How Tech Is Shaping The Future Of Legal Services for SMEs
Law firms have been slow to let analogue practices within their business give way to digital alternatives. But things are changing. Below, we look at how some of the current technology trends will have a transformative impact on legal services.
When looking for reasons why Law firms have held back from fully embracing digital transformation, you cannot ignore how firms are typically structured. Law is not alone in this, but it's not hard to see why a profession focuses on developing and analysing rules and principles rather than their disruption, and values longevity and experience so highly.
And rightly so. Lawyers with tenure and knowledge garnered from their practice reach the top of their profession over time. Because of the traditional structure, career progression brings partnership and management responsibility. However, without deliberate initiatives, this structure could lead to the more digitally minded/digital native elements of the workforce, who represent a growing number of clients and decision makers, having a quieter voice.
Reluctance to change is, of course, a human trait, but one thing that seems clear: it's coming. In fact, since the start of the pandemic, the legal sector has, like many others, already seen the fast-forward button pressed in relation to digitisation.
Some of this technology was already available, but a national lockdown led to many senior leadership teams putting it high on the agenda, creating firmwide technology forums and seeking consultants to help with their digital maturity. Now there's no going back.
But don't expect any overnight transformations.
What’s holding transformation back?
For many law firms, digital transformation still feels risky, and it's understandable why this is the case. An explosion has been there in legal software, and many lawyers will recognise the experience of receiving daily emails from software providers promising a digital panacea for knowledge management, form building, automated proofreading, document bundling etc. However, much of it requires substantial investment. They can also carry complex and costly implementation issues with a firm's PMS (practice management software), which can range from a creaky patchwork of unsupported IT (in need of updating) to state-of-the-art systems that are, often not entirely understood and under-utilised.
Again, partnerships (of which the law firm is one of the last remaining bastions) will naturally have a strong focus on year-on-year profitability rather than a capital exit. Large infrastructural changes that require ongoing and increased investment in IT may only come to fruition when senior partners have retired. Budgets will need to be prioritised, and making decisions on how and where to deploy resources among new and untested solutions is complex, particularly when (in a comparatively short period of time) they could provide the necessary foundations for a business to attract the next generation of clients.
However, much of the hesitation is bound up with a very clear rationale. For clients purchasing legal services, there will, for a long time yet, be considerable value in bespoke and human solutions. Legal advice regularly engages emotionally charged issues, and this can be as true for separating spouses as it can for an entrepreneur who is selling a business after shedding blood, sweat and tears building it.
So long as there are human clients, there will be human lawyers because trust and empathy are cornerstones of advice that is both well-given and well-received and enables a client to move forward with confidence.
So, whilst digital solutions will not replace lawyers, two areas that are already seeing the benefit of technology are client administration/onboarding, legal service delivery, and dealing with lower-skilled but labour-intensive tasks.
This includes giving clients direct access to digital documents (rather than emailing electronic files to bloated inboxes), scanning documents via OCR to glean information on due diligence material and building out documents, including from stored data that can automatically be agitated by software. This will not only improve client experience, reduce human error and improve consistency, but it also allows lawyers to focus on where they can provide real value.
Efficiency versus value
Many clients, especially those working in progressive and entrepreneurial businesses, are eager to make legal services more efficient. To help meet the demand, a growing number of tech disruptors are seeking to complete with (rather than support) the traditional law firm. These services can, for example, automate the production of documents for equity fundraising (friends and family through Series A), compile a straightforward EMI scheme and run a cap table.
The challenge for many of these platforms relates to a business's inevitable Venn diagram of issues. When there are overlapping concerns pertaining to previous investors, parallel incentive schemes, existing tax structuring etc., a standard form document generated by the software cannot complete with cross-discipline advice from a joined-up team of business lawyers.
The future for the legal sector is, as always, about being client-centric. It will be about finding ways in which technology can amplify the human value and assist lawyers in delivering a better service, rather than how it can replace them.
Before COVID-19, Morr & Co developed technology to assist with residential conveyancing to improve workflow efficiencies whilst appreciating a lawyer's value in the process. They have successfully licensed this to a number of other firms. They have also built their due diligence platform. And are not stopping there.
When building or buying technology, we've learned that IT investment must be coupled with a transformative change in the client experience. It's when the client starts to see the value.
Pushing the possibilities further
There is also potential in how technology can help give litigants better, faster and more efficient access to justice. It includes the possibility of using AI to assist in resolving disputes. In fact, with the vast amounts of data, inherent logic and (sometimes) binary outcomes for disputes, it's not inconceivable that law firms could actually be negligent if they're not using AI in future.
But at this point, there are still significant obstacles. Courts don't just take legislation and deploy it in an algorithmic way. Some of the landmark decisions that provide the foundation of legal principles were only possible due to brilliant, progressive and original thinking. Understanding the wider social and political context of facts remains the territory of humans, including the sleight of hand that makes them appear evolutionary rather than revolutionary.
The future of law will undoubtedly feature much more technology. Just like every other sector. But for now, the biggest question for law firms is often where to begin. Where do you invest? How do you plan out your digital transformation journey to get the best return? How do you make sure it's an ongoing investment, and what should you do with it?
And that's a question for the experts.