If the coronavirus pandemic has proved anything it’s that law firms can quickly adapt to changing circumstances. Firms have embraced remote-working technology and this way of working looks set to continue in the future. But will the change forced on us drive a transformation in law firms’ attitudes towards tech investment or will they continue to lag behind other industries?
As the world heads towards recovery from COVID-19 and the economy steadily builds back, professional services firms are now looking to move from survival tactics to growth strategies. Previously, an average of 5.2% in revenue has been invested in IT in law firms, as reported in the HSBC 2020 law firm strategy and investment survey, Ready to grow. That lags behind an average of of 6.9% in Banking and 6.5% in the Technology and Communications industry. The big question here is whether firms will up their game and look to embrace technology for real competitive advantage or whether they’ll consider it no more than an unavoidable cost.
While the pandemic has ‘switched on a light’ and forced some law firm leadership teams to realise that increasing tech investment can be a huge competitive advantage, others seem to have frozen. So, what are the benefits and why should firms have tech investment as a key strategic agenda item?
The application of remote and flexible working methods and technologies is a positive step that will certainly help businesses adapt and react to other crises that may hit in future. Analysis by McKinsey in June 2020 found businesses that had embedded flexible models prior to the pandemic fared better when it hit: “many non-agile teams struggled to transition, reprioritize their work, and be productive in the new remote setup.”
Most firms now have in place the day-to-day technology to keep people productive – Zoom, Microsoft Teams – but investment in advanced collaboration technology is needed to enable teams to work cohesively and in a way that’s fully aligned to the firm’s plan and strategy. Strategic planning tools have been a godsend for many firms as they flipped the switch to remote working. Without this, firms would have struggled to make their plans visible and easily understood, putting the alignment and output of their people at risk.
Remote working drives the need for better alignment and collaboration, not less – so, being able to deploy and align objectives and goals, then track and measure the results, is critical to ensuring a firm’s strategic agenda and productivity dial remain on track. With everyone knowing exactly what they’re working towards, the pressure to ‘look busy’ – while not achieving anything – is removed. This sense of clear purpose and alignment has proven critical to the mental wellbeing of staff in these difficult times.
Find hidden opportunities
How often do you find people crunching data in spreadsheets in attempt to gain valuable insight on new business opportunities? Sadly, even in firms with a sophisticated practice management system, it’s a common event. Sharing data through spreadsheets can be painful. It’s manual labour that no one likes doing and often the information contained is out-of-date by the time processing is complete.
Artificial Intelligence (AI) may be the latest buzzword and scare tactic – “we’re all being replaced by robots!” – but, when applied with context and purpose, it can be a most valuable tool for analysing data and spotting new business opportunities you didn’t even know existed. Interrogating data with contextualised algorithms, based on previous scenarios and benchmarks, allows for smart modelling and insight to help your business development team and client partners uncover new opportunities. It can also be applied to help them identify the talent within the firm best placed to win new business, based on people’s skill profiles and similar experience on other matters or with similar clients. Used in the right way, it can help with diversity and succession planning within firms – so the same tools can be applied for multiple uses. Such systems exist now and can really help accelerate a growth strategy based on data, rather than assumptions.
Stand out from the crowd
With a challenging economy, firms will need to stand out from the competition more than ever. Clients have been asking firms for years increase the use of technology – relating to solutions, productivity, and touch points with clients – to increase value for money and service levels.
New entrants to the market often use technology to drive disruptive strategies. And they’re more likely to invest in tools that will power those strategies, as highlighted in Forbes’ article: How will legal providers be affected by the next recession? The rise of Alternative Legal Service Provider’s (ALSPs) in recent years, according to The Lawyer’s recent report (gated), has largely been due to their high level of investment in technology solutions so other firms should take notice.
The analysis in the HSBC report suggests firms are planning to invest more in technology – potentially putting them ahead of that 5.2% marker – but only 3% said they expected to see a ‘significant’ increase. The lesson, or opportunity, here: it doesn’t take much to stand out if almost everyone else is basically standing still on the technology front.
The people part of technology is not something to be glossed over. Having the right tools at your disposal is key for fee-earners and other staff alike to be able to do their job properly.
How frustrating is it when you can’t do something because you don’t have the right tool to use? If your people can be productive and avoid tech-headaches throughout the day, they’re more likely to stay with the firm.
Firms looking to differentiate themselves to prospective candidates can do so through their tech-stack. It’s much more attractive for a potential new hire to see a firm that understands the needs of its fee-earners and provides the necessary software to support their success.
Open up new geographical markets
When looking to grow internationally, technology gives the ability for UK-based staff to support regional offices to secure business in new markets.
Instead of new office space, firms could move this investment into technology to help surface relevant, local information and entrench relationships in growth regions and markets. Making staff better connected means sector or practice expertise can be sourced from any location. With real estate leases generally lasting three-to-five years, being able to hire or deploy staff quickly, without the commitments of leasing offices, means firms could react quickly or trial new markets.
If you’re looking to adopt a ‘follow the sun’ model (like many ASLPs and the Big Four accountancy firms have for years), having the right technology allows you to provide around-the-clock service to clients in one physical location with professionals spread across time zones.
2021 is just the beginning
Whether your firm is already well on its way to technology utopia or just starting out with post-pandemic strategy, now is the time to stand back and survey the tech landscape. Look at new ways of generating growth and assess the types of tech that will enable successful strategies of the future.
If you simply ask the question, “how can I use technology to improve what I do?”, you’ll make some progress – but you won’t radically change what’s possible. If, however, you start by asking the question, “if I was building a law firm from scratch today, what would it look like and how would I use technology?” you will arrive at a very different place.
You may not be able to build out this exact vision but having sight of what’s possible will lead you to a much better place. And knowing what’s possible is often the best place to start your strategic journey – it helps you set objectives that will move you in the right direction.