A recent feature article in Wired explored an interesting idea: technology is beginning to change the way lawyers practice law. As members of a highly people-driven industry, law firms rely on human talent over technology to complete many key processes. However, with the challenges that emerged around the economic crash in 2008, the recession limited legal budgets and encouraged consumers to work with firms that were more efficient. In fact, according to the Business of Law, finding ways to save money and cut costs is one of the top three challenges for leaders of legal firm operations.
Consequently, law firms are increasingly looking at technology that can help streamline key processes and allow them to focus their billable hours on value-added activities such as meeting with clients, preparing strategy, and actively negotiating or litigating cases. How can technology—including higher-speed networks—help your law firm increase its billable hours?
Investments in Legal Technology Signal Growing Trend
Technology is in the spotlight for its ability to make a significant difference in bottom line operating costs and free up time for legal teams to focus on client service. As the North Carolina Journal of Law and Technology notes, a major venture capital company invested $8 million in a startup that was designed to make the legal research and discovery process more efficient. Preparing for trials, conducting research, and managing a high volume of documents—particularly in the cloud—require a significant amount of time. More effective tools can help increase efficiency at this critical stage of the legal process and as a result, law firms can more successfully increase the number of clients they serve and produce better results for their current client roster.
The Declining ROI of Billable Hours
Historically, law firms have lived and died by their billable hours. Unsurprisingly, technology is helping these businesses get more done faster, which puts the idea of billable hours into question. Many law firms are increasingly finding that they are being forced to adopt evolving business models if they want to stay competitive. The Business of Law reports that 82.9 percent of lawyers have discounted their hours, 68.9 percent have accepted a fixed fee per matter, and 54.3 percent have accepted a flat fee to handle all issues related to specific matter for a client. As The Atlantic reports, many firms are exploring strategies that allow clients to pre-purchase blocks of time, or even have a dedicated attorney on call certain days of the week. Law360 reports that 50 percent of firms anticipated increasing their alternative fee arrangements during the next year.
Whether your law firm focuses on billable hours or is experimenting with alternative billing models, strategically planning your technology setup and evaluating your infrastructure can give you an important competitive advantage.
Strategies for Using Technology to Increase Profit Margins
Increase your speed in discovery and research: One of the most important— and onerous—areas of the legal process is discovery, research and document preparation. When firms make process improvements in this area, it is possible to dramatically cut costs without compromising the quality of service clients receive. In fact, clients may ultimately receive better service as the legal process moves more quickly and their legal teams can focus on high-touch interactions. Several different tools and platforms—some commercially available and others that are proprietary, in-house systems—are focusing on helping legal researchers achieve new heights of efficiency. Examples include systems that base document creation on templates and have more sophisticated research tools and case management systems. Capturing the benefits of these methods starts with a high-speed network.
Invest in underlying systems: As technology plays an increasingly important role in how legal firms serve their customers, more attention will need to be paid to the infrastructure that underlies these platforms. Typically, legal firms rely on large databases of template documents or massive repositories of case law. Systems that house or parse through this data to make the process more streamlined require significant amounts of bandwidth. Law firms and other small businesses may find that fiber connections supporting enormous amounts of information transfer over symmetrical bandwidth have better support systems and eliminate important delays in the client process. When you’re carefully recording time and need to monetize each minute, small delays in work productivity can quickly add up to big losses.
Use data to make decisions about fees—and the infrastructure needed to get there: Law firms often have tremendous amounts of data available to them on everything from past engagements to the types of clients that are most profitable. To increase billable hours or profits, and adapt to the changing business landscape, law firms increasingly need to access this historical data and analyze it to form their strategies moving forward, and that means greater amounts of data that is accessible from a secure, shared environment. A variety of different systems and tools can be used for analytical purposes. However, processing big data requires more than strong computing power. It requires bandwidth to access that wealth of information from the source, meaning a data center hosted on-site or in the cloud. Network power is critical to capturing the full benefit of today’s big-data tools. Law firms need to have the right infrastructure in place—including network speed—to support long-term decision-making data analysis. With a faster connection, it’s possible to access and process information in real time, versus slower connections that time out, create delays, and may not support systems’ abilities to handle real-time data analysis.
Operational improvements benefit the bottom line and productivity: As mentioned above, finding ways to cut costs is one of the top three concerns for many legal firms. However, investing in high-performance bandwidth can help reduce costs over time. In some cases, it’s possible to get access to a wider range of services your organization would use for a fixed price as part of a bundle—and that can include higher speeds of symmetrical Internet and network services. The same report suggested that gaining financial resources for technology investments can be a challenge for legal firm operations experts. A survey of 900 in-house counsel reps found the quality of advice and the quality of delivering advice was the single most important factor in hiring an outside law firm. The right infrastructure can not only streamline your delivery, but ensures your legal teams are focused on the right issues to provide the highest levels of advisory, negotiation and counseling services.
Today’s law firms need to be agile when thinking through their business models. Some firms still operate via billable hours, but need new systems to make leaner teams more productive. Others are beginning to experiment with alternative billing arrangements and need to find the tools to make those hours as profitable as possible. While platforms and best-in-class legal industry tools will play an important role in making the transition, a fast network is one of the critical underpinnings to long-term success.