Digital transformation is probably the main challenge facing law firms and companies today. At the same time, it is an unmissable opportunity. In a traditionally conservative sector, with a very particular culture, known for typically being a 'late adopter', getting there first can mean getting further.
The adoption of legal tech tools is nothing new. There are countless software and tools available on the market for managing legal and arbitration proceedings, drafting and managing contracts, e-discovery, litigation analytics, compliance, etc. In a future just around the corner, each practice area will have at its disposal a portfolio of tools designed to automate legal tasks or make them more agile and efficient. The use of legal tech is inescapable for any law firm. However, implementing these tools is just the tip of the iceberg. The real challenge lies in learning from other sectors and industries and undertaking a real transformation of the operating model.
If we look at service sectors that are not very different in their business model, we can immediately identify several areas that are already benefiting from the adoption of data-driven strategies, i.e. based on advanced data analytics using artificial intelligence (AI) and machine learning (ML) models and algorithms. And, truth be told, between timesheets, records of performance indicators, invoicing, time, resource allocation, etc. it's not hard to conclude that the legal sector is a data-intensive industry. The challenge is therefore to exploit its potential and draw knowledge from it in order to make better decisions, streamline processes and achieve efficiency gains. All the while ensuring compliance with regulatory and, above all, ethical standards which, in any case, but especially in a law firm, cannot be overlooked.
In an increasingly competitive sector, it is essential to allocate work optimally (giving it to the lawyer or team that historically performs best) and to accurately predict the cost/hours to be spent on a given project or task. Only in this way will it be possible to present the client with alternatives to the 'billable hour', i.e. a fixed amount that involves a low level of risk for the firm and is at the same time competitive for the client. The use of AI and ML algorithms makes it possible to track, group by cluster and compare historical data in order to predict the performance of lawyers and teams, guaranteeing optimum allocation and an accurate cost estimate.
Similarly, business intelligence based on internal and external data that transcends the limitations of personal contacts and knowledge, as well as support in the expeditious preparation of proposals based on a database that, in a structured way, gathers, groups and filters the experience of the firm and its lawyers, promise to radically change the traditional business development model.
Without pretending to exhaust all the learning and parallels with other sectors of activity, I would venture to say that talent management will be one of the challenges that will benefit most from a data-driven strategy. The use of data in talent management makes it possible to take a predictive approach to future medium- and long-term needs, map existing skills in the organisation and identify the skill gap in order to build a hiring plan tailored to the future needs of the sector and the office in particular. It's not difficult to foresee that the skills required of a lawyer in the next 5 or 10 years will certainly not be the same as those that firms are looking for today, whatever their specialisation or area of practice...
Data analysis supported by AI and ML algorithms also makes it possible to change the approach to retaining talent, predicting the likelihood of a lawyer leaving (churn) and identifying how critical they are to the organisation. The use of data analytics will make it possible to address a historic challenge for law firms and companies in a precise and customised way.
The possibilities are endless, and the priorities depend to a large extent on each specific office and reality. What is certain, however, is that for law firms, rather than betting on this or that specific "trendy" or "competitive" tool, the time has come to question the traditional business model globally and embrace digital transformation in the various areas of the organisation once and for all. Only in this way will it be possible to keep pace with clients and cope with the offer of legal services in alternative, increasingly 'productised' ways, which is progressively gaining ground, so often taken away from so-called "traditional" law firms.
by Francisca Almeida, Wiimer's Chief Corporate & Legal Officer
Article originally published in Jornal Económico