The legal sector is an old profession that's very much set in its ways – though profound change is happening.
Like practically every industry, digital disruption is changing the ways legal firms of all sizes are operating, bringing with it plenty of opportunities but also challenges. The next step is a big one, and relates to how they see disruption, as something that will drive positive change or see them stuck in the mud. The difference is being defined by how they are confronting the ongoing challenge of information management.
The legal trade is changing from both an internal business perspective and through their clients. Here are six ways the old profession is finding new ways to operate, manage risks and succeed in the modern business world.
70 per cent of fee-earners in a firm we've worked with said they could bill an extra half an hour a day.
The legal profession is no stranger to mergers and acquisitions. Ernst & Young's Capital Confidence Barometer found that more than half (53 per cent) of Australian companies are hoping to acquire another business in 2016 – the highest in the study's six-year history.
Whether it's guiding their clients' M&A, being affected by M&A activity in the industry, or undergoing such a change themselves, legal businesses of all sizes are bracing themselves for plenty of change this year.
2) The big boys coming back to play
The big four accounting firms are moving back into the sector after getting gun-shy with their services following the Enron disaster. So for instance, with things like tax law, which is very closely aligned to tax advice, the larger firms that specialise in tax advice will refer clients to their own tax law practice, preventing that business from ever making it to market. Law firms' tax practices will never even see the opportunity.
3) Recognition that information is changing the industry
Various firms are settling into one of three modes of operation, narrowing their focus to concentrate on productivity. Transaction-based services – repetitive things like conveyancing – are pushing through higher volumes of lower-revenue work. In the middle is tailored advice, like will-writing, while high-level legal consulting advice is at the top end of this scale.
"We're seeing various firms settle into one of these three modes of operation," Experience Matters' Managing Director James Price explains. "The more standard the documentation, the more automation you can have, meaning you need efficient processes and more automation compared to the judgement and experience needed further up the scale."
So, whether more automation is needed, or if decision-makers require greater insight for judgement calls, the information management structure they use will be a point of difference.
4) Legal firms moving into different business models
Firms are changing their legal status: Some partnerships are becoming corporate entities in order to drive cultural change. Some firms are even listing on the stock exchange.
In late 2014, IPH Holdings listed on the ASX and raised $165.9 million for around half of its equity, Lawyers Weekly explained. The trick now is finding a way to maximise the success of a corporate business model.
"Law firms are naturally going to need far better information than just historical experience."
5) Clients are becoming far more savvy
Clients are recruiting in-house counsel who know how law firms work. Large clients are issuing requests for tender – a euphemism for cheap rates. Clients are requesting and firms are offering fixed price quotations, and more assertive firms work on a "no win, no fee" basis
"What that's saying to the law firm is they better know exactly what lawyers are going to be doing, who's going to be doing it and how long it's going to take," James explains "So, law firms are naturally going to need far better information than just historical experience."
The legal industry is one where really only two resources are deployed – Information Assets and their people.
6) Technology is becoming disruptive
Thanks to mobility and other disruptive technologies, legal professionals are working from home without the overheads of a large, shiny office in the city, lots of support staff and so on. There are lawyers who are running these types of businesses and doing quite well because they can say "I will provide you with the same standard of service for two-thirds of the price".
The legal industry is one where really only two resources are deployed – Information Assets and their people. So what we're seeing in the legal industry is a great deal of interest in information management to help reduce costs and supply that information more quickly and reliably.
By being able to provide their information more quickly, 70 per cent of fee-earners in a firm we've worked with said they could bill an extra half an hour a day, while a further 20 per cent said they could bill a further hour each day.
They're very attractive figures, and ones that suggest how putting new ideas into an old industry could revive it for the future. Where can legal companies start? We think it's with a simple change of mindset.
All organisations look after their money, but few look at their valuable information in the same way. Our free white paper delves into this subject in more detail, so feel free to take a look. For legal firms, it could be a matter of keeping up or falling too far behind.