UK's Legal Sector financial losses in 2021 due to time wastage

Written by Shrisha Sapkota
Written by Shrisha Sapkota


case management software, practice management software, legal accounting software, legaltech, technology for lawyers, case management, immigration, london, united kingdomcase management software, practice management software, legal accounting software, legaltech, technology for lawyers, case management, immigration, london, united kingdom

The speed of the legal business today is unprecedented. The pace of change, demands on lawyers’ time, and breadth of knowledge that they need to access, process and manage is reaching new levels.[1] Today’s legal practice management solutions are easily adaptable and scalable to any size firm, from the solo practitioner to the corporate in-house legal department to the largest global firm.[2]

For attorneys, there is scarcely a moment of any workday—and likely many weekends— where they aren’t consumed with something to do with their jobs.[3] As a legal professional, properly filing documents is one of the biggest tasks that they have to tackle. The time constraints are non-negotiable and making sure everything is properly formatted takes up a big chunk of the day.[4] But a report from the Thomson Reuters Institute (TRI) indicates that firms are knowingly spending too much time on tasks that don’t make them money.[5] The aphorism ‘time is money’ is particularly true for law firms. Productivity is critical to a lawyer’s success. However, surprisingly, an average law firm could be losing out on £2.7 million of lost revenue every year due to lack of productivity.


[6] Professionals in every industry can and do fall into habits that eventually cause time management to put a drag on workplace efficiency. For legal professionals whose lives are ruled by deadlines, it can be hard to break out of time-wasting ruts.[7] Some firms have concerns that clients will find it off-putting to be contacted by a salesperson.[8] Lawyers and paralegals lose as much as 2.3 hours a week searching, but not finding, the right documents and another 2 hours recreating documents that can’t be found. Time wasted in document creation and management activities cost firms $9,071 per lawyer a year or a 9.8% loss in the firm’s total productivity.[9]


While it isn’t possible to be 100% efficient, firms can find benefit from simply striving to reach that goal even if just with incremental steps.[10] Some of the most overt sources of waste being cut are administrative tasks. These tasks are labour intensive, low margin, and at worst, unbillable. The most wasteful administrative tasks are those that require the expertise of an attorney rather than a full-time administrative assistant or clerk.[11] By reducing the time spent on these particular tasks, firms are increasing margins and face time with clients. When you consider that consumers expect a greater level of customer service when they choose to engage a firm over a DIY solution, this is a true win-win.[12] Any law firm possesses, and uses, a tremendous amount of valuable information in the form of previously performed client work, results from litigation law softwares and client experiences. To make such business treasures available to all lawyers in the firm in order for them to be able to use advanced automation and analytics tools to rapidly condense exactly what is required in a particular case will not only save time spent but also increase the throughflow of legal cases and improve end result quality.[13]


Procrastination is a significant cause of wasted time. Usually, a particular task is delayed because it is big, difficult or complicated. Of course, the best course of action is not to avoid these tasks; they do not go away. The best course of action is to confront the challenge of the task.[14] . In a 2020 Thomson Reuters report on the State of Small Firms, 57% of firms with fewer than 30 attorneys acknowledged that lack of internal efficiency is a moderate to significant challenge. And 74% of small firms reported challenges with spending too much time on administrative tasks rather than billable work.[15] The data from a September 2012 IDC white paper report found that information workers (including lawyers and other professionals who are connected to the Internet and create, edit, review and/or approve electronic documents) spend 11.2 hours a week dealing with challenges related to document creation and management. At least six hours of this is wasted time.[16] Data from the SRA shows that the number of regulated firms fell by 1.9% between December 2019 and December 2020 (from 10,278 to 10,080) with 426 new law firms opening and 539 closing. Legal Aid firms have struggled the most with over 70 closing since April 2020. The CLC reported that there were 11 fewer practices that they regulated at the end of 2020 compared to 2019.[17]


In looking at the legal trends we’ve seen this year, we see that while law firms have a path to new growth opportunities in 2022, it won’t be an easy one.[18] As the legal sector adapts to a post-pandemic world, a more profitable and efficient law firm is one that is able to reduce costs while embracing change to improve service to clients and grow the firm.[19] Recent data from various sources suggests that the legal sector in the UK has remained fairly stable throughout the pandemic. It is clear that there are some areas of the law which have suffered, but the general trends in numbers of regulated lawyers seen prior to the pandemic have continued and there is no significant change.[20] Even before Covid-19, lawyers acknowledged they were tech laggards. A Gartner CEO survey from December 2018 found that legal departments positioned to support digital business efforts can increase on-time project delivery by 63% and increase the number of digital projects with appropriate risk management measures in place by 46%.[21] Now, a few years on, with most firms engaged in a phased return to offices, there is general agreement that hybrid working, and communication, and at least partial digitalisation of law firm operations is here to stay.[22] A report shows that the sector faces a fresh set of challenges – including attracting and retaining staff, remote legal work, and the risks from cyber-crime. The survey, from accountancy and professional services firm Smith & Williamson, finds that almost half (47%) of respondent firms reported an improved outlook for their firms over the last 12 months, with 43% saying that the situation remained the same.[23] Covid-19 turned out to be profitable for most law firms. UK-based international firms reported record earnings in their first full year of trading during the pandemic, and by the end of 2021, Crowe’s Law Firm Benchmarking survey found that 91% of City firms and 75% of regional firms reported increased profits.[24] The top 50 firms generated revenue of £19.5bn up from £18.7bn the previous year. While this was an increase of 4.3%, it was the second lowest annual increase in the last seven years.[25] Consequently, operating profit margin fell from 32.0% to below 30.0% at 29.8%, the lowest level and biggest movement in the last seven years. While these changes might seem small, this reduction in operating profit resulted in £430m less profit being earned by the top 50 firms.[26]


As the technology in the legal sector adapts to the new digital economy, a more profitable and efficient law firm is one that is able to reduce costs while embracing change to improve service to clients and grow the firm.[27]


Here are some ways law firms can help in improving efficiency and reduce time wastage:

Examine the firm’s marketing efforts:


A law firm must understand which marketing campaigns work, and drop the ones that don’t. By allocating unique telephone numbers to each campaign, the law firm can use software for law to give real-time data that shows where their biggest ROI is.[28] Understandably after the pandemic, the one area that has thrived has been with private clients, with some firms reporting a four-fold increase in enquiries and instructions, especially around wills, power of attorney, trusts and tax planning.[29]


Be Organised:


In a more recent report, a 2015 impact study on electronic content management conducted by the Association of International Information Management Professionals (AIIM), indicates that one in four workers fail to conform with document management and retention rules.[30] The most obvious and persistent thing to blame for time loss: disorganisation. Maybe this means needing 10 minutes just to find the file that is needed next, or maybe the lawyers have an overarching issue with scheduling, and the appointments and deadlines become casualties.[31] As frustrating as these interruptions can be to a law firm’s workflow, they can also potentially damage the law firm’s profitability.[32] If attorneys can’t organise their work-life, productivity is likely to suffer.[33] Most firms are “dismal” at following up on what was decided at a retreat, which makes it not worth it. “Better not to stir up the creative juices at all than to do so and then let them dry up from lack of action,” writes Ellen Freedman, a certified legal manager, law practice coordinator of the Pennsylvania Bar Association and president of Freedman Consulting in Lansdale, Penn.[34]  Maintaining a relatively clean and organised workspace can surprisingly work wonders on the overall law firm profitability. A streamlined workspace and appropriate filing rules cuts down on time searching for documents, thus creating more time for billable hours for the attorneys and a focused environment.[35]


Matter management tools:


Many firms still rely on Outlook for daily calendaring, but Outlook is not designed to meet the special needs of attorneys. Practice management solutions provide automated rules-based calendaring. Instead of calculating dates based on a review of local rules, the system does it for you. When the rules change, your provider updates the rules, not you. Plus, if a date changes, other associated dates can be automatically moved.[36] Many personal information management tools offer the ability to help you transform a lawyer’s email into an actionable item on their calendar.[37] The legal title management and calendaring applications and lawyer software perform all the tasks associated with titles along with giving lawyers quick insights of what all tasks they have to do on that particular day.[38]


Time & billing tools:


No attorney would say that he or she enjoys tracking billable time, but most would agree that it’s a necessary evil.[39] Many practice management solutions also include tools such as billing timers, automatic collection of time spent on various tasks, and time entry templating. These tools for law help you bill as much time as possible, with less effort spent on tedious time entry.[40] If lawyers know where ALL the time has been spent, they can adjust and shift resources accordingly to maximise efficiency and use of time. They might be spending 7 hours a week on a task that could be or should be outsourced or handled by a non-billable employee.[41] It is a simple exercise that will show you exactly where you are wasting time.[42]


Mobile working:


Remote working has been a commonplace term for many years, with some firms having spent years and large amounts of money ensuring that some employees were able to work from home prior to 2020. As a result, for some, it was just a case of scaling this to encompass the entire company when lockdown hit.[43] Firms are notoriously slow at adopting new technologies, but failing to embrace new legal tech software is a missed opportunity to cut costs, improve the bottom line and provide better links between lawyers and their customers.[44]


Remote working has proved a hit within legal and wider industries as a whole, and many firms are reacting accordingly. Even post-lockdown, 86% of UK employees want to continue working from home for at least one day a week, suggesting that the future of working could see a much more flexible approach in relation to office working.[45] Cloud-based company Clio’s 2020 Legal Trends Report released in early October found that 85% of responding firms are using legal softwares to manage their practice, 79% store data in the cloud and 83% hold virtual meetings with clients.[46] Applications are available that provide secure access to all the information needed to do the job from a mobile device. The lawyers can even access and use their desk phone from a mobile; this consolidates the work communications, helping them monitor their billable hours, and means that the lawyers can provide a consistent and professional service, no matter where they are.[47]


















































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