The digital transformation of law firms
At a time when almost all we ever hear about is digital transformation, law firms are also starting to wonder what it means and whether they should start to go digital. So what does being digitally transformed involve?
Digital transformation means the use of technology and advanced technology in the firm’s everyday work, orientated towards its strategy and looking to the future and to new technological developments.
Digital transformation becomes necessary in industries or sectors with a high level of commoditization. The legal sector, until just a few years ago considered to be highly artisanal, is showing firm signs of rapid development towards packaged, automated and commoditized services within the reach of all kinds of clients and budges (Legal Zoom, Rocket Lawyer, Robot Lawyer Lisa, Partner Vine, Axiom Law, Lawyers On Demand, etc.). When companies like these, that started from nothing and have expanded very fast, force the main players to adapt or die, the whole industry has to move, alarms start ringing everywhere and the process of digital transformation must begin.
In our experience, most firms have already taken steps of one kind or another in their digital transformation processes, however timid they may be. But the digital transformation process for the firm involves all its areas: from the production of the service and the way it is offered to clients to its marketing and sale. It covers all kinds of clients in the broadest sense: external clients, but also internal clients who are particularly important in the legal sector in relation to capturing and retaining talent.
Convergence between digital transformation, new technologies and innovation
Years ago, we used to apply technologies as the big commercial companies suggested them to us. They were basic technologies with functions which, although we now take them for granted, were revolutionary in their day. We are talking about word processing, e-mail and the first internet search engines.
Later, websites, file management programs and document managers were introduced, with a degree of document automation using templates and clause libraries, the computerization of judicial decisions and legal databases and so on. These important advances have already been implemented by most firms. Now, barely leaving us time to assimilate this, advanced artificial intelligence technologies are appearing, together with Big Data, advanced analytics and the internet of things, although the practical application of these for law firms is not yet easy to see.
There is a substantial difference because it is no longer a question of buying or paying for a license to use these technologies, we first have to understand them, think how they can help us and decide whether the investment and functions are in line with the firm’s strategy. And it is precisely here, in the firm’s strategy, that digital transformation converges with innovation. There is a first level of computerization firms must achieve to continue to be competitive in the market: implementing technology to reduce costs; improve response times to clients and provide a better, more satisfactory client experience; reduce production costs and store information; make lawyers’ work easier and so on.
Once this first level has been reached, firms will have to turn to innovation to find creative ways of using the new technologies to allow them, for example, to computerize the client experience; stand out from the competition; automate processes to completely redesign the firm’s services based, for example, on artificial intelligence algorithms if necessary, and so on.
The role of technology and strategy
The technologies accompanying the computerization process range from the Cloud, Big Data and advanced analytics to artificial intelligence, mobile technologies and those associated with mobility, and the IoT. But it is not necessary to use or implement all of them. Nor must business models be changed to imitate successful initiatives filling particular market niches and meeting specific needs that might be very different from our clients’ requirements. For this reason, the digital transformation process must begin by analyzing both business strategy and the competitive environment around us.
If we take a look at our surroundings we will see how the sector, led by the big firms, even the Big Four, is moving forwards with two clear, common strategic thrusts:
1) improving processes
2) more flexible working environments
These two areas are the essential minimum that will be required of any firm to continue being competitive in the market.
Process improvement affects services and has a direct impact on the client (speed, efficiency) and on commercial profits (eliminating duplicated work and bottlenecks, improving the delegation chain, automating work, higher productivity, etc.). Flexible working environments, for which Cloud technology will be decisive, have a direct impact on lawyers (less need to come to the office, better quality of life, work-life balance, etc.). Both aspects are crucial not only in the relationship with the client but also in finding and retaining talent.
With this lowest common denominator implemented, each firm will have to move forward and develop a far-reaching differentiation strategy in the market that puts it one step ahead of the competition. Here, strategy, technology and innovation meet.
The firm’s strategy sets the objectives to be achieved. It is essential that the technological tools it decides to use help achieve these objectives. The type of client and case, the working processes and the way clients are secured at a firm will be decisive for choosing the specific technologies to be used.
The error of artificial intelligence
Artificial intelligence is perhaps the technology we all have in mind when we talk about digital transformation. But we must not insist on using artificial intelligence simply because everyone is talking about it now, or because it seems that if we do not use it we are missing out on something wonderful, or because we will simply be left behind in the process of digital transformation.
Artificial intelligence is useful – tremendously useful – but it is not for everyone, nor is it within reach of all budgets. For example, law firms produce large quantities of texts, or they analyze them on behalf of clients. This is an activity that takes up a lot of time and requires large teams of professionals. When the number of documents to be analyzed is high, data extraction and analysis are very useful. However, these technologies require tens of thousands of documents and an intense period of training to achieve satisfactory results.
Artificial intelligence must be used to solve specific problems; under no circumstances must it guide the firm’s strategy.
Firms must concern themselves with their digital transformation processes now to continue to be competitive in the market and attractive for their clients. The first steps to be taken in these processes must be orientated towards achieving the first level of computerization.
Many firms will be satisfied with this necessary and basic stage of digital transformation. Others will want to move on to the second level, or they will be pushed there by their competitors.
When this happens, it is important not to make the mistake of wanting to implement all the technology that is being talked about. It will be essential to align the firm’s strategy with certain well-chosen technologies meeting the real needs of its clients and professionals. It will therefore be fundamental to talk to both groups.
About the Author
Eva has a Degree in Law, a PhD in Communication from the UAB (Autonomous University of Barcelona) and an MBA from EADA Business School. As a lawyer, she worked with Morison ACPM and Bufete Pi Costa and at a technology based Legal Process Outsourcing firm.
Eva is Founder of AlterWork, a legal management consulting company with a focus on technology and innovation.
She is a teacher at the UPF (Pompeu Fabra University-Barcelona) and ESIC Business School. Professor of Marketing for the Master for Access to the Legal Profession at the Central University of Barcelona.
Eva is the author of: “Tendencias, Marketing e Innovación en el sector jurídico” (Ed. La Ley) and co-author of “Reflexiones sobre la importancia de la gestión en los despachos de abogados” (Ed. Thomson Reuters) and New Law New Rules: a conversation about the future of the legal industry (Beaton Capital).
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