The pandemic has forced law firms to recognise that digital transformation is key to future success, but which Covid-driven changes will become part of business as usual?

Covid-19 has been referred to as an inflection point for legal services – and legal tech. In forecasting, an inflection point is the point of the curve where the function changes concavity. However, for the past decade, and certainly since the emergence of legal tech startups (accelerated by the Legal Geek community since 2015), legal services and specifically legal tech have followed an upward trajectory with a plethora of tech-powered ventures attracting major interest and investment. But now, in the face of an economic downturn, technology, which has powered law firms and their clients through lockdown, remains business-critical and is a key factor in determining which organisations survive and thrive.

Joanna Goodman

Joanna Goodman

The response to Covid-19 by law firms and legal departments has demonstrated that a combination of business agility and digital capability is the closest that any organisation will get to ‘future proofing’. This article looks at some of the opportunities and challenges law firms face around technology as lockdown lifts. How can law firms best use the momentum of tech adoption that was kickstarted by the pandemic to drive digital transformation?

In a challenging market with deal volume down and competition up, tech brings agility to respected law firm brands, helping them to compete effectively with commercial market entrants. According to CB Insights, banks are betting on financial technology to fend off upstarts, through a combination of investments, partnerships and acquisitions. Is digital transformation and tech adoption the answer for law firms too as they face increased competition from outside the sector?

Strategic approach to tech adoption

Before Covid-19, the reluctance of lawyers to adopt new technology was commonly identified as a barrier to digital transformation. But the pandemic has demonstrated that, given the right motivation, lawyers will quickly gain competence in using online tools and applications, and change the way they work. However, digital transformation is more than tech. It needs a more holistic approach than making sure everyone in the firm is comfortable using Zoom/Teams and e-signatures.

Even straightforward tech implementation requires thought and planning, observes Jamie Fraser. He moved from in-house at Smiths Group plc, where he was director of legal operations and innovation, back to the profession combining his role as consultant solicitor at Jurit LLP with his legal operations consultancy NineNineSix Solutions. ‘It feels like, in the rush to adopt technology during the crisis, there wasn’t enough time spent thinking about process and implementation,’ he says. ‘A great example is Zoom – everyone started using it without considering whether it was a secure platform for business. Thankfully, Zoom introduced new functionality to increase security, but this was only after various breaches. I wonder whether companies thought enough about how to implement digital signatures? It’s easy to buy a Docusign licence, but much harder to change culture and practices to ensure it is used in a way that delivers great outcomes.’

Isabel Parker, former chief legal innovation officer at Freshfields Bruckhaus Deringer, agrees. She references Salesforce’s definition of digital transformation as ‘using digital technologies to create – or modify existing – business processes, culture and customer experiences to meet changing business and market requirements’. She says that ‘the law firms that “win” will be those that use the momentum created by Covid-19 to commit to a reallocation of capital to digital transformation’, and that ‘all other capital investments should be deferred unless they are part of the digital strategy’, particularly as ‘their clients are already doing this – digital is an integral part of most corporations’ strategies’.

It feels like, in the rush to adopt technology during the crisis, there wasn’t enough time spent thinking about process and implementation

Jamie Fraser, NineNineSix Solutions

Need for speed

But not all firms have capital to invest in large-scale change, particularly when a lot of firms are currently struggling with liquidity. How can firms leverage the momentum of tech adoption without significant investment?

At Legal Geek’s online conference last month, Freshfields’ presentation on digital transformation highlighted a new focus on speed – in developing and rolling out tech solutions. Charlotte Baldwin, chief digital and technology officer, observed that when lockdown was imposed, the necessity to become a virtual law firm overnight accelerated its progress towards a digital transformation vision that was set out two years ago. ‘We are no longer looking for a “big bang” transformation,’ she said. ‘Rather, we continually work with the latest technologies to develop quick-win solutions and support agile working.’

This was not just about video conferencing, although lawyers across the firm participated in more than 80,000 Teams meetings in 90 days. Shifting the firm’s IT infrastructure to the cloud sped up the delivery of client-facing digital solutions – and firms of all sizes are using Microsoft 365. The biggest challenge is modernising lawyer attitudes to technology. Chief legal innovation officer Adam Ryan said that at Freshfields, this meant challenging the culture of perfectionism that is common among lawyers with a ‘test and learn’ approach. Tech applications do not have to be perfect before they are rolled out. And if a pilot is not effective, drop the idea and start again.

Drop the autopilot

The premise of the recent McKinsey article ‘No longer on autopilot: Lessons for CFOs from Covid-19’ is equally applicable to law firms. It suggests that firms are using robotic process automation (RPA) and artificial intelligence (AI) to improve productivity by automating processing and tasks. But firms are not capitalising on the opportunities inherent in the data collected by intelligent applications to enhance decisions and reimagine/expand their services.

However, some firms are stepping up to the plate. Fraser acknowledges that ‘law firms are definitely moving away from asking “how can we use tech to increase our margins?” to a more customer-centric “how can we use tech to make our clients more satisfied?” Whether this is offering HighQ collaboration spaces or Shoosmiths’ new Cia platform (for reviewing contracts), law firms seem to be recognising that this is a valuable service that they can offer clients,’ he adds. ‘The next step is whether law firms are willing to move into the consultancy space and advise general counsel on what technology could assist them. Firms bold enough to do this will further develop relationships with clients as trusted advisers.’

Mid-size firm Foot Anstey has adopted a client-focused approach to digital transformation. ‘It’s not about adopting any specific technology, it’s about being agile and responsive so that we can deliver the best possible services and support clients with technology adoption,’ says tech adoption manager Sophie Anderson. ‘It’s about educating lawyers in technologies that their clients are using, or wish to use, and helping them to understand the digital world.

‘Our teams want be involved so we set up an innovation forum to get input from different roles and levels within the firm and spot opportunities. To ensure that our lawyers can also be business advisers, we set up a business skills academy at the end of last year and we are expanding this to include a new digital skills academy.’

Home free

As lawyers realise that they need to be at least tech-savvy (there are still arguments about whether or not lawyers should learn to code) a silver lining of the pandemic is the panoply of free online legal tech learning resources. Legal Geek is hosting a series of live webinars on the future of the legal industry led by Professor Richard Susskind and Mark Cohen of Legal Mosaic, with the final instalment scheduled for the end of July. Digital media company Crafty Counsel produces free-to-access video content for lawyers covering a broad range of topics including legal technology, legal operations and legal innovation ( Bucerius Law School in Hamburg brought its Legal Tech Essentials summer school online and its series of lectures by world-class academics and legal innovators is free to access (click here).

Online tech training

Engaging lawyers in the possibilities of new technology and providing effective training so that they are competent and confident using the firm’s tech resources is a high priority for many firms. As remote working will be at least part of the mix for most firms into 2021 and beyond, firms’ digital credentials will become increasingly important.

‘In terms of training, law firms and corporate legal functions need to get better at moving to this idea of constant learning,’ observes Fraser. ‘Crafty Counsel is a great example of this – producing informal, bite-sized videos, providing insight and experience from interesting people.’

At Foot Anstey, Anderson is launching a tech/digital skills academy for lawyers to boost core competencies and familiarise them with emerging tech. ‘We use a mix of podcasts, bite-size videos, virtual training session, tech bars and roadshows,’ she explains. ‘This enables us to be more responsive and proactive in creating relevant content for the firm and clients.’

There are clearly major challenges ahead, but one way in which Covid-19 is a positive inflection point for legal technology is that it has forced law firms to recognise that digital transformation is their key to the future. Digital transformation is an iterative process, and right now it is perhaps less about incremental change than deciding which Covid-driven changes will become part of business as usual and unlocking new opportunities in an unpredictable business environment.