Law firms are facing a “pivotal moment” where they need to turn talk of improving efficiency into action, with those that are seeing the competitive advantage, new research has claimed.
It said that while clients were demanding change, “law firms appear to be in a holding pattern, pledging forward-looking action, while cleaving to traditional thinking, from hourly billing to old-school assumptions on what they believe is in their clients’ best interests”.
The “crux of the matter” was efficiency, said the report, The Race to Evolve, the latest publication by LexisNexis as part of its Bellwether series.
It predicted that “the sooner firms take the leap across the divide, the faster they’ll outpace the competition. The possibilities – particularly the utilisation of the full roster of legal tools and technologies – are well within reach, and clients are ready and waiting”.
The report added: “While the short-term changes may seem demanding, requiring a restructuring and re-evaluation of working practices, the rewards are well worth the effort.”
Last year’s Bellwether found that many lawyers underestimated the importance of efficiency and timeliness to clients.
The latest, involving a survey of 149 SME law firms, found that while 92% of lawyers said continued investment in technology was no longer optional, and many linked better technology to greater efficiency, some 58% of firms were spending less than 5% of the turnover on legal tools, and 81% less than 10%.
Half of lawyers considered their law firm’s efficiency to be average, with just 36% rating their firm’s efficiency to be above average.
Ratings were mixed as to which activities lawyers considered the most important drivers of efficiency in their law firms, but “not dabbling outside your practice area” emerged as the frontrunner (41%) – higher even than investing in new technology (17%).
The report said it was not surprising then that 95% referred enquiries outside their firm’s specialism to other firms.
“Given that 75% of firms are actively involved in generating new business, the report suggests that investing in the right tools and processes may give more firms the opportunity, resources, skills and procedures, to start accepting more of the potential business that comes directly to the door.”
Jon Whittle, market development director at LexisNexis, said: “Law firms must align their working practices with that of their increasingly tech-savvy and informed client base.
“One of the problems is getting lawyers to take a long-term view. While their firms may be thriving now, if they don’t take a commercially savvy, customer-centric, progressive view of the business and invest in solutions that drive efficiency today, this will not be in the case in five years.
“It’s clear from our research that those firms that are investing are far outpacing those who aren’t, and this isn’t going unnoticed by their clients.
“While it seems many law firms understand where the gaps are, there is a push and pull phenomenon between traditional and modern working practices, and a disconnect between words and action.
“Ultimately, while many lawyers are still charging by the hour they are not understanding the value of their time – and this needs to change.”