The future of legal tech Part II: The fixed idea of a paradox in automation

The future of legal tech Part II: The fixed idea of a paradox in automation
In the legal industry it is a general belief that investing in automation will impact the amount of billable working hours negatively - at first glance a lose-lose situation.
This article is part of a series on the future of legal tech. It’s reflections and beliefs revolving the current dilemmas and crossroads in the legal business - mostly regarding the choices made in the digital spectre, choices which very well may determine whether legal firms will perish or prevail.

Is it really worth the investment?

If you have read our first article, you know that we already established that automation in law firms is inevitable. Automation provides an exciting opportunity for optimizing the gathering and organizing of information. Unfortunately, it appears that this leaves law firms in a severe dilemma as well. If a firm implements automation in the services, they provide, it is a general belief that it will eventually impact the amount of billable working hours. And to make things worse, this happens at the same time the company just spent a noticeable amount of money investing in the very same solutions providing automation. Work processes would be leaner, but to many, it seems like an apparent lose-lose situation.

There is no doubt that automation must be a strategic choice. Implementing it would allow a law firm to lower expenses, provide a better product or service while obtaining a competitive advantage. For apparent reasons executives at law firms often see such implementations naturally leading to lower revenue, which will then require the company to cut down on staff, leading to a slimmer organisation. And is it then worth it? - They wonder. But it doesn’t have to be so if you ask Søren Nielsen, co-founder of Whyyy: “If you optimize work processes by implementing automation, it will lead to doing work faster at a higher quality. Such investments will unquestionably open for even more business which would instead increase revenue”.

Better services shouldn't be cheaper

When investing in automation, the superior goal remains to obtain a leading market position. The decisive factor of success will be whether the firm will manage to pull in new clients. But with an extensive proactive effort, why should this not be possible? According to Søren Nielsen, the reasoning is clear: “Why would clients want to continue buying services at a competitor company, providing a more mediocre service, when much better options exist? And better and faster service shouldn’t necessarily be cheaper,” he says.

We are living in a time where consumer awareness is only increasing. Clients are asking questions about what they are paying for - even in dependable areas such as legal advice. Should an economic recession enter, everyone is even going to increase their effort in finding ways to cut costs or spent money more wisely - also in terms of expenses to law firms. These are not pioneering ideas of our own. In 2016 Deloitte took a thorough anticipatory look at the legal industry in the UK. “We believe that the most successful law firms will be those that are agile enough to flex resources in order to meet client needs at an efficient price”, they concluded.

"If you wish to attract the best talents, it's crucial to have the best internal work processes to offer."

Søren Nielsen, Co-founder, Whyyy

You don't need more horses - you need a car

Implementing automation seems reasonable. There is still one major issue, though: “It seems like the general belief among law firms is that clients are not asking for new digital tools. This might be true. But just like Henry Ford didn’t ask his customers, neither should lawyers. Just providing faster horses isn’t enough within the next five years. Law firms need to start building cars and impress the clients with superior legal services,” says Søren Nielsen.

Once a law firm implements (the right) new solutions, they will get a considerable advantage against competitors. But it will be on borrowed time. No law firm executives in their right mind will stand by and watch their clients desert. Once they understand the automation which winged them, they will implement similar solutions themselves and level competition once again. This means two things: Those months you have a competitive advantage are of great value, and they should be well-used roping in new clients. Secondly, the effort might have been for nothing unless you keep improving products and services. So, the strategy just described must be implemented persistently.

Recruitment becomes easier

Pursuing such a strategy does, however, provide yet another advantage that many law firms might fail to see at first. It is not only the clients who are starting to ask questions. Employees are as well. It seems reasonable they would prefer to work at a company, where they can unfold their skills in complex cases, while making use of advanced tools, rather than being forced to extracts data and turn it into information. As soon as automation becomes more widespread, so does the expectations of employees.

“Prestigious law firms have always raced each other in hiring the most talented students since they provide a better long-term value. But younger generations have even higher expectations in terms of technology and automation. If you wish to attract the best talents, it's crucial to have the best internal work processes to offer”, says Søren Nielsen.

At this point, some questions are still up in the air. Implementing automation is indeed a vague designation. It can mean so many different things, and it usually involves a dilemma of choosing between cheaper off-the-shelf solutions and more expensive custom-built ones. We will cover this dilemma in our next article.

Other articles in the series

Part I: Automation in law firms is inevitable

Part III: Why you should avoid off-the-shelf-solutions

Part IV: Being just a traditional law firm might not be enough

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