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Efficiency

How non-lawyers and tech are changing the modern law firm

In a previous post, we discussed how the lack of integrations between legal tech tools and platforms has proven to be a drag on lawyer productivity. And that lack of productivity can translate to a lack of profitability.

A new white paper from Thomson Reuters, Start at the end: Why legal tech needs an end-user focus, discusses strategies for achieving that interoperability. It’s also worth noting that the need for digital interoperability extends beyond lawyer productivity.

The fact is, today’s firms are becoming increasingly intertwined with other types of expertise besides legal. More and more firms, particularly large and midsize ones, need to interconnect with non-lawyer professionals, both inside and outside the firm.

As the Thomson Reuters Legal Executive Institute’s Alternative Legal Service Providers 2019 report noted, one of the main drivers pushing these changes is the rapid growth of non-law competition in the legal market, notably alternative legal service providers (ALSPs) and global tax and audit firms EY and PwC. Another key driver is client demand. Clients are increasingly requiring their legal counsel to have expertise in business disciplines such as project management and digital technology.

In order to make those connections useful and profitable, law firms need to share information easily. And that’s adding urgency to the need for interoperability.

At the same time, law firms continue to face pressures to rein in expenses and strengthen the bottom line. Technology improvements can address these pressures. So can tapping the expertise of non-lawyer professionals whose skills can help firms streamline their business processes and add new services. The market is demanding innovation from legal services providers. In order to innovate, law firms need to bring together legal and business expertise, along with tech tools that bring those offerings to light more quickly and cost-effectively.

Bridging disciplines

Altman Weil’s 2019 Law Firms in Transition Survey reveals that significant numbers of firms are using technology to boost efficiency even beyond “standard” legal tech such as online legal research and automated contract drafting:

  • 64% of large law firms and 43% of midsize law firms are using technology tools in place of a human resources department. One of the goals: reducing the spend on departments that don’t generate revenue.
  • 91% of large firms and 72% of midsize firms use profitability data to evaluate partner performance.
  • Related to this, 64% of large firms and 42% of midsize firms are rewarding efficiency and profitability in compensation decisions.

Providing detailed metrics that measure profitability, establish realistic pricing, and boost attorney performance is just one example of the kind of thinking that non-lawyers are introducing into legal operations.

More and more firms also are bringing in legal operations managers — non-lawyer professionals hired to oversee multiple functions within a firm or a legal department. These can include finance, technology, managing outside counsel relationships and spending, and general day-to-day management. Altman Weil’s 2019 Chief Legal Officer Survey found that more than 75% of large law departments (those with more than 50 lawyers) employ someone in this position. When choosing or retaining legal counsel, clients are looking more closely to see how well the firm is run. Having a legal operations manager can also serve as a client retention strategy.

And as Thomson Reuters’ 2020 State of the Legal Market report notes, larger firms in particular have brought on a variety of C-suite executives — COOs, CFOs, and even CTOs. At first, these executives primarily focused on internal firm management. But they are becoming integral for client-facing interactions like pricing, project management, and tech adoption. One key reason: these business executives help firms take a more holistic view of their clients’ business.

“The business professionals’ presence adds a different perspective than that of a relationship partner focused on the immediate fulfillment of a client’s legal needs,” said Reese Arrowsmith, head of legal operations for Campbell Soup Co., in the December 2019 issue of The American Lawyer. “They can make sure the firm is delivering services with the same strategy and methods that the in-house operations person has for the company.”

Another “cross-disciplinary” strategy a number of firms are pursuing is providing consultative capabilities that don’t fall under the category of traditional legal services. They include a number of sometimes surprising offerings, including software development, technology consulting, and advisory assistance with Dodd-Frank and other financial regulations.

Interconnection means innovation

Modern law firms, particularly large and midsize ones, are looking for innovative ways to stay competitive and profitable. All the more reason for developers to create legal technology that connects with the ways that modern law firms are operating. Non-lawyers are changing how law firms are run. In some firms, business professionals exert as much influence as the attorneys themselves.

The interconnection of lawyers and non-lawyer professionals will continue to provide new opportunities for law practices to add services and boost financial performance. This will require attorneys to adopt new kinds of tools and metrics. For many firms, that won’t be easy. That’s why the time to prepare for the future is now.

To learn more about the future of legal tech and how law firms can help make that technology more useful for the ways they operate today, download the Thomson Reuters white paper, Start at the end: why legal tech needs an end-user focus.

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