Tony Williams, Principal, Jomati Consultants LLP
Anyone listening to futurologists or reading reports on the development of technology and artificial intelligence (“AI”) would be forgiven for assuming that many professionals, not just lawyers, will find themselves replaced by machines within five to 10 years. It is however important to appreciate that new developments can take years to have a significant impact, but that impact when it comes can be massive. For example, Sir Tim Berners Lee was writing about the possible impact of the internet in about 1990. There followed a great period of hype up to the Dot Com Crash of 2000. Indeed only now are we seeing the major impact the internet is having not only in business but also in our daily lives. Furthermore, for over 20 years hydrogen cell powered cars have been discussed as the solution to the search for clean energy and the reduction of CO2 emissions. Recently Toyota announced that it will commence production of hydrogen cell powered cars but it is likely to be at least 2025 before they are a significant presence on our roads.
This is not to suggest that we should ignore new developments until the full impact of them has been demonstrated as by then it may be too late. However a measured and proportionate response is both necessary and appropriate.
For lawyers, and especially lawyers in smaller law firms, the challenge produced by significant change can be dramatic. For example, in Hong Kong the abolition of scale fees for conveyancing work was a seismic shift which had an adverse impact on many law firms. But those who survived adapted to the new environment, revised their business model and continued to develop.
Being prepared to change when it is appropriate to do so and appreciating when that time has come requires good judgment. For smaller law firms faced with a range of larger and possibly international firms, the challenge can appear impossible. Larger law firms can devote considerable time and resources to IT and the re-engineering of their businesses. Some law firms have developed increasingly sophisticated process centres in lower cost locations at home or abroad. They can achieve considerable economies of scale with these investments as they have the level of work to keep such centres fully occupied. Faced with what appears to be an IT arms race how can a smaller firm hope to compete?
We suggest 13 ways in which smaller firms can stay relevant in the age of technology.
- Strategy. Be very clear what clients you want to act for and what work you want to do for them. Question if your proposition is relevant to and attractive to the clients especially when compared to the offering of your competitors. How price sensitive is the work you want to do, can your expertise and service delivery justify a premium price and can you deliver the services and provide a reasonable level of profit not only for partner remuneration but also for future investment in the business?
- Clients. Knowing the level of IT sophistication of your clients and target clients is key to understanding what you will need to deliver and how to deliver it. Younger clients will have grown up with the internet and social media and will expect you to be comfortable in these formats. Other clients will have different needs and expectations and you need your service to be properly aligned with them.
- Nimble. Large law firms may have more money to invest but rolling out a particular offering or change programme can take months or even years. Conversely, a small firm can adopt change in a matter of days if it wants to. This speed of action means that the time from identifying an opportunity to delivering it to market can gain a smaller firm a considerable “early mover” advantage.
- Utilise. It is a sad fact that many users of IT only use a fraction of the functionality that their IT system provides. By really understanding what your current IT system can provide and identifying inexpensive add-ons it is possible to significantly improve the range of functions that you can provide at no or very little incremental cost.
- Empower. It is often assumed that partners in law firms must be the ones to suggest new ideas. But, younger lawyers and support staff are often far more aware of what can be done using IT and if encouraged and empowered are happy to make suggestions that will significantly enhance the business of the firm. Not only is involving such people good business it is also likely to add to their motivation and improve staff retention. Some young lawyers have helped their firms to develop Apps covering issues of relevance to their clients which are then readily available to their clients on their mobile devices.
- Don’t Save The World. There is a tendency for it to be assumed that to stay relevant a firm supposedly has to invest in all singing and all dancing IT systems. Clearly sometimes a major upgrade will be necessary but it is important to be brutally realistic as to what the firm needs, what it will utilise, what the client expects and what the client would like. As mentioned in point four above, fully understanding the capabilities of your current system may enable major new investment to at least be postponed. For some firms, the use of the cloud to hold their data may reduce the capital cost of any IT upgrade and enable greater access to files and information when on the move, subject to the security issues mentioned in point 12 below.
- Relevant Delivery. Understanding your clients’ needs can help you fashion products and services that precisely satisfy their needs. For example, a small property practice in the UK developed a simple system for their own use and made electronic copies of all key property documents, details of lease expiry dates, rent reviews, repairing obligations, and the like accessible to their clients. This ensured the information was readily available to the lawyers involved with that property and to their clients. They used an easy to use template system to ensure that the information was kept up to date. A calendar system linked to key rent review and other dates also helped to ensure that all notices were given by the due time and significantly reduced the likelihood of a professional negligence claim. This was developed at low cost and was capable of being utilised across a property portfolio. Using more advanced systems one could also identify any deviations from the client’s standard documents and significantly reduce the time taken on a subsequent sale of the property. Other small firms have developed IT to analyse insurance claims and make that information available to their clients thereby adding significant extra value to the client relationship at minimal extra cost.
- Social Media. Some lawyers are understandably very nervous about the use of social media for business purposes. It can however be a useful way to maintain a degree of contact with clients either via LinkedIn, Facebook or Twitter. In the UK, one family law firm used Facebook to identify recently engaged couples within a reasonable radius from their office and after some further filtering, was able to offer them a fixed price pre-nuptial agreement. Perhaps not a very romantic use of social media, but it gave them access to a potential client base that would otherwise never have used them.
- Website. Your website is an increasingly important window to your firm. Is it mobile friendly? Is it up to date? Does it contain interesting and eye catching material? Most law firm websites are surprisingly poor. The cost of developing an inspiring site is not high and can really help to demonstrate an innovative approach and client-friendly image. You must however pay attention to and comply with r. 2AA of the Solicitors’ Practice Rules (Cap. 159 sub. leg. H) and the Solicitors’ Practice Promotion Code.
- Examine. Firms need to examine the work they do and consider carefully in relation to each part of an instruction who that the work should be done by and how. In a competitive market this means delegating work down to the cheapest level of competence. It is also necessary by the use of precedent templates, intelligent drafting tools and basic know how and training systems to improve any lawyer or paralegal’s level of competence as quickly as possible. Again, it is often assumed that such an approach requires heavy investment. It does not. A few simple tools can rapidly improve efficiency and job satisfaction. It does however require some time to analyse the type of work done and the relevant pieces that can be delegated. There will also be some investment of time getting the new approach to work well. However, if done well, the results should start to be realised within six months.
- Go Paperless. Many lawyers seem to consider piles of papers in their office as a status symbol or security blanket. It is perfectly possible for a firm to go virtually paperless by the use of simple email folders or more sophisticated programmes or scanners. Not only is the data readily accessible and searchable and, if properly backed up, even safer than paper files, it also frees up time spent on filing and even more importantly frees up valuable office space.
- Be Secure. With hackers and spammers becoming more sophisticated, firms are exposed to increased business, financial and reputational risk. It is necessary to keep security systems up to date and to be alert to dangerous emails. A quick Google search and ‘Who Is’ search will often alert you to current scams. Some basic housekeeping such as random passwords which are regularly changed are a minimum first step.
- Be Curious. It is very easy to assume that the way we do things now is the optimum in service delivery. Unfortunately this is rarely, if ever, the case. Maintaining openness to new ways of working, changing client expectations and new products keeps one fresh and enables the quality of our service to continually improve. This does not mean slavishly adopting every passing fad but it does require a level of willingness to look fairly and objectively at how we work and continuously striving to deliver a service which is faster and better than before.
The age of technology will present many challenges for lawyers but probably even more opportunities. Smaller firms can not only survive but thrive in this environment if they are open and prepared to adapt to the new reality.