Think Tank: Can Legal Technology Really Provide a Strategic Advantage?

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Think Tank: Can Legal Technology Really Provide a Strategic Advantage?

By Chris Cartrett, Executive Vice President, Aderant

Does legal technology really provide a strategic advantage?

In my experience, yes it does, but not for the reasons some might assume a solution provider to cite.  Generally, I find the advantage of the technology is more dependent on the law firm – its people, culture and creativity – than it is on the technology.

My theory is this: in the more than twenty years I’ve worked in the legal community, I’ve observed that law firms that are focused on client service are more inclined to adopt technology and find creative ways to use it. This is because they look at technology to better serve clients, and then incorporate these ideas into the organizational fabric to improve service delivery.

Financial Management and a Tale of Two Law Firms

Let’s put this into an example – a tale of two firms. Both firms have a financial management system that is approaching its end-of-life and will have to be replaced.

One firm looks at the problem and decides they should merely upgrade their billing software. It’s a logical decision but it’s one that is focused on the law firm needs without considering the impact on clients. Chances are, it’s a decision that can be made by the back-office staff alone because they don’t believe they need to bring the front office into the decision-making process.

By contrast, the other firm looks at this exchange as a major change to the business. If the firm must replace the financial system, then the team is going to look at this as an opportunity to better serve their clients and the lawyers who are interacting with those clients.

In the case of the latter, this is unquestionably a big decision with strategic ramifications. It will, as research demonstrates, bring the back office and front office into closer collaboration to solve complex legal problems in order to serve clients more efficiently. Such as, in today’s environment, it’s expected that lawyers have mobile access to check on their matters or manage their WIP wherever they are, whenever it’s convenient for them. If the back-office chooses to replace only their financial system, they are losing the opportunity for greater collaboration and efficiency, leaving their lawyers to do things the old-fashioned way.

Sure, it may take a little longer to get the project approved than just replacing a financial system in the short term because of the front office involvement. However, in the long run, the technology decision provides more creative business options to a team that is inherently focused on the client.

Spending Money to Manage a Business  

Some law firms today are trapped in a vicious cycle: a firm feels pressure on rates and, so it sets out to find more clients to make up the revenue. To serve those clients, it adds more human resources and technology, but it is doing so reactively, rather than selectively and strategically.

A firm I spoke with recently is spending an insane amount of money to manage their business. It’s a smaller firm, but not a small firm, that serves a niche market. They are feeling pressure because larger firms are moving into their space.

The result?  Work they used to get based on their reputation and niche, are now awarded based on a competitive RFP process.

To help manage the deluge of RFPs – something it has never had to do before – the firm has added systems and people at a pace that’s overwhelming.  It’s literally destroying law firm processes and choking the business.

The outcome can be seen in a graphical representation of revenue and cost. If I were to draw two lines for revenue and cost, we’d see these lines are moving closer together. The pressure on rates is pushing the revenue line down, while the effort to reduce the complexity through the tactical addition of resources is pushing costs up.

This is an important point because buying technology by the pound isn’t going to provide a strategic advantage. Technology is an enabler – it provides creative options if the firm has the skill and is organized to tap into the potential.

Taking Touches out of Data

Touches cost money. Every time a pre-bill is passed back and forth for edits and reviews, it adds cost, drags on efficiency, and slows down the WIP-to-cash cycle. This is just one example of an inefficient process that occurs a dozen times over within many law firms.

Here’s why this is important:  if a law firm wants to get strategic value out of technology, if it wants to serve more clients as the same cost, it must automate or in some way, shape, or form, streamline the process.

In other words, the firm must identify ways to take physical touches of law firm data out of the process.  For instance, instead of an attorney sending an email to ask the back-office staff to pull a report, the technology simply provides it.

What this illustrates is just how interrelated people are with technology to improve law firm processes. If technology is to provide law firms with a strategic advantage, those firms have to be willing to do things differently, to try something new, to think bigger than just the problem at hand.

If we think of firms in the construct of cohorts or peers, they all have access to a similar mix of talent and technology. It’s the firms that are best organized to capitalize on the combination that will be likely to credit legal technology with a strategic label in the coming years.

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