It has been said that the COVID-19 pandemic accelerated trends across all industries.
“Take any trend — social, business or personal — and fast-forward 10 years. Even if your company isn’t living in the year 2030 yet, the pandemic has spurred changes in consumer behavior and markets,” said Scott Galloway, New York University business professor and author of “Post Corona: From Crisis to Opportunity.”
In 2020, videoconferencing became as routine as email. The number of workers using instant chat platforms such as Slack and Microsoft Teams ballooned. Tech tools allowing for e-signatures, cloud storage and delivery, and online commerce became must-haves for businesses to remain competitive. In many areas, the legal profession has not kept pace.
Twin Cities lawyers in general counsel positions and at law firms state they are aware of the importance of broadening their legal teams’ technological capabilities in order to enhance the services they provide. Being comfortable with videoconferencing and other high-tech communication tools is “table stakes” at this point, said Peter Carlson, general counsel at Nerdery, a digital business consultancy with offices in Edina as well as Phoenix and Chicago.
Nerdery helps its clients adapt and thrive in an increasingly digital world by helping them create and carry out digital transformation strategies. Carlson said the company does not have any law firm clients.
Law firms must keep pace
The legal profession joined the rest of the white-collar world last year in making investments that were necessary to allow their workers to perform their jobs remotely. However, surveys and anecdotal evidence suggest that legal teams — particularly small and medium-size law firms — continue to trail other professions in making significant strides to deploy technology more broadly. This is in light of the fact that studies indicate those law firms that invest smartly in technology are better able to serve their clients, maintain business continuity and increase profits, in part by improving efficiency and cutting costs.
“As the industry continues to recover and a ‘new normal’ emerges, technology will be a driving force. The question remains, who will be future ready?” states a 2021 report on “the future-ready lawyer” from Wolters Kluwer, a software solutions provider for a number of professions, including law.
The Wolters Kluwer report and others like it emphasize the focus on technological capabilities is especially keen when in-house counsel is screening outside law firms to work with. According to the report, 82% of corporate legal departments say it’s important the law firms they work with fully leverage technology. Top changes legal departments expect in the next three years include:
- Greater use of technology to improve productivity.
- Greater collaboration and transparency between law firms and clients.
- Increased emphasis on innovation.
- Greater use of alternative fee arrangements.
The report indicates that legal professionals themselves don’t have a lot of confidence in their overall technological capabilities. Overall, 36% or fewer lawyers say their organization is very prepared to keep pace with the most significant trends they believe will have an impact over the next three years.
Simplifying data and strengthening client relationships
The two top trends cited by legal professionals as having the biggest impact on their organizations over the next three years are the increasing importance of legal technology (77%) and coping with increased volume and complexity of information (77%). Yet, only 33% say their organization is very prepared to address the first trend and only 32% feel very prepared to address the second.
Carlson confirms the report’s finding that general counsel increasingly assess outside law firms’ technological capabilities when determining whether to hire them. He said Nerdery’s own clients — leading companies in manufacturing, health, industrial and consumer goods — adapted quickly to the touchless world wrought by the pandemic by developing apps and other technology that streamlined customer interaction and helped maintain strong customer relationships. Law firms need to do likewise, but many continue to drag their feet, said Carlson, who worked in private practice before joining Nerdery.
“I’m not surprised by the lack of confidence that legal professionals have in their technological skills. It is my sense that many law firms want to be as far down the curve as they can in terms of embracing technology, but just ahead enough that they aren’t creating risk for themselves or their clients by not adopting something new,” he said.
Both Carlson and Jared Kemper, vice president general counsel at Twin Cities-based Schwan’s Home Delivery, said the broad array of practice areas that larger firms provide can make it difficult to identify what technological investments make the most sense.
“The law firm model is complicated in the sense that it’s often not a centralized business structure. If you have partners who have their own clients, it’s like their own small businesses they are running,” Carlson said. “You end up having to wrangle those kinds of investments across the whole law firm. There is some work to make that happen.”
Out in front
One law firm that has proven its ability to get ahead of the technology curve is Ballard Spahr LLP, a general practice firm with more than a dozen offices spread across the U.S., including one in Minneapolis that employs about 70 attorneys. Last year, Financial Times recognized Ballard Spahr with its “Rethinking the Workplace Award,” citing its proprietary Ballard360 suite of technological tools for enhancing communication and the services the firm provides its clients. Introduced in 2019, Ballard360 provides clients 24/7 access to pricing and project management, document creation and uploading capability, and case tracking. Ballard Spahr has received widespread recognition beyond the Financial Times award for its use of technology.
Karla Vehrs, managing partner in the Minneapolis Ballard Spahr office, said the firm’s client-focused technology has set the firm apart from competitors in competitive RFP situations and helped the firm win valuable business.
“If we’re managing a lot of matters for our clients, that means our clients are managing the same number or even more matters. The more we can do to give them easy access to documents and budget information plus updates and schedules, it all helps them do their jobs more efficiently,” Vehrs said. “In complex matters, there can be so many moving parts at once. Having everything nicely organized for the sake of our internal team and also the client team really makes everyone’s jobs much easier.”
Melissa Prince, chief client value and innovation officer at Ballard Spahr, is grateful that leadership at the firm recognizes the difference maker that the right tech tools can be. She said many large firms don’t have that top-down support. In the Wolters Kluwer survey, 53% of law firm lawyers report cost of change as a barrier to implementing change in their firm while 47% report difficulty of change management and leadership resistance to change.
“Part of the problem on the law firm side is that partners, especially those who are older, don’t often feel that clients want technology or the need to innovate as quickly as they probably do. Once that shift takes place more universally across the industry, you’re going to see a lot more change,” Prince said.
The aggregation of marginal gains
The 2020 Legal Trends Report from Themis Solutions Inc., maker of Clio law practice management software, points out that shifts in technological know-how among legal professionals don’t need to be seismic to make a difference. It references the aggregation of marginal gains, a concept developed by British cycling coach Dave Brailsford, who continuously focused on making small adjustments to improve his team’s performance.
To Brailsford, every detail was worth examining, the report states. He redesigned bike saddles for comfort, tested lighter, more aerodynamic uniforms, improved hand-washing to avoid illness, and managed dust contamination of high-performance bikes. Within five years, Brailsford transformed a hapless cycling team into a championship performer that won 60% of the gold medals for cycling at the 2008 Beijing Olympics. It would go on to win 178 world championships, 66 Olympic or Paralympic gold medals and five Tour de France races.
The Themis Solutions report states that an analysis of tens of thousands of legal professionals after the pandemic hit showed that those who adopted any of three technology solutions within the Clio platform — online payments, client portals, and client intake and CRM software — saw improved year-over-year business performance throughout the pandemic. According to the report, “the adoption of more than one technology shows a compounding effect in business performance, both in terms of impact during the coronavirus pandemic and overall volume of casework and revenue collection.”
The Wolters Kluwer survey reported similar findings. The law firms and corporate counsel teams in the survey self-identified into one of three groups in terms of leveraging technology — Technology Leaders (40% of firms), Transitioning (53%) and Trailing (7%). More than twice as many Technology Leaders (46%) were prepared to support clients remotely when the pandemic struck than Transitioning organizations (20%). Leaders were more than five times more prepared than Trailing organizations (8%).
“Law firms and business services firms that are Technology Leaders outperform their colleagues in terms of profitability,” the report states. “While the pandemic took a financial toll for many, Technology Leaders weathered the year better than others: They were most likely to increase profitability during the past year (47%), compared to 28% for Transitioning firms and just 13% for Trailing firms. They were also more likely to report their business increased, despite the pandemic: 43% of Technology Leaders reported this compared to 24% of Transitioning and 19% of Trailing.”
What investing in technology looks like
It is interesting to note that the legal professionals in the Wolters Kluwer survey self-identified as leaders, transitioning or trailing. Carlson said as corporate legal departments and other businesses look more closely at the technological solutions that law firms have implemented, a firm that simply states it is investing in tech won’t be enough.
“What does it mean when a law firm says they’ve invested in digital? Have they really, or have they just invested in the bare bones that the rest of the business world has already done? Something like video conferencing is now just the table stakes of being in business,” he said.
Nerdery clients that are consumer facing can point their customers to apps that were developed to make doing business with them more seamless and simple. Law firms will have to be able to do likewise, Carlson said.
The top five technologies that law firms identified in the Wolters Kluwer survey that they plan to invest in are:
- E-signature (81%)
- Automation of document and contract creation (78%)
- Collaboration tools for contract drafting and reviewing (77%)
- Document and contract workflow management (76%)
- Cloud-based services (75%)
“In the past three years, we have been able to identify technologies that we feel it’s important to invest in as a legal team and a risk management team because it aligns with what our company is trying to achieve from a strategic standpoint,” said Schwan Home Delivery’s Kemper. “It becomes a prioritization exercise. There are a lot of different technologies that may be nice to have, but what are the essential ones?”
Asked for an example of an investment in technology that has streamlined his company’s services, Kemper mentions Legal Tracker, software developed by Thomson Reuters that can be used for workflow management, case tracking, e-billing and analytics.
Artificial intelligence (AI) is something every industry is trying to determine how to best incorporate into their workday processes. As with technology use in general, the legal profession is likely further behind than other industries.
As part of its report, Wolters Kluwer reached out to legal professionals with questions about what can be learned from the past and what lies ahead. Jean P. O’Grady, a thought leader in the legal tech community who has over 30 years of experience developing strategic information initiatives for Am Law 100 law firms, stated, “AI will not replace lawyers but it certainly can be a transformational power tool. [AI] can provide a variety of benefits, including identifying vulnerabilities in a lawyer’s work, driving efficiency and extracting insights and trends for both the business and practice of law. We will begin to see the emergence of truly predictive legal solutions. Of course — we still have a long way to go in identifying and eliminating biases in algorithms.”
Tech companies and lawyers must work together
Dean Sonderegger, senior vice president and general manager at Wolters Kluwer, said companies like his must work with legal professionals to help them identify how technology can enhance the services they provide. For their part, Sonderegger said, law firms and corporate legal departments have to embrace the possibilities and put leaders in charge of making their organizations technologically proficient.
“We provide tools and want to help them integrate those into the workflow, but there has to be somebody on the law firm side that really understands the priorities of their practice areas and understands how tools are implemented and applied,” he said. “There is a fair amount of stuff that one has to sift through to get to the right value. You need boots on the ground in the firm that understands the implementation of technology.”