Law firms will find the competition tough in the future without some careful IT planning, write Elliot Rose and Victoria Barker of PA Consulting Group.
Professional services firms have traditionally been able to thrive in virtually any market conditions. They have been consistently successful for several decades without ever needing to re-examine or change their basic operating model. However, gradual but inexorable change in client expectations and the business environment over recent years now means that more of the same is no longer enough.
In the future, law firms will increasingly need to use IT more effectively in order to remain competitive. To do this, they will need to ensure that all their information systems function as an integrated whole, and are available to their staff, their clients and their business partners.
Integrating the legacy of information and system silos.
Law firms have traditionally invested in solutions focusing on specific requirements of their sector such as client relationship management, searching, portals, practice management, financial management and collaboration. In many cases this has resulted in a patchwork of systems and information silos. Often such systems are not integrated with other legacy systems so while they may meet initial requirements in one area, this can lead to inefficiency overall – especially when seeking to provide information to clients.
In response, some legal industry vendors are now offering functionality outside their traditional product set. For example, we are seeing the emergence of case management systems that provide integrated time recording, and document management systems, that provide on-line collaboration tools. Some law firms, especially those in the ‘magic circle’, are moving away from traditional legal sector solutions, implementing truly ’industrial strength‘ enterprise-wide integrated solutions, such as SAP and Oracle.
The IT opportunities can be considered under two categories – cost reduction and value add. Both of these come together to provide improved services to clients. We look at each of these areas in a little more detail below.
Cost reduction is not just for commoditised legal services
Firms that have geared themselves to high volume/low profit margin work need to constantly reduce costs whilst increasing efficiency – though many of the IT tools that they use are applicable to other firms who seek cost reductions that increase the profitability of all kinds of work.
Developments in new case, practice and document management technology are key enablers in automating the typical high volume case management work. For example, documents can be imaged and routed electronically depending upon case worker utilisation; standard letters can be set up so that details are automatically populated from stored data; documents can be shared across the internet with third party advisors (such as medical experts); and time recording can be embedded within systems to make it seamless to the case worker. Some systems allow the creation of a single interface for users, so that they are working from a logical single system that provides them with the right information (and no other information!) at the point that they need it. This allows them to perform their job even more effectively and the workflow can automatically deal with procedural issues, information capture and financial aspects such as billing.
The use of case management systems provides real time metrics to identify performance issues. Such metrics can be used to improve the legal decision making process. Using historic information from previous cases, the engagement can be more accurately costed – increasingly important as clients seek fixed price work – and the probability of achieving a positive result for the client can be established thus leading to reduced costs and improved client satisfaction.
On-line interaction with clients will play an increasingly important role in reducing the number of processing steps. Furthermore, giving caseworkers on-line access to the case management system makes their geographic location irrelevant. Their work can be performed in regional or off-shore locations where the cost of labour is low, or opportunities can be taken to rationalise the firm’s property portfolio by increasing home working and hot desking.
Internally within the firm, technology-driven change has led to fee earners, in particular the younger more technologically aware, undertaking more of the traditional administrative activities, such as managing diaries and interacting with clients via email. This has had an impact on the traditional role of the secretary, with many law firms reviewing the level and skill sets of support staff.
Document assembly tools are becoming ever more sophisticated and the effort required to set up standard document templates is reducing. Some firms are looking to deliver new on-line services directly to their clients. As the tools become more sophisticated, much of the routine drafting of standard legal documents will become more automated, reducing both the level of fee earner input and effort from support staff.
The advent of digital dictation allows fee earners to email dictated documents to central word processing facilities. This facilitates more efficient processing as individual documents, rather than physical audiotapes, can distributed. This has led some firms to consider where their word processing functions should be located and whether they should be outsourced. Some of the traditional document management outsourcing vendors have established low cost processing centres, in countries such as India, with guaranteed quality, service and security levels.
Adding value to legal services
For all firms, not just those who focus upon low volume / high margin work, the use of IT will play an increasingly important role in ensuring that the firm provides cost effective, consistent and best practice legal advice to their clients.
Knowledge management should provide the right information to allow employees to work more effectively. However, existing information and IT systems are typically fragmented and do not easily support a firm-wide knowledge base. It is often difficult to gather all information on a particular case as details are held in separate document management, contact management, financial and case management systems. This is exacerbated by regional offices maintaining their own, autonomous, systems. As firms service an increasingly global market place, fee earners will need greater mobility and global, rapid access to information that is accurately and timely.
In response, some firms have purchased new solutions that provide an increased level of functionality and/or global capability. Others have opted to build upon their legacy systems but ensure that the information from these systems is managed and presented through a single interface or portal. Given the current economic climate, such an approach, leveraging the existing investment in technology, is likely to grow.
On-line services – virtual deal rooms
There will be an increasing role for IT in developing new and innovative services to attract new, and retain existing, clients. Following on from the emergence of virtual case or deal rooms, there is now a move towards furthering client relationships through the provision of on-line relationship sites where clients can subscribe to access the firms’ knowledge bases or be provided with billing information. A single standard or system for virtual deal rooms has yet to emerge and while law firms continue to invest and view such systems as a way of offering additional value added subscription based services, such a common standard or system is unlikely to prevail.
However, the development of these non-standard systems may become unacceptable to clients who use several law firms and are unwilling to use a different system for each one. Some large corporates are, therefore, already building their own virtual case or deal rooms, which they expect their law firms to use. This trend is likely to continue.
IT needs to be better linked to business vision
Whatever the future direction of new emerging technologies, it is vital for companies to have a clear strategy against which the right technology can be deployed to deliver business value. The full value of IT is only realised when it supports the overall business objectives and where the business and IT leaders of the firm have a common view of those objectives.
Without this commitment to clear direction setting, IT will not provide the advantage that law firms will require in the future to maintain their competitive position. Without a similar commitment to driving out the benefits from their IT investments, that competitive advantage could wither in the vine.
