Why Law Firms Need To Digitize Their Processes, Now
Currently, you can apply for a mortgage via an app. You can submit all of your supporting evidence – your identification documents, your highly personal financial information, the lot – using a mobile device to get a provisional decision within minutes of application.
Your conveyancing documents? Another matter entirely. Enter PDFs with unfathomably-worded small print in tiny writing which you have to print off, sign and send off via post, and a process that adds weeks to an already lengthy purchase.
In a nutshell, that’s how far legal firms lag behind other industries when it comes to digitization.
Until recently, law firms have been able to dig their heels in with no immediate consequence. Long-term however, this reticence has created a frustrated customer base eager to embrace change, and with digital legal service providers on the rise, it’s never been easier for lucrative commercial clients to bring their legal needs in house.
If you want to keep up with your clients’ expectations – whether individual or commercial – the time to act is now. If you don’t, you risk losing ground to more tech-savvy competitors and legal service providers that will be incredibly hard to make back up.
What Does Digitizing Legal Processes Look Like?
Digitizing your legal processes simply means that you’re finding digital ways of completing tasks and processes that were previously paper-based.
At a very basic level, this involves digitizing your records and core processes – contract signing, for example. This, on its own, will offer significant time and cost saving advantages. The scope for automation, however, goes far beyond this. Basic legal automation solutions can now reduce need for manual input in:
- Matter management
- Legal billing
- Due diligence
- Time and expense recording
- Legal calendaring
- Client accounting
- Compliance management
The technology behind the automation of these processes is growing steadily more powerful as approaches like machine learning, AI and predictive analytics emerge. Right now, there are solutions on the market that could cut 40-60% of the time junior lawyers need to perform due diligence tasks, for example.
Contract analytics solutions can score contract drafts for complexity, legal phrasing, and enforceability, and offer suggestions for tightening them up. AI tools can help you forecast opponents’ arguments by processing data from innumerable previous cases.
Consider automation of manual processes a baseline level of legal digitization. On-the-market solutions can stretch far beyond it, and this trend is only going to accelerate as time goes on.
What Are The Immediate Advantages of Digitizing Your Legal Processes?
Think of how slow traditional, paper-based legal processes are, and then think of how fast-paced the world we live in has become. It’s a complete mismatch, and for all the digital progress we have made elsewhere, law firms are sorely lagging behind.
Digitization is disruptive. It’s going to require an amount of upfront spend to complete successfully. You may need to onboard new hires, make changes to your team structure or invest in new software solutions (and potentially the hardware to support them).
Does it all pay off? Absolutely.
In general, digitally mature companies are 23% more profitable than their less digitized competitors, with digital-first companies 64% more likely to achieve their business goals than their peers. That’s a significant return on investment indeed, particularly if you’re operating in a market where the majority of organizations are lagging behind the curve on digitization.
If managed well, digitizing legal processes offers these key immediate advantages:
- Increasing efficiency: digitizing records into an easily-searchable database, or automation of repetitive manual processes like legal billing, allows you to complete case work quicker, remove bottlenecks and hit tighter deadlines.
- Reducing costs: digitization reduces labor costs associated with manual processes. You can reinvest the money you save into your competitive assets rather than pouring it into non-beneficial cost centers. You can also pass these cost savings onto your clients by offering a more competitive price point for your services.
- Reducing human error: in fields like compliance, where regulations differ across borders and are updated frequently, the risk of human error is high and the legal consequences potentially serious. Digital solutions reduce this risk considerably.
- A better customer experience: digitizing your legal processes brings your customer experience in line with the fast, seamless experience customers demand from their service providers in other industries.
Digitizing Your Legal Processes Needs To Happen Now
Legal digitization is both exceedingly advantageous and long overdue. With the exception of the Big Four, a few larger organizations, and some disruptive entrants, most law firms have significant ground to make up when it comes to digitization. Those that don’t act soon risk losing clients and revenue to ahead-of-the-curve competitors, or fully-digitized legal service apps or providers.
This urgency is underpinned by three main factors:
- Changing consumer expectations and behavior
- Early adopters setting the agenda
- Heightened investor interest in digitized legal solutions
Changing Customer Expectations and Behavior
Worries from legal practitioners about document security and privacy are understandable. Law firms deal with a large amount of sensitive data every day, and you want your clients to know they can trust you. You might worry that, should you digitize your major processes, they won’t feel their data is secure.
These worries fail to take into account that customer preferences are changing. And given that two-thirds of a company’s competitive edge comes from the customer experience it offers, it’s essential to your firm’s success that you keep up with them.
Consider the success of online and mobile banking. Whilst the mass market was initially skeptical, thanks to large-scale digitization in the finance industry it is fast becoming the norm – by 2021, app-based banking is set to become more popular than visiting your local branch.
Consumers entrust digital banks with a huge amount of personal data, e-sign important documents, and in some cases provide them with enough financial information to grant a loan or mortgage.
What this shows is that people and businesses are far more open to digital solutions than they were a decade ago. Not only that, but the speed and convenience of a well-built digital customer experience is fast becoming an expectation. Offering a digitized service will be increasingly appealing to clients, who will naturally gravitate to firms with a faster, more transparent service offering.
Then, of course, there’s the price point.
Digitization reduces associated legal costs by reducing project time, labor costs and human error. Digitized firms will therefore be able to offer far more competitive fees than non-digitized firms, even when offering the same service. Offering a service that’s slower, less accessible and more expensive than competitors’ won’t be sustainable in the long run.
Early Adopters Are Setting The Agenda
Because of customer demand, widespread digitization is already happening in the legal industry. Legal professionals are facing a choice: act now to keep up, or get left behind.
UK firm Freshfields Bruckhaus Deringer, for example, has seen great success partnering technological specialists with lawyers to create digital solutions to client issues. Their Antitrust 101 app, which helps clients maintain compliance with antitrust laws and reduce the risk of dawn raids, was created within weeks using this model.
Increasing numbers of law firms are employing technical specialists, both to create new client-facing solutions and to digitize existing processes. Whilst smaller firms might not have the resources available to create entire apps for clients, digital transformation doesn’t have to be innovative to be successful. Even baseline automation solutions can cut lawyer workloads significantly for small-to-mid-sized firms, helping them compete on speed and price with much larger rivals.
The gap between digitized and non-digitized firms is only going to get wider without action. According to a 2019 report by Gartner, 81% of law firms feel unprepared for the digital transformation that lies ahead even though the benefits are well established. The danger for firms that don’t adapt is that the 19% of law firms who have digitized will start setting client expectations that non-digital firms simply won’t be able to meet.
Heightened investor interest in digitized legal solutions
Investors are fast becoming aware of the potential of legal digitization solutions.
Investment in legal technology reached $1.3bn up to September in 2019. 2018 saw $1bn worth of investment, and 2017 just $233m. That’s an astronomical increase over three years, and indicates a significant upward turn in the long-term viability of these solutions.
What does this mean for you? Well, there’s good news and bad news.
The good news is that increasing investment in legal tech means you’re likely to have a wider range of solutions to choose from, incorporating the latest possible technologies. If you’re looking at any sort of legal services digitization, whether that’s basic document storage, the most up-to-the-minute AI applications or anything in between, the range of vendors on offer will increase.
The bad news? Some of the solutions available will undoubtedly start to tread on your toes with the service they provide. Legal service providers – unlike law firms – have been quick to realize that digitization leads to faster project completion, minimal human error and an overall better customer experience. Your commercial clients are realizing this too, with increasing numbers of companies bringing their legal work in-house, with the help of digital legal services software.
In this environment, you need to be able to demonstrate what you can offer that these services can’t. There is still, and perhaps always will be, a compelling case for employing a certified law firm over a legal services provider, but your clients won’t want to hear it unless you can offer a comparable customer experience.
It’s impossible to offer the level of customer experience your clients demand without digitizing, so this should be one of your absolute most important strategic goals going forward.
Legal Digitization: Closing Arguments
The crux of the issue is this: your clients want a fundamentally different type of customer experience than they did a decade ago. Digital-ready legal service providers, the Big Four and some larger law firms realize this. The majority of traditional law firms have not.
If nothing changes, this is going to be a real problem for the industry as customers gravitate towards the few who can provide them with the experience they want. Larger, digitized firms will hold more appeal thanks to faster, competitively-priced services, and companies that previously outsourced to commercial law firms will be increasingly attracted by in-housing and digital legal service providers.
Non-digitized and non digital-ready law firms need to act fast to avoid being left behind. If deployed correctly, digitization has the potential to be a great leveler for mid to small-sized firms, for whom time, cost and efficiency savings would have a profound impact. By no means is it too late for action – but it is long overdue.