The time for change is now

Unwittingly, the legal industry is at a crossroads. Not only has there been constrained revenue growth over the past five years, but increasing globalisation and ever-expanding competition (both from within the industry and via external sources) has changed the landscape. As in other professional services industries, technological advancements and innovations are seeping through and having a genuine impact on the way that the industry and clients operate.

Despite the transformative potential, fewer industries have been more stubborn to technological innovation than the legal industry. While some aspects have been embraced and successfully embedded into practice – like the use of e-discovery and case management tools – the reality is that they address operational inefficiencies rather than the underlying framework of service delivery. While using technology to streamline operations is highly important, these technologies rarely address the fundamental issue of how to best serve today’s clients in their own rapidly changing environment.

The competition keeps growing so the profession must adapt

Despite industry revenue almost stagnating – 2018-19 will see an increase of only 0.2 per cent – competition within the industry continues to squeeze the share of the pie. Increasing numbers of law students are graduating from the growing number of law schools and are competing for fewer graduate positions.
Services from new law and non-traditional offerings are growing in demand as cost-conscious clients lean toward more transparent and cost-effective services.

Their fixed, upfront fees are appealing to savvy buyers of legal services when compared to the traditional method of billable hours, often favoured by more traditional law firms.

The 24/7, digital world in which we now live means clients are more connected and aware than ever. The knowledge imbalance which has traditionally underpinned the profession is evaporating, as is the routine work which can be automated. In-house counsel teams with sophisticated general counsel and legal operations are growing in size and specialisation, meaning that work once performed by external firms is increasingly serviced in other, more efficient, ways.

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The legal profession’s value proposition, therefore, must centre on high-value strategic advice and system navigation. In other words, adding value where real value can be added.

The landscape is changing

In the dispute resolution sector alone, clients recognise that the current systems are complex, lengthy and prohibitively expensive. This is not because the current systems are without merit. It is because they are inherently not scalable, nor are they designed to value efficiency over perfection. It is all for good reason, but the unhappy consequence is that justice is often out of reach.

Consequently, the costs of litigation in court can very easily outweigh the value of the dispute itself – without even taking into consideration the value of stress and time – and clients are calling for change.

As a profession, we must provide better value for money and services if we are to remain relevant and useful to our clients and the community. Moreover, our systems need to be accessible. Justice must be available, which means it should be affordable, timely and meet client’s demands.

There’s profitability in technology adoption

The legal industry and the firms that operate within it trade on their reputation, their expertise and in most recent years, their price. In fact, as competition within legal services continues to grow, there has been an industry-wide decrease in profit margins, with many law firms – especially in areas of low margin work – lowering their costs and pursuing off-shore options in order to secure clients and keep costs down.

In order to maintain and increase profitability moving forward, it’s crucial that law firms – and the industry as a whole – take steps to meet the client’s demands.

For many, this means embracing technology and the potential of innovative platforms are a key to streamlining not only workloads but also the foundation of the legal industry and its perception in the eyes of clients and consumers.

If we fail to embrace innovation, there is a risk to the continued growth of the industry and its revenue. We operate in an extremely crowded market and despite the deep expertise and breadth of services available across the board, we must listen to the concerns of our increasingly connected and price-sensitive clients and adjust our methods to meet those demands accordingly.

Laura Keily is the founder of Immediation.