How Legal Tech Innovation Can Drive Success in Your Firm
The legal landscape continues to change rapidly, and in the next few years, we will see breakaway firms and practices. Will your practice evolve and thrive?
Look back at past commentary, and this may seem like a stale retort. However, much like a glacier, the ice sheet has been moving slowly; the movement has become more noticeable, and soon a large sheet will break off and pick up speed. We can’t predict the exact moment this will happen, but we can be aware of the signals and react at the point of inflection.
Perhaps most importantly, you should be mindful because your clients are driving this change.
There are many moving pieces, but we can simplify them into three broad categories: innovation, disruption, and technology:
“Creativity is taking capital and turning it into ideas, innovation is taking ideas and turning them into capital. Disruption is applied innovation” – Andy Billings, VP, Profitable Creativity, Electronic Arts
I would add that technology is the set of tools by which you solve the problem. This article results from discussions with firms, corporate teams, and practitioners in and around Singapore to understand their views on how technology fits into their broader strategy, their process for selection, and the challenges they have to navigate. This article hopes to validate that these questions are not one-off and to spark ideas through a view into how your peers are thinking.
Why Legal Tech Innovation?
Innovation is turning ideas into capital, and legal technology (products or services that benefit the practice and business of law) is one way to achieve the results. Legal tech innovation is not about selling products or services. It is about serving your clients in the best way possible.
Legal technology is a very busy space, with hundreds of tools and over US $3.5 billion invested across 2018-2020. Additionally, there continues to be significant M&A in the space, e.g., legal technology company Litera recently announced its 12th acquisition.
Looking at data from the last 12 months, the level of adoption of technology within legal practice continues to increase. In-house legal teams are supporting the increased demand, and this trend is poised to continue, with Gartner reporting that by 2025, legal departments will increase their spend on technology, threefold. Disruption is a function of client demand.
In speaking with firms in Singapore, I wanted to explore three ideas:
- What problem is the firm looking to solve?
- How are they approaching the solution?
- What impact are they hoping to achieve?
What Problem are You Solving?
Unanimously, in considering technology purchases, the budget is one of the most important considerations. As Lynn Ariele Soh, Director at Eng and Co. LLC shared, “the budget is not generous, and where you choose to spend it needs to make sense for the people and the business.” Looking at what is being done at other firms, it is worthwhile remembering that there is a difference between automation, innovation, and disruption. There is a lot of automation in the market, but for there to be innovation it requires a mindset shift. Transformation comes from innovation – using technology in ways that allow new or different ways of working.
What problem you are looking to solve should influence how the budget is spent. As Ms Soh added, lawyers need to ask, “what will my practice look like in five or 10 years? It will only be supported through the adoption of more technology, but not replaced by technology.”
There are several reasons why firms are driven to change; they can be broadly categorised into three buckets:
- Competitive advantage – winning by differentiating;
- Avoiding competitive disadvantage – avoiding loss by matching the average in the market; and
- Strategic appetite focused on elevating the game – gearing up to take advantage of opportunities for rapid growth.
Exceptional firms are client-focused and can anticipate the problems their clients will need to solve in the future — this should support the direction to take.
Finding the Solution
There are often multiple approaches to any problem. There can be any number of variables that impact what you choose to do; among the firms in Singapore, one of the most common is to balance the size with available resources.
Ms Soh shared her perspective, “depending on the size [of your firm], sometimes you are so lean that the question becomes how many pairs of fresh eyes can you really spare?”
Technology can help with the problem of scale. One way to tackle this is by having diversity in the workforce, something that Eng and Co embraces. The firm supports younger partners to drive part of the business.
Changes such as these allow for positive signals to spread throughout the business and build champions.
For many, innovation can be difficult to conceptualise. This makes it hard to measure what impact legal technology is having on a business. To successfully implement legal technology, you need storytellers. These champions are the people who can speak to the ways technology can modernise and improve different aspects of your business.
Another option is to prospect for ideas in novel spaces. Azman Jaafar, Managing Partner and one of the founding members of RHTLaw Asia, looks to other markets and verticals for potential solutions: “we are constantly scanning the horizon for something new. It could be something that may have been developed outside of Singapore, and we can maybe participate in the testing locally or become a subscriber of such service.
In more recent times with the pandemic, we are looking at ways in which we could use technology to engage in a more meaningful way.”
As with any change management exercise, it is about balancing between various options such as when you choose to act, which provider you select and the impact to the wider firm and your clients.
As Mr Jaafar added: “sometimes it is just a question of finding the right time to change how we do things because sometimes it is a question of the moment. If the market is not ready to move in that direction, you can be the first mover, but nobody’s coming along.”
Similarly, consideration must be given to the welfare of your lawyers, especially the junior population. As Ms Soh suggested: “How will the technology vendor affect the training of the junior lawyers? How do you make sure you strike a balance between adopting tech and not short circuiting the training of the lawyers?” Most technology providers should provide resources to support adoption through guides, videos, and more.
You must also balance how you procure the technology – either by building it yourself, buying a tool designed for general use, or obtaining tech specialising in the legal space. Mr Jaafar summed it up well:
“the law practice is a very narrow field or with few players, notwithstanding great lawyers, senior counsels, and everyone else that. But as a function of a bigger economy where we are actually small, narrow, and niche …
It is a big challenge to develop something from scratch. I have never been amused by the amount of time it takes to do this and the amount of resources we have to put together to get it done …
In the end, we have always tried to strike a balance between what we can obtain off the shelf from vendors who specialise in software built especially for law firms and those which we can build ourselves.”
And, as Ms Soh shared, the other side of the coin is to balance between a technology solution or a human solution.
“It is a numbers game. Do you spend your budget and go through the challenge of technology implementation? Or, do you spend the resources to get an additional warm body to do the work instead?”
The ultimate goal of a legal innovation strategy is to attract clients by making all members of the firm effective at their jobs. Gaining an understanding of what your clients want does not have to be a guessing game.
Law firms leveraging technology can become more data-centric. Through the use of technology solutions and/or dashboards for partners, practice areas, or industry groups, the firm can develop a legal project management strategy effectively. Over time, the firm can also build a narrative around understanding its clients better which allows for meaningful connections in the moments that matter.
Ultimately, the focus is on providing value to your clients, which should be the focus of the practice and business side of the firm.
Each client will inevitably value different priorities. But, at the most basic level, clients want to receive a high-quality work product delivered promptly. Technology enables you to deliver on this expectation.
A well thought out transformation and innovation initiative allows the firm to cement that trusted advisor role and provide solutions to second and third-order problems. It empowers the staff to be masterful practitioners and focus on the business side of the firm, leveraging data and drawing insights.
As Azman Jaafar concluded:
“it is just the thrill of knowing that there is a better way to do something or there could be a quantum leap in innovation that can make you do something that nobody else might have thought about.”