Digital transformation has become the buzz-phrase in recent years. Like all service industries, legal is being influenced by advances in technology, changing client expectations, and new competitors - many of whom are non-traditional technology-led disruptors. To stay relevant and competitive, law firms must embrace digital transformation. It’s quite simple: clients and employees expect no less.
But is it all just for show? Well not according to this report - half of SME law firms say that “building an agile, digital first culture” is a strategic priority. So, what is driving this digital charge?
Firstly, digital transformation helps law firms improve their efficiency and productivity. By automating routine tasks and using an array of tools (from document automation through to fully-fledged practice management software) law firms can reduce the amount of time and effort required to complete work. Good technology also reduces the risk of errors and improves the quality of output. What’s more, digital tools can help law firms analyse data more effectively, providing insights to inform decision-making and improve outcomes.
Secondly, digital transformation is beneficial for the client experience. Increasingly, decision-makers on the client side are younger professionals who have always been surrounded by technology. Today’s clients expect a seamless, personalised, and technology-enabled experience from their service providers, including law firms. Digital tools can help law firms meet these expectations resulting in increased client loyalty and retention and perhaps even a referral or two…
Thirdly, the changing demographics within law firms themselves are contributing to the pace of change. Most lawyers today have a forward-thinking attitude towards technology simply because they have grown up with it. Recruitment and retention are tough: a digital first approach is one way to attract and retain talent in a highly competitive market. A talented candidate, given the choice of Law Firm A, a digital first firm, and Law Firm B, a firm which is not prioritising digital investment, is, all else being equal, picking Firm A every time.
For many years, the received wisdom was that law firms were resistant to digital transformation because the billable hour was the prevailing route to revenue. The billable hour, by definition, provided a built-in disincentive to become more efficient - why bother when efficiency simply means fewer hours to bill?! However, the 2023 LPM report shows a marked trend toward fixed fee billing. Increased fixed fee billing gives firms a structural motivation to pursue increased productivity through innovation. Layer on client and employee expectations, and the ingredients for digital transformation are well and truly in place.
