Tech in Law Firms: Trends and Challenges

Law firms have long been slow in responding to technology-driven changes because of their risk-averse nature. But it seems that things start moving as we see an increase in LegalTech investments.

The proof comes from Gartner. In their recent research, Gartner predicts that the proportion of legal budgets spent on technology is set to increase threefold by 2025.

Some attribute this to the pressures created by the COVID-19 pandemic that forced law firms to automate part of their daily activities — e.g. document management and team collaboration. It did have a major impact on the fast adoption of legal technology. But ‘fast’ doesn’t mean effective.

Even if you already use legal tech, chances are you use the wrong one. And those chances are pretty high.

70% of digital transformations fail because companies do not adjust the technology to their individual processes. Instead, they adjust their processes to fit individual technology. The result? They invest impressive amounts of time and money in running it, but it doesn’t add any tangible value to the business and the client alike.

Technology itself must not be your end goal, it’s just a means of achieving a clear business or customer outcome. So before implementing any tech in a law firm, ask yourself what problems you are trying to solve and how it can help you serve your clients better.

Here are red flags indicating that your business and your clients would appreciate a digital change:

• Your operations are largely paper-based.
• The response time for a client inquiry is over 24 hours.
• Most of your daily work is conducted in-office.
• You create all client contracts manually from scratch.
• The collection of initial client and case information requires face-to-face meetings.
• The client is unable to track their case progress at any point.
• Your legal support team spends most of the time answering simple client questions.

These are just some of the most common practices that legal companies stick to. But it still works, doesn’t it? — It does, for now. However, if you continue neglecting LegalTech improvements, you might find your law firm unable to catch up with the competitors later on. And most likely, you will never be able to.

So if you were looking for a sign, here it is. It’s time to optimize, automate, and innovate.

As a rule, businesses give priority to their internal benefits when it comes to choosing legal technology solutions. Yet still, if you want to play a long game and be good at it, you should put your customers at the heart of digital transformation and opt for win-win solutions. That’s why we are going to consider legal trends that work for both.

1. Data privacy & Cybersecurity

Data is the new gold. That’s why we see the number of digital crimes related to data theft growing with every passing year. In 2022, the number of ransomware attacks alone saw an 18% increase between the 1st and 2nd quarters!

Along with that, you should take privacy considerations seriously — it’s not a legal trend, it’s rather an obligation towards your clients. Keeping clients’ data on-premises or sharing it via mainstream digital channels put this data at risk of exposure. Make sure to invest in specialized legal tech with a safe encrypted collaboration environment.

2. Digital identity

Different verification processes in law firms are mostly manual, meaning they are prone to human error and inconsistencies or are simply resource-consuming. That’s why industry leaders have started looking for worthy alternatives.

We are now witnessing a shift toward digitization even on the governmental level. This is due to numerous benefits — ease of use, better security, and efficiency. But along with it, the adoption of digital identity management practices allows you to meet the expectations of modern digital-first clients, who crave streamlined experiences across the board.

3. Client experience

Speaking of client experience, customer centricity is what people look for in each and every business by default. Modern consumers are different. They expect you to deliver exactly what they like, want, or need in a way that is convenient for them. And today, they are convenient with mobility and flexibility.

If your law firm is neither the biggest nor the smallest, you need to have something that sets you apart. And in this day and age, this something is how customer-oriented you are. Any technology that makes client experience easier, more personalized, and more consistent can potentially bring you positive publicity through the word of mouth, leading to more people seeking your services.

In order to optimize your legal operations, get used to answering these questions:

• What do our clients want?
• How do they want it to be implemented?
• What can we do to exceed those expectations?

And only after that, decide what technology stack will ensure your operational excellence.

4. Transparency

Do you want to hear the hard truth about how clients see cooperation with law firms? Most of them don’t trust law professionals. That’s because they don’t have a clue about what’s going on behind the scenes in their case management. And to top it off, when it’s over, they end up with a bill that makes their eyes pop out.

Clients want transparency in billable hours, access to information, and processes behind their cases. Firms that caught this legal trend early on are now successfully using special portals for secure client-lawyer collaboration. All case-related activities take place there — conversations, document sharing, verification, reporting, etc. Clients also have 24/7 access to a knowledge base on their matter, self-service features, and real-time tracking of the case progress.

If you haven’t used such a tool yet, you should start using it soon.

5. AI/ML

AI-driven technology is a powerful tool that changes the way lawyers work by making them more effective and accurate at legal advising. In the AI/ML domain, we’ve noticed 2 major legal technology trends: data analytics and virtual assistants.

Another area improved by artificial intelligence is client service. Law firms start implementing virtual legal assistants to decrease response times and redistribute the load. Virtual legal assistants are smart bots that are not only able to collect client contacts but can also answer frequently asked questions. As a result, this helps support teams focus on more complex issues.

1. Don’t shy away from innovation — it is a source of much-needed workflow optimization.
2. In order for your technology strategy to be successful, you first need to identify the specific issues you want to solve with it, and then, analyze legal technologies available in the market.
3. When it comes to choosing from the list of fit-for-purpose legal tech, opt for solutions that focus on delivering a better and more seamless service to clients.
4. Consider all your business processes through the lens of customer experience. It will become your competitive differentiator.
5. Go with a legal tech company that understands your needs.