Big Law, Big Legal Tech?
Most partners, associates, silks, juniors and even trainees and pupils are aware of the often reiterated status of the legal profession as ‘recession proof’. No couple of years have proven such a professional folk tale true as those of the early 2020s and late 2010s. Quite unlike the relatively light squeeze and sluggishness of 2008, for legal businesses, the pandemic years have caused the oncosts of law practises to deflate, while revenues have contrastingly ballooned.
This of course is, in general, and depends on the practice in question. The result is fewer operating costs; less travel and office expenses, as well as a technologically charged workspace, where instantaneous communication and agile document platforms have replaced turgid meetings and ring binders.
Across the legal sector, profits have risen, on average, by more than 6%. This trend shows little sign of slowing down either, lawyers looking to the horizon can see that states around the world are on a trend towards more regulation, spurred on by bloated supply chain snarls, climate crisis damage control, as well as emerging antitrust movements aimed squarely at big tech oligopolies and their various platforms.
Moreover, on the private equity side, the mechanics and influence of ESGs are galvanising investors to be more cautious and choosey with their capital, creating a greater level of requisite due diligence for funds, as well as private and public companies, to have to satisfy in order to remain attractive to an increasingly fastidious investor base.
Global, national and local businesses will need the help of law firms of all corresponding sizes to successfully navigate the times ahead, creating a lucrative prospective upswell in demand for legal expertise. And yet, with all this sanguine news for lawyers, it can be tempting to forget that the legal sector has its own rapidly developing challenges and pitfalls, most strikingly and predominantly in relation to intra-sector and extra-sector competition.
Just as almost all other areas of the global commercial ecosystem are seeing a marked increase in bureaucratic controls, the law, passing in the opposite direction, is adversely deregulating. The SRA’s new SQE qualification programme is a sharp reminder of this. Designed to improve access to qualification in legal practice, it is intended to create further competition in an already competitive sector. To partners, law firm managers and existing practitioners this might not seem like something worth being concerned over, as ostensibly this simply means more prospective candidates to choose from when recruiting new legal talent.
However, the trainee and junior lawyers of today are bound to be the partners and practitioners of tomorrow, which means even more long-term competition. Without a training contract bottleneck, which the SQE functions to obviate, the supply of solicitors might well further outstrip the demand in the coming years.
All this competition might not be a problem if the legal work was shared around equitably. However, this is unmistakably not the case, as a select group of dynamic magic and silver circle firms have an increasing propensity to hoover up commissions, denying any chance to share in extant work, from not only their competitors of financial and scale parity, but also those of smaller national and regional firms. High street practices should also be increasingly wary of this tendency, as mega firms rarely start out that way, and with the increased commercial flexibility these larger firms can bring to bear, engendered by legal support and remote working tools, there is the possibility of more sizable firms muscling out smaller practices, or indeed smaller practices outmanoeuvring other high street competitors.
The situation that lawyers and law firms are facing currently is one commonly seen in the natural world. When an incumbent population acquires a sudden uptick or abundance of an energy source, it will rapidly proliferate in accordance with the extra space for growth. However, external factors aside, this population will almost always overshoot the equilibrium – endeavouring to consume more than is sustainable.
This eventuality is worsened in market conditions, where strategised business competition effectively forms a zero-sum game. Practises with agile enough managerial systems and the best legal software can artificially stretch their capacity for workloads, so as to achieve economies of scale and begin to massively outcompete their less efficient competitors, in a way that is effectively not paralleled in the natural world.
These market truths have led the most forward-thinking and competitive firms to embrace the managerial structure of their corporate clients. Partners and strategists in these practices will readily discuss their common belief that the law has too long been a hermetically sealed industry that relies on outmoded methods and models of business.
This being said, transforming the way firms and practices operate will not just be a managerial effort, but a technological one also. This is not a new revelation, even before the digitising ramifications of Covid-19, legal tech startups were beginning to sprout up at an increasingly heated pace, with legal tech ideas and patents seeing a 484% increase since 2017.
Some larger firms, such as Clifford Chance, have set up their own R&D branches, researching, among other things, methods and strategies for developing their own digital legal products to be sold to their corporate clients as digital solution packages, such as smart contracts, as well as supporting their own native lawyers through ease of life enhancements, like legal task delegation software.
Models of legal tech incubators such as these are feasible for large legal firms, who can absorb the costs of R&D and have the managerial flexibility to be able to integrate their solutions, through a process of trial and error, into their firm’s ecosystems. This is a far more difficult challenge for smaller and mid-sized legal practices, who may not have the corporate structure, personnel or resources to pursue home-grown legal tech options.
For these more localised and bespoke law firms, the ability to get into legal tech is one that must instead be pursued through outsourcing the expertise of legal tech companies whose legal IT software is developed specifically for their business model.
Indeed, any in-depth appraisal of the current legal landscape will invariably generate the same conclusion: failing to ‘go digital’ will soon equate to failing to effectively compete. This reality means that it is a foregone conclusion that legal tech will soon be a ‘must’ rather than a ‘maybe’. This does not mean that the competitive edge legal tech offers will be rendered obsolete through the mass adoption of it. Quite the opposite, whether a legal firm becomes insolvent, simply stays afloat or thrives will rely not just on their adoption of legal tech software, but also on how compatible and well-matched their chosen legal tech provider is with their practice.
Legal tech does not serve to replace lawyers or minimise their roles but instead is an extension of their professional capacity as advisers, negotiators and strategists. It logically follows that the support software a law practice adopts should be an uninterrupted extension of their professional ethos and mode of operation.
This is something especially lacking in the legal space today. Most of the major law technology players are almost exclusively using two particular business models:
- Prioritising a larger firm target market, to maximise their profits in high-value sales.
- Using the ‘one size fits all’ system of legal tech, where the same technology is distributed to all practices without any credence paid to the size and workplace culture of the firms to which this legal software is being distributed.
These two models have left many small to medium-sized firms without a viable or optimised legal tech support system to integrate their practice. Take Customer Relationship Management or CRM software for example. CRM technology is incredibly important in ensuring that firms retain and grow a good relationship and goodwill with their customers. Having an efficient and bespoke system that can provide unique contact points and reminders is incredibly important in ensuring that customers feel catered for and considered.
However, despite the recognised importance of client-side legal tech systems, such as CRM, few to none of the current legal tech providers are taking steps to provide appropriate and specialised software to smaller firms. Currently, legal practice CRM for midsize legal firms and legal practice CRM for small law firms are woefully unoptimised and uncatered for.
This is a space that needs much more attention, as regional, local and high street firms and chambers make up an important part of the legal ecosystem in the UK. Providing tailored and specialist advice to clients, in a manner that should be retained.
This is exactly one of the gaps Good Law Software aims to remedy. Our software is created with qualified lawyers’ input and designed around these needs and requirements. We also listen to our client’s feedback to ensure that our systems do what our clients need in a comprehensive and easy to use fashion, with no hidden costs.
Indeed, GLS’s origins can be traced back to an intimate legal practice that prioritises customer satisfaction and consistently providing good advice over attempting to secure only high-paying, high-margin clients. This ethos has been imputed into the GLS software package.
We believe that the future of law, while digital, need not be led and solely represented by giant corporate-esque firms, but also by the diverse, thorough and personal practices that make up the backbone of the UK legal system. It is for this reason that we aspire to provide this cornerstone of firms with the legal technology they need to stay competitive and to stay indispensable.