It has been said enough times: The legal industry is facing a turning point in its digital journey. What McKinsey dubs the “next normal” centers around the acceleration of digitalization and its tech-enabled re-imagination of business to better serve its customers. Even before the crisis, 92% of business leaders felt their business model wouldn’t remain viable through current rates of digitalization – and the COVID-19 crisis has sped this up.
The digitalization of life is pushing companies to reexamine the way they do business, and the legal industry is no exception. If lawyers were slow to evolve their services, they are now at a point where they must adapt to changing client expectations, or risk being outpaced by the competition. While some legal providers are innovating to adapt, resistance from others is creating a widening gap with their own clients and an opportunity for customer-centric providers to accelerate market share gains. In short, client-centricity, enabled by digitalization, is imperative for firms in order to survive and prosper.
Client expectations have changed
Customers are increasingly at the epicenter of the economy, and business has become all about improving how they are served. The B2C space has set expectations of a seamless, faster and more user-centric experience (think, for example, easy-to-use banking or food delivery apps), and this is setting a new standard for business interaction in the B2B space as well. The impact of transforming their customer experience processes has been similar among B2B and B2C players, with higher client satisfaction scores, reductions of 10-20% in cost to serve, and revenue growth of 10-15% (source). Industry structures are being disrupted, and client experience will be at the heart of legal delivery by 2025, as predicted by the Head of Global Legal Services at KPMG. Clients are also digitalizing their own businesses to a huge extent, moving to the cloud as a way to scale their services and improve security and flexibility. According to a 2020 Report on the State of the Cloud, 93% of enterprises already have multiple clouds, and 57% of enterprises and SMBs predict their cloud usage will be higher in the future.
Client experience in every industry now covers the entire scope of how the service is delivered – and this requires digitalization. Clients expect connectivity, efficiency, centralization and transparency. They want real-time communication with lawyers, and the ability to work on the go. They also want their services done quicker, at a lower cost – hours billed for manual processes that can be automated are no longer accepted as an inevitability. As the business they support go digital, KPMG predicts that pressure to reduce costs and growing comfort with automated solutions will combine to see the automation of routine legal work being subsumed into the legal business as a route to efficiency.
How transaction management tools will streamline client experience
As business reimagines the legal function, legal departments can respond by enhancing their services through technological capabilities. Firms should prioritize tools like transaction management solutions that improve efficiency in a way that yield a high, and quickly apparent, ROI. Technologies that automate processes can free up as much as 23% of lawyers’ time by 2025, as predicted by McKinsey. This does not mean reinventing the wheel but working smarter by harnessing digital and automated workflows. If implemented effectively, this technology, coupled with data security, scalability and usability, can impact client relationships in the following ways:
1. Digital collaboration for smooth interactions
Collaboration between stakeholders in legal matters can be achieved through shared digital platforms that provide easy access to information and a holistic view of the deal. Closd lets lawyers keep on top of deadlines, more easily locate and store documents, and monitor case progress in real time, making the client feel in the know and informed. A digital closing solution allows the flexibility and speed clients expect; a lawyer in, say, the UK can schedule a signing with a client in Sydney to begin at their convenience and let it unfold automatically, tracking each step at a distance. Automation makes the transaction process more accessible from start to finish, allowing clients to work on a more fluid, flexible model.
2. Workflow automation for quick completion of deals
Clients complain about billable time wasted on tasks like locating documents, coordinating between parties, and organizing cumbersome physical closings. This is where efficiency – the heart of transaction management tools – comes in. Streamlining workflows by automating manual and time-consuming tasks at every step of a deal, from KYC to post-closing, reduces hours doing work like shuffling through papers or assembling closing bibles. Rather than relying on email for communication, automatic reminders for case milestones or deadlines allow stakeholders to be proactive. Together, these accelerate the timeline of the deal, providing clients with efficiency at a lower cost.
3. Data and legal security to feel at ease
Clients are responding to increasing cybersecurity risks and expect their sensitive documents and information to be stored safely. They also expect their data to be compliant with shifting data sovereignty laws and regulations to avoid potential legal issues arising. The increasing adoption of cloud-based solutions is a step in this direction: These tools provide a security-by-design approach that is much safer than paper-based services and on-premises infrastructures. Closd’s software infrastructure was built from the outset to protect user data; all files and data uploaded to the platform are encrypted and hosted in the EU by a top-tier cloud services provider, whose job it is to build and maintain a tamper-proof and fully available infrastructure. Moreover, services like electronic signature are guaranteed to be compliant with established law. A digital safe like Closd’s protects clients longer-term, too, by archiving documents and conserving their probative value. Moving to the cloud is a competitive advantage for firms looking to reduce infrastructure and IT costs, while improving security and flexibility.
So where is the legal industry now?
Overall, tech adoption in the law industry has been slow and fragmented; many firms have remained reluctant to invest in technology despite consumer expectations having advanced beyond what the traditional legal model currently offers. Beyond being a consequence of the industry’s traditionally conservative attitudes, one reason for this is a lack of change management strategies or senior executives with sufficient experience or resources to deploy legal tech at scale. Another is more legal tech marketplace crowding, which makes it more difficult for teams to discover and vet options.
Though the majority of firms have not adapted yet, there are more and more exceptions. Forbes points to a handful of tech-enabled, scaled, and agile “business of law providers,” that have invested in technology and customer experience, that are now gaining market share. By emulating the language of business and demonstrating their value to customers, they are gaining a solid reputation, loyal clients, and are reshaping the traditional boundaries of the legal function to be more proactive and impactful for enterprises.
Legal tech has not revolutionized the industry inasmuch as it has become part of the mix, as Artificial Lawyer explains, and a large amount of old-fashioned manual labour remains entrenched in the legal process. However, even these advances are enough to disrupt the economic model of legal production and provide competitive advantages to those that use technology to their advantage. Moreover, legal professionals are only at the beginning of their tech journey – the transformation is slowly, but surely happening, and has been picking up speed since COVID-19.
With a continuous stream of new legal service providers entering the market, competition has never been greater. To succeed in this new market, law firms need to consistently provide added value by accelerating their digital adoption and transforming their operations to meet consumers where they already are. Clients now have a plethora of legal service options to choose from, and will select innovative firms that respond to client pressure and improve the quality, speed and price at which value is delivered.