An investment in legal technology can leverage firms into delivering legal services efficiently and cost-effectively, partners at Lotis Blue and Estrada consultancies outline.

This is the fourth in a series on practical, low-cost options to improve performance and profits amid tight budgets and layoffs. The first piece, on collections, can be found here, the second, on practice management techniques, can be found here, and the third, on optimizing firm performance can be found here.

In a recent report from the Legal Pricing & Project Management Survey, 72% of corporate law departments say, “law firms are [not] leveraging technology to deliver legal services efficiently and cost-effectively.” This statistic is maddening for any firm leader, firm IT professional, and attorneys who spent time, money, and resources on any recent technology initiative. Additionally, there was a 14% decrease in law firm professionals who think their firm is “leveraging technology to deliver legal services more efficiently and cost-effectively.” So, law firms are not getting what they expect out of their existing technology stack, choosing the wrong solutions, or not acting fast enough for client needs.

Finally, the 2022 Legal Ops + Tech Survey from Bloomberg Law found that 70% of respondents either “do not currently have a process in place to evaluate the legal technologies they are using or are just not sure if a process exists.” A concerning statistic that shows firms and legal departments are unsure of the value and efficiency of their IT solutions.

Dissatisfaction with IT solutions can often be a representation of other firm-wide operational opportunities. If IT is not adding value to clients, helping the firm run more efficiently, and grow, then what other areas of the firm might be falling short? This is a difficult puzzle to solve, particularly in large firms where practices, Partners, and departments have a lot of autonomy. This may cause individuals or smaller groups to experiment with new technologies like AI, ChatGPT, or other technology and analytics when the connection to firm strategy and client value is unclear. It’s worth firm leadership’s time to understand these opportunities from a strategic, operational efficiency, and cultural perspective.

These experiences are likely driven by one or a combination of the following factors:

• The specific legal or business problem the technology or analytics solution is intended to solve is not well understood by everyone involved (IT, firm leadership, attorneys, and legal professionals).
• There is overlap and thus confusion between the capabilities of the proposed solution and existing solutions that might do something similar.
• Users cannot articulate a tangible benefit that drives them to use the proposed solution (ex. revenue generation, time savings, better client results/interaction, etc.).
• The proposed solution does not connect to helping client’s—which reduces return on investment (ROI), decreases its priority for client-facing people, and likely deviates from client-related firm strategy. The solution is interesting or new, but additional technical understanding or training is needed to go from “this is really cool” to “this is adding value to my clients, team, and/or the firm.”

No/Low Cost Solutions

As with our prior articles, we start by offering firms no/low cost solutions to these challenges given the current push for firms to be more efficient and cost sensitive. Notice that most of the ideas have nothing to do with technology, but more to do with creating the environment in which IT solutions can be most successful.

• Create a data strategy and/or append existing firm-strategy with data strategy that outlines:
  • • Security and risk management approach to protecting firm and client data
    • Data inventory
    • Data governance
    • Most valuable use cases (internal and client-facing/revenue generating)
    • Opportunities where technology and/or data analytics are critical to inform the approach and outcomes
    • Process for evaluating and integrating new technologies into the data/technology strategy (ex. natural language processing, AI, etc.)
• Conduct a technology service stack assessment:
  • • Which technologies are most critical?
    • Which are performing poorly/out of date/performing well?
    • Where can you re-negotiate technology contracts?
    • Which technology solutions/platforms should be more integrated?
    • How could your technology solutions be more client-focused/friendly?
• Calculate and document the ROI of existing or proposed solutions—if the firm cannot articulate the ROI and if not large or scalable enough, clients will not notice or reward the firm for their efforts

On the surface, these ideas may seem like a lot of work with no immediate or tangible ROI. However, an effective, thoughtful, and integrated data/technology approach and strategy provides…

• Faster decision making—saving time and lowers frustration around the firm Role clarification—avoiding duplication of efforts and allows people to focus on their highest and best use for the firm (often revenue generating roles)
• Firm risk management—avoiding costly data breaches, reputational risk, and associated business impacts
• The highest chance for impactful and client-centric ROI from technology solutions
• A clear roadmap for expected technology/data outcomes, spending, and resourcing

Where To Invest

Many firms invested dollars and the associated time/resources to set up technology and analytics solutions during and directly after the pandemic. Thus, there may be existing solutions in place and a feeling of “sunk cost” that is driving firms to manage with mediocre solutions. Even if a firm is not interested in buying and implementing a new solution, time and resources can be invested to get the most out of what they have.

• Prioritize critical needs followed by revenue generating investments and then operational efficiency solutions—there must be a clear ROI that aligns with the firm’s expectations on
  • • Revenue generation—how a solution will help a firm win new clients, retain existing, or expand with existing clients. Solutions could be stand-alone offerings or significantly enhance existing offerings. The key is to demonstrate how the solution provides specific and unique value on its own, otherwise clients will not pay more for it. Examples might include:
      • Litigation and risk management prediction tools
      • Cyber security assessments and simulations
      • Claims trackers (ex. insurance, labor & employment, etc.)
      • Proprietary databases (ex. M&A deals, expert witnesses, etc.)
    • Time savings for all professionals—less time on lower value tasks, more time for high value/revenue generating and client-centric tasks. Leaders need to know which IT solutions make their lawyers, professionals, and client’s lives easier. That way they can make decisions about IT solutions on behalf of their internal and external clients. Examples might include:
      • • Matter/client management
        • Legal research and document/knowledge management
        • Technical capability and talent matching
        • AI-generated deliverables and templates
    • Direct cost savings—unsubscribing from duplicative services, removing IT solutions that overlap with other solutions’ capabilities, and renegotiating existing contracts. By reviewing IT solution capabilities, the firm and leaders will necessarily be defining and better understanding what they need from IT. These requirements should be documented and tested when any new IT solutions are considered or reviewed. Examples might include:
      • Negotiating lower per-user cost when sharing IT solution across practices
      • Consolidating to single collaboration platforms with similar functionality (ex. Microsoft Teams, Slack, etc.)
      • Streamlining enterprise solutions and utilizing additional platform capabilities (ex. HRIS systems, Finance systems, document storage, etc.)
• Continue on your IT roadmap—this may require some re-prioritization in the short term, but should not alter the 3-5 year vision you have for your firm’s technology solutions.
• Move towards the cloud (if you are not already)—especially in larger firms, but also for mid-sized/growing firms the move to the cloud represents and easier, more consistent way for your professionals to work with enhanced security. These aspects will continue to be critical to how the firm operates and protects itself/its clients.
• Invest in the best IT solutions and cut the rest—Many legal and corporate technology solutions are multi-functional and can get confusing as overlapping capabilities may cause the firm to sub-optimize what they are paying for. Certain solutions are better for collaboration, but also offer reporting. Some have a great user experience, but user data is difficult to get to produce insights. Investing in the best solutions with multi-functional capabilities will improve user adoption, bring better ROI, and allow the firm to simplify their IT solutions.
• Understand the balance between new/exciting technologies, what they could do, and the risk management tolerance of the firm. Recently popularized technologies and data models like ChatGPT and AI solutions are powerful if used correctly, but dangerous if misunderstood. Doing the homework of understanding what the technology/solution is, what it can/cannot do, what data it uses, and how it would play within the firm is worth the time to capture the potential without risking the future.

No matter the firm or point in time along the IT roadmap, keeping solutions simple and client-focused is the key to getting the most out of them. In a year where firms are learning a lot about their focus on the business of law, ensuring the technology and analytics portfolio are linked strongly to intended strategic outcomes also goes a long way in a path towards a more operationally sound firm.

By Mark Masson, Jay Russell, and Ed Estrada

Originally published in AmLaw, July 18, 2023