We tend to see the legal profession as resisting change when it comes to technology. Yet, many law firms tend to prove us wrong and we have the research to prove they are on the right path. This article compares the legal thinking of ‘Technology Leading’ organizations with both ‘Transitioning’ and ‘Trailing’ organizations respectively. And where you stand depends on where your tech head resides…
- Leading Organizations leverage technology effectively, almost nonstop today, and will continue to invest in new technologies. We see them moving ahead over the next 3 years.
- Transitioning Organizations use technology somewhat today, and plans to invest more in the future over the next 3 years.
- Trailing Organizations are not leveraging technology.
Wolters Kluwer Legal & Regulatory recently released the 2019 Future Ready Lawyer Survey, conducted independently with 700 legal professionals from law firms, legal departments and business services firms across Europe and the US. The survey demonstrated that technology is already a key enabler of competitive advantage for organizations that are fostering innovative solutions today and plan to invest even more in the future.
But the survey also revealed that only 34% of legal professionals believe their organization is “very prepared” to keep pace with changes in the legal market. Then again, 50% of Technology Leading organizations said they were “very prepared” to keep pace with these changes, compared to just 19% of Transitioning organizations. Figure 1 sheds light on preparedness in our legal arena.
Figure 1: Legal Marketplace Change Preparedness
Importantly, the survey demonstrated that leading organizations in technology adopting (Technology Leaders) perform better today, are more profitable, and are better prepared for the future than those still Transitioning to more tech-enabled business practices. Figure 2 shows where higher profitability really lies according to research.
Figure 2: Firm Profatibililty
The survey provides -- for the first time -- a key link between internal strategies to implement technology and their direct impact on the company’s productivity and, therefore, profitability.
Why few lawyers are prepared to address changing trends
The legal sector has been under pressure from a series of trends that will continue to impact organizations over the next three years. According to the Future Ready Lawyer survey, the top global trends include the following -- which means the legal sector is now…
- coping with increased volume and complexity of information (72% report expected impact);
- emphasizing improved efficiency and productivity (71%); and
- understanding which legal technologies deliver the highest value (69%).
The gap between the anticipated trends and their readiness to manage them is quite surprising. In fact, less than one-third of lawyers report their organization is “very prepared” to address any of the aforementioned trends.
For example, although coping with “increased volume and complexity of information” remains a concern for 72% of lawyers, only 31% indicate their organization is “very prepared” to address this problem.
And, although 69% of European lawyers surveyed identified the growth of business services firms - including the Big Four legal service providers - as an impactful trend -- only 30% of these lawyers report their organization is “very prepared” to address this issue as well. This tends to confirm the current evolution of the legal services market.
Why do they resist investing in new technologies?
While the need for legal tech transformation may be powered primarily from external factors – including client expectations, pricing pressures and competition – the ability to successfully change and adopt new technologies must be managed with an approach that looks at the real reasons for resistance.
It’s an internal mindset that needs to change. Specifically, research shows that legal professionals identify the following among the main reasons to “not embrace new technology”:
- their organization’s lack of technology knowledge, understanding or skills (36%);
- organizational issues (34%), such as change resistance and lack of vision; and
- financial matters (30%), such as direct costs and proven return on investment.
In other words, lawyers acknowledge that understanding the benefits of new technology remains a major challenge, and some organizations report that they are taking steps to address that challenge by hiring technology specialists to support their transformation. Figure 3 identifies reasons for resistance including lack of knowledge, lack of strategy and lack of Return on Investment (ROI).
Figure 3: Reasons New Technology Is Resisted
Transformational technologies by 2022 are likely nonetheless!
Most organizations are now moving forward with implementing a variety of technologies from foundational (basic technologies organizations rely on to conduct business), to enabling (technologies that improve productivity, efficiency), and even to transformational technologies (technologies that deliver demonstrable new business results).
About one-half of Technology Leading organizations have already implemented foundational technologies and the vast majority expect to do so by 2022. Similarly, Transitioning organizations tend to be establishing a foothold with many of these technologies, but also expect to significantly increase their use over the next three years.
Among foundational technologies, third-party e-billing systems are most likely to see the highest growth among Technology Leaders, while client portals will see the greatest growth among Transitioning organizations.
In the meantime, Transitioning organizations seem slower to embrace these technologies and are expected to lag behind Technology Leaders over the next three years. Yet, online legal research software and document management should have the highest use within the next three years across both Technology Leading and Transitioning organizations. Several other enabling technologies will be widely used by 2022 among Technology Leaders including contract management software (87%), customer relationship management (85%), knowledge management (85%), practice management (85%) and data analytics (83%).
The implementation of transformational technologies, including artificial intelligence (AI), predictive analytics, machine learning, blockchain, smart contracts and decision support tools, is also expected to double by 2022. Technology Leaders expect to embrace these technologies at a much higher rate than Transitioning organizations, confirming the correlation between such investments and a foreseeable return on investment (ROI). Figure 4 illustrates the breakdown of transformational technology and the expected increase in use within the next three years.
Yet, the lack of understanding of technologies mentioned by many legal professionals remain a major obstacle for adopting any of the technologies especially for Transformational Technologies. In spite of more than one-half of lawyers expecting to see some impact from transformational technologies over the next three years - less than 24% understand them “very well”!
Preparing for Change
Figure 5: Preparing For Change
Progress for adopting the technology is uneven among legal professionals. Technology Leading organizations are strengthening their competitive edge, while others, struggling to keep pace, may be left behind while the legal services market reshapes itself. During this significant transformation for lawyers, a gap is clearly widening between hesitant adopters and a forward-looking approach. Early adopters are now Technology Leading organizations that discovered, by using technology that it is a highly beneficial source of efficiency and profitability.
Are you Future Ready?
Source for Figures 1 through 5: Wolters Kluwer Legal & Regulatory. (2019). 2019 Future Ready Lawyer Survey. Retrieved from: https://landing-legisway.wolterskluwer.com/2019-future-ready-lawyer-report-legal-departments
ABOUT THE AUTHOR
A former practicing lawyer in the energy sector and entrepreneur, Greg Miot founded a consulting firm dedicated to the digital transformation for legal professionals. He continued on to lead the development of Leaders League Group subsidiaries, expanding the portfolio of digital services for the legal market. Involved with legal technology for the past 10 years, he joined Legisway in 2018 as Head of New Markets and Chief Evangelist. Legisway was acquired by Wolters Kluwer at the end of 2018.