How Digital Transformation Impacts the Legal Industry

welocalize March 11, 2019

Are law firms and corporate legal departments prepared to support digital transformation for themselves and for their client stakeholders? The short answer is “no”, according to the “2018 Report on the State of the Legal Market” from Georgetown Law and Thomson Reuters Legal Executive Institute.

The effect of digital transformation increasingly seeps into every area of the consumer experience. From AI to  GDPR, legal practitioners are scrambling to keep up with the opportunities and implications that arise from a world fueled by more digital, more data, more risks.

Taking cues from other business sectors, the legal industry has been examining ways to leverage data and technology to better connect with stakeholders, streamline legal tasks, and create more efficient and intelligent platforms for collaboration.

What does digital transformation mean for the legal industry?

Digital transformation refers to the digitization of nearly every aspect of the legal experience, including service delivery, processes, workflow, marketing, team collaboration, and client engagement.

The pace and flow of work in the traditional law firm may seem glacial in comparison to the speed and instant gratification that consumers have come to expect from the ever-present digital tools in their daily lives. Legal industry practitioners are taking note of the many digital tools now available to deliver an always-on, always-connected experience to both clients and employees. Although the human side of the legal industry remains a crucial component, digital transformation can effectively improve the delivery of legal services in practical and innovative ways.

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How do legal practitioners benefit from digital transformation?

Savvy legal teams will be able to incorporate digital solutions that will meet their most pressing needs. It’s no surprise that data management and client contact, which present plenty of challenges at the average law firm, have captured the most attention in digital transformation initiatives.

Here are some of the key initiatives:

  • Today’s cloud-based enterprise resource planning (ERP) platform can provide a valuable starting point to harness the power of centralization to increase information transparency and decrease administrative costs. An ERP system centralizes key elements of a case in one system, including the initial client engagement, invoice and billing, time tracking, and talent management. An attorney or paralegal accesses the ERP and retrieves relevant data for a case. Powered by analytics, the system could be configured to automatically analyze a new matter and designate the best attorney for the task. This kind of data-driven decision-making frees up legal staff to tackle more strategic work. It also provides an excellent platform for collaboration, as the system will automatically tag the appropriate person to handle the workload.
  • ​​​​Computers use rules, or algorithms, to analyze data and extrapolate patterns and insights from the data, also known as machine learning. For example, an associate typically spends hours combing through research to find a particular document or case relevant to an argument. With the help of machine learning-powered software, the associate could begin the research process by flagging only relevant documents – and the technology would automatically search for such relevant documents or case files.
  • Clients accustomed to performing most transactions via their smartphones may expect the same level of accessibility from their legal counsel. To address that demand, many law firms and corporate department are adding a “chatbot” to their websites or intranets. Chatbots employ artificial intelligence to retrieve information from knowledge bases. Chatbots often pop up on law firm websites, inviting visitors to pose their questions (such as “What are my rights in…” or “How do I set up a will?”) and guiding them to the appropriate resources within the website or instructions on scheduling a consultation with an attorney.
What are key considerations as legal teams embark on a digital transformation journey?

Be prepared to manage different expectations for measuring ROI. Although traditional digital initiatives are aimed at saving money and ramping up productivity, the benefits of digital transformation may be more difficult to measure with traditional metrics. For example, deploying an app that allows stakeholders to instantly connect with lawyers will increase transparency and responsiveness – but might not necessarily deliver an easily quantifiable ROI. What’s the right measure for customer satisfaction or customer experience? How would these metrics lead to an expanded client base and lower client attrition?

Address anxiety over new technology by understanding what business problems are being solved. Although those suspicious of technology developments might fear that machine learning would replace the need for humans, in most cases this technology only frees up time spent on some of the more labor-intensive and time-consuming tasks. Data-driven decision-making adds more value in the form of solving complex queries or automating transparency through timely reporting. Those in charge of spearheading the change will want to stress the benefits to staff, such as reducing administrative cost and time, and make sure to schedule ample training opportunities during the implementation process.

Law firms and legal departments that leverage digital tools can successfully distinguish themselves from the increasingly competitive legal landscape. When used as a complement to the human factor, digital innovations can enhance productivity, cut workflow friction, and allow legal practitioners to deliver more skilled, efficient service to their stakeholders.

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