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2023 Business Planning. The 15 “Must Haves” for a Digitally Savvy Law Firm

Introduction

2023 could be destined to become the most interesting year for Legal Tech.

In the UK it feels like lock down is a distant memory. By the 31st December 2022 it will have been over one thousand days since lock down was announced. Professional Services firms, despite some initial turbulence have both survived and thrived.

On positives we are seeing many:

  1. Virtual working has been embraced.
  2. Profitability has increased for many.
  3. Demand for legal services still seems to be high.

We are increasingly seeing approaches from firms who have got to a position where their core platform is in good shape and are now keen to move on to accelerating and enhancing the way that legal work is delivered within their groups. There seems to be a real step change in this area.

On negatives:

  1. There is a talent shortage.
  2. The way that many people in younger generations want to work is perhaps not fully aligned with the traditional ways that law firms are operated.
  3. Salaries are increasing.
  4. Cyber risks are increasing.
  5. Everyone knows a recession is coming but no one quite knows how it will affect them.

If we do have a recession, things might not work out as many are envisaging. Law firms don’t need a buoyant economy to be profitable, they just need things to be happening. If sterling is low we see an increase in transactions from the US.  So long as there’s funding there are always buyers for assets. Yes the shape and size of legal work may alter but professional services firms tend to weather recessions better than most.

Overall this promises to be a really interesting few years.  We have always engaged with boards but we have seen a real uptick in interest.  Increasingly board room leaders seem to have a deep understanding of technology and the role it can play.  They see the opportunities for business planning whether it be for scaling practices or launching products.  They are learning the same lessons as their corporates by leveraging MS365 to the full – increasingly smaller law firms have the same fire power as their larger cousins.

In this article we have tried to document the 15 must haves that any firm needs to consider (all of which are driven by very different needs).  We have looked at this area over the last couple of years having had literally hundreds of discussions with clients.  The good news is the direction of travel is still very similar and so we appear to have been on the money.  Accordingly we have updated rather than rewritten our thinking and have included a couple of extra areas of focus.

  1. Cost Control/Budgets.

We live in strange times. On the one hand there are really strong reasons to invest in tech and so legitimately budgets should increase:

  • Increased security spend
  • Increased automation
  • New market tech products
  • Increased innovation spend
  • Dual running of systems at home and in the office
  • Reduced real estate costs

That being said cost control is becoming increasingly hard and unpredictable. In recent years we have heard of vendors increasing costs by over 200% and Microsoft themselves by 20%, (albeit there had been no increase from them for some years). The fundamental reasons for this are as follows:

  1. Cloud computing allows vendors to increase cost and without taking your data back/unravelling a time consuming implementation it is hard to control. See here for more information on this.
  2. We are buying more IT and have more vendors to manage (although MS365 is providing a good opportunity to reduce your tech stack).
  • Things are becoming more complex. Security aside even tools like MS365 require new skills.
  1. Legal IT is now increasingly moving under the skin of legal work. Projects of this nature are much more complex than just delivering say a DMS or objectives system. In many cases specific “real” legal tech tools are needed.

This is a really hard area where technology buyers seem to have got themselves into a difficult situation but there are some tactics to mitigate this. Every business needs a cost containment strategy. In our experience clients increasingly want to invest in tech but that can’t be at any cost and with above inflation year on year increases.

For more on cost per user see point 11.

We would also refer you to our recent article The Failure of LegalTech — Hyperscale Group Limited :

“Cost – First to get one thing straight I am a firm believer that suppliers should be paid at an appropriate level.  It is in everyone’s interests that they are stable and invest in R&D.  Like everyone they will be subject to cost increases. Data centres have power requirements that will be subject to the energy cost inflation we are seeing which has to be paid by somebody.  That being said we perhaps need to get a little perspective in the market.  In the past many people will have licenced a product on a perpetual licence with say 20% annual support and maintenance.  This gave a degree of price certainty but probably this model was skewed more in favour of law firm and corporate clients than the supplier.  With the move to SaaS we have seen annual recurring revenue models.  Again, there is nothing wrong with these per se but what is becoming evident in the marketplace is that around costs rising and some suppliers are taking advantage of this. In the last 12 months we have heard from clients who have had nearly 300% price increases imposed on them with 3 months’ notice. Yes, it is possible to move away from a SaaS product but in doing this there is a large implementation and data transfer project which makes things hard and/or expensive. If we wind the clock back a little to the times when inflation was low, we were seeing suppliers who wanted to impose 7% or 8% price increases per year (albeit query now with current levels of inflation, it looks much more appropriate) which again was not great (and in any event well above inflation at the time).

My point is quite simple that for some suppliers I think the market was skewed in favour of the customer too far, and now is skewed too much in favour of the supplier.  This makes things very hard for customers who need much greater degrees of price certainty.  In fairness we are seeing some suppliers with capped price increases, whereas others are less keen which leaves customers exposed. We need more balanced models in the marketplace with much greater degrees of price certainty.  If this is possible for commercial real estate leases e.g., with only 5-year rent reviews and break clauses, it should be possible for SaaS products and perhaps we will see the emergence of the ”SaaS lease”?”

  1. Data is King. We are entering an era where data and understanding data will be key. Many firms now have a strong understanding of financial data but beyond this (and documents and emails) often firms will have little more, those firms running case and matter management being an exception. Ironically at a time when firms want to increase their data quality and understanding we have seen a huge growth in collaboration and SaaS platforms meaning their data is becoming more out of their control. In addition to Teams and HighQ we have identified around 20 collaboration platforms in legal.  Despite the fact there are admin controls the ability to control and manage data and bring it back into core systems is not as developed as many would like, which compounds this problem. We are also seeing the growth in law firm collaboration platforms such as www.lupl.com which perhaps offer greater interoperability and Syncly.io which delivers much better data management.

In short firms need to develop a data strategy. They need to regain control and work out their strategic objectives in this area. With the growth in MS365, AI and data driven services will all data and documentation be available in machine readable format? Is their scope for the firm to seek funding for data driven projects from organisations such as Innovate UK.

We also refer you to The Failure of LegalTech — Hyperscale Group Limited and our comments in relation to Dashboards:

“Dashboards and Silos – Sometimes you have to compare LegalTech with other markets. The insurance market isn’t necessarily renowned for its client care but if anyone calls a major insurer, the insurer has available to them screens that show a customer’s details, records of telephone calls and other key points to help them sell, such as dates of renewal of other insurances.  Law firms have all of this data but for most law firms I know (excluding smaller firms operating on a case management model), most of this data is hidden in their systems.  It can be accessed but not easily. None of it is optimised around the tasks that lawyers carry out.

For the last 20 years we have been helping to deliver law firm dashboards.  As long ago as 2006 we won the “Legal Business most Enterprising Law Firm of the Year” award for the work we had done on a client centric dashboard.  To me there is a huge opportunity for law firms here (especially as they advance their data strategy).  It means you are presenting the right information a lawyer needs at exactly the time they need it.

Having literally consulted with hundreds of organisations, lawyers principally need five dashboards with potentially six supporting dashboards, and this is very deliverable. To deliver these however requires internal silos to be broken down.  I often hear comments about what HR and finance are and aren’t willing to do and the way that they want their own dashboards. Whilst this is progress, delivering dashboards from an internal business services function perspective as opposed to focusing on the jobs and tasks a lawyer needs to do, is inevitably going to add much less to productivity.  In big picture terms, draw an analogy with a car. Many law firms operate on the basis of getting a report at the end of the month showing how fast they have been going and having to lean over to the back seat to turn on their indicators.  This needs to change and we need to optimise the interface of our systems more.  Many suppliers could help in this area too.”

  1. 3.   Understand MarketTech. As you will have read in the Death of LegalTech, for most firms LegalTech has not “pushed out”. To this day most LegalTech is tech with no legal in it (e.g. PMS, DMS and CRM). Whilst LegalTech has failed to expand we have seen the growth in PropTech, ConstructionTech, DisputeTech, IP Tech, DeathTech and more. Some of the solutions in these areas are game changing. I know already of IP teams who are leveraging the leading IP systems and platforms on many areas of work. https://www.exizent.com/ for example shows great promise to completely transform the probate market. Some of the leading litigation firms are really leveraging some of the great DisputeTech products. My point here is simple. Any lawyer in any of these practice areas needs to understand these tools and what is happening in their market. These tools are now part of the market ecosystem – they need to be able to articulate a strategy for both efficiency and their strategy for interfacing best with these systems. If they don’t understand what is going on in the areas relevant to them they need to learn quickly or perhaps surround themselves with people who do, as this is business critical territory which needs to be taken into account in their strategic planning. The savvy firms we are working with increasingly are using the technologies to wow their clients. We are also seeing property technologists appear in real estate groups etc. You need to ask do these technologies affect how you develop products and pitch to clients? What is your competitive play and how does this alter your cost of delivery? Increasingly we are being asked to challenge business planning as this knowledge is simply not optional anymore.

Please also see education and skills in 6 below and our recent article A Conversation with a Builder — Hyperscale Group Limited which explains what Legaltech can learn from builders in this area.

  1. Your Operating Platform and the Missing Middle. Firms need to focus more on their operating platform. The demands we are seeing for automation, risk management and reporting are on the increase. Also, firms will increasingly need to collaborate with clients and third-party organisations as well as the multiple platforms we are seeing in PropTech, ContractTech, IP Tech and DeathTech – the list goes on. If in two years’ time all real estate transactions are done on two blockchain platforms with algorithmic valuations and auto-settlement how will your technology interface? If you have to automate the workflow in 60 teams in 10 countries how will you get the resource to do it? To us two things are certain: 1) A standard PMS/DMS model set up won’t cut it alone. This operating model is 25 plus years old and simply won’t cope with the plethora of demands being thrown at it; 2) Firms need something more to help with this – some sort of no/low code orchestration layer which will allow firms and fee earners to build solutions and integrations quickly. We refer to this as the missing middle, but technologies have now emerged to help fill this gap. Without this firms will struggle dealing with demand, day to day operational costs will grow and dissatisfaction will rise. Understanding data will become increasingly key. Without addressing this what granularity of data will you have simply from word documents and email? Will this be the era of no code tools and matter management?

Again please see our comments in The Failure of LegalTech — Hyperscale Group Limited:

“Platforms for Legal – In the work we do with corporate clients, for years we have seen the emergence of platforms for other business functions such as finance, HR and procurement e.g., SAP, Workday, Oracle and Salesforce What is frustrating however is that within legal this is still not the case.  Yes, we have best of breed systems to manage information but some of these systems are expanding out into other areas e.g., Aderant, NetDocs (Afterpattern), iManage, Closing Folders and Tracker).  Intapp also has a very strong connected firm vision.  Lupl is a very interesting development to drive collaboration. That being said we still don’t have a recognised platform for legal and the tools available, although good, have perhaps not tackled the automation of legal work as well as we could hope which has given rise to a whole range of start-up products.  This might be solved with the emergence of SaaS based case and matter management systems but again there’s often too much work in joining the key components together.  One might argue we are now at a time where we perhaps need to see the emergence of more dominant players.  Is the emergence of a platform foreseeable from one of the main aggregators as per our LegalTech M&A list? In some ways I hope it is.

  1. Tenders 4.0. We are lucky to work in a range of areas within the legal marketplace. Often this is for in house clients and we run tenders and form part of assessment teams. We have 20 years plus experience in this space and what I can tell you with absolute certainty is that the nature of requests from clients and law firm’s offerings is very different to say 5 years ago. Clients are getting much savvier and the requests are getting more specific and sophisticated. No longer does a marketing department cutting and pasting an answer from a year ago cut it. We are seeing some firms put forward new operating models. They are demonstrating deep understanding of the technology in particular markets and have appointed senior experienced people to implement and manage solutions. No longer is it a side job. One commercial partner blew me away as his knowledge of a product when questioned at length would have put many IT professionals to shame – this is the new standard. Lawyers need to learn how to talk like this and not just in pitches too. Pitch documents I have seen from the Big 4 and ALSPs also take things to another level. My message again is simple. To win work and market share (see 10 lessons for recessions) firms not already doing this absolutely need to raise the bar in their client offerings and how they present them – their lawyers need to walk the talk and increase their knowledge to enable them to have intelligent day to day conversations with their clients. There is nothing wrong with HighQ as a product (and indeed it is very good) but the days of just saying you will just “use HighQ” as your answer to a sophisticated client have long gone – you need a better understanding of how you will use it, what other tools you will use and what systems client themselves have. The classy operators too are recognising that to perform in this new era means “thinking solutions” and truly embracing multi-disciplinary teams on pitches which include “non lawyers”. We have three recent examples of clients who have achieved superb results in this space with our help. There is a great opportunity to level the playing field as these technologies are often not expensive.
  2. Education and Skills. One area we are seeing a massive uptick is in relation to the education of lawyers about technology.  There are a number of facets to this which we have detailed in  The Failure of LegalTech — Hyperscale Group Limited

Education and Skills – Many years ago, the law firm formula for making money was much simpler.  In short you had to have the right number of people with the right skills and experience at the right time to charge them out at a rate which exceeded your cost base.  It was still possible to get this wrong – the standard joke about resourcing was that law firms were like a 1980s Porsche 911 Turbo where perhaps you put your foot down and nothing happens and then all of a sudden there was a surge of power meaning in this case that the resource timing was not aligned with the demand.

We are now entering a different era.  If you look at the major stock markets of the world, it is easy to see they are dominated with tech stocks as digitising delivery means you can scale and improve profitability in a way not linked to headcount. The same applies to legal. The biggest and most popular firms no longer need to have the most people. The days have gone where a lawyer just needs to be able to give great legal advice and manage clients well.  Lawyers going forward need to find different ways of delivering, that leverage new technologies (whether they be market tech, AI or wider) as well as differing skill sets. The more sophisticated clients are doing this themselves and accordingly will expect it of their lawyers.

None of this will be possible without educating our lawyers differently.  Research from Acritas and others have shown that there is a gap here where often lawyers don’t know enough about the technology, don’t know how to implement it and accordingly are nervous about speaking to clients. This gap is compounded where there are perhaps some deficiencies in basic tech skills.

There are many answers to this. Some firms are launching their own academies or delivering courses.  Others have video footage cascaded to their people and/or use tools such as The Professional Alternative which have been developed to address this.

In short, however, unless we educate our lawyers better in relation to technology and new delivery models (as well as other essential areas), they will not be able to meet the demands coming.

Many proposals from suppliers often include training or train the trainer models.  This is great but is it enough? Frequently we ask suppliers to supply video training for new joiners but again often more could be done.  I have also seen some suppliers who keep video training modules up to date and who also have opportunities more aligned with delivery of commercial objectives.  These things can only be good.”

A Conversation with a Builder — Hyperscale Group Limited is very relevant in this space too.  We don’t train people to do the jobs they do with the tools they use like in the building industry.

You will be pleased to know there are some great app based solutions emerging in this area from the likes of Fliplet

  1. Microsoft 365 Strategy. The latest stats indicate there are now in excess of 260 million users of MS365. Some wrongly assumed that MS365 is just an online version of Office. Those looking at it properly (including many of our corporate clients) now appreciate that it has huge capability. It has digital dictation, an e disclosure system, workflow, embedded RPA, translation services, telephony and video services, reporting and analytics software, apps, power apps and bots. The investment in AI is huge with projects like Project Cortex in the wings. There are several key points here including: 1) MS365 is huge and for many of our corporate and law firm clients there are now options to retire off legacy products by leveraging the 365 stack whilst reducing cost; 2) There is really no limit to what you could use it for but as a business what is the right thing for you? What do you want to use and not use it for? You need to decide and perhaps redevelop your target architecture – if not people will take their own choices and it will cease to be in your control; 3) How does this affect what other products you buy? Should you favour application layer products which configure MS365?; 4) What will your team need to look like? There is a rush to recruit subject matter experts. A Power BI expert is different to a SharePoint expert though and so may need several. Whatever you decide our prediction is that firms will diminish the number of products in their tech stack and cost for “operational tech” if the corporates we work for are representative. Some argue tech will become dull but we think the opposite.  The playing field will be levelled higher. Will this be the year of MS365 opportunities leveraging tools like Intapp Documents and Peppermint? The access to data aspect will be very relevant to this too.
  2. The Shift to Capability. We have all seen the tsunami of solutions hit the legal market in recent years. More has happened in the last 5 years than the 25 before. Some of these are great and others less so and in fairness many start-ups have tried to really get under the skin of the delivery of law which many tech vendors have not been able to do in the past. Let’s face facts though: 1) Every solution like every asset adds to risk, maintenance obligations, complexity and increases total cost of ownership; 2) No firm in the world has the bandwidth to manage and implement multiple solutions in multiple areas – firms have a large number of teams focussed on a wide range of offerings; 3) IT can be personal and so everyone will have their favoured solutions. In short, to buy everything would need every firm to have infinite time and money which they simply don’t have. Sensible choices need to be made – the model we have implemented which works well for this is to stand back and decide what capabilities a firm will need both now and in the next 5 years to run their business and serve their clients as efficiently as possible. You ignore product but focus on what teams need. You then prioritise and test against your tech stack (inc MS365) and then form your budget, cost per user run rate and timeline. This also helps you communicate and avoids random innovation led products appearing. You move forward more efficiently and spend less money. In a tsunami there is no other choice but to work and plan in this way as if not you are likely to get swept away. No code fungible systems like Kim Technologies and Share Do will play a part.
  3. Product Strategy. Law firms typically only get paid for their work once. Fees are linked to hours worked or outputs. By contrast software companies now “rent” their software. Year after year they get paid for the right to use the software and any enhancements and upgrades. This is a very nice commercial model in that they get an annual recurring revenue and every new sale is additional annual recurring revenue. This combined with the ability to scale without regard to headcount is why software companies become so profitable and why private equity houses like to invest in them. Law firms have no ARR which is why by contrast venture capital investment is so hard despite the relatively high margins. Many firms have realised this and are increasingly launching projects. Some could be described as software houses and one (who shall remain nameless) turns over £25mil in ARR every year. Imagine at the start of your financial year knowing you have £25 mil guaranteed income – in short you can. Law firms are adapting like never before. They are launching products, reselling products and are launching Alternative Legal Service Providers (the fastest growing segment of the legal market albeit some firms have launched ALSPs and have shut them down following a change in strategy). Any firm interested in making money and providing a holistic service needs to decide if they want an ARR and if so, what their product strategy is? If they don’t, they will need to accept they may get left behind and won’t enjoy the financial benefits and broader service offerings of some of their competitors. Some of these products may become essential capabilities in the future too.
  4. Partnering Strategy. Running a law firm used to be pretty simple. It was a cost-plus model with high margins. Success depended on having the right number of people with the right skills at the right time and matching them with client demand. Sadly, things are now much more complex. Law firms are experiencing unpredictable and multifaced demand. Clients want services delivered in new ways, they want new offerings and prices to be lower. They also want firms to be more global. On top of this, as mentioned above, law firms need to understand and leverage market tech more and importantly, they need to build capability (see above). Very few firms can do this on their own – the investment and change are simply too much and too capital intensive. They have too many practice areas and products Increasingly firms are realising they don’t necessarily have all the skills they might need to. Digitally savvy firms (and even the Big 4) are increasingly realising they need to partner and form alliances. We have seen it with ALSPs as well as service providers and software businesses. Firms like Hogan Lovells have been vocal about this and we are even seeing “Alliance of the Year” awards springing up at the annual awards dinners. The important thing though is the building of capability. Collectively we need to remember that our job is not to do things but more to “make the right things happen”. This does not mean you need to invest in, buy or do everything yourself but you do need to put the right things in place. Given the multifaceted nature of many law firms you may need someone senior to be responsible for these deals and this is likely to become an increasingly strategic role.
  5. R&D Strategy. Many businesses have a formal R&D programme and investment budget albeit many of these will be very focussed on products – the ability to launch a new product is linked to their ability to make profit. Law firms are obviously knowledge-based businesses but historically they are different in this regard – they sell experience and knowledge and have been less product focussed. They also have invested in R&D by employing Professional Services Lawyers and buy in intellectual knowhow from the publishers. Also, in recent years we have seen an investment in Innovation people. The challenge though is that as an industry we have not got this area bottomed. I don’t think many firms could say R&D is “sorted” and they have a clear plan, and the reality is that the bulk of profits are paid out every year. This is also in an era where we are seeing more automation and productization and when a firm’s ability to succeed will be intrinsically linked to increasingly focussing their efforts on a proper R&D strategy. Areas that many firms seem to need sorting still include: 1) Tensions between innovation and IT people; 2) Legal Engineers feeling they know all legal areas when they only have experience in one; 3) Salary changes or failure to change packages when a fee earner moves to a non-fee earning role which may command different rates; 4) Incentivisation models for fee earners spending time on non-chargeable work; 5) the shifting demands of IT teams and the make-up of their teams; 6) the lack of scalability in many of the models and the piecemeal delivery of some innovation led solutions; 7) the changing role of the PSL; 8) Proper benefits realisation; 9) Career paths for those involved in this area; and 10) Proper assessment of maturity and capability. Also some innovation groups are struggling, and they are becoming more mature – should they have budgets and targets in the same way as others? There are pros and cons of the different approaches. As an industry we need to professionalise R&D. We need to recognise it is here to stay and build a sustainable model. How will every group support this area as R&D and innovation can’t be “done” for them as they are experts in their areas. This may require a firm wide reorganisation and long-term views rather than annual budgetary cycles – perhaps like some of the Big 4. As a client has recently pointed out we need to manage the BAU of R&D better too. There is a stream of things that need to be supplied although not mainstream. As a final point our people need a much better understanding of legal ops to support this R&D push. They need to understand what is possible and to be able to have intelligent discussions with clients, some firms are launching training academies whereas others are leveraging tools such as www.theprofessionalalternative.com. However, a firm delivers the knowledge, their people need to understand more. Also see 6 above education and training.
  6. Cost per User. For years we have seen percentage of turnover on IT figures and the latest being quoted is 4-5% on P&L and 1-2% on capital depending on size.  For reasons previously explained these are not helpful as they skew actual investment figures and can cause firms to take the wrong decisions – the only metric that makes real sense is cost per user as it represents real spend irrespective of profit model. A high percentage of turnover figure may for example cause a firm to reduce spend meaning they become less efficient, whereas the differences are caused by different profit models. It is now the time to focus on IT investment more and to really decide what your firm wants to be. There are many competing dynamics here: 1) Cloud systems can give rise to short term cost savings but become more difficult to control in the long term; 2) MS365 can make a big difference in reducing legacy spend and capability; 3) Spending on innovation (Products and People) is not free but should reduce costs in other budget areas but where does this sit?; 4) Tech spend now has the potential to reduce real estate spend but again is this efficient displacement expenditure rather than an increase in cost per user; 5) Some spend on areas like AI can reduce the cost of delivery of jobs and people cost but will simply add to overhead if not priced correctly – does a team get the benefit for reducing headcount whilst an IT team gets additional cost or is this a completely new metric for innovation people by creation of a virtual P&L; 6) Best of breed systems and multiple products can give higher total cost of ownership figures than say combined all in one systems and so much depends on what you actually need. My point is that you need to understand this area and take conscious investment decisions which are balanced given the overall changing dynamics of your business – cost and benefits realisation need to be understood to ensure displacement savings are properly understood and more mature cost allocation models developed.  Three exemplar firms spring to mind for wider work they have done on costs management too. One is a small but fast-growing elite firm who are using a new breed of systems combined with MS365 to deliver a market leading cost per desktop and are working with us focussing spend on more innovative projects. Another large firm has used non-legal industry systems to deliver a great, but again, market leading cost per desktop but with greater capability – they don’t have a “missing middle”. A third has hugely reduced the cost of its day to day IT infrastructure and has diverted the funds and team (with some additional investment) to deliver revenue generating products for its firm. So, I am not saying spend less – far from it. More understand the market dynamics and look at the detail of what your firm wants to do – really think about what your budgets should be versus standard benchmarks and how you spend your money.

We are delighted to say that after years of lobbying the PwC Survey now includes cost per user technology costs based upon size of firm.

  1. UI is the new Culture. I am not going to repeat what I have said before but suffice it to say the world has changed for ever. We don’t know the full stats yet, but we now know we are going to see a material increase in home and agile working and most firms seem to have settled on a 3/2 day split in the working week. We are also seeing rising talk of 4 day weeks but no one knows yet how this would work in the hourly billing legal market? Organisations will have to be bi modal with more than one operating model. People will interface with technology more than ever before and it is vital that we optimise the interface, both from an efficiency perspective but also from a well-being and talent attraction perspective. Given the current talent shortage, firms will need the very best technology and to have strong flexible working capability. The casual conversations in the lift will be rarer as will be the ability to walk over to people’s desks when you see them looking upset. Knowledge will need to become much more accessible. The operating platform will become more important than ever before and firms will need to work hard at it and we are seeing a real uptick in demand in this area (for good reason) – to quote previous words:

“In the past culture has never been about technology – apart from perhaps in the sense that individuals may want to work for an organisation which prioritises how they leverage technology. The world has changed now though. In lockdown technology has become much more important and a greater proportion of our working day. It has gone up the pecking order. Screen time and engagement levels with technology have seen massive increases – daily Zoom sessions have scaled from 10 million per day to 300 million. Meetings have been replaced by Teams and Zoom, as has supervision and social. Where technology is great it stands out a mile – where it is not the cracks show much more readily given people’s exposure and reliance has increased so dramatically. For many (and despite the well-intentioned efforts of some organisations to engage with people) technology, together with its strengths and weaknesses, has become the face of organisations – their most dominant touch point.

The key point is therefore that technology has become much more important and is a much greater part of people’s experience of an organisation – it is what they live and breathe. If the IT interface or support is poor this will reflect to a much greater extent than before and vice versa. How can an organisation be regarded say, as supportive or caring, when information technology just focuses on the technology and not the underlying information or processes leaving people to fend for themselves? How will an organisation know when someone needs help, is struggling or stressed if the technology and processes do not provide methods of surfacing this – surely any platform should minimise any stresses and strains?  How capable is the online platform from which you operate and how well does it support the different levels of fee earners and support staff? What do your people think? If a firm have just pushed out their previous on prem processes and technology to an online format it is probably not enough as the needs of people (and how they judge your organisation) will be very different”.

We need to focus more on neurodiversity and the needs it brings. How configurable is a piece of software for an individual? Also mobile looks destined to play a huge role here given it is the “common denominator” that people carry with them at all times.

  1. Mobile. Ironically one of the market’s biggest trends has been staring us in the face and in many ways this has been a genuine failure of Legal Tech were somethings obvious has been overlooked by many:

As mentioned in The Failure of LegalTech — Hyperscale Group Limited:

“Mobile – Recently I have seen a webinar for Fliplet and was blessed to have a selection of superb IT directors and CTOs including David Hymers, Paul Harker, Emma Jackson and Jo Owen. It was a real eye opener in that when looking at the mobile adoption stats, globally and in other sectors the figures were jaw dropping. Examples include:

The Growth of Mobile

Smartphone users in the world today = 6.37 billion

People who have smartphones today = 80.63%

Global smartphone users increased by = 73.88% in 2016-2021

Internet users who will solely use smartphones to access the web = By 2025, 72%

The adoption of mobile devices is continuing to increase at a pace and foldable phones will provide a very different user experience and accelerate this.  We obviously have mobile applications in legal (Fliplet have done a great job in this regard) but is the LegalTech market missing a trick here? Also, when looking at areas like hybrid working, mobile is the common denominator, should it now be used as an interface to drive business process.  Users of tools such as Leap, Xero and QuickBooks all have access to very good mobile interfaces, letting them do a whole range of things including view information, issue bills, make expense claims etc. Should all LegalTech do the same and give mobile the serious attention it deserves?”

More people seem to be embracing mobile as a tool to train people with and usage stats from The Professional Alternative.com show this is a default tool for many.

  1. Resilience

We are probably entering an era where we need to think more about resilience. If there is one thing we have learnt in the last 5 years is that we can take nothing for granted. There are numerous dimensions to this including the following:

  1. Supplier Resilience – we have already seen vendors struggling. Also we have a lot of private equity backed businesses operating in this market (see M&A tracker). The days of guaranteed funding rounds and cheap money have gone. For some this will be musical chairs – where were you when the music stopped? Who will survive?
  2. Supply Chain Resilience – Some basic hardware still takes a long time to arrive.
  3. People Resilience – the same applies for our people. Cost increases, interest rates, energy costs and inflation are hitting people hard. Will some not be able to cope? Who do we need to put our arms around
  4. Mental Health – it has been a demanding 5 years with lots of stresses and strains. To what extent do we have a mental health ticking time bomb?
  5. Business Resilience – yes law firms have survived recessions before and are normally fine so long as there is activity. What will be affected and how deep will this go?
  6. Salary Inflation – will the Great Resignation be followed by the Great Redundancy when some realise, they can’t support agreed salary increases? Will firms see the “Bite from the Fight” to retain talent?
  7. War and Political Stability – Many firms have had to adapt shutting down Russian Offices and perhaps domestic is looking more attractive than international given world instability and the move to virtual working. What I am not saying is that the world will implode – what I am saying is that we seem to be in period of greater global uncertainty

No one has a crystal ball but perhaps this year is the time to observe more carefully what is going on around us and to be prepared to react and support more where needed. Within this there will be both challenges and opportunities.

Conclusion

To conclude, we all know there is no certainty in life but a firm which has clarity in relation to the above points will be well placed to succeed.

I think it’s important for firms to realise that we are perhaps entering an era of opportunity which we will never witness again.  Those firms that are technologically savvy and understand the need to invest as well as the right things to invest in will prosper. More and more the delivery of legal service will be underpinned by technology and data.  Yes there will be opportunities in the future but seldom will we ever have an opportunity where we are staring at such an open goal as we are now. We are seeing firms do great things across the market and what is even more pleasing to see is the genuine ambition and recognition of the role that technology has to play.

We hope you have found this article helpful – for more information and up to date benchmarking we would recommend the following from Harvey Nash/KPMG and PWC.

Digital Leadership Report – Global Study on Tech Strategy (nashsquared.com)

Annual Law Firms’ Survey 2022 – PwC UK

 

Hyperscale Group are an Independent Technology, Digital and Operational Advisory and Implementation Business with over 25 years plus deep market experience. We work for In-House teams and Professional Services Firms all around the world and support them developing and implementing their strategies.

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For more information, please contact dereksouthall@hyperscalegroup.com

Derek Southall

Hyperscale Group
Derek Southall, founder and CEO is a high profile and very well connected figure in the legal technology, innovation, knowledge management and digital marketplaces. Derek has spent nearly 25 years in a range of leading strategic roles for a top 50 global law firm, for most of this time as a Partner and Head of Strategic Development and subsequently as Head of Digital and Innovation. During this period Derek oversaw and helped drive growth from £27 mil TO to in excess of £425 mil TO as well as driving and supporting numerous mergers and international expansion to 18 offices in 10 countries. Derek was ranked by the FT as one of the top three most innovative lawyers in the UK in its first study into the legal market. Derek also led the firm’s technology team to become ranked as the most innovative in Europe and subsequently the firm to ranked as the second most innovative firm in Europe as well as picking up a range of other awards. Derek has been the relationship partner for a long list of major household name clients in a range of sectors including Automotive, FMCG, Financial Services, Food and Drink, Fashion and Construction and has a strong track record in sales and product delivery. Derek has been ranked three times in the last three years as an Acritas Star for outstanding client delivery (based on independent feedback). Derek chairs and was one of the founders of the Legal IT Innovators Group (www.litig.org) which has 80 or so of the top 100 firms as members and which plays a key role in driving ahead technological thinking and change for the good of the legal profession. In this role he has worked alongside the United Nations and a range of other large organisations. www.hyperscalegroup.com recently joined forces with two other leading advisory businesses in the fields of technology, operations and financial management to create the www.intuityalliance.com which has been referred to as the “Holy Trilogy” of Legal IT. Its purpose is to pool experience and intellectual knowhow to ensure we have a more holistic approach to how they give advice. Derek also serves on the advisory boards of several start-ups and has recently been appointed to the advisory board of the Global Institute of Innovation, which brings together around 400 academics to solve some of the world’s biggest problems.