change and automate law firmA few years ago a number of industry experts began talking about the transformation of the legal profession, and how commoditisation, competition, and automation would change the way in which law firms work. “Not us,” said the large firms. “It will only affect small and mid-sized firms.” “Not us,” said the small firms. “It will only affect the mid-larger firms.” “This won’t affect me,” said the older practitioners, “since I will be retired in 20 years”. Four years later, we now know that they were all wrong. Firms of all sizes are already feeling the margin squeeze, and South African law firms are no exception.

So how do firms meet this challenge?
One of the best ways to insulate your firm from margin squeeze is to find a good niche market. That means legal work that has not been commoditised, or a strong relationship with a Client that brings profitable business. Unfortunately there is not a lot of this type of niche work available, so for the rest of the profession it means working smarter. (Yes, I know that’s a very overused phrase, but is certainly true in the current business climate.)

But what does working smarter mean?
In a nutshell, it means achieving more output with fewer resources. Or getting more out of your people. It is always easy to employ additional staff members to handle an increased workload, since employing people is a part of business. But if you consider that each person you hire will cost you at least One Million Rand over five years, you might look for other ways to increase productivity.

Like what?
The truth is that there aren’t many ways to achieve this. Firstly, you could record time and disbursements more diligently which will increase profits. Remember that any additional fees you raise are 100% profit as they have no associated costs. The same applies to giving fewer, or lower discounts. It is all net profit. And one sure way of giving lower discounts is to bill clients monthly while the gratitude curve is still high and not only when the matter is finalised.

The old ways of forcing fee-earners to work longer hours or simply increasing the hourly rate don’t work anymore. Clients want to pay less, and the new generation of lawyers want a better work-life balance. This means that firms have to find clever ways of being more productive. Fortunately, there aren’t too many alternatives to choose from, and almost all of these alternatives revolve around technology.

Firstly, firms can give their staff better tools to work on. Given the huge cost of salaries, the cost of giving a staff member a fast computer with good software pales in comparison. Firms should also look for better accounting and practice management software, which allows them to record their time and disbursements more easily. One example of this is using a browser-based accounting system which makes it easier to work from anywhere. Another is attaching all of your documents to the actual matter in the practice management software so users can easily recall and email documents without wasting time.

But arguably the most effective ways of increasing productivity is through process automation and the re-use of information. Process automation, or ‘workflow’ as it is sometimes known allows you to create process steps which perform actions automatically (like sending emails, raising fees, generating documents, etc.) and ensure that nothing slips through the cracks. It is a bit like having a diary on steroids!

The best example of re-use of information would be where the firm creates a library of often used precedents, which allow fee-earners to generate contracts and other correspondence more quickly. There are many benefits to be had from document automation, such as improved accuracy, less proof-reading, work can be delegated to junior partners, and all correspondence complies with your firm’s corporate image. So font, letterhead, numbering, etc. are all managed by the template software.

One industry expert went as far as to say that there will be two types of law firms in the next 10 years: “Those that use document automation software and those that have gone out of business.”

So why isn’t every law firm using document automation software?
Actually, almost every law firm in the world is already using document automation software, but this is mostly where expert systems have been created for them. For example, conveyancing software and collections software which generates documents automatically. And almost all of the bigger law firms already use document automation software because they know that re-use of information is a real money-maker.

But creating a precedent bank takes some time and effort and a lot of the smaller law firms don’t have the time or the resources to design their own templates. While template creation can be outsourced to expert template designers, they can be pricey. And for lawyers who decide to design their own templates, it also takes time to learn the thirty-or-so document automation commands that are required for most templates, and many practitioners simply couldn’t be bothered to invest time in this.

One consolation is that the younger tech-savvy generation of lawyers is now reaching maturity, and they learn these types of systems very quickly. Another factor which will drive the adoption of document automation technology is that lawyers no longer have a choice. They simply have to re-use document templates if they are to remain viable in the future. And the longer they wait, the more it will cost them.

Chris Pearson is a Director of XpressDox and has been in the legal technology industry for over thirty five years. XpressDox is a document automation company which develops, sells, and supports a range of document solutions for law firms and other paper-intensive organisations.

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