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Legal tech frenzy – lessons from industry

Friday, November 18th, 2016

http://www.dreamstime.com/royalty-free-stock-images-man-working-modern-technology-image22891879The legal geek moves centre stage
There has been an explosion of interest in information technology in the legal sector of late – particularly technology at the leading edge such as Artificial Intelligence (AI). This interest was crystallised in the recent and well publicised ‘Legal Geek’ conference in London when a number of major law firms mingled with ‘LawTech’ companies and startups to discuss how new information technologies and new thinking could be used to transform ways of providing legal services. As well as AI and technologies such as blockchain the conference looked at ‘softer’ elements such as innovation and cultural change.

New thinking

This is a significant development in a business sector that has long been conservative and behind other sectors in its application of new business thinking and technology. It comes as many firms law struggle to maintain their levels of profitability in market conditions that have been challenging since the 2008 financial crash. The combination of price-focused clients, globalisation, the internet (and market deregulation in the UK) has driven law firms to seek to innovate in the services they provide and the ways they work.

Law firms typically have applied IT for legal research, case and document management and for the management of support activities such as time recording, billing and finance. This new wave of IT brings internet-based technologies and – what typically makes the press – Artificial Intelligence (AI) systems. The application of these new technologies promises to revolutionalise the way law is provided – for the benefit of law firms who can work more efficiently and effectively – and for the benefit of clients who will receive ‘more for less’. The implementation of these technologies will – over time – help in digitizing key elements of legal services – making law more affordable and accessible to the large unmet market of small businesses and individuals.

Deja vu? Lessons from industry

Having worked for the last decade in helping major UK law firms transform their services through re-engineering and innovation – and also one who has consulted to multiple business sectors for twenty-five years – I am feeling a sense of deja vu.

In the 1990s, the industrial sector was in the midst of an ERP frenzy – implementing new Enterprise Resource Planning systems such as SAP and Oracle to transform the efficiency of their business operations. In the late 1990s and into the 2000s, the next wave of technology looked outwards into SCM (Supply Chain Management) and CRM (Customer Relationship Management) – to better link business with their suppliers and customers. In both these ‘tech frenzies’, many companies suffered from implementation programmes that significantly overran their budget and plan and failed to achieve their business goals.

The root cause of many of these problems was the lack of an holistic and integrated approach to implementing these technologies as business transformation programmes, not simply as technology projects. The lessons learned were that there were key success factors for IT exploitation, particularly:

1. A vision & strategy are required for effective communication within the business, getting buy-in from key stakeholders and coordinating the resources and activities.

2. To get the best out of the IT, business processes need to be re-engineered¬†first (to avoid the all-too-common ‘pig in lipstick’ outcome).

3. Effective programme management is required for effective coordination of IT, process and people work-streams.

4. Change management is fundamental to effectively deploying the new technology and working methods into daily business.

Are law firms grasping for a silver bullet?

New technology can often be an attractive ‘silver bullet’ for management teams faced with major business challenges. It appears as a nice ‘clean’ solution to a firm’s problems – as compared to complex messy process and organisational-based improvements. For this reason many businesses have wasted money and sub-optimised the impact of their technology investments by not ‘preparing the ground first’ with re-engineering and restructuring work.

We should also be clear that those law firms currently looking to apply new IT such as AI systems, are typically larger firms – the ‘Top 50’ in the UK – not the other 10,433 firms*. These are the wealthier and more sophisticated firms.

However in my re-engineering work with these larger firms in the last decade, it is clear that their services and processes have much opportunity for improvement. Re-engineering projects have typically yielded 25-50% cost reduction – whilst improving service quality – without the application of any new technology.

These services simply were not designed or operated in a systematic and efficient way. Automating them without re-engineering them first would significantly reduce the benefits from IT investment. Indeed for smaller firms lacking the capital or the resources for major IT investment, internal re-engineering work would be a better approach  for now Рthen later exploit the use of these new technologies when prices have reduced and functionality improved.

Structured evaluation and execution

So law firms should look outside their sector and seek to learn from others’ experience on how best to truly transform their businesses by exploiting new technologies and thinking. They should strategically evaluate – and incubate – these new technologies to determine how they can be used to re-fashion their value proposition and their business model. They should prepare the way by first systemising their services and processes. And they should manage the implementation of these new technologies as an holistic programme.

 

For more information on law firm innovation, see ‘Innovating professional services – transforming value and efficiency’ by Alastair Ross, published in May 2015 by Gower.

* There are 10,483 law firms registered in England and Wales in September 2016 according to the Solicitors Regulation Authority.

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