“OK, so I understand that law firms need to embrace technology in order to survive going forward. But how do I do that?” This is a question I hear regularly when giving talks about the future of the legal profession. There seems to be a general belief that technology is just something that happens automatically in the background. So what should law firms do in order to truly embrace technology?
To begin with, most law firms don’t use the software products they already have. It’s a bit like owning an aircraft, but driving it to your destination! The problem is twofold: Firstly, partners at law firms simply don’t know what their existing technology is capable of, and (b) the staff is not trained in how to use the products properly.
Most legal accounting systems are really full-featured, but new employees are invariably left to fend for themselves, with little or no training from their predecessor. Over time, the knowledge of the functionality in the system gets worse and worse. It is not only true for the accounting system, but also for the desktop applications like Microsoft Office. Put simply, training on software products boosts productivity significantly. Yet most firms fail to do this.
I am often dumfounded when Partners at law firms are happy to employ more people but dead off spending any money on computers, software, or training for staff. It is no secret that people are the biggest expense in almost every law firm! And if one takes an employee with a salary of only R10,000 a month, along with associated costs (at least another 50%), that equals a cost to company of R180k a year, or roughly a million rand over 5 years. Yet employing another staff member is an easy decision!
The use of technology is all about saving time and money, and in some cases increasing fees. It is logical that if your staff is more efficient, you will require fewer people, increasing profits. In years gone by, a partner’s status would be measured by how many secretaries she or he had. Today, the situation is reversed, and it is all about the Attorney-to-Support-Staff ratio. (Three lawyers to one secretary is not uncommon in productive firms today.)
Another great boost to efficiency is where partners know how to use the software themselves. Increasingly, younger lawyers are really tech-savvy, so they aren’t the problem. But older lawyers still use their secretaries to do account enquiries and invoice fees. I would recommend that these more senior partners should begin by doing their own matter enquiries on the system – which is quite straightforward. Once they become comfortable with that aspect, they will be more confident to try other aspects of the system.
So let’s look at the products and technologies that law firms need to embrace, in order to improve profitability. As mentioned earlier in this article, a good legal accounting and practice management system is essential for future success. Firstly, all work done on a matter is captured as it happens, ensuring that no billing slips through the cracks. Secondly, most legal accounting systems offer document management functionality, where all documentation (emails, SMS’, letters sent and received) are attached to the relevant matter. Since many emails and letters will almost never be viewed after a matter is finalised, it makes sense to file these electronically rather than wasting money on printing. (Disk space is cheap.) While on the subject of files, most accounting systems cater for a dead-filing reference number which makes finding the paper file much quicker down the line if it is needed. Another function that you’ll find in most accounting systems is time recording, which ensures that all time is accounted for.
Next, although pretty much everyone uses email these days, many firms still send and receive faxes. In recent years firms have signed up for various fax-to-email services, and these services earn a share of revenue from the telco for the time taken to send the fax at an inflated call rate. It is no secret that these services are in the region of 3-5 times more expensive than sending a fax on a regular fax machine! And the cost of printing (ink/toner) on today’s fax machines is also a complete waste of money. That’s why law firms should try to avoid sending and receiving faxes wherever possible.
I mentioned document management earlier. There are major benefits to be had from creating a paperless file on your accounting system. It is not simply saving the costs of printing and dead-filing; it is also saving time on retrieval and being able to see exactly what transpired in a matter. In addition to attaching all correspondence, the user can also add comprehensive notes for future reference.
So far we have talked about email and better use of the accounting system. Another important technology is voice over IP, or “VoIP” as it is called. Most VoIP systems offer reduced calling rates, but many younger lawyers have begun using Whatsapp or Skype voice calls to communicate with colleagues and people they know, because it is free. Many young lawyers also use Skype with video for a face-to-face meeting, rather than a physical visit to the client’s offices, saving on travel time and cost.
That introduces another technology that makes a real difference: “work-from-anywhere”. By using browser technology over The Internet, lawyers and support staff don’t need to be in the office to be productive. So for example, staff members could start later in the day to miss early morning traffic. Or they could finish earlier – and continue working from home. The future law firm will also need to form strong relationships with its clients, and using work-from-anywhere the lawyer could even work from the client’s offices. Increasingly younger lawyers are looking for work-life balance, and this work-from-anywhere technology makes that possible.
Law firms will also need to innovate in the future if they want to remain viable. Not simply in marketing, but in all aspects of the practice. Here too work-from-anywhere technology promotes this. For example, lawyers on maternity leave can work from home; the firm can create satellite branch offices quickly and easily; finance departments can operate from lower-cost centres, and retiring lawyers can continue to work from retirement homes – ensuring that the relationship with their clients is retained after (semi) retirement.
Work-from-anywhere goes hand in hand with hosting your applications on a remote server. Many firms are doing this already, but it will soon become mainstream. Not only does this mean cost savings as you won’t need a server or someone to maintain it, but it also provides disaster recovery and backups are done for you.
Many larger firms use cost recovery software, which automatically records all phone calls and photocopies made, and then passes that information to the accounting system for billing. Not all firms are disciplined enough though, but for those that are, the recovery on disbursements improves significantly.
Another technology which is essential for law firms is document automation. Unlike document management – which handles the storage of information, document automation involves the creation of template precedents for often-used documents such as contracts and agreements or even letters. There are many benefits from this: Firstly, errors are minimised since most of the document is boilerplate text and does not change – which makes proofreading quicker. Corporate styles are enforced, ensuring that all correspondence looks professional and conforms to the firm’s corporate image. Junior lawyers can use precedents created by senior partners, reducing the cost of drafting agreements. This re-use of information is also one of the ways in which firms can use technology to “create more billable hours”. “There will be two types of law firms in the future: Those who embrace document automation, and those that have closed their doors!”
Another technology which has been around for years is process management, or workflow. Think conveyancing, litigation, and debt collection software. The advantages of workflow are that the system manages many of the tasks automatically, and where necessary, users are reminded about tasks that need to be completed. These systems organise the process, saving time, and ensuring that no tasks slip through the cracks. So although most law firms already use workflow for conveyancing and collections, smart firms are starting to use it for other departments too.
Many new technologies are being planned for the legal profession, some that will help the profession, and some that will not. One such technology is IBM’s “Watson” – an artificial intelligence system that will be able to dispense legal advice without the help of a human. While certain websites already provide legal content at a fraction of the cost of using a real lawyer, we are led to believe that Watson will be much more. Smartphone billing technology is also becoming more commonplace as the younger generation permeates the profession.
There is no getting away from it. Lawyers need to embrace technology in order to survive in the future, and yet it is technology that is the profession’s biggest threat. One thing is clear though: Firms that don’t embrace technology are going to find it increasingly difficult to remain profitable in coming years.
Contributed by:
Chris Pearson
AJS Legal Practice Management Systems
