Digital transformation through a cloud-first strategy is now essential for law firms to stay competitive and grow their businesses, says Mike Hinchliffe, General Manager EMEA at Tessaract
“Cloud is not a trend, it’s a stampede — and it’s irreversible,” suggests Mike, who believes the risks for law firms that don’t adopt cloud services will grow significantly in coming years.
Improved security, scalability and integrations with other software are key reasons for moving from on-premises to cloud-based or, better yet, cloud-native platforms, he says. A “born in the cloud” legal software provider, Tessaract’s vision of digital transformation is one in which all services have moved to the cloud, disrupting a market “crowded with antiquated technology”.
And although there’s still a digital divide in the SME legal market, with firms at different stages of their transformation journeys, Hinchliffe notes: “There’s growing understanding of the need to have a digital-first strategy. Firms increasingly see the risk that old technology acts as a handbrake on their growth.”
Competing in a challenging market - talent, pricing and reputation
Pricing pressures and the ‘war for talent’ are top challenges for SME law firms, a snap poll of leaders found at LPM Conference 2023. Hinchliffe notes that digital transformation can help them to differentiate their offering in this competitive landscape.
“Talent attraction and retention is a massive deal for law firms. A graduate today only has one view of the world — and that’s digital. They have extremely high expectations of the tools they’ll use, and firms still working with on-premises systems will struggle to appeal to them,” he says.
Can you imagine how confused and frustrated a new recruit who has grown up with digital and mobile technology feels when they’re told they can only access their firm’s tech at the office? And that’s even before they’ve realised they’ll be working with systems that are difficult and costly to maintain and upgrade.
And with growing pressure on pricing, digital transformation also becomes “a key element of a firm’s strategy to stay competitive”. Those that fail to invest in newer technologies designed to make people more productive and to automate repetitive tasks are at a significant disadvantage when it comes to offering competitive prices while maximising the profitability of work.
What being seen as a tech-forward firm communicates to prospects and clients is as important, Hinchliffe continues, offering a potential boost for both operations and marketing. “While the digital culture aspirations of SME law firms may still vary, most are now quite forward-thinking when it comes to connecting with their audience. A client portal is simply essential, and we’re increasingly seeing even very small firms investing in chat technology to engage with those customers online.”
Mindset for change
Widespread software-as-a-service (SaaS) adoption is inevitable, Hinchliffe believes, and the technology landscape will continue to evolve. “The cloud will look different in five years’ time, although no one can entirely predict what those changes will be,” he says.
In October 2023, the UK’s Competition and Markets Authority began investigating cloud services amid concerns of a potential monopoly. “It’s the first time regulators have paid attention to the cloud computing market, which could lead to interesting consequences — both for provider strategy and consumer choice.”
And with ever-evolving cybersecurity risks, Hinchliffe finds more SME legal business leaders are now recognising the advantages of cloud-native security. Providers invest heavily and deploy regular updates to ensure their platforms remain secure, taking the burden from firms having to maintain on-premises systems.
What isn’t in doubt, he says, is that services native to the cloud — an intrinsically agile technology — will continue to improve and unlock tremendous benefits for these firms. But does that mean all cloud-based platforms are made equal?
Not necessarily, as not all products offer optimal user experience. “The challenge isn’t deploying software to the cloud, it’s building exceptional software that people love to use, that’s designed to work for its users, not the other way around,” he says.
At the core of Tessaract’s product design philosophy and strategic vision is foregrounding the client’s needs. “Configurability is incredibly important. We’re always thinking about how best to design a particularly complex workflow or process. And building on that, cloud-native allows us to swiftly configure the platform based on clients’ specific requirements during the implementation process, and to offer low-code/no-code mechanisms that empower users.”
And it’s not all about the tech— firms must also optimise their people to make the most of a digital transformation strategy that includes investing in new systems and tools, he adds. It’s something that legal business leaders neglect at their peril.
“One big challenge for the adoption of new technology is education — and should the vendor be responsible for that, or the firm? The answer is that it’s a shared responsibility. It’s for the vendor to make sure people understand how to use the software they’ve implemented, but it’s for the management who have invested in that technology to drive the changes they want to see across the firm.”
Digital transformation is no longer an option, says Hinchliffe. Getting the right mix of people, process and technology improvement is critical to SME law firms embracing the cloud era effectively and unlocking the best opportunities for growth.