steady decline. The profit margin is being squeezed largely because salaries are increasing at a faster rate than revenue growth,. Hours have been addressed in the previous section. The only thing that has picked up the slack is rate.

This may seem to conflict with what is being reported or even the general mood in the market, but where firms are able to charge hourly rates, they are doing so at all-time highs. How long this will continue is an unknown, and there is no doubt there is a trade-off between hours and rate; however, we must be about to level out in terms of price in the near term.

What next?

Change in the legal profession has historically been incremental and is likely to continue that way. There are a number of firms which are doing things differently, and new players with a different pitch or approach will emerge.

There appears to be a real appetite to try something new particularly if it leads to reduced overheads or could lead to the firm having a somewhat variable cost base. This means that when there is evidence of a firm doing something particularly well that leads to operational efficiency, it will be a relatively short time before it is adopted by other practices.

I expect the pace of operational change will increase and this – along with an improving market – will lead to better financial times for good firms in the next couple of years.