Future of Law Firms: Leveraging Digital Disruption

Burke Turner

Never before has the label ‘traditional’ been more limiting than for the law firm in today’s digitally accelerated climate. Digital disruption hits swift and it hits hard. No stone is left unturned, from the business model itself, to business processes, access to markets, and all amidst increasing expectations of a consumer grade experience at work, the challenge is real.

Disruptors come from anywhere, and everywhere – the Uber moment for the legal sector is already here with disruptors like LawDingo, which instantly connects a consumer to a marketplace of legal professional bidding for the work, and Axiom and Clearspire proving that many clients prefer new routes to value over tradition. And that talent in the legal sector can be engaged and deliver excellent work through digital tools and new ways of working previously considered only relevant for silicon valley.

It’s not the legal sector’s first rodeo.

In such a highly regulated industry, disruption is not a new thing. What is new, however, is the need for new business models that escape the pyramid partner fiefdom that bills on time, and replaces with a model that bills on value, with access to greater scale and leverage. This is the opportunity afforded through digital.

Marketplace disruption is already here. The new generation of clients who are conditioned to life on Amazon, Uber, and AirBnb are more comfortable with trusting people found online, and will consider value without such a critical dependence on personal recommendation; the market will elevate the best performers in a world of feedback and reviews.

As the hunt for value continues, clients are embracing new models such as offshoring, inshoring, embedded outsourcing, and in-housing for specialist, high risk areas of work.

The law firm as a catch all providing a range of services is no longer a given, cross-sell opportunities are now being lost to more cost effective alternatives.

Jerry Nelson, writing for Tech.co, has a good whip around of disruptors including Priori, which proves the marketplace moment is viable, and Shake, which takes a user centric approach to demystify contract law. Users of the platform are able to create legally binding agreements in seconds.

This increasing DIY approach to consumer law is a clear threat , however a growth mindset would see the value of a legal professional now of greater importance. "Sure, as you can create the contract yourself, you don’t need to pay me to draft the papers anymore, and I can now spend that valuable time guiding you through the platform to make sure you are covering all your bases and won’t incur further unplanned costs down the road."

Technology is facilitating these and other disruptions amongst broader consumer and market drivers that enable rapid adoption and support of these new approaches to delivering legal services.

New capabilities and economies of scale

Startups that are driving change in the legal sector include Modria, the cloud based, AI led dispute resolution centre adapted from proven success at eBay and PayPal. This technology supports 60 million people a year through a path to resolution, with nine out of ten no longer requiring human intervention. CaseText democratises access to laws, regulations and statutes through a collaborative and contribution membership model, making the ‘hive-mind’ a reality for legal professionals, while Docket Alarm functions as a Google alerts style service for the lawyer, however with analytics and prediction on litigation outcomes based on historical case records.

The potential for machine learning to further consume aspects of legal work at vastly reduced cost and incredible scale is very exciting. Unless you’re a dispute resolution lawyer, that is.

So what are the priorities for firms?

Raconteur published findings from PwC and eFax Corporate which clearly indicate an understanding of the need for a more aggressive approach to self-disruption. “Improving the use of technology” ranked the number 1 priority for 94% of firms surveyed, and the biggest change expected over the next decade due to legal technology appealed to 35% of respondents was “Paperless offices as the new normal”. Seems we have quite a way to go to flying cars. Indeed, it may well be self-disrupt, or face self-disruption.

Meanwhile, a third of firms have not undergone significant businesses innovations in the past two years according to research by Peppermint Technology, instead clinging to a fast dating model that lacks in customer centricity, with a scepticism about the value that automation can bring to their business.

For client self-service for access to documents and case tracking, legal firms lag well behind, with 8% of firms offering this capability compared to 16% for the comparative sector of accounting.

The research also indicates that one-third of firms have not been involved in any business innovations over the last two years. Two years is a decade in the scale of digital.

The long (robot) arm of the law

AI is already proving its capability. The University of Liverpool has conducted research on AI outcomes for court cases and found that AI was able to mimic the actual outcome with a 96% accuracy rate. The vision being that AI will help judges to arrive at the right decision faster, and with greater efficiency and consistency, always learning and aggregating cases to feed a virtuous circle of increasing capacity to support the operator.

Firms will struggle to shape a winning strategy and to implement any solution

Only 23% of law firms are underway with a clear digital strategy, while 80% of firms consider this activity as critical for the future, according to PwC Law Firms Survey.

"Reluctance to change operating processes” and “Overly cautious approaches to adopting new technologies" are the top two ranking hurdles to adopting emerging technologies, according to the International Legal Technology Assoc. Interestingly, both scoring above the third hurdle – "Security concerns". The opportunity lies in supporting and upskilling leaders on the potential of digital; brokering a digital mindset when approaching change, to spot and leverage the digital dividends that are available to cash in.

While struggling to meet expectations

In a report titled The Declining Client Satisfaction Antidote, BTI reported that only 30% of clients would recommend their law firm to others, with the top three drivers of dissatisfaction being:

  1. Not keeping up with changing client needs
  2. Doing a poor job of articulating and delivering value
  3. Poor communication between law firms and clients

New world: new ways of working

By using technology to deliver legal services that focus on smarter, more flexible (including self-employed) resourcing, delivering work with a greater project management style, and thinking in terms of process management and improvement, to seize further gains and efficiencies afforded by applying new technology.

For the digitally enabled leader:

Flexible working and distributed teams spell a faster route to resourcing corporate growth; Streamlined and automated processes spell opportunities for more diversified income streams;AI unlocks greater accuracy, reduced human error, and the chance to redeploy/re-skill talent into higher value added activities.

AI unlocks greater accuracy, reduced human error, and the chance to redeploy/re-skill talent into higher value added activities.

The digital mindset and confidence to take stride into the new world is critical here, the challenge surpasses technology and is very much cultural.

New world: new ways of connecting

Current marketing for law firms presents plentiful opportunities to reinvent and reconnect with markets on their terms. Content marketing strategies that integrate several channels, across web, email, and social media have been driving traffic for those firms who understand where and how to play. Remembering that contemporary consumer behaviour places trust in the hands of the market (ala tripadvisor), likes, shares, retweets all work to build reputation capital; since 2012, the Law Society tracks referrals from Twitter for law firms as a 663% increase.

While potential clients will be searching, rather than relying on word of mouth, it is critical to establish credibility across all service areas; a ‘specialty’ approach to each business division, appealing to the right consumer on their customer journey to find the right partner.

Once engaging, an area where legal falls behind comparative industries is customer service. With declining loyalty due to increased expedience of information and access to wider options for services across markets, firms will need to deliver excellent customer experience in addition to excellent work in order to realise the potential return brokering referral and loyalty to maximise their client acquisition spending.

New world: new definitions of value and the importance of purpose

As technology enabled efficiency gains become more apparent, clients will come to demand greater transparency and expect the procedural work that is not necessarily reinventing the wheel to become increasingly commoditised. As technology decimates the model of billable hours and practice shifts towards delivering valuable outcomes, part of that perceived value will include benefit shared to a wider community and stakeholders. Purposeful business agendas increase in value, particularly when engaging a millennial audience (internal and external).

The only thing that is constant is change

The legal sector faces immense disruption, amidst poor customer satisfaction and the rise of the machines to replace human interaction, with comparable accuracy that is only improving. Technology brings increased capacity and scale when delivering positive outcomes for clients that previously were inconceivable for the sector. As just about every sector continues shifting to a more customer centric, outcome driven, quality experience at scale as enabled through digital dividends, the laggards will be left behind.

Heraclitus stated the only constant is change. You don’t need a lawyer to tell you that. Depending on the sector’s ability to embrace change, you may not need a lawyer at all..

Burke Turner heads up the Ways of Working practice for We Are Atmosphere, empowering organisations to navigate transformation to realise better business futures.

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