Experts say digital transformation has pushed the legal industry to a tipping point. Here’s how you can navigate digital transformation at your firm – without it tipping you over.
The digital transformation of law is a phenomenon that has come into sharp focus over the last year. While the legal industry has undergone a number of slow and incremental evolutions since the Great Recession, the COVID-19 pandemic has forced law firms to adopt digital solutions faster — and digitize more parts of their operations — than they had previously planned.
It is clear that the majority of law firms are now using at least some digital solutions. One Clio survey found that 83% of law firms are meeting with clients virtually, 73% allow clients to pay invoices online, and 62% are using e-signatures & electronic documents. According to Twilio, the COVID-19 pandemic has accelerated technology adoption in all industries by at least five years, and law is no exception – pushing the legal industry along the digital adoption curve from Innovators/Early Adopters to Early Majority.
Mark A. Cohen, CEO of legal business consultancy Legal Mosaic, says that “digital transformation has become an existential imperative of corporate viability”, and a wholesale reboot of legal culture is needed in order to facilitate and manage the changes that are already underway.
In other words, law firms that are treating 2021 like it’s 1991 will soon be faced with a choice: Transform or perish.
If your law firm is behind the times, implementing a digital transformation plan is one of the best ways you can stay competitive, make your practice operate more efficiently, and find or create new opportunities for revenue and growth.
And if your law firm is one of the growing many that are embracing digital technologies and constantly looking for ways to innovate, you’re well-positioned to capitalize on the momentum you’ve already built.
Here are some important considerations to ensure you can enact (or streamline) digital transformation at your law firm — and avoid getting hamstrung by outdated tools and processes.
Before starting the process of digital transformation, you’ll want to ensure the senior leaders at your company understand the need for change. Altman Weil’s 2020 Law Firms in Transition Survey, which was cited in Thompson Reuters’ 2021 Report on the State of the Legal Market, asked law firm leaders to provide their opinions on how well firms had adapted to demands for change over the course of 2019. Over half (56%) of respondents said law firm leaders weren’t serious about changing service delivery models to serve clients better.
When asked how well law firms had adapted to changing circumstances on a scale of 1 to 10 – how much change law firms implemented versus how much change was required to solve problems and capitalize on opportunities – 75% of respondents said their law firms did a poor job (5 out of 10 or lower) of adapting to change. Only 25 percent of law firms were moderately successful at adapting to change, and less than 2 percent of law firms excelled at adaptation.
When the respondents were asked to explain why their firms aren’t prioritizing digital transformation and adaptation to change, over 70% said it’s because the firm’s partners stand in the way of change. Over half of respondents also said the partners at the firm simply can’t picture a different way of doing things. According to Altman Weil, “most law firm partnerships don’t want to change, aren’t good at it, and by and large don’t think it’s necessary.”
When enacting digital transformation at your firm, you’ll want to start by winning the support of key stakeholders, including partners and senior lawyers. One effective way of getting leaders on board with digital transformation is to build your case for why the change is necessary. Use facts, statistics, and case studies to show leaders the concrete results that digital transformation can achieve. How much time can your firm save by, for example, implementing an artificial intelligence-powered records management platform?
There are many different models of digital transformation that law firms can use to guide changes. But when implementing or contemplating new digital solutions, you’ll want to evaluate your law firm’s needs and goals on an ongoing basis. You’ll want to ensure that every new innovation you bring into your firm has its own distinct purpose. You’ll also want to ensure you can make on-the-fly changes when needed.
One great model for tracking your needs and managing the solutions you implement is the Digital Transformation Flywheel.
A digital transformation flywheel is a framework for implementing technological changes and business process innovations in a way that pursues a specific objective. The digital transformation flywheel model is built on a few simple principles:
The flywheel model has several strengths. First, it can demonstrate how different technologies work together to create efficiencies. Second, its emphasis on continual momentum helps accelerate change. Third, its focus on refinement and improvement over time can pinpoint when things aren’t working or bring attention to emerging opportunities that you might have missed otherwise.
Different organizations have conceptualized and applied the flywheel model in different ways; while RPA software company UiPath applies it in software development, and management consultancy Arthur D Little uses the flywheel to illustrate strategies for business growth, you can also use the flywheel model to organize your firm’s digital transformation. Deloitte, for instance, uses a triple-flywheel model in managing its innovation projects.
In sum, the flywheel makes it easier to see where in your firm a transformation needs to occur, whether that’s in your records management, your client acquisition processes, your billing practices, or something else entirely.
However you choose to implement your own digital transformation flywheel, the key factor in its success is staying agile and adaptable. The flywheel approach places a significant emphasis on learning from each digital transformation initiative and carrying the lessons learned into the next change.
Digital transformation initiatives can help your organization save time and money. It can also open the door to higher profits and a more effective team. But the process of digital transformation can be messy, and a lot of companies abandon digital transformation partway through. One Everest Group study found that 73% of digital transformations fail to create any value, usually due to a combination of factors like prioritizing technology above process, poor planning, a lack of clearly defined goals, and half-hearted leadership from senior management.
Successful digital transformation means proper planning. It means segmenting transformation projects into achievable pieces. It means setting the proper expectations, developing and using the required skills, and bringing in experts when needed. In sum, it means treating your own firm like you would treat a client, whether that involves setting up a dedicated internal project in your project management software, scheduling specific dates and times for your team to work on transformation activities, and setting milestones and benchmarks for performance.
When you start your digital transformation, dedicate the appropriate time, people, and resources to it. Manage it the same way, using the same systems and methodologies that you would use with a client – because when it comes to staying competitive and maintaining growth, your firm is its own number one client.
Digital transformation can bring significant time and cost savings while helping your firm respond faster to new opportunities. When properly managed, digital transformation can also create a compounding effect where different transformations work together to produce more time and cost savings.
Digital transformation is an ongoing and all-encompassing process. But one of the easiest ways to get started with digital transformation is with your document automation and records management.
With an AI-enabled system like Appara, you can simplify your document creation and management process and accomplish more work in less time. Claim your free trial today to see how Appara can help you transform your law practice.
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