We explore some of the reasons why legaltech innovation can be challenging
For an organisation to succeed in the long term, innovation plays a crucial role. Today, many law firms employ innovation specialists or entire departments dedicated to this area. However, despite the huge selection of available technologies to solve seemingly any common challenge or problem, legaltech innovation remains a hard nut to crack.
In this article, we look at what innovation means for the legal sector, the barriers to overcome for those working within this area, and strategies for making innovation more successful.
What does legaltech innovation mean for law firms?
Although traditionally the legal industry may have been seen as slower to adopt technology than other sectors, innovation is now a significant area for law firms. Investing in innovation provides a number of tangible benefits – allowing firms to work more efficiently, remain competitive, be more client-centric, and adapt to the changing demands of the legal market.
Some of the areas that legaltech innovation typically impacts are:
- Efficiency: Technology such as automation tools, AI and machine learning (ML), can help reduce the burden of repetitive time-consuming tasks and admin, and lower lawyer burnout.
- Processes: Innovation can help streamline and improve internal processes such as document management, invoicing and client onboarding.
- Collaboration: Dynamic online platforms, client portals and real-time overviews facilitate easy and quick communication between multiple parties – irrespective of locations and time-zones. It can also help improve the client experience and, by association, the lawyer-client relationship.
- Project management: Legaltech can help lawyers manage complex projects with several stakeholders with greater ease and efficiency. The use of online platforms, for example, can make it easier to assign and track tasks and access relevant information.
- Knowledge management and sharing: Knowledge management is an important area for law firms. Extracting knowledge from the minds of lawyers and making it available to others is a crucial factor in building a knowledge pool and reducing reliance on specific individuals. Technology can provide lawyers with a means to share their knowledge, ideas and best practice in a way that’s accessible to others.
- Data and analytics: Data provided by legaltech can help firms gain useful insights that they can use to analyse performance, optimise resources, and identify areas for improvement. It can also help them make better-informed, data-backed decisions.
What are the key challenges impacting legaltech innovation?
Legaltech innovation is a complex area involving multiple stakeholders and a host of considerations to factor in. Whilst the primary aim of legaltech innovation is to reduce the pain points of law firms, and those working in or alongside them, innovation also comes with its own set of pain points. These can include:
1) Lack of alignment
The various departments within a firm may have differing priorities and mindsets. This can affect how impactful an innovation project can be and influence the budget and resources allocated towards it.
2) Fragmented legal landscape
The legal sector is both extensive and varied – taking in many practice areas, jurisdictions and processes. This can make developing and introducing legaltech challenging for those involved.
3) Risk-averse culture
The legal industry – by its nature – demands accuracy, attention to detail and precision. Implementing legaltech requires legal professionals to overcome concerns they may have about relinquishing full control of tasks that have previously been done manually.
4) Regulatory and compliance restrictions
Legaltech solutions need to comply with the strict framework of regulations and compliance requirements that prevail within the sector. Navigating these can be challenging for legaltech vendors and those working within innovation.
5) Resistance to change and lack of adoption
Countering resistance to legaltech innovation and barriers to adoption requires robust training and change management strategies. The more thought that can be put into these upfront, the more successful a firm will be when rolling out new tech. Time spent on training and upskilling in this area may be seen as a ‘non-billable’ cost, however, which can increase resistance further.
6) Security concerns
Data security and privacy is a crucial consideration in the legal industry. As such, legaltech vendors have a strict set of requirements to meet. Getting new technology past InfoSec and Risk teams within firms, and on the side of their clients, can also be difficult.
When technology makes sudden leaps and is thrust into the limelight (as is the case with AI currently), much of a firm’s resourcing may be pulled towards this area. Balancing new technological developments with the day-to-day core needs of the business can come under significant pressure as a result.
How can firms make legaltech innovation more successful?
Despite the challenges, there are steps firms can take to make innovation more effective, and ultimately more successful. We’ve listed a few useful strategies below:
1) Establish an innovation culture
Innovation should begin at the top of an organisation, with its leadership. It isn’t enough to have it confined to a job role or department. The ideology behind it and the potential benefits need to be understood and ‘felt’ by the organisation as a whole.
2) Form strategic partnerships
Law firms should work with others in the innovation sector, such as legaltech vendors, to help find the right solutions for their needs. They should also collaborate on a strategy to roll their chosen solution out. Selecting the right vendor can be critical to your success, so choose wisely.
3) Stay close to your users
Those working in innovation need to listen to the technology’s users to understand what is working and what isn’t. Similarly, they need to be aware of the feelings of third-party users concerning any specific pain points.
4) Keep it simple
The sheer number of available technologies can bring its own challenges in itself. Make sure your lawyers and legal teams know what technology they should be using for what purpose.
5) Change management, people and processes
These three elements play a crucial role in successful innovation. As such, they should not be underestimated – irrespective of how good the technology is.
6) Drive adoption and usage
Firms should encourage initiatives that use technology whilst there’s sufficient momentum. For example, trainees are often early adopters, so arrange mandatory training using the legaltech when they join so they’re familiar with it (and using it) from day one.
Identify adoption champions and look for opportunities to suggest legaltech to clients that have expressed an interest in it. Track clients who have specifically asked for legaltech tools to be used on their transactions as part of the pitch process to win the work. Then ensure this happens when the work begins.
Addressing the obstacles to legaltech innovation requires people of varying roles and mindsets to work together. It must also always start from a place of understanding your firm’s key challenges and what your employees and clients actually need to solve them. To find out how transaction management software can help you work more efficiently, see our customer success stories or request a product demo!