Modern Lawyer Feature – Making the case for lean innovators over legal luddites

Research by the Legal Services Board into the sector’s use of technology1 has found that fewer than 5% of law firms in England and Wales use technology-assisted review, predictive technology, robotic process automation, blockchain, or distributed ledger technology.

Reporting this as the headline finding, a comment piece on the legal pages of The Times described lawyers as “complete Luddites” and ended by saying, “that pretty much leaves word processing and email as the extent of the UK legal profession’s expertise”.

Reading this, I didn’t recognize the law firms I engage with each day. Our SME firms range from £2m to £25m in turnover, so there’s a broad spread in terms of tech adoption, which is inevitably driven, or constrained, by access to resources and potential return on investment.

But the one common theme is an open attitude towards innovation.

In making its jibe, The Times was overlooking the bigger picture on tech adoption reported by the LSB, which shows video conferencing being used by 80% and around half using cloud-based solutions, ID checking tools and electronic signatures. This is considerably more than “word processing and email”, but the research does highlight a slowdown in adoption, with the amount of firms investing in new or improved services down by six percentage points since 2018.

These operational management solutions are almost universally embedded in the day-to-day for our member firms. Also evident in our network is a broader solutions-focused agenda towards facilitating compliance and combating cyber threats, as well as prioritizing enhanced client experience.

These higher levels of adoption may be because our members share experiences with each other, which can inspire collaborative learning and innovation, and because the support structure of LawNet gives them access to vetted specialists and expert knowledge that are more typically the preserve of bigger players

Certainly, the LSB research highlighted that there were distinct patterns by firm size. As size increases, so too does the likelihood of using external organizations for ideas and information. Meanwhile, the most common constraints identified were a lack of IT expertise within firms and the risks of unproven technology.

We conduct our own benchmarking research across our network, in areas such as finance and management, customer experience, as well as IT adoption and innovation. These are not conducted as a litmus test like the LSB, but to identify how best to steer our support strategy and for members to share experiences and identify proven solutions.

Solutions-focused risk strategies

Among our firms, risk-focused strategies built on tech foundations range from protection to leading edge compliance mitigation.

For protection, we see firms securing their operating environments with standardized access controls while also increasing risk-aware capabilities and mindsets, by proactively involving their staff and their clients.

Consultant David Baskerville is one of the legal sector tech specialists guiding and supporting our network members, and the lead advisor on our IT benchmarking. His insight from working with individual members, combined with the bigger picture from regular surveying, gives a unique perspective on SME law firms.

“We see protectionist solutions and a multi-layer approach to cyber security across firms,” he says. “The majority have Cyber Essentials or other certification in place, such as through ISO, and toolkits such as Mimecast or Microsoft Defender. Many are doing penetration testing and social engineering testing, and all have adopted multi- factor security, where access requires a code sent to the mobile number on the account.”

This level of adoption is significant compared with the LSB research, which found that three in ten firms surveyed were not currently using cyber- security measures.

“Tried and tested mainstream products are the best option for cyber risk. Firms can consume advanced technology, but through a commoditized solution,” David adds.

Also on the agenda among members are innovative, sector-specific solutions to deliver added value in risk management. According to Grant Sanders, partner and practice manager at South- coast firm Stephen Rimmer LLP, there is a huge opportunity ahead for firms in regulatory compliance.

He explains: “Many firms, large and small, still rely on reactive, paper-based systems to manage compliance. Some software solutions are available, but tend to be more sophisticated filing systems, rather than tackling the bigger challenge.

“There is a huge opportunity for proactive, tech- based management of compliance, automating, and consolidating different regulations and accreditations, such as the SRA Accounts Rules, anti-money laundering and GDPR. For the past two years I’ve been contributing to the development of a start-up that has been conceived as a comprehensive compliance dashboard.”

When live, the REG1 platform aims to unify front- line transactional data and compliance rules to automate routine tasks and proactively identify and address potential issues.

“This sort of approach has the potential to revolutionize my role as COLP, and every firm should be open to minimizing regulatory breaches and associated cost to the bottom line and reputational value,” he adds.

Customer-focused enhancement

Transactional relationships, where clients gave their instructions and then left it up to the lawyers, are long gone. Speaking to our network members, a driving force for IT adoption is often whether it makes the firm more efficient while better serving the client.

We see tangible impact in adopting a client-centric approach among our member firms. As part of our mandatory ISO 9001 LawNet Quality Standard, which includes a benchmark for customer experience, firms must take part in external monitoring of their client journey. With some 9,000 experience reviews and 100,000 client satisfaction surveys undertaken during the past ten years, we have a wealth of data and insights for firms to draw upon, across all aspects of the business. They are encouraged and supported towards improvements, with targeted learning where needed.

This is crucial. One of the most important aspects of a client feedback program is to have a process in place for acting upon the feedback and, importantly, communicating action back to the client. When Thomson Reuters undertook its State of the UK Legal Market Report 2023,2 fewer than one-third of clients said they had been asked for feedback by their law firm and, where it had been given, fewer than half of respondents noticed any change in service as a result.

As the Thomson Reuters report goes on to say, “The key lies in understanding and meeting client needs…” with business clients saying they are actively looking for greater innovation and tech adoption by the legal sector. More than three- quarters of law firms taking part in the survey recognized this, saying digital transformation was a high or medium priority, with 43 of the top 50 UK law firms saying they have appointed a chief technology officer – or a c-suite-level tech specialist – to drive this transformation.

While the focus of the Legal Services Board is on how consumers can engage with firms from micro level upwards, the Thomson Reuters sample lies at the other end of the spectrum, focused on global law firms and their major commercial clients, the majority of whom have turnover in excess of £800m. At this level, tech innovation and c-suite appointments are unlikely to be subject to budgetary constraints, unlike smaller law firms, yet we see equal commitment at some of our member firms, as an enabler to exceed client expectation.

At niche commercial property firm Stepien Lake in London, David Jackson is chief technology officer, a board level role alongside chief executive Richard Hill, who describes the “added value” a CTO brings to the firm. Their headcount is around 25, but their client deals range up to £500m and they are frequently dealing with Top 20 firms on the other side of transactions. This positioning translates into their commitment to tech. As Richard says, “There is no room for complacency, because you can’t service our clients unless it’s an excellent service, and part of that is ensuring that we have the technology in place”.

The firm has a bespoke client-facing extranet and app to manage property transactions, portfolios, developments, and investments. This was built more than ten years ago when there was no ready-made product on the market. More recently, they have adopted off-the-shelf solutions to bolt on to their existing infrastructure, such as Orbital Witness, which has its origins in MDR Lab – the Mischon de Reya tech incubation hub. This platform is revolutionizing the way the firm walks the client through a site, reporting and enabling downloading of documents and Land Registry titles. This is making service quicker and easier, while enhancing the standard of presentation for the client.

This reflects the firm’s metric for successful tech adoption – added value for the client. As Richard explains, “We don’t want to make conversations just around our fees. We want to show how the service from the firm can make life easier and better for the client.”

Revolution waiting in the wings

When the Solicitors Regulation Authority commissioned Oxford University to undertake research into Technology and Innovation in Legal Services (2021)3 they found fewer than 2% of firms surveyed were using blockchain or distributed ledger tech, with 8% saying they planned to adopt it in the future, but that left 90% of firms saying it was not on their futures list. When the LSB researchers asked the same question a year later, the number thinking about adoption had shifted very slightly, rising to 12%, with still just 2% having taken it on board.

This is reflected in our network – adoption of distributed ledger technology for service delivery is not prevalent among our members, but we find this is less about resistance and more about being laser- focused on benefits. As David Jackson, Stepien Lake’s CTO says, “If we are going to invest a lot of time, a lot of money, a lot of effort into something that will maybe not get traction in the marketplace, then it’s better to wait and watch the landscape unfold further.”

The other area that is subject to many a prediction, but fewer concrete examples, is generative AI. The Thomson Reuters research says one-third of law firms globally are considering adopting generative AI, with 80% of law firm leaders believing it can be used for legal work.

It’s the hot topic on everyone’s lips, but it’s already seven years since we held our annual conference on AI, looking at “How today’s technological vision will become tomorrow’s reality”, with IBM Watson’s legal sector lead and a range of tech practitioners in professional services joining the debate.

From that day’s event, it was apparent that our firms were keen to step up, but wanted support in deconstructing big concepts to make meaningful interpretations appropriate for firms of their size and type. We formed a focus group comprised of legal IT specialists, managing partners, and senior operational staff, to help us understand how best to support member firms in this area.

Fast forward to today, and while many offerings are being sold as “AI”, much is re-badging of existing tech, such as for dictation or cyber security, so it can be hard to register true levels of adoption.

According to the LSB reports, areas likely to see greatest impact from AI in future are more complex solutions such as technology assisted review, predictive technology, automated document assembly, and robotic process automation.

One of our member firms at the vanguard is Cleaver Fulton Rankin in Belfast, where lawyer Kerry McCloy is the firm’s innovation and legal technology director. The firm has established a well-earned reputation for breaking boundaries in embracing tech – its legal technology group,4 headed by McCloy, provides innovative managed document review and eDiscovery solutions.

By leveraging cutting-edge legal technology and AI analytics, combined with trusted and efficient workflows, the firm has streamlined its eDiscovery process for high volume, document-intensive legal work, serving nearshore law firms and public sector bodies as well as its own in-house legal teams. This enhancement of the firm’s service offering has led to new opportunities in new markets and ultimately an increase in revenue.

Getting out of the saddle

Wider adoption of innovation may be down to lack of insight, by both firms and clients, as to what may be possible. As Henry Ford said, “If I had asked people what they wanted, they would have said faster horses”.

This can be reflected in the constraints some firms may find in their practice management systems – they are scoping the requirement while standing in the stable, rather than on the highway.

At Stepien Lake, Richard points to the importance of looking outside the sector for new ideas, flagging the challenge of inflexible practice management systems that try to please all lawyers, and lead to compatibility headaches.

In Darlington, managing director and private client lawyer Liz Armstrong took part in a management buy-out of agricultural and private client specialists Latimer Hinks early in 2020.

Overhauling the practice management system was always part of the plan but became a top priority when the pandemic struck. She explains, “Introduced in 2012, the previous system had been imposed and remained static ever after, creating frustrations for users across the firm. When it came to overhauling our tech, we knew we had to involve everyone.”

Dissatisfaction and disengagement from IT is a common problem reflected around the sector, says David Baskerville:

“Firms want a simple turnkey solution, so when they are told this is it, just turn it on and your problems are sorted, there is relief. They have an answer to something they don’t properly understand. When it doesn’t work, firms switch off. The problem may be a poor system, or the wrong system for that firm, but any system requires more than financial investment to make it work. We have to recognize that the IT industry itself plays a part in why some law firms are not adopting technology.”

At Latimer Hinks, Liz Armstrong says their journey would have been like seeking a needle in a haystack if it had not been for independent guidance from David and another consultant who provides their IT and hardware support.

“This was a major project and we needed to get it right,” she says. The firm established a user panel, encourages clients to take part in troubleshooting, and has built on the system incrementally. That journey has included adopting subscription-based bolt-ons, which helped reduce concerns that may arise when investing lump sums in tech that could prove unworkable or become redundant once out of the box.

Clearly, money can be a powerful barrier to innovation, but much is being achieved by smaller firms. At 55-strong, with 25 fee earners, Latimer Hinks is funding enhancements and embracing solutions that places it ahead of its peers.

Innovation on a budget

The Oxford University / SRA report5 found many firms believed they did not have the money to innovate and adopt technology, in part because they were focusing on high-end, expensive, bespoke, or more advanced solutions.

The authors went on to say: “In reality, for many firms the best opportunities will actually come from embracing simpler, more common or generic technology. We will therefore look into how we can challenge this perception by collating and sharing information on the typical costs of common technologies and innovations.”

This reinforces two important factors we know from our own network experience.

Firstly, that sharing knowledge can inspire innovation. The style of benchmarking we conduct, with ideas and information shared openly between peers, is a clear driver of innovation, with adoption directly linked, as evidenced in subsequent surveying.

The second important consideration is that technological innovation doesn’t have to be ground- breaking or expensive to create appreciable gain.

Efficiency and cost control are universal priorities, and these may be achieved through simple process or communication improvements to release fee earners and support staff for more valuable activities.

A good example of this can be seen in recent projects focused on the simple matter of print resources at two of our member firms. Alongside its ground-breaking AI-enabled eDiscovery offering, the innovation strategy at Cleaver Fulton Rankin recently included a project to overhaul its printer and telephone infrastructure to better support a flexible working model. The streamlined printing solution reduced the number of devices by 60%, reduced print volumes by more than 10%, and cut costs by a quarter, while better serving a hybrid workforce. It also had a significant impact on environmental targets, with the project anticipated to generate a reduction of 57% on CO2 and 77% on kWh for the firm’s printer resources. By enabling a significant reduction of its carbon footprint, the switch to a managed print solution has also considerably aided the firm on its journey to reduce its greenhouse gas emissions by 50% by 2030.

Another member firm achieving efficiency combined with environmental improvement through process change is Mercers in Henley upon Thames. Senior partner Peter Hopkins is passionate about the need for the sector to face up to climate change and the firm has gone to war on paper, closed one office, and switched to a 100% renewable energy supplier. In just one year, its paper usage dropped by more than 75% and the firm’s overall carbon footprint was cut by 35%.

As Peter explains, “Tech has not played a huge role, but our journey to paper-lite included a move to bundled software and secure file-sharing portals to reduce printing”.

Mercers also encourages staff and clients to have meetings online to avoid unnecessary car journeys and uses electronic biometric identity checks to cut the need for clients to make trips into the office.

These may all be small things, using commonplace tech, but incrementally they can influence a significant shift.

Conclusion

So, enough of the “Luddite”. Let’s recognize and celebrate the lean innovators in the sector – much of which is led by smaller firms on a tight budget.

With all the evidence showing that innovation is faster when you share, let’s collaborate more. One has only to look at the outcome of the openness between scientists seeking a vaccination for COVID-19 during the pandemic to see how this can be a game-changer. Benchmarking against others can be another major driver of improvement.

Most importantly, let’s listen to staff and clients, to understand where improvement is needed and ensure they are on the journey and feeding back as change is implemented.