Key findings from a recent US survey by tech giant Aderant looked at the key challenges facing law firms – technology changes is clearly one of them, following issues like pricing, billing and collaboration.
The US survey provides an insight into how global law firms are facing these challenges, most of which are also faced by firms in New Zealand.
The survey notes law firms continue to face intense competition from new, alternative and traditional sources, including clients, which have increasingly taken more work in-house for the last several years.
All this has placed continuous pressure on pricing which in turn motivates law firms to seek out ways to perform high-quality legal work more efficiently and much of that outcome depends upon ‘tech tools’.
The highlights –
1) Top law firm challenges. Respondents indicated the top challenges facing law firms today are a) pricing pressure, b) improving operational efficiency, c) winning new business, d) growing more business from existing customers, and e) improving law firm agility and adaptability.
2) The billable hour reigns; firms don’t see broad AFA demand. The median number of law firm client accounts structured under alternative fees arrangements (AFAs) – those invoiced by a model other than the billable hour – is 14%.
3) Law firm billing benchmarks and challenges. More than half cite the sprawl of complex and lengthy outside counsel guidelines and the proliferation of e-billing technology as the most difficult aspects of law firm billing.
4) Collaboration inside law firms is changing for some firms. The market dynamics that are changing the legal industry are not just external. Nearly half (47%) of respondents said who they collaborate with, inside the firm, is different from five years ago.
5) Top legal tech tools. The top technology tools that deliver the most benefit for law firms include a) document management, b) financial applications and ERP, c) business intelligence, d) matter pricing and planning, and e) case management.
What’s unique about these findings and the survey, is that most of the answers stem from a specialized group of professionals on which law firms have grown increasingly reliant: non-lawyers with business skills.
Five Key Statistics from the Survey
The Aderant survey was aimed at examining current trends in the business of law and legal technology and garnered input from 112 respondents in late June of 2016. Other notable findings include the following:
- Business as usual? About half (48%) said business is about the same as it was last year, while a little more than one-third (36%) suggest business is picking up. Just 16% said business has gotten worse.
- Highly competitive. The vast majority of respondents (98%) said the market remains competitive or very competitive.
- Clients as a source of competition. About one-third (29%) said clients were the #1 source, while 44% said clients ranked second to other law firms.
- Accounts structured under AFAs. The percentage of law firm client accounts structured under alternative fee arrangements (AFAs) is 14% (median). An open-ended comment reflective of the overall sentiment for AFAs: “80% of our client base requires hourly billing.”
- The top 5 technology systems offering the greatest benefit to law firms:
- 66% say document management;
- 52% say financial applications or ERP;
- 49% say business intelligence (BI);
- 47% matter and pricing and planning; and
- 47% say case management.
The full survey is freely available for review without registration.