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Cultural change is the biggest challenge law firms face in keeping up with technology

An overwhelming majority of law firm leaders believe technology will have the greatest impact on law firms over the next five years but are deeply concerned that cultural changes may prove to be a barrier in keeping up with new technology, according to a new report.

The global legal industry is at a tipping point, and there is an urgent need for law firms to consider the longer term impact of technological change on their strategic and competitive market position, suggests a report by accountancy and business advisory firm BDO LLP. The report, entitled Law Firm Leaders Survey, polled the managing partners and senior partners of 50 international and United Kingdom law firms.

Law firm leaders believe that greater client demand, generational change and legal market consolidation will be factors that will affect the business of law over the next five years, but four out of five cited technology as the factor that will have the biggest impact. Yet while technology is considered a strategic priority for 94 per cent of law firm leaders surveyed, it is only a top strategic priority for only six per cent of them.

The practice of law however has been largely shielded by technological developments over the past fifty years, suffering little more than glancing blows. While the way that law professionals process and share information has evolved with new technologies, primarily with the emergence of personal computers, email, and the Internet, it did not fundamentally transform it.

“Technology’s impact on the legal sector is not new, but the degree of change over the next five to ten years is likely to be very different,” said the report.

Nearly one in five law firm leaders believe that artificial intelligence is the technology that will change their law firms. Some think it may replace the work of lawyers while others believe it will shed a significant layer of work and revenue from law firms. This in turn could bring about changes to the resourcing mix at law firms, the law firm model and its financial structures. Other law firm leaders would not go so far, believing the impact AI will have is unpredictable.

Artificial intelligence aside, nearly one in five law firm leaders believe that technology could lead to greater efficiency and productivity, but not necessarily a disruption to the business model. One in ten said that technology could lead their firms to offer new services to clients and it could change the way they are delivered. Technology, these law firm leaders believe, will enable or drive them to offer a wider range of services to clients, and provide better and deeper legal analysis.

“New technologies are likely to replace some the routine work which is currently undertaken by junior lawyers,” said one law firm leader. “In turn, this will have an impact on the shape of the law firm of the future.”

But almost half (49 per cent) of law firm leaders said cultural change is the “greatest” challenge law firms face in keeping up with new technology. There is an interesting disparity however between global and UK firms. Twice as many global law firm leaders believe that cultural change amongst the partnership – as opposed to across the firm – was the main impediment. UK heads were three times more likely to say the challenge lay within the firm compared to the partnership level.

Investments in technology too was a preoccupation of global law firm leaders. Nearly 30 per cent of them viewed new investment funding as their greatest challenge, “perhaps because of the scale of investment many are looking to make in new technology.” The nature of the partnership model is another factor that was cited.

“In this new world where technology and changing client demands are causing firms to reconsider how legal services are delivered, is it feasible that law firms can continue to provide legal services in the same way they have done for decades?” asked rhetorically Matthew White, international practice leader, professional services group at BDO. “Law firm leaders must accept that if they want to maintain competitive advantage they will have to be much bolder in their approach to overcome with these disruptive market changes.”

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