LPM: Overcoming the impact of the 'cost of living' crisis through tech adoption
John Sewell details how, during difficult economic times, automation can provide cost efficiency for a firm and transparency for clients, alleviating some of the stresses of the cost of living crisis.
The current 'cost of living' crisis in the UK – the effect of high energy costs, rising food prices, stubborn inflation and interest rate hikes – is being felt by all of us, on personal, business and industry levels.
In the legal industry, some sectors are more adversely impacted than others. Immediately, the access to justice sector comes to mind. Already with legal aid significantly reduced, the cost of living crisis has significantly impacted pro bono activity as many lawyers and firms, who are seeing reduced income streams, simply don’t have the resources to support such activity.
The property sector is going through a gloomy period. With households struggling to make mortgage payments, data from HM Revenue & Customs shows that the number of UK residential property transactions in April 2023 was lower than the corresponding period in 2022. With further evidence to suggest that this same period has been the lowest since the outbreak of Covid in 2020 and the second lowest in the last 8 years.
On the other hand, legal areas such as fraud, litigation, and debt recovery, are predicted to see an uptick in business. However, whilst firms with these specialisms may not struggle to acquire business, they face other pressures, such as staff retention due to unprecedented competition for talent. This is leading to workforce challenges, and budgetary pressures due to rising staff salaries and bearing down on profitability.
Astutely leveraging automation
Strategically adopting automation can provide solutions for many of these challenges. There are still many administrative tasks performed in legal organisations that can either be eliminated entirely because they provide no material benefit, executed more cost effectively through better resource planning (e.g., utilising paralegals, outsourcing models, an optimal combination of all options) or simply automated entirely. Good examples of such tasks are internal processes that are not visible to clients – risk checks, client onboarding, anti-money laundering processes, management information and reporting, and so forth. The cost savings will be significant.
In difficult times, organisations that differentiate themselves based on quality of communication and customer service tend to come out as winners. Technology can enable organisations to conduct business with empathy, deliver services in the way clients are comfortable consuming – and also keep an eye on costs, to ensure profitability – without compromising any of these functions.
For instance, technology can help achieve the optimal balance between self-service options for clients, automation and meaningful lawyer involvement at the right times across transaction lifecycles to deliver superior customer care. Likewise, creating a customer app or portal to give clients real-time visibility of the status of their transaction can go a long way in relieving their stress, whilst taking the burden off lawyers and case handlers so that they can focus on high quality lawyering.
This automation-led approach will of course help legal organisations effectively overcome some of the difficulties brought on by the current economic conditions, but more importantly, they will be well placed to take advantage of the new opportunities once the cost-of-living crisis eases.
This said, the reality is that with or without the cost-of-living crisis, the guiding principles that good business is based on – cost efficiency, productivity, optimal resource utilisation, customer care, profitability and so forth – should always be a focus. Technology, when deployed with a clear outcome-focused mentality, can be a reliable support, whatever the wider socio-economic conditions.
If your systems do not allow for this level of automation and customisation, it may be a good time to explore those that can.