Law Technology Today From the ABA Legal Technology Resource Center
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It’s no secret that technology and the legal sector have long maintained a strained relationship. While industries with similar regulatory constraints, such as healthcare, insurance, and banking, have managed to optimize traditional business practices and workflows with tech innovation, those within the legal industry have largely refrained from capitalizing on technological advancements.
Granted, you’re likely to find most firms using email on a Wi-Fi network, but the industry’s à la carte style of adopting technological necessities is far from the all-encompassing tech integration permeating nearly every other industry. So why has one of the oldest industries to date remained steadfast in its tech abstinence?
Familiarity and reigning culture are very telling. From its inception, the legal space is inherently resistant to waves of change. Consider the unaltered trial judge’s courtroom apparel as prime example. According to Justice Sandra Day O’Connor, the symbolic, gown-like black robe has long served as standard judicial attire since the early 19th century. No rule or proclamation binds those presiding over our nation’s court system to abide by this standard of dress, yet very few judges stray from the unspoken norm. The only thing upholding this ritual? Tradition.
While a dated dress code may seemingly pale in comparison to adopting technological infrastructure, the message is identical: Law inherently resists change. Regarding technology, the resistance, in part, stems from a generational divide within the industry. While Generation Y and the latter half of Generation X easily comprise more than half of today’s workforce, from a top-down perspective, a majority of the legal profession’s decision makers and senior partners are products of the baby boomer or early Gen X generations. So, in the driver’s seat, you’re left with professionals reared in a pre-tech era who have long navigated the industry with very little consideration given to innovation.
However, in the passenger seat is the industry teenager, comprised mostly of Gen Y, who isn’t prepared to use a fold out map if a GPS is sitting right in-front of them. For the new wave of lawyers and legal dwellers, adhering to the status quo is a no-go if it means leaving tech on the sidelines…
… which leads us to the first of three reasons legal firms need to begin prioritizing tech innovation:
The Millennial Workforce Demands Innovation
Remaining at an arm’s length from technology and adaptation will only prove to be increasingly problematic for the legal space, particularly with respect to attracting millennials.
With the tail-end of this generation soon beginning their first year of college, the legal sector can no longer afford to ignore the defining trends, desires, and customs of the workforce’s newest and upcoming professionals.
Much like the legal industry’s inherent unwillingness to readily adopt innovation, millennials share a similar sentiment towards rigid and outdated working environments. A recent survey conducted by Microsoft found that an overwhelming 93% of millennials deemed technology to be “important” or “very important” in choosing an occupation and workplace. In a separate survey, 90% of millennials attributed technology to increased opportunity.
The Problem with Billable Hours
Millennials not only overwhelmingly embrace technology in the workplace, they demand it. As a result, if the legal industry wishes to avoid an impending interest drought, dated pivotal operations, such as the billable hours model, are in crucial need of an overhaul.
Despite its perceived efficacy in translating casework into billable price points, the billable hours measurement method is quickly becoming outdated, if it isn’t already. The issue? The pricing model lacks consideration of modern resources at a practitioner’s disposal, which easily accelerates research methods. Diligent case preparation, without question, involves thorough research of pertinent case law and legislation, but with advancing resources such as artificial intelligence, machine learning, and content tagging, the pragmatism of preparation becomes much more time efficient. The same level of productivity is now achieved in half the time, and millennials aren’t likely to sit well with receiving half the pay as their predecessors for working smarter, not harder.
If billable hours—along with other dated processes and scales of measure—maintains prominence within the legal sector, traditional firms can expect to rank relatively low on a millennial’s interest scale. The firms and other legal enterprises that adopt innovation now stand to outpace their competition in attracting the cream of the millennial crop.
A New Wave of Innovation
Millennials who do maintain interest and enter the industry will comprise a new wave of practitioners, who will undoubtingly leverage more technology than that of their predecessors. Moreover, it will be interesting to see where and how these new and coming legal dwellers will funnel their innovative focus.
According to Nielson, 98% of young millennials now own a smartphone. Another survey by Shift Communications revealed that 82.1% of mobile phone users open and read every text message they receive. Stats like these, coupled with the rise of businesses leveraging SMS—text messaging—functionality for electronic consent, it would not be surprising to see an influx of focus on mobile technologies among young lawyers to enhance outdated processes and attract new clients.
Rise of Non-Traditional Service Providers
While “traditional law firms” still hold the torch in the delivery of legal services, they’re no longer the sole custodian.
According to a 2016 Altman Weil Flash survey, 82% of law firm leaders believed that “non-traditional service providers” pose sizable competition to their firms and are here to stay. These in-house departments, consulting firms, and other alternative legal services are often fan favorites due to lower costs and improved efficiencies.
What’s more, 74% of Flash survey’s respondents identified “non-traditional providers within a technology core” as posing the second greatest competitive threat to firms, bested only by internal law departments. Additionally, technology was the unequivocal “potential threat” front-runner among all legal services.
An additional factor contributing to the rise of non-traditional services is the surge of start-ups and tech companies offering more timely and efficient aid in discovery through legal research automation. This impedes on a large percentage of billable hours (see above) a traditional legal firm would impose on a client. These services are usually offered at a fraction of the cost, making the choice to consumers an easy one.
Not only do these start-ups assist in research, they can largely assist consumers with isolated legal consultation at much lower costs. This wired article illustrates the ability for a legal technologies enterprise to craft an electronic legal document for a consumer. What’s more, thanks to ESIGN legislation, this document could be signed and stored all within the digital space. If coupled with mobile innovation, like SMS eSignatures, an enterprise could legally strike a deal with another business or consumer in minutes. These technology innovations adopted by rising legal start-ups coupled with competitive pricing and an a la carte type of legal consulting make non-traditional providers all the more attractive.
Improved Efficiency, Reduced Time and Cost
In a recent research brief, Aragon Research discussed the implications of failing to adopt “digital transaction management” (DTM) as part of organizational infrastructure. The brief discusses the digital overhaul of traditionally paper-laden processes and further notes the surge of companies leveraging popular mobile technologies, such as text messaging, to interact with consumers. The brief all but concludes that businesses avoiding DTM processes will soon fail to meet muster.
Understanding Digital Transaction Management (DTM)
DTM, by definition, is the automation and streamlining of existing workflows and processes through digital means. At the forefront of the DTM concept is its foundational element—arguably a modern business imperative—”taking the electronic version of a document and allowing people to sign it online…” Businesses that have adopted even just this basic element of DTM have significantly reduced overhead costs, increased revenue, diminished document turn-around times, and strengthened efficiency.
DTM: A Legal Perspective
In efforts to streamline its processes, reduce overhead, and remain competitive among consumers, Captorra invested in the foundational element of DTM, the electronic signature. After implementation, the popular case intake and lead conversion software company reported its user firms to have cut shipping costs by an astronomical 900%. This is thanks mostly to the near elimination of mailing documents for signature and associated costs. Moreover, Captorra reported its user firms’ client and case on-boarding time to have diminished from days to mere minutes.
Extracting an example from presumably outside the industry, the aforementioned research brief claims another unrelated DTM implementation to have yielded: 51% of customer agreements signed and completed within 15 minutes, 62% within an hour, and 84% completed the same day.
Reduced overhead costs and diminishing procedural time-lag equates to huge gains with consumers. This circles back to the point made about traditional law firms losing its monopoly within the legal space. Non-lawyer professionals such as investigative and consulting firms and data analysis centers are embracing the same technological advances that many traditional law firms continue to neglect.
Traditional legal firms continue to excel in what they’ve mastered for centuries: the practice of law. Until now, the industry has withstood waves of change while remaining relevant and dominant in its field of expertise. However, the digital era has brought an unprecedented contender to the legal space… technology. If traditional legal firms wish to stay marketable and competitive with consumers, they’d be advised to embrace innovation, not combat it.
