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Law Firm Innovation - Yes But We Don't Have Mega Budgets To Play With


In opinion / By Charles Christian / 11 March 2019

We’ve all read those stories in the legal press about big City, international, “Magic Circle” and “Silver Circle” law firms announcing they are going to spend millions of pounds on innovation projects involving leading-edge technology, space-age office spaces, radical new ways of working, and so on.

We’ll gloss over the fact some of these projects never see the light of day but the bigger point is although the sums involved seem HUGE, as a proportion of these firm’s global turnovers, it is a relatively modest percentage. But where does that leave the SMEs of the legal world, all those smaller-to-mid-sized firms that never make The Lawyer Top 100 – or even the top 200? Does a lack of a big budget mean the doors to innovation are permanently shut?

The answer is a resounding “NO”.

Let’s start with one very positive factor… when you read of big firms spending big sums, it is worth noting much of this money is spent on routine “keeping the lights on” technology. For example, if you have 1,000 plus users in multiple offices around the world, merely upgrading to the latest version of Microsoft Word and training staff on the changes becomes a huge deal and expense.

The second point is that many of these grandiose innovation initiatives smack of being unrealistic public relations exercises intended to impress clients, prospects, staff and potential recruits. “Hey look at us, we’re pioneers, did you read that article about us in the national press?” At the moment, many of these firms are throwing money at AI (artificial intelligence) or they want to be a “lawtech startup” because that seems trendy and might grab them a few more column inches in the media.

Let’s return to the real world of SME law firms… The difficulty is law firm managements are frequently over-sold the benefits of new technology initiatives, leaving everyone anticipating some major “Big Bang” like paradigm shift in productivity and profitability which is never realized. For example, document management will be pitched as moving your firm into the era of “matter-centric computing” or similar. But, it’s not, it’s just a better filing system for legal paperwork, the digital equivalent of the steel filing cabinets you’ve had in your firm since at least 1919.

The fact is, apart from email about a quarter-of-a-century ago, there have been no new technologies to transform the way law firms operate. There are no “killer apps” waiting to revolutionise “lawyering.” And neither are there any technologies which will radically change the economics of legal practice by, for example (and this remains the dream of many lawyers), allowing them to sack all their secretaries and support staff to delegate their administration to a couple of computers.

What has been going on is not “Big Bang” but “Little Bang” and the realization some technologies can bring minor benefits that, once spread across a whole firm, have a substantial cumulative effect. And, if the firm invests in multiple technology initiatives of this nature, the incremental impact can transform a firm in terms of making more productive use of fee earner time and reducing lawyer to support staff ratios.

Take case management. The ability to control, automate and delegate means expensive qualified lawyers are not wasting their days on low-value routine administration and firms are able to handle higher volumes of work than previously – without having to recruit more staff but while still enjoying a healthy profit margin.

Ditto digital dictation and speech recognition. Yes, we do still have secretaries and PAs in law firms but their workloads have changed and the need for temps, floaters and frequent overtime has been reduced – and work is being turned around far quicker than was previously possible.

The secret with all these changes is the technology may not be dramatically transforming the way a firm operates but it is allowing firms to do what they’ve always done in a more efficient, cost effective, less labour and time intensive fashion that both increases productivity and reduces administrative overheads.

This all adds up to an increase in profit margins, which should be the objective of any firm hoping to remain competitive in the current market for legal services. Turnover is vanity but profits are sanity and the drip-drip cumulative effect of incremental changes is better than betting the farm on over-ambitious grandiose projects.

Although there is no one-size fits all, at Nasstar, the Professional Services team have the experience and knowledge to advise on the best technologies to work within your business and the needs of your future plans.

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Charles Christian

Charles Christian

Charles is a former barrister and Reuters correspondent turned writer and the founder of the Legal IT Insider newsletter, website and resource.

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