Law firms are approaching a strategic junction. According to Deloitte, there is going to be a 39% reduction in legal sector jobs over the next two decades due to automation. Regardless, law firms are facing a situation where they have to make a choice: embrace the new technologically-savvy generation or maintain focus on their current target market.
The UK legal landscape has undergone a significant transformation in recent years. The government has spent hundreds of millions over the last few years attempting to digitise the criminal justice system, and while it has been reported as ‘wasted’ money, it is indicative of the expectations of the public and businesses. Many law firms are now concerned that their clients will embrace technological solutions to problems that law firms would usually be able to charge for. We have seen signs of this already, such as services like DocuSign, which allows you to sign legally binding documents wherever you are, with no need for the presence of a lawyer.
Firms that are adopting AI technology may be able to offer legal services more efficiently than traditional lawyers working by hand. AI can also allow smaller firms to keep up with the larger, elite law firms. For example, Kira Systems is able to analyse and review contracts, with users reporting time savings of 20-40%. Another popular tech example in the legal industry is Artesian, which scans millions of online news and information sources relevant to you and your clients. It offers the ability to target, connect, and share with customers and prospects, as well as to measure outcomes. The surge in technology in the legal sector was the catalysts for 66% of firms increasing their budget for IT-related investment from 2016 to 2017.
Like much of the world today, the legal industry has the opportunity to transform how they operate. As technology becomes ubiquitous in society, can industries afford to sit on the sidelines of progress? One thing that is for sure is that the legal profession will be different in the future, and firms that want to develop or maintain prominence need to consider their strategy for that future.
Adapting to change
The good news is that the legal sector is still growing, and that’s not likely to change. While the Deloitte report suggests there will be a reduction of 39% in legal sector jobs, it might not be as simple as that. Some claim that it’s more likely that 39% of the workload shall be redundant, giving solicitors the opportunity to redirect their attention elsewhere (you will be hard pressed to ever find a solicitor that says they are underworked).
Nonetheless, the legal environment is evolving and lawyers will be expected to keep up. Understanding technology is becoming just as much a standard in business as knowing how to use a stapler so, to prepare the next generation of legal experts, universities are setting up facilities to educate law students in technology. Ulster University has launched the UK’s first Legal Innovation Centre to expand thinking in legal process innovation and technology.
While technology in law can be disruptive, it’s also an opportunity. Once a firm has established its technological systems, they will very likely find themselves operating at increased efficiency. But technology isn’t the only step that law firms can take to bring their company into the future. ‘Design thinking’ is a modern business philosophy that means being forward-thinking in problem-solving. Even a business that has nothing to do with design could find themselves with better problem-solving capabilities with this strategy. You can find out more about design-led innovation on our blog.
A future law firm
So what will law firms look like in the future? There are several directions that they can take. Businesses could maintain their status quo and attempt to rely on existing markets to deliver traditional services, although this could mean losing the section of the emerging market that expects modern technology, which could be a large chunk of the market. They could also lose business when some of the services they offer become automated, allowing clients to complete it themselves.
A firm could begin making adjustments to their corporate structure to explore adjacent markets or services to test the waters and begin to prepare for a digital transformation. Alternatively, a business could take a more radical approach and actively explore brand new markets, or begin to scale back on some of their existing markets and services for the purposes of refocusing and refining their strategy. Whatever works best for a business, they need to be sure they’re prepared for the inevitable changes to the industry. Deloitte predicts the legal profession will be radically different in ten years, with fewer traditional lawyers in law firms, and elite lawyers will be expected to have a mix of skills. It’s also likely that the workforce structure and career progression routes will change as the skillset of the industry evolves and adapts to the new environment. It could even be the end of the legal industry only hiring people with legal backgrounds, as the skills of workers from other industries become more applicable to the legal sector.
Law firms, just like many other industries such as finance, are operating in an era of the greatest technological developments we’ve seen since the industrial revolution, and keeping up can be difficult. However, like many of our clients, firms tend to work more efficiently, with greater client satisfaction/retention once the benefits of technology start being felt. If you’d like to know more about design thinking or technology for law firms, feel free to contact us and we’ll be happy to respond!
