For many years the Legal sector was generally recognised as a closed profession with traditional business structures, the billable hour and somewhat outdated processes and practices.

Post the Legal Services Act (2007) and the emergence of the Alternative Business Structures,  new ways of operating and investment opportunities are gradually opening up, but adoption is slower than expected.

Covid related lockdowns have caused some areas of Law to suffer, while a few have flourished. Still, overall, a survey by the Law Society’s Law Management Section suggests that firms are forecasting a 10-20% drop in revenue for the 2020/2021 financial year.

Surely now, more than ever, the Legal sector must innovate: can intelligent automation help?

Listen to the podcast episode

In this Digital Know How podcast episode, digital experts Damon Harding at Digital Works Group, and Dave Horton from Triad discuss the challenges facing the Legal sector as well as opportunities and potential solutions

Damon’s expert advice for leaders in the Legal sector

Dave Horton of Triad explains the ‘intelligence’ and how it can help

The podcast interview transcript

Clare Carroll:

Today we’re talking about innovation in the Legal sector and the use of Intelligent Automation. I’m delighted to say that I’m joined by two digital experts, Damon Harding of Digital Works Group and Dave Horton of Triad.

Damon is an established strategic business transformation leader and a non-executive director. He’s been successfully transforming complex businesses for over 20 years. One of Damon’s key specialisms is process re-engineering, and he has a track record of driving improvements to the front and back-office processes.

Dave heads up Triad’s Intelligent Automation practice and is responsible for providing IT strategy and architecture services to clients. He has helped UK law firms and government bodies, including the Department for Transport and Highways England and is committed to ensuring businesses secure the benefits that automation offers.

Hello, and welcome to you both. Thank you so much for joining me today.

Damon, shall we start with what impact the pandemic has had on the legal sector and perhaps some of the challenges?

Damon Harding:

Yeah, I think it’s probably worth saying that the legal sector was in some degree of flux before Coronavirus hit. So I think the three main things were:
– increasing pricing pressures from clients and big moves to manage costs, including legal process outsourcing.
– the new types of legal services, the alternative business structures, the delivery model is still being worked out. So a fair degree of flux on that.
– the massive growth in new technologies and with it, the new types of legal roles emerging.

So there’s a lot of change in the legal sector. Then add on to that the impact of Coronavirus!

I think the Law Society’s benchmarking survey, which they did in conjunction with Lloyds, suggests that reduction in revenue in 2021 could be 10 to 20%. For the legal sector, that’s going to further compound the cost pressures that they are already facing.

You’ve got some very hard-hit areas such as litigation, PI, clinical negligence, commercial and corporate services where things aren’t really progressing during a lockdown. Then other areas like private client and employment law are thriving because there’s so much extra work to do. Add on top of that the remote working challenges which many legal firms are trying to work out, as with every other industry, but for legal, you know, document exchange physical signatures, face to face meetings with clients, they’re all very big challenges to face.

Clare Carroll:

Absolutely Gone are the days where you could just pop down to your local solicitor’s office.

Dave, what other challenges, besides the ones that Damon’s mentioned, is the legal sector facing?

Dave Horton:

Things I’ve observed the most when I look at the lawyers working is that they don’t have the tools they need to do the job effectively. That results in lawyers doing a higher amount of what I would say is administrative work (challenged by their clients), and they invoice them. If I look more deeply at what are the causes of that, it breaks down to three things:

  • The first is data management. I see lawyers having to wait to input or extract data when they’re away from the office because they don’t have the right tools to enable them to do that. Not being able to store increasingly large amounts of data so that it is easily discoverable later when it’s needed. Quite often, data is held captive in the systems it is input into because there are niche systems, focused on very specific things. If you can’t get to the information, you limit the effectiveness of your ability to do your job.
  • The second challenge I see is kind of related to data management in that there’s a high reliance on paper documents or their electronic equivalents like PDFs, or even faxes in some cases. It’s just so difficult to get that data off. Quite often it’s rekeyed, and it’s repeated with mistakes. So the quality there suffers.
  • The third challenge, I think, and it’s an enduring theme within the law sector, is the concept of the billable hour. It comes up many times, but realistically now the corporate clients are requiring more predictable legal costs. They’re questioning the breakdown of those invoices. So if your Lawyer’s doing more administrative work that a support member of staff could do for them, it would be a lower invoice. So they’re questioning what their lawyers are doing. Also related to that is effectively extracting the information data held in the systems we mentioned before. That just takes too long, so that adds to the bill on the invoice. They can’t give their clients the information as quickly as they need it. Ultimately, when you’re working in a billable hour, from a staff perspective, there’s a fatigue that sets in. The job satisfaction is not there, and there can be a degree of turnover as well, or just pure burnout because people aren’t being as effective as they really are. But the underlying point is, the challenge is that they don’t have the effective tools they need to do their job.

Clare Carroll:

Yes, exactly. Obviously, having client dissatisfaction is one thing, but then also having employee dissatisfaction is an added problem.

What do you both think law firms should be focusing on right now? And what should they be prioritising?

Damon Harding:

Obviously, the thing that most needs to happen is they need to embark on digital transformation in order to make use of some of the tools that Dave’s been talking about.

So I think where you start with digital transformation is really understanding what drives value for the group or firm. There is this focus on billable hours, and you have to bill as many hours as you want, but what about services with outcomes? What really drives value for the organisation? Financial things as well as nonfinancial things, you know, employee satisfaction or employee engagement could be one of those things. Customer satisfaction could be one of those things, and some of the ethical and environmental factors can also be perceived as value drivers within the organisation.

Then I think, facing this fact that much legal work is routine administrative stuff and clients don’t like paying expensive lawyers to do routine administrative work. The flip side of that is the technology solutions can often do these jobs more efficiently and accurately than humans can. The other side to that is that creating services with the knowledge that you can help businesses with prevention and risk management rather than expensive litigation at the end of something going wrong. I think this is often described as the ‘fence at the top of the cliff’ rather than ‘the ambulance at the bottom’. The operations need to adapt and transform to leverage these new services. So there are new skills and roles developing and emerging, such as legal knowledge engineers, legal project managers, legal process analysts, and all of these need to work together to facilitate transformation within the legal sector. So I think that’s one of the biggies.

Dave Horton:

I absolutely agree with a number of things you’ve said, Damon, on the transformation aspects, and I can relate back to some of the points made. The ability to move away from what I previously mentioned, as a kind of a time-based activity towards an outcome and results-based service is really achievable if you adopt technologies and tools like Intelligent Automation. It’s a real effective enabler of this because the point Damon made about the technology and the transformation is that these tools can work with the lawyers, not necessarily replace them. Although there are some that can do that, but the aim is to work with the skills and knowledge that exists in a law firm.

In addition to that, I think there’s also the IT department within the law firm. Traditionally, that’s been seen as: Can you reset my password? Can you fix this application? Can you give me access to that? But I think the transition required there is for them to be working in partnership with the business rather than as a supplier to it. In other words, they’re delivering products or information to the lawyers that need them to service their clients, they’re part of that delivery of legal expertise. That doesn’t mean to say they’re just doing the admin work that the lawyers are currently doing, and doing it cheaper, but it’s optimising the information the lawyers need to be effective. So there’s a good balance, and it puts the IT team potentially into the fee-charging world.

Clare Carroll:

I guess my question is, what is Intelligent Automation? How does it help?

Dave Horton:

It’s become a bit of a label right now. If I was to describe what the success factors are, to enable automation to help. They are:

  • You need a platform that brings technologies together. Intelligent Automation enables that process as it acts as the glue as you develop a new workflow.
  • A well-defined process. So in terms of the kind of administrative tasks that we’ve said that are a burden to lawyers when they perform them currently. The way around this is to find what the repetitive tasks are, cost them up and see how much time can be saved by automating them. The transformation is really, really important here because if you believe your process is good, but it isn’t, all you’re going to do is automate the problems. They’re going to be exacerbated. So, step back, look at the processes. Pick the repetitive ones first that can be easily automated. By doing this, you’ll end up with a better handle on the data. You’ll probably be able to achieve a 360 view of client data, specifically if they’ve got services and multiple different legal disciplines in the firm. Ultimately, you’ll become more data-driven.
  • The third one is really to have the right team and implementation partner, a business champion to promote automation and drive its adoption in the organisation. Because there will be fear, uncertainty and doubt that “it’s replacing my job”. It’s absolutely not doing that. Intelligent Automation works best, alongside a human. It complements the activities they perform. As I said earlier, it’s about having the right tools to enable them to do the job.

Clare Carroll:

It’s interesting what you were saying about people being afraid of this kind of technology taking over their jobs. What sort of intelligence are we talking about?

Dave Horton:

We’ve been doing automation for years; the intelligence bit is really benefiting from the commoditized, artificial intelligence capabilities. It sounds a bit advanced, but actually, when you look at what commoditized artificial intelligence gives you, it’s things like natural language processing. The hard work that would have been done, it’s been built for you, and now it’s more accessible than before. So lawyers could use that. They can train up the technologies to understand the legal language better because it’s more structured than the conversation we’re having now, for example. Therefore, this allows them to process legal documents quicker. They can probably get insight on what’s being said, but the ultimate judgment is with the human, it’s an advisory service.

There is sentiment analysis as well, which is well used in social media. You know; Is your customer happy? Sad? Are they likely to praise you or criticise you? You can apply that to legal statements, documents, again, in an advisory capacity to inform the lawyer on the decisions they need to make.

The third commoditized bit of intelligence is computer vision. Really, what that means is, if you have a photograph in a document, you can extract it by just pressing a button, and it’s in your system or evidence file, case file, whatever. But also, if you have a table of data that’s in a PDF file, rather than recreate it, the computer scans it and brings it in as editable text. So that rekeying problem and the errors I mentioned earlier, are mitigated by these techniques. The automation aspect just really brings these together in a total package, enabling the lawyers to do their jobs more effectively. It reduces that administrative burden and obviously reduces costs for the company overall.

Clare Carroll:

Absolutely. Okay, thank you Dave.

Damon Harding:

Can I just say something quickly Clare? The cost reduction is obviously important. But I also think, the redeployment of skilled resources on to other things, which are more value add, is also a key attribute. I think there’s a lot of focus in Intelligent Automation on the cost reduction business case. But we also need to look at how skilled resources can be redeployed into more value add activities as well; I think that’s very important to capture.

Clare Carroll:

Absolutely. Damon, I think that’s a really valid point you’ve made.

Dave Horton:

Yeah and I’d like to build on that. A question I get is, “Dave if I’m automating my processes, I’m not going to be able to bill my clients? I’m billing them less! So why should I do that?”. The answer is no; you can bill more clients; you can grow your business! From a private sector perspective, you could do more of the same thing as you’re not capped. So if your business now is at a point where you can’t really take on any more new clients without hiring people, you’re going to add to your cost base but make less profit. If you automate it, you could do more with less. You increase your profit; you don’t really have to create large amounts of invoices and try and build your customer accounts from within. You can look to grow from the outside and build your company at the same time.

Clare Carroll:

Thanks, Dave, that makes perfect sense.

Can you give me a practical example of how Intelligent Automation has been used?

Dave Horton:

I think it’s really important to learn from what other sectors are doing, and consider how that can apply to the legal sector. So at the start, I mentioned the challenge of accessing data when you’re not in the office, the kind of mobile working field worker basis. There’s an example that we’ve done for a surveying company and what they had was a very costly manual process for site visits.

So they’re travelling around the country, but the whole allocation of where you’re going and what to do was manual and subject to errors. The way they addressed that was an IT modernisation project. The specific bit we did on the automation was to solve their daily booking process. Allowing a better allocation of surveyors, significantly reducing manual administrative burden there, because we’ve got access to their information that’s in different systems. We created a platform to bring the information together, so we could more accurately assign the right person to go to the right site. So it was a more effective use of transport time and all that. That really did improve the working day of the surveyors; they were less frustrated. Previously, they were being sent on long journeys, when someone else closer could have done the job. It was all achieved because we use this platform to bring their technologies together. The automation bit was really the glue to enable that. It’s a small thing, but it had a big business impact.

Damon Harding:

And I think the legal sector before the application of the alternative business structures was very closed and not necessarily open to new ideas and innovation. The opening up of that sector has enabled new ideas to come in, new investors from different industries. As those ideas, just as Dave’s described, get applied to the legal sector, they will bring a whole load of innovation, new solutions and new ways of looking at things that perhaps people working in the legal sector wouldn’t have thought of.

Clare Carroll:

Brilliant, thank you Dave and Damon.

Damon, what are your thoughts? What would you advise leaders in the legal sector to be thinking about doing?

Damon Harding:

I think that legal firms really need to be focusing on the big themes at the moment because there is so much to focus on, if you don’t focus on the big themes, you’re going to miss out.

I think those, just to go back and reiterate, are the client cost pressures; they’re not going to go away. So looking at efficiencies and better value. The liberalisation of the legal markets with the alternative business structures and legal process outsourcing, they’re here to stay. Making sure that those processes are optimised is a big area of focus. Then finally, the tech is advancing at such a pace, and we know it will take up repetitive administrative tasks with greater precision, and also recall capability as well, so that’s a big advantage.

So I would say that embarking on Intelligent Automation of processes now is a really good and smart way to start reducing your costs and redeploying skilled resources onto value add activity. So those are the things that I would focus on.

Clare Carroll:

Thanks, Damon. That’s really good advice.

Well, I’m afraid that’s all we’ve got time for today. So a very big thank you to Dave Horton of Triad, and Damon Harding of Digital Works Group. It’s been really interesting to hear some ideas on how the legal industry can innovate.

Lightly edited for readability! 

Can the Legal sector really open up? Will ‘LegalTech’ be the new FinTech? We would love to hear your thoughts. 

Damon Harding
Damon HardingPartner