Four strategies for law firms to close the digital gap
Lagging behind with technology and digital adoption can leave law firms at a serious disadvantage as they seek to deliver greater value to clients, writes Demetrio Zema.
The legal profession has been a slow adopter of technology and overall business innovation.
The key business success measures are now based around accurate, live and insightful data. So, those law firms or in-house teams that fail to leverage technology for business advancement will inevitably fall behind. In uncertain and volatile environments, businesses and teams that most effectively harness data, apply human insight, and connect these with talent, innovation and purpose will create a competitive advantage.
Once dubbed by The Economist as “the world’s most valuable resource”, the importance of data has only continued to grow, reshaping the C-suite’s expectations of legal providers. In 2023, executives expect their legal advisors (both in-house and external) to deliver more anticipatory, data-backed advice that can guide corporate strategy at the highest level.
Until recently, legal teams were not well equipped with the technology (largely due to human resistance), let alone the digital literacy, to meet these expectations. While the technologies now exist to optimise the delivery of legal services, few practitioners are prepared to completely invest to ensure they remain relevant and meet their clients’ changing needs.
How does the legal profession measure up?
There is no doubt that compared with other industries and business functions, the legal function lags in terms of digital maturity. Despite accelerated digitisation of the legal profession during COVID-19, a digital gap has emerged between legal departments and the rest of the business.
A US-based study by RELX Group polled 1000 American senior executives across the healthcare, insurance, legal, science and banking industries, as well as government, which found that the legal profession came last compared with other industries – and just ahead of government – in utilising big data in some form.
This gap impedes the profession’s ability to deliver greater value to clients (and other business units) for whom decisions are expected to be data-backed. Simply relying on individual lawyers’ biases, experiences and gut instincts is insufficient.
Seeing data as a tool, not a threat
While plenty of practitioners are eager to ‘lean in’, few know where to start, or simply do not have the bandwidth to prioritise digital transformation, let alone see it as core to the legal value proposition.
In my view, the digital gap has emerged because many lawyers still see data (and other emerging technologies, such as generative AI) as a competitive threat, rather than as a tool to substantiate advice and expedite transactional work.
As the sophistication and accessibility of digital tools improve, it is important to remember the value we bring as lawyers – which is not to produce the best possible legal solution, but to provide actionable, data-backed insights that guide commercial outcomes.
How to meet the C-suite’s expectations
A data-backed, digitally enabled legal function is one which meets the expectations of a more demanding C-suite by providing efficient, informed, predictable, cost-effective and fit-for-purpose legal services.
Four strategies can help achieve this.
1. Invest in understanding legal operations and technology
Technology is the single-greatest enabler for supporting higher value, data-backed legal insights, but the legal tech market is noisy, complex and, oftentimes, overwhelming.
We confirmed this first-hand at Law Squared when, in just our sixth year of operation (and involving a seismic shift in the way we work) we embarked on a digital transformation to design and implement a future-fit legal operations and technology strategy and roadmap.
Aligned with our mission to deliver a more positive, human-centred experience for our clients and lawyers, our focus on digital maturity has been a game-changer for us. The lessons were many, and countless hours were spent with vendors and stakeholders to ensure a fit-for-purpose outcome.
Replacing myriad legacy architecture and connecting the firm’s systems and data more effectively, client data is now centralised in Sales Cloud and automatically directed to the firm’s other systems, including Xero for accounting, Microsoft SharePoint for document management and Qwilr for proposal generation.
The result is a more transparent, responsive, data-backed and frictionless service that enables our team – and by extension, our clients – to focus on higher-value commercial matters.
2. Prioritise digital literacy
In a world where communications and access to data is increasingly via digital platforms, digital literacy is a non-negotiable for modern lawyers.
A concerted focus on building digital literacy within the legal profession is needed – probably starting at university-level, but there is also a case for accelerating and embedding internal capability with non-traditional hires. This was the approach we took in building our own Digital + Operations team from the ground up, hiring strategically for technologists, product managers and human-centred design experts.
Building digital literacy will also be critical if the profession is to meet the market. Risks associated with cybercrime, data and privacy are on the rise and require lawyers to have a sound understanding of digital issues.
So committed are we to building digital literacy that Law Squared graduates spend their first month in the legal ops team to build confidence in using technology platforms, learn to identify and manage legal data, and practice data analysis (a subject law graduates rarely practice at university).
3. Make data protection priority #1
Lawyers have a duty of confidentiality, and we must keep pace with what that means in a digitised world. Greater integration of data and technology into the legal lifecycle creates a new onus on firms and teams to protect that data. Pity help the first Australian law firm that suffers a cyber breach, or fails to comply with the Privacy Act!
Just as data protection must become a mission-critical task for law firms, our clients too will undoubtedly implement tougher minimum standards for data protection that firms will need to respond to if they want to win work.
4. Ditch the lawyer/non-lawyer mentality
There is a mistaken belief that the digital transformation journey ends when the purchase agreement is signed. To extract maximum value from technology investment and elevate the value of insights delivered, a considered, actionable adoption plan is required, along with the operational capability to support it.
To ensure fit-for-purpose outcomes, our own digital implementation required multi-disciplinary collaboration and alignment from legal, operations, marketing and communications, sales, technology and the executive. For more traditionally structured firms, this will seriously challenge the closely held lawyer/non-lawyer mindset.
As legal practitioners, we should lean in to the emerging technologies that can deliver us data. In the same way that calculators have not replaced mathematicians, it is about lawyers embracing these technologies and using them to expedite transactional work, and focus on higher-value, more strategic work.
Demetrio Zema is the founder and director of Law Squared, a NewLaw firm specialising in working with Australia’s leading disruptive businesses, corporates, ASX-listed entities and multinational clients.