The legal industry, traditionally people-centric and semi-resistant to the pace of tech growth, is at a digital transformation tipping point. It has never been more important for law firms to evaluate their readiness for it. Firms that fail to adapt to the tech innovations pouring out of every seam of the industry, stand to lose clients, capital, and market space.
But where do you start?
Recently, Gartner predicted that, by 2023, 25% of legal requests will be handled by virtual legal assistants (VLAs). At the same time, McKinsey suggests that companies focus heavily on “bold moves to adopt digital technologies early and at scale,” later adding that these efforts should be combined with Mergers & Acquisitions (M&A). Both fantastic pieces of advice, but they’re catered toward larger firms.
As a small-to-mid-market firm, you probably can’t afford significant investments in early, kernel-stage law startups, and you certainly can’t afford to be the first firm to enter into a new tech space; you simply don’t have the resources or scale to operate as a test pilot for new digital strategies.
In fact, even C-level execs at massive companies struggle with digital transformation. Forty-five percent fail to see significant profits from their investments, and 78% completely fail to meet their digital transformation business objectives.
There’s risk in transformation.
It’s an ambitious project. And smaller firms don’t have the liquidity, people, or energy to cross early bridges. So, where do you point those tech investments as a smaller firm when the legal landscape is at a crossroads? You need technology to compete, but investing in the wrong technology or failing to have an adequate IT setup can actually spawn revenue losses and shrinkage.
Here are the three proven technologies that small and mid-market firms are investing in this year. This is where you should plan to enter the tech space:
Artificial Intelligence Fuels Competitive Agility
When it comes to the “proving grounds” of technology, AI is well-vetted. Gartner surveys suggest that over a quarter of law firms with AI have seen productivity improvements of over 50%, with a few select firms (typically larger firms) seeing +90% gains. A good chunk of these gains are on the administrative side. Pesky, time-consuming tasks like compiling legislative history and data entry for documents can be nearly eliminated with AI-fueled technology. But there’s a more cutting-edge (and disruptive) side to AI. Some firms leverage AI to help them understand judge tendencies, accelerate research, and even provide client-side solutions like automated will creation platforms.
The American Bar Association admits that AI will completely restructure “the composition and structure of law firms” as well as the “economics of law.” The way you provide service, bill, and spend time researching can all be reshaped by AI. Don’t worry. You don’t have to dive head-first into the pool of vendor marketing whitepapers and tech consultancy. You can start slow. Simple AI-driven technology like Business Process Automation (BPO)—which automates data entry—is a great place to start.
In fact, we generally recommend that smaller law firms invest in the most proven solutions first and work their way toward the cutting edge. The sooner you see profits on your digital journey, the more fuel you’ll have to invest further (and smarter) throughout your digital evolution.
Predictive Analytics: How Law Firms Pick Smarter Cases and Clients
Predictive analytics is fuelled by AI and is probably the most significant technology currently making waves in the legal industry. This isn’t a mid-horizon, late-value technology like blockchain or Virtual Reality/Augmented Reality (VR/AR). You can find immediate, tangible value in predictive analytics, and it’s relatively easy to onboard (so long as you have sufficient IT architecture).
In simple terms, predictive analytics uses data (not assumptions) to help you make decisions. In use, this touches virtually every layer of your firm. With predictive analytics, you can leverage data to understand and predict case outcomes based on judge behaviors, opposing counsel records, and time-to-trial statistics. You can also feed back-room processes like budgeting, marketing, and acquisition with rich data from every case (vice-versa).
Again, predictive analytics are well-vetted. They drive immense value to your firm. But don’t use them as a crutch. One of the core tenants of predictive analytics, machine learning, leverages past experiences to “grow” and “learn.” COVID-19 disrupted those machine learning models, so companies who were completely guided by predictive analytics saw unprecedented disruption. But that’s a caveat, not a flaw. Global events at that scale are rare, and predictive analytics are getting better at dealing with those sorts of issues.
Outsourced IT: The Hinge of Small and Mid-market Firms
AI, BPO, and predictive analytics are the holy grails of the modern law landscape. Most of us already have digital collaboration tools and simple mobile connectivity, so these next-gen solutions are the perfect mix of cutting-edge and well-tested. Unfortunately, investing and ingesting these tools requires a significant IT infrastructure. That can be difficult for smaller firms, and the trend toward smaller, specialized firms in Canada is growing in popularity:
“When it comes to describing Canadian law firms, terms like “big, medium, and small” don’t make much sense anymore. The reality is a complex, rapidly evolving landscape, with firms structured around changing client needs; that can mean a handful of international outposts or a raft of lawyers with parallel training in business or applied sciences. One of the fastest-growing areas is that of the “boutique” firm; usually small (under 20 lawyers)…”—Canadian Lawyer Magazine
There is limited feasibility for these firms to build out dense and complex IT ecosystems. They would need to hire multiple IT professionals (which cost around $88,000 a year plus benefits, onboarding, and training), set up complex cloud servers, and manage their hardware and software infrastructure. It’s a reach.
To compensate, many firms (39%) outsource their IT. It’s the glue that allows firms to invest in technology without crippling their liquidity. With outsourced IT solutions, you get a fully-managed, fully-staffed IT infrastructure without any onboarding or space committal. Your outsource partner handles everything. That makes sense because law should focus on law, not the tech underneath law.
Vertex Transforms Your Canadian Law Firm
Small and mid-market law firms are in a challenging position; you need to embrace digital transformation, but you can’t afford to eat failures like big firms. Your investments have to be smart, practical, and revenue-driven. We can help. Vertex provides end-to-end outsourced IT management solutions that make your life easier. We’ll handle the back-end infrastructure, deal with monitoring and cybersecurity, and tackle any hardware or software issues. In addition, we integrate ourselves with your firm’s operational capacity, so we can help you make smart, savvy decisions about tech investments and utilization. Are you ready to transform? Contact us.