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How can law firms leverage technology to value add?

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Although the market for legal services continues to strengthen, it’s clear that the change that occurred during the economic struggles of the early part of the decade were not transitory, but structural - clients will not allow law firms to return to old practices.  

Many law firms that I speak to acknowledge that it will take significant change to the way they organise themselves, deliver legal advice and service their clients to allow them to return to pre-financial crisis levels of profitability. They also recognise that the innovative use of technology needs to be at the heart of this change.  

The Change Harbour 2015 survey of 250 law firm leaders clearly shows that law firm leaders now recognise the importance of technology. 82% say using technology to make lawyers more effective is a high priority over the next 18 months. Comparatively, 18% say reducing the cost of supporting the business is of high importance. 

What do you want from your technology investment - 2015 Change Harbour law firm leader survey

As depicted in the graph above, from their technology investment, law firm leaders want to identify and implement ways in which technology can drive lawyer efficiency, deliver business value and differentiate their firms. This is refreshing of course, but my experience is that for a large number of law firms, IT is simply failing to support the business change that these organisations are striving to achieve.  

The reality is that the majority of effort and investment is actually being applied to building and maintaining the servers, storage and networks that make up traditional on-premise or co-located IT infrastructures.  Law firms typically spend between 4% and 5% of their turnover on IT, and this often equates to several thousand pounds per person per year.  With this large fixed investment, IT departments subsequently spend their time maintaining this investment.  Indeed, it is estimated that law firms allocate approximately 80% of spend and 85% of resources on operational activities. This means that only 15% to 20% of the focus of an IT function is directed towards activities that will exploit technology to generate business value.  In other words, the needs of law firms and their approach to IT investment are fundamentally miss-aligned.  So while the strategic exploitation of technology needs to be at the heart of all innovation in legal service delivery, law firm IT departments are not well placed to deliver it.

IT directors and CIOs often complain that they are not given enough of a voice in the way their firms set and execute broader business strategy.  This may be the case, but it will not change while the focus of those IT leaders is on infrastructure technology.  Managing partners and CEOs are not interested in hardware specifications or virtualisation techniques; they are interested in business efficiency and profitability.  Until IT leaders start to focus on how technology can support these ambitions, they will not be invited to the ‘top-table’.

Tags: LexisOne

About the Author:

Simon Thompson is the Managing Director of Change Harbour. He utilises his extensive experience in leading edge law firm management, enabling firms to implement innovative solutions to deliver operational effectiveness and support revenue growth. Established in 2011, Change Harbour is an independent consultancy advising organisations operating in the legal sector in the areas of strategy, process, technology and organisational design.

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