How to Overcome the Challenges of Digital Transformation in Law Firms

Jul 30, 2020   |   By SEI Team

Digital transformation can be challenging in a tradition-driven industry like law, but the reward is often worth the effort.

Law is one of the oldest professions in existence, and, true to its age, the legal industry is notoriously slow to embrace change. However, while most law firms still operate under a traditional business model, they are not immune to the pressures of the digital world. Increased competition, slowing revenue growth, and shifting client demands have all led firms to seek ways of driving innovation while mitigating risk. Striking the right balance between adhering to long-standing — and, in many cases, still essential — principles and integrating new technologies can be challenging, but doing so should be a top priority for most if not all of today’s law firms.

While law is a profession that relies on the intellectual abilities and extensive training of human beings, there are numerous law-related tasks that could easily be partially or entirely automated. As a result, many law firms have entered a new era of digital transformation, exploring technologies such as artificial intelligence, cloud computing, and blockchain to drive operational and commercial benefits alike. That said, while these tools promise to deliver a great deal of value, they also complicate firms’ compliance with regulatory standards, making proper data governance and compliance frameworks all the more important.

Law’s Obstacles to Digital Transformation

Law’s digital transformation is not without significant obstacles, both those relating to its traditional culture and not. For example, data security is one of the industry’s leading concerns. Law firms are responsible for protecting a wealth of sensitive client information, and, as a result, must be acutely aware of industry regulations and in tune with data security best practices. Among other adverse outcomes, a data breach can result in compromises of attorney-client privilege that, in turn, can result in everything from delays in legal proceedings to sanctions or even disbarment.

Unfortunately, to date, the industry as a whole has not always risen to the challenge: between 2014 and 2019, over 100 firms reported experiencing a data breach to authorities, and high-profile incidents like the Panama Papers leak illustrated just how serious the consequences of a breach can be. And while the American Bar Association affirms attorneys’ duty to safeguard clients’ information, it offers little in terms of uniform requirements. As such, it is largely left up to individual firms to determine what security measures to put in place to protect themselves against potential cyberattacks and what kind of formal response plans they should have in the event a cyberattack does occur.

To make matters more complicated, firms face the added challenge of meeting ever-increasing UX expectations. In this day and age, utilizing digital tools is not enough — these tools need to be as intuitive and user-friendly as most people have come to expect from their favorite smartphone applications. While many law firms use digital tools for file sharing, electronic discovery, and research, many of them are clunky and outdated. As Millennials begin to fill out the ranks of firms around the country, improving the UX of digital legal tools — even at the highest level — will be imperative.

Finally, many firms must take steps to evolve their deeply rooted analog cultures. For instance, human error is the leading cause of data breaches, and when digitizing an industry as sensitive as law, it is absolutely vital that employees at every level of an organization are brought up to speed on cybersecurity best practices and that safeguards such as encryption policies and firewalls are implemented.

Initiating a Digital Transformation in the Legal Industry

As in any professional services organization, responsibility for digital transformation in law firms tends to fall on the shoulders of upper leadership, who must foster buy-in and clearly communicate the importance and benefits of their new digital initiative. Of course, it is impossible to communicate these benefits without understanding them, which is why leadership teams must take steps to become more tech literate themselves.

When rolling out a shift in firm culture, focus most prominently on what is not changing. For instance, your firm’s commitment to high-quality work, integrity, and client satisfaction will never change. You are simply utilizing new tools to deliver for clients at an even higher level. However, a firm’s culture is not built solely on internal interactions; it is also defined by its relationships with clients. Strategically loop in clients to your transformation, reassuring them that the new tools will optimize your ability to deliver complex legal advice in a more cost-effective manner.

Demonstrating your digital prowess does not only solidify relationships with existing clients, but can help you secure new ones, as well. Clients are increasingly looking for law firms that demonstrate a commitment to digital innovation, not least because digital tools often lead to more effective attorney-client communication and improved cybersecurity practices and transparency.

Taking the First Step Toward a Successful Digital Transformation

Ultimately, rolling out a digital transformation at a law firm is easier said than done. With high billable hours demands and increasingly slim margins, most law firms would be hard-pressed to find someone in house with enough time on their hands to lead the charge on a comprehensive digital transformation. Further, most attorneys will readily admit that they are not IT experts. Law firms typically need support to be able to recognize existing cyber-risks and identify processes that would benefit from digital transformation, which is why many firms choose to partner with a consultancy like SEI.

SEI is a boutique consulting firm that employs expert practitioners with years or decades of experience in their field. Law is unique, and digital transformation roadmaps that work in other fields often cannot — or should not — be applied to law firms. SEI’s consultants understand these industry-specific nuances, and can help your firm design and execute a digital transformation strategy that is tailored to your unique needs.

To learn more about partnering with SEI, contact us today.

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