There’s more and more evidence that law firms are innovating and applying more technology in their service delivery models, but they could do a little better job telling their clients about it. That’s one of the conclusions to draw from the latest Law Department Operations Survey, the 13th annual survey published by the Blickstein Group.
The legal operations professionals that are the subject of this survey have their pulse on the state of technology-enabled service delivery. They’re the ones making the calls on their own organizations’ use of technology, or alternatively, they are engaging with outside organizations - whether it be law firms, Alternative Legal Service Providers (ALSPs), or other forms of outsourcing - to find areas where technology can enhance productivity, reduce costs, and increase quality.
Their opinion of outside counsel’s technology and innovation capabilities is inching upward, according to their survey responses. 51.7% of them say that law firms are leveraging technology to deliver legal services more effectively and cost-effectively.” That’s up from 50.9% in last year’s survey. And 36.2% think that “our law firms are innovative,” up from 32.6%. That’s not a ringing endorsement, but it does show that many in-house organizations are recognizing their outside counsel’s innovation, and that the confidence is growing.
The more telling data point in the study, however, is that an overwhelming number of respondents - almost 90% - say they “would appreciate law firms approaching us more frequently with new legal service delivery models.” The report concludes, “so while it seems that LDO professionals believe that their law firms are becoming more innovative, they do not necessarily feel that those innovations are executed or offered to them in any systematic way.” It’s as if law firms are locking their innovations up in a vault, shielding them from clients.
Law firms should feel some urgency around doing a better job selling their technology and innovation capabilities. In-house legal ops teams have alternatives. For one thing, they can bring work back in-house; 74% of respondents said they are actively trying to cut costs by bringing more work in-house. But another source of new service delivery models is ALSPs, which can devote technology and human resources to many types of legal work at scale. 32.1% have increased their spend on ALSPs in the past 12 months, and 37.7% expect it to increase in the next 12 months. Confidence in the ability of AI-based solutions to handle much of the workload is up; 64.9% think that most law departments will be using AI for legal work in the next three years, compared with 58% who thought so last year.
These data points open a window on a paradox in the progress of legal technology. Many law firms truly are innovating their service models and leveraging technology to a greater extent than before. The 2020 Report on the State of the Legal Market from Georgetown Law and Thomson Reuters points to many examples of innovative responses from law firms, including increased integration of legal operations professionals; better internal systems for practice management and knowledge management; a shift to more effective pricing strategies; expansion of partnering and outsourcing, including the creation of “captive” subsidiaries for technology and process-intensive work; and some are even investing in their own software development operations and “productizing” offerings. But if these practices are indeed spreading, the Law Department Operations Survey shows that not all clients have received the memo.
A big part of innovation is being able to communicate and partner with clients around changing practices and delivery models. Many law firm innovation activities are internally-focused, however, and even solid progress is not always visible to clients.
One way law firms can address this gap is by working with technology partners that understand this business development imperative. At Kira Systems, we don’t just provide technology; we partner with customers to understand their vision of exceptional client service, and we help them get there. This can include helping them with client pitches; strategizing on how to maximize the scope of review within a specified budget; or figuring out how to get the most information to the client in the shortest time frame possible.
We have observed that many law firm partners like to think of themselves as experts - and they are, in their legal and business domains. When it comes to technology, however, they are less comfortable speaking with clients. That’s where a firm’s technology partners can really help the firm, and its clients, identify opportunities for new and expanded services.