Tech Adoption Has Never Been So Important for Law Firms
Over half (51%) of law firms are pinpointing the adoption of new technology as one of their biggest challenges over the next two to three years, according to research by Smith & Williamson, the financial and professional services group.
Tech adoption has catapulted up the list of priorities of decision-makers. The 2016 Smith & Williamson law survey highlighted it as only the sixth biggest challenge, but it has leapt to second in just 12 months. Talent held firm at the number one spot; with nearly three quarters (72%) of firms placing it as their biggest challenge over the same period.
“Talent has been a perennial issue for law firms. However, decision-makers are coming to recognise the cost/benefit ratio of investing in recruitment when compared to new technology. The early adoption of tech can be a game changer. It is reassuring that firms are taking notice of the wider business community and considering the impact tech could have,” said Giles Murphy, head of professional practices at Smith & Williamson.
Smith & Williamson surveyed those running law firms to get their gut feel of developments in the legal market. The survey endeavoured to get to the heart of the issues affecting legal businesses by ensuring only the managing partner or CFO was questioned.
Tech bringing opportunities
Two thirds (62%) of respondents also identified tech investment as one of their biggest opportunities over the next two to three years. Many respondents (54%) felt that technology could be used to help enhance client experience.
“Ten years ago those managing law firms may have turned away from the potential of tech but developments in core areas, such as big data, cyber security and the cloud, are beginning to have a noticeable impact on the industry,” said Giles.
Nearly a quarter of respondents identified AI as one of the key areas of opportunity for their firm.
“AI has the potential to complete the more onerous and mundane document management tasks that firms face. It could allow those currently focused on these tasks to switch to more client-facing roles and generate fees. Crucially for law firms, it could increase productivity across the entire business which is an area we have seen suffering. However, no firm wants to be the first to move in case things go wrong,” said Murphy.
Can tech boost productivity?
“Adopting new technology may not revolutionise the culture of firms or the nature of their work. However, investing in workflow systems to reduce manual processes, such as automating the collection of overdue fees could have a huge impact on cash flow, efficiency and staff costs. Crucially it can free up vast quantities of time for client interaction and therefore income generation,” said Giles.
Recent analysis of the most up to date accounts from the legal sector by Smith & Williamson indicates that fee income per lawyer in the UK’s top 50 law firms is declining. Over the past two years it has moved from £307,600 to £304,900.
“Fee income per lawyer has long been seen as a key metric of productivity. What has become apparent is that law firms can no longer charge as much, or any, fees for some work, such as document management or simple correspondence. However, firms have the opportunity, resources and now, for potentially the first time, the ability to introduce new systems and methods of working that can halt and then reverse the problems associated with declining productivity,” said Giles.
(Source: Smith & Williamson)
