Legal and compliance professionals have historically had a reputation for being conservative and change-averse. But modern times call for modern measures.
Law has gone from being an elite profession to a global enterprise market worth almost €600 Bn in 2020. To cope with the outstanding growth of competition, law firms worldwide are looking for ways to differentiate themselves. In this context, digitization is increasingly seen as a way of standing out in the crowd, and LegalTech ultimately allows firms to be more competitive when pitching for new work.
This article outlines the most recent trends in the industry to help you plan LegalTech investments and set your business up for success.
1. By 2025, legal departments will triple their spending on LegalTech
According to Gartner, legal departments will triple their spending on LegalTech by 2025.
Legal technology, also known as LegalTech, refers to the use of technology to support legal professionals and their clients by easing the practice of law.
The legal industry was already undergoing a modest innovation phase even before the pandemic. Many of the more progressive firms had employed digital dictation, contract review software, or document management solutions. Some had even started working on their web presence.
But there’s no doubt that the outbreak has further pushed lawyers to widen their use of technology to meet pressing needs arising from distance and isolation. A perfect example is the use of digital signatures to sign documents remotely.
As a result, the demand for legal tech solutions is rapidly growing. 53% of legal professionals in the US and Europe revealed that their LegalTech investments will rise in the coming 3 years. Consequently, the LegalTech market - valued at €2.6 Bn in 2018 - is expected to reach €12.4 Bn by 2026, rising with a CAGR of 36%.
2. 87% of legal departments expect their number of employees to stay the same or decrease
Research by Gartner also shows that 87% of legal departments expect their number of employees to stay the same or decrease.
Traditionally, the response to address increasing workloads has been expanding the workforce. But hiring new attorneys or relying on outside counsel is undoubtedly much more expensive than adopting new software. Larger workloads can now be met by using technology to increase in-house productivity.
In general, 63% of operational tasks in a law firm are found to be fact-based, recurring, and repeatable – ergo, automatable. Lawyers waste too many billable hours on administrative tasks. Document signing, client onboarding, and due diligence activities are all tasks that LegalTech solutions can handle. This helps free up employees’ time so they can focus on the work that matters.
Digitization is reshaping the industry and levelling the playing field in law, enabling smaller firms to compete for work. Just a decade ago, the market was dominated by larger law firms as the smaller businesses could not take on cases requiring more resources. Technology has been a game-changer. When relying on digital solutions to speed up manual work, small legal teams can improve their competitiveness and gain a bigger market share.
3. 70% of law firms land new cases through their website
According to Law Technology Today, 70% of law firms land new cases through their website.
Modern customers are digitally savvy. They are used to getting the product they want online and looking for the services they need on the Internet. 38% of clients needing legal assistance search online. Therefore, a legal professional is best suited to thrive in this new reality by adapting to it.
While 3 in 4 lawyers have landed new cases through their website, 40% of small law firms do not have websites, and 35% have one, but it has not been updated in the last three years.
Aside from dealing with difficult clients (22%) and long hours (18%), generating new clients (17%) is one of the most challenging aspects of a lawyer’s job. You should ensure that your firm is discoverable on the tools that potential clients are using for their research. This might translate into having an up-to-date website with accurate contact information, as well as being active on social media.
4. Videoconferencing is the preferred method of communication for clients
Today’s customers avoid meeting in person if it’s not absolutely necessary. 25% of clients prefer emails as the initial method of outreach. Similarly, they prefer digital workarounds to any paper-based activities – be it filling out forms, handing over identity information, signing contracts, and so forth.
New technology is the key to meet clients’ expectations with a customer-centric approach. With digital tools, you can provide clients with real-time updates, send out automatic reminders and personalized emails, and keep them engaged. Mobile enablement adds convenience to the process as customers can connect with legal advisors without stepping out of their homes.
Legal professionals need to start using tech to deliver easier experiences - from the moment the client begins the search for legal assistance, to the collaboration once the relationship has been established, to the communication and support when handling their matters.
5. The most used LegalTech solutions are document review and management systems
Lawyers can now sift through filings available on their document management systems from any location and share documents in seconds with their colleagues. Whenever there’s a need to look at a specific contract, the document needed can be easily found and accessed.
However, 1 in 3 lawyers is opposed to cloud migration because of cyber threats and data theft risks. Cybersecurity concerns are often used to justify attorneys’ attachment to paper documents.
The legal profession is probably unrivaled when it comes to over-hoarding paper sheets. Still, paper records are much more vulnerable to security breaches. On the other hand, implementing technology can massively improve a company’s security profile. And the fear of cyber risks can be relieved by ensuring appropriate global trade controls, information security protocols, and privacy requirements abidance.
Besides, the migration to the cloud leads to substantial cost savings and enormously improves efficiency.
6. Many law firms will continue to work remotely after the pandemic
The physical offices are already making a comeback, but many firms plan on adopting a more hybrid approach to work. Major firms have invested heavily in their information and communication infrastructures. As law firms grow in size and expand the geographical reach of their services, cloud-based systems provide the mechanisms for coordinating and controlling their operations.
With cloud-based technology, attorneys can cooperate even when working from home or traveling to countries with different time zones. They can maintain communication with partners, colleagues, and subordinates, get updates in real-time, be notified about cases’ progress status, and more.
Workspace flexibility has had a far-reaching impact. Legal professionals can work from anywhere in the world, opening the doors to a broader talent pool. Businesses are now able to attract and freely pursue the best candidates, regardless of their location.
7. Legal professionals want to start leveraging data and analytics
The pandemic brought law firms to realize they can get work done with less. Moving forward, this logic needs to be transferred into cost optimization and profit increase. 80% of law organizations plan to adopt smart contracts, decision support tools, and predictive analytics technologies by 2022.
While law has been a late adopter, firms and corporate legal departments are now taking a new interest in how they can leverage data to improve their processes. Real-time insights and performance tracking can help to identify what work is getting done, by whom, and how long each activity takes to be completed. Having reliable data is crucial to eliminating process pitfalls, managing budgets, and making more informed and profitable business decisions.
Let Penneo set you up for success!
Even today, many legal professionals do not have an in-depth understanding of what technologies to use to derive better outcomes. 36% of lawyers don’t embrace digitization because they don’t know where to start.
For many lawyers, the lack of confidence in the way ahead is the biggest obstacle. Some might have realized it’s time to change, but they keep holding back because there is no clear path to follow. And that’s what we’re here for!
Penneo can guide you to get rid of manual processes so that you can focus on value-adding activities.
We can assist you to:
Speed up data collection
Our secure web forms let you gather personal data efficiently and securely. Your client can fill in the form from any device and location. You can then redistribute the information directly into your workflows, minimizing the time spent on data entry.
Automate client onboarding with our AML/KYC compliance solution
You no longer need to book in-person meetings or collect paper IDs via unencrypted emails. You can meet your due diligence, record-keeping, and reporting obligations in a safe, efficient, and fully digital way.
Get your documents signed, sealed, and delivered with our eIDAS-framed digital signatures
Penneo supports certificate-based eID signatures. Therefore, it enables the creation of advanced e-signatures surrounded by top-level security, built on PKI cryptography, and virtually impossible to defraud. Our signatures are valid and enforceable in the EU and worldwide.
Manage your documents and data in full GDPR compliance
All the data Penneo holds is safely stored in data centers located in the EU (Germany and Ireland) and never transferred outside the EU. As a trustworthy data processor, Penneo guarantees its customers greater power, awareness, and control over the collection, processing, and storage of personal data.
Check out our newest guide to get more insights on how to make your business more agile and your customers more satisfied.