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Technology in the legal sector: a race towards digital transformation

legal sector

Digital transformation and investment in technology in the legal sector are key in managing the effects of the pandemic.

The global pandemic has accelerated digital transformation also in the legal profession, marking an important step especially for some fundamental technologies in business management and cost containment. However, the gap in the ability to make the most of technology in the legal sector remains wide.

” 2021 Wolters Kluwer Future Ready Lawyer Survey: Moving Beyond the Pandemic ” is a research carried out by Wolters Kluwer Legal & Regulatory on a panel of over 700 professionals in the legal world between firms and corporate legal department of the United States and Europe, precisely to understand the importance of digital transformation and investment in technology in the legal sector and how many of these professionals are keeping up with the digital transformation still underway.

80% of the panel highlighted an increase in the need for technological solutions as a function of the pandemic. “Research shows that technology solutions have proved essential for business resilience over the past year,” said Martin O’Malley, Executive Vice President and Managing Director Wolters Kluwer Legal & Regulatory . ” Professionals see digital transformation and technology in the legal sector as two drivers of change in which they will continue to invest to improve performance, efficiency and productivity “.

Confirmed the general trend of the last three years regarding investments in technology in the legal sector, which will increase for 61% of respondents (51% in 2019, 60% in 2020).
For 77%, the greatest impact in the next three years on the legal sector will be generated precisely by the growing importance of technology as well as the ability to manage a greater amount of complex information. In contrast, for the second consecutive year, the ability to manage these technologies: only just over 30% of the interviewees, in fact, believe their business is capable of doing so.

In 2021, those who foresee the use of “alternative legal service providers” (ALSP) are increasing from 68% to 73%.

The relationship with digitalization also affects the choices of external consultants: 91% (81% in 2020) of corporate legal offices already ask, or plan to do so, how the law firm they rely on uses the technology. For 82%, the ability to use technology to improve productivity and efficiency – as well as collaboration and work processes – is the first evaluation factor in selecting the legal partner to rely on.

Among the technologies that are revolutionizing the legal world, the best performing technologies are confirmed in first place, capable of bringing greater added value. In particular: Big Data and predictive analysis in the next three years will have an impact on the legal activity for 75% of corporate legal offices, up from 67% in 2020. The percentage relating to law firm website development is also increasing, it stands at 69% compared to 58% in 2020. In this case too, the general gap in the application of these two types of technology in the legal sector is confirmed: in fact, less than a third declares to know them very well. Expectations are growing, at all levels, of the impact on business generated by transformational technologies.
Transformational technologies are on the rise : according to 75% (67% in 2020) of corporate legal offices, Big Data and predictive analytics will have an impact on their businesses over the next three years.

Investments in technology in the legal sector have seen greater preparation by law firms and corporate legal departments since 2019 (46% of respondents), which have proven to be able to manage the crisis generated by the pandemic, while maintaining business continuity. 65% also confirmed that they want to continue investing in innovation.

Research data on investment in technology in the legal sector.

Following a particularly complex year, lawyers expect that, in overcoming the pandemic, the trends already highlighted in 2020 will accelerate at all levels. The main dynamics estimated to have the greatest impact on the activities of the legal sector are:

  • Growing importance of technology in the legal sector (77%)
  • Handling a greater amount of complex information (77%)
  • Meet changing customer / leadership expectations (76%)
  • Ability to hire and retain talent (76%)
  • Focus on improving efficiency / productivity (75%)

A significant gap is confirmed between the overall trends and the readiness of lawyers to keep up: only 36%, or a lower percentage, of lawyers say their business is prepared to keep up with these trends.

Relations between client and law firm

Faced with the need to improve productivity, technology in the legal sector is more exploited by corporate legal departments which require their legal advisors to do the same:

  • In the next three years, 91% of corporate legal departments plan to ask the firms they intend to work with to describe how they use technology, up 10 points compared to 2020.
  • An increasing number of corporate legal departments believe it is important that the law firm they work with:

– you use technology to offer the best possible service – 78%

– use technology to improve productivity / efficiency – 76%

The Future Ready Lawyer 2021 research highlights the discrepancy between the expectations of corporate law offices and the ability to meet them by the law firms they target. This gap in technology in the legal sector means that only 30% of corporate legal departments are very satisfied with the law firm that assists them. More corporate legal offices intend to change their consultant: 24% of corporate lawyers say that the replacement of the current law firm is “highly probable” compared to 13% in 2020.

Corporate Legal Department

The pandemic has exacerbated the pressure on corporate legal offices. Faced with a significant increase in workload and limited resources, the main challenges identified by the corporate legal offices included in the “2021 Future Ready Lawyer Survey” are:

  • automate routine activities and leverage legal technology in business processes;
  • reduce / control external legal costs;
  • manage the growing requests directed to the corporate legal department.

To overcome these technology challenges in the legal sector, 57% of corporate legal departments expect their technology investments to grow over the next three years, while 84% expect greater use of technology to improve productivity.

In the face of cost cutting and increasing demands, corporate legal offices are changing their way of working. The technology in the legal sector will thus be used by most of the corporate legal offices: third party or outsourced resources (77%); internalization of legal activities (76%); contract staff (75%); alternative service providers (73%); personnel who do not practice the legal profession (70%). Each of these areas has shown increasing percentages compared to 2020.

With change also come challenges. Only 28% consider their office very prepared to efficiently implement Change Management processes and only 27% to implement Transformational Technology in technology in the legal sector.

Legal Studies

Law firms are committed to responding to increasingly pressing demands from companies, investing and innovating on technology in the legal sector to increase the efficiency and value of their consultancy.

These foresee changes in all areas of the profession. The following are the areas highlighted by the “Future Ready Lawyer Survey” in which most law firms expect a change in the way they offer services in the next three years:

  • 82% expect greater specialization of the legal services offered
  • 81% expect greater use of technology in the legal sector to improve productivity
  • 78% expect greater attention to innovation
  • 78% expect greater collaboration and transparency between law firms and clients

63% of law firms expect growth in their technology investments; while studies focus on changing customer expectations, 74% emphasize that they will invest in new technologies to support business and customer work.

However, studies need to take some steps forward as only 32% believe they are very prepared to use technology in the legal sector to increase productivity and only 28% are prepared to use technology to improve customer services.

In conclusion, with regard to investments in technology in the legal sector, the legal offices, including corporate ones, are evaluating new working methods. Compared to 2020, a higher percentage of law firms plan to increase the employment of non-legal personnel to carry out the work (69%); self-service tools for customers (68%); third party or outsourced resources (68%); and contract staff (65%).

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