What the Data Tells Us About the Future of Law Firms

by McKenna Brown on November 06, 2019

Community , Law Firm , Legal & Industry Education

For law firms, technology is a path to salvation.

That’s the conclusion of a report released earlier this year by advisory firm and RelativityOne Certified Partner BDO—called “Navigating Legal Digital Disruption”—which examined the ways digital disruption affects legal professionals.

BDO broke down some of the law firm-specific data from the report in a recent white paper: “Inside e-Discovery & Beyond: Lessons for Law Firms.” Its message is clear: Innovate or die.

Quantifying a Remarkable Shift in Client Demands

“Law firms need to get their innovation house in order. They should be looking to incorporate new technologies so that they can compete in the ways their clients need and want,” said George Socha, EDRM co-founder and managing director of forensic technology services at BDO. “Larger firms around the world already are investing seed money and starting incubators to figure out how to operate more effectively and efficiently to do higher quality work faster and at a more competitive rate.”

According to the report, 36 percent of corporate counsel are considering replacing their law firms in the next 12 months, a direct result of law firms’ slow adoption of new technology.

“The legal industry today is experiencing significant disruption on all fronts,” said BDO Partner and Technology & Business Transformation Services Practice Leader Stephanie Giammarco. “Law firms must embrace digital solutions to not only keep pace with their clients’ own transformative changes, but to be prepared for the myriad of risks and uncertainties in the future.”

Seventy-one percent of corporate legal departments expect to leverage technology to streamline their legal operations over the next year, the report noted, and that number jumps up to 91 percent of large organizations.

In fact, 29 percent of the corporate counsel surveyed cited lack of innovation as their top concern about their current outside counsel.

“While this may seem discouraging,” the report said, “it can actually be the catalyst law firms need to embark on a path to meaningful digital transformation.”

How to Defy the Odds

It isn’t all doom and gloom about how clients are working with their law firms. The report also highlighted five main strategies law firms can implement to foster innovation to not just compensate for existing gaps between their attorneys and their clients, but create more stable and more competitive business models for the future.

1. Develop one or more specializations in emerging technology legal areas, such as privacy and data protection or digital tax law.

With the advent of the GDPR, data privacy and protection have become two of the hottest specialties in the legal field. Expertise in these fields could ensure strong demand for services in the future.

2. Improve case and knowledge management capabilities from inception to conclusion.

Your law firm already has tons of information at its fingertips. Building or maintaining a robust knowledge library or intranet will make sure you’re not squandering all that valuable data.

3. Enhance service delivery via automation and process improvements.

Technology provides ample opportunities to automate processes or offer user-friendly client portals. Solutions like these help your attorneys and legal professionals focus more of their time and efforts on more valuable tasks and less on busy work.

4. Create new services or alternative service models.

Get creative. Perhaps you can automate certain services so you can expand into underserved communities, or you could take advantage of AI to offer value-add solutions that your competitors can’t or won’t replicate.

5. Establish partnerships with industry providers.

“Creating separate ventures with industry providers is becoming an increasingly common practice among many law firms,” the report says. “Not only can this help firms distinguish themselves as innovators, but it also creates additional revenue streams.”

Another easy win? Using technology to solve a longtime grumble among clients: surprise costs.

Fourteen percent of the corporate counsel surveyed said that inaccurate billing was their top complaint about their outside counsel. Leveraging data about your firm’s past billings to predict future costs is a simple way to increase client satisfaction.

“With general counsel starting to take on more prominent in-house roles, firms are finding their pricing models to be more heavily scrutinized by organizations that have their own ranges and expectations,” said George Rudoy, managing director and legal management consulting at BDO. “Fortunately, firms can take a proactive approach to this issue by leveraging AI and other technology-enabled solutions to derive more accurate pricing models that can lead to both higher client satisfaction and business profit.”

Build a Brighter Path Forward

For law firms, these numbers may seem disheartening at first, but knowing where and why your clients are dissatisfied is the first step toward greater innovation and success. The solutions are out there, but law firms need to start transforming the way they work now.

“By ‘future proofing’ their operations, systems and processes,” the report concludes, “law firms can not only mitigate their business and digital risks, but also make themselves a critical and indispensable part of their clients’ goals and journey.”

For more insights on how law firms can stay ahead of changing client demands and a shifting legal landscape, download the full white paper from BDO.

McKenna Brown is a member of the marketing team at Relativity, specializing in content development.

 

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