Technology’s role in the legal sector is moving beyond a formality in 2023. Back in 2021, most firms had adopted some form of technology due to the pandemic. Two years on and three quarters of law firms across the globe have continued to invest in automation after seeing significant returns on investment in this period. And as recently as August 2022, the UK government announced another £4m investment into its LawtechUK programme to modernise the sector. On the face of it, digitisation in the legal sector is progressing full steam ahead.
But nowadays, nothing can be taken for granted. The ever-present and changing economic and societal challenges that dominate news headlines are altering priorities. As costs mount, there is often an instinctive reaction to trim software budgets and staff to focus on lawyer activity. But can firms really risk not adopting legaltech in the current climate?
LawtechUK’s 2021 report showed evidence that increasing use of legaltech could generate productivity gains between £1.2 to £1.7 billion, resulting in “better outcomes for consumers”. The report also cites speaking to “the head of innovation of a large law firm who estimated that they had achieved a return of £2 to £5 for every £1 invested on lawtech.” This is alongside its progress report from 2022 showing that the market opportunity for lawtech is currently sitting at £22bn annually. Clearly, investing in technology means driving cost and time efficiencies. And in the context of economic uncertainty, time is both as scarce a resource as money and crucial for innovation.
If anything, this market unpredictability has simply enhanced the necessity for investing in technology to meet business and client expectations. As White comments in the Legal Insider, during 2008, those firms that “innovated and continued to invest […] reaped the benefits.” The pay-off of investing in Legaltech, therefore, is in building capacity for more than just survival in tough times – it is an investment for firms who seek to thrive.
Yet seeing the need for digital change is one thing; legal IT leaders then need to both advocate for this change and deliver it.
Legaltech benefits: revolutionising workflow and cybersecurity
Workflow tools
Document analysis, classification, contract reviews and basic client communication – this is a list of just some of the manual and drawn-out tasks that automation can tackle. Through activating automation, firms not only save heaps of time for value-adding activities, but assure accuracy and compliance. Furthermore, AI can dramatically increase efficiency; for example, it can look at previous data examples to apply rules to future events and situations.
Having access to a cloud database is also now a must-have. Workers and clients expect access anywhere, anytime. Not only does cloud migration embolden client relationships, but it can assist with talent retention, helping businesses to provide an array of flexible working options and opportunities.
Cybersecurity
These tools are not only revolutionising the way law firms function – data and technology is also being used to buffer up cybersecurity. The FT recently highlighted a Thomson Reuters survey that found firm leaders were growing concerned by economic pressure and cybersecurity threats, with more than three-quarters planning to use more technology as a result.
In fact, the rise of cloud uptake is enabling this shift. Placing data on the cloud empowers companies to take advantage of a tech provider’s data encryption technology, something that is used widely and works so well in consumer tech (with WhatsApp being arguably the most famous example).
Legaltech is efficient, accurate and secure – key fundamentals to the practice of law.
Implementing the tech: outsourcing, reskilling and training
Of course firms need the talent and skills to bring about these advancements. As companies look to digitise further, the same FT article notes that “the legal jobs market has cooled significantly this year after a frantic two years of recruiting, and the war for talent has shifted in focus towards data experts and technologists.”
But finding and hiring this talent – and calibre of talent – is a constant endeavour. A survey of 300 IT leaders from last year showed that 63% had difficulties doing just this. Many firms will not be equipped with the skills and expertise to develop software and implement such technology. So, how can firms still digitise with quality?
Outsourcing can be one of the keys to unlock this shift. For less cost, firms can access a wide pool of expert talent to flexibly work on a project-by-project basis immediately and tailored to its needs. But the benefits don’t end there.
Meeting the digital shift means investing in ways to reskill and train existing staff while hiring talent with the potential to develop the same skill sets. It’s what makes up the ‘blended’ strategy. Through outsourcing, you can build up your team’s own internal skills by having them work side-by-side with an external team, learning new skills and strengthening older ones.
Simply delaying the inevitable?
Every week presents a new economic forecast. Roles and priorities shift on a weekly – even daily – basis. Instinctive constraints to budgets and delays to projects are understandable. But the benefits and return on investment of legal firms continuing to digitise are hard to ignore.
Rather than a ‘job replacer’, technology is a tool to enhance clients’ and employees’ lives. Those leaders who continue their legaltech journey, investing strategically, adopting the right tools and leveraging the right talent, are sure to reap the rewards. It seems the surge of legaltech is set to continue for 2023.
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About the author:
Leanne Aldrich joined Amdaris in 2021 as a Software Solutions Consultant. Following a prosperous career in the oil and gas industry and then as a director for a tech start-up — a position which saw her navigating the company through a successful buyout — Leanne now leads on expanding Amdaris’ impressive portfolio of Law Practice clients.
To speak to Leanne about supporting your tech strategy, get in touch:
Leanne Aldrich
Software Solutions Consultant
Email: leanne.aldrich@amdaris.com