Law firm innovation is the key to success, but what is it?
Legal innovation is the latest buzzword in law. Most law firms are claiming to be innovative, but what it actually means is often muddled, and proving this concept to your clients can be challenging.
It isn’t simply a matter of implementing random legal tech and calling it a day - you need to prove to your clients that you are taking into account what they want from the firm and actively addressing it.
Tech that manages the workload is useful, but it’s only one part of law firm innovation. However, it is a crucial one. It is also one of the easiest ways to visibly demonstrate your commitment to innovation to your clients. With that said, defining innovation is important before we can discuss exactly how law firms can put this into action.
What is legal innovation?
Legal innovation refers to how you improve the day-to-day operations of your firm, often through the use of legal tech. It can also focus on discovering new ways to deliver your current services.
The Solicitors Regulation Authority (SRA) defines innovation and legal tech separately. Legal technologies, they say, “are technologies that aim to support, supplement, or replace traditional methods for delivering legal services, such as automating documents, chatbots, interactive websites, and artificial intelligence (AI).”
They then divide innovation into three different categories:
- Product - creating new or significantly improving upon existing services
- Delivery - enhancing how your services are delivered
- Marketing - improving the way services are marketed to clients
Therefore, innovation and legal tech go hand in hand - technologies like document automation and AI can be used to significantly improve services currently provided by law firms.
Now that we have a clear definition for each, we can examine the most significant ways innovation and legal tech have impacted the legal industry.
Artificial intelligence tools
AI has been one of the most well-known technologies to visibly change the legal landscape in recent years. Some believe it will eventually replace up to 50% of all tasks performed by lawyers, while others offer more conservative estimates. For example, Mckinsey predicts that AI may take over up to 25% of a lawyer's role through automation, but may replace them entirely for standard activities.
Regardless of the accuracy of these figures, AI is here to stay and its application is growing. Law firms can now use AI to predict case outcomes, simplify the proofreading processes, and aid legal research. A report by Oxford University found that around half of the lawyers they surveyed were using AI-backed legal tech, demonstrating its prevalence in law.
Drafting and proofreading solutions
Automation tools like document drafting and proofreading software have become mainstream tools used by many law firms. As reported by Thomson Reuters, 83% of lawyers have complete confidence in drafting software and believe that it helps mitigate the risks associated with human error.
Fewer risks imply greater efficiency since lawyers will need to spend less time making sure their documents contain no mistakes. More time can then be spent working on interesting and valuable client work, lessening the impact of lawyer burnout.
Lawyers have widely accepted legal technology. If law firms wish to retain and attract new trainees and junior lawyers, they must recognise this. They must also understand that with the rise in alternative fee arrangements (AFAs), where time is a much more precious commodity than it is under the billable hour, these solutions are going to become a much more enticing prospect for future clients.
Firms are reluctant to embrace change
Unfortunately, even with legal tech on the rise and innovation at the forefront of many law firms' plans for the future, there are still some dragging their heels. These firms certainly won’t be winning any legal innovation awards. Regardless, they must understand the importance of innovation and how strategically implementing legal tech can help them succeed.
Why innovation matters
Law firm innovation proves to your clients that you are willing to invest in things they actually want. You’ll win over more clients while also significantly improving the firm's current processes. When this happens, firms become more attractive to clients since they can offer enticing incentives like alternative fee arrangements and greater transparency regarding cost, thereby creating a loop of innovation and firm success.
Make no mistake, clients are demanding technological innovation from their law firms. According to a Wolters Kluwer survey, 91% of corporate legal departments expect “the law firms, they are considering, to fully leverage technology”.
But, clients are not the only ones yearning for this. Lawyers want it too - the same survey found that 80% of lawyers found it very important that they work for a “tech-savvy law firm or legal department.”
Therefore, it is not only a matter of implementing LegalTech - it must be done in a way that benefits both the firm and its clients.
LegalTech demonstrates innovation
It’s no surprise that innovation and LegalTech are so intertwined. The benefit of this is that demonstrating your commitment to innovation can be accomplished through the use of efficient and targeted legal technology.
As we have discussed, clients are eager to enter the conversation around alternative fee arrangements. It seems this trend will continue as it has done for the past few years - BigHand reported that law firms offering AFAs and fixed-capped fees rose from 28% in 2020 to 43% in 2021. For law firms, leveraging legal tech able to increase profits under the current billable hour model, along with future payment arrangements, is a must if they want to be viewed as innovative.
This progressive thinking will ensure firms can continue to profit, whilst also remaining attractive to prospective clients. Crucially, there may be far-reaching consequences for firms unwilling to innovate. Only 36% of lawyers believe their organisation is “prepared to keep pace with the most significant trends [..] over the next three years”, according to Wolters Kluwer.
By implementing LegalTech that shows clients the value of their investment and demonstrates a commitment to the trends of the future, like AFA’s, law firms can demonstrate their innovation.
An example of one such technology is Definely Draft, which utilises AI to increase the efficiency and speed at which documents can be drafted. Paired with Definely Proof, software able to flag and correct hundreds of spelling errors, missing citations, and more with the click of a button, firms will be able to showcase to their clients that they have their interests in mind. Specifically, with this time-saving technology, firms can prove to clients that their time is valuable.
Get in touch with us today and we can discuss how the Definely Suite can future-proof your firm, ensuring your clients are impressed by your innovation efforts.