LexisNexis' Bob Hadingham argues that law firms should be gearing up to radically overhaul their underlying business processes in order to emerge from the recession in the best possible form

The recession has thrown the legal sector into turmoil – not simply because of some of the predictable ways in which law firms have reacted to market conditions, such as cutting staff, laying off associates and even de-equitising partners. It has initiated irreversible change. For instance, hourly rates for legal services could soon be a thing of the past, as could the notion of 'partner for life'.

Most agree that economic recovery, however protracted and slow, is around the corner. This, therefore, makes it a good time for law firms to take action – to re-think their business and grasp the opportunity for innovation.

Further, as the market opens up as a result of the Legal Services Act 2007, firms really have no option but to operate in a more competitive, enterprise-like manner. The commercial imperatives to reduce costs simply cannot be ignored.

A steep decline in profitability is putting pressure on firms to look for ways of increasing efficiency to reduce costs. Improving business processes lies at the heart of it. Previously, most firms focused their business process efficiency efforts predominantly on legal process areas such as matter management. However, the recession has compelled a change in approach – law firms are now looking for business process efficiency beyond just the legal activities, spanning every aspect of the legal business – from finance and accounting to customer relationship management; from business development to human resources.

The rationale for business re-engineering

Historically, the legal sector has been one of the forerunners in technology adoption. There is recognition that technology and automation is crucial to achieving efficiency gains, which is perhaps the reason why firms deploy a plethora of platforms such as customer relationship, case and matter, and document and practice management systems. But on the other hand, often organisations 'make do' with disparate legacy systems that have evolved, developed and grown alongside the firm. Therein lies the problem.

While it is unrealistic to expect law firms in hard times to start from scratch, invest heavily in new technology implementations or justify huge upgrade initiatives, they can consolidate existing technology systems and re-engineer their underlying processes to create a unified platform from which to conduct their business.

Many of the larger law firms are already doing this. Mishcon de Reya is creating an enterprise-wide workflow-based platform encompassing all legal and business processes to maximise efficiency gains. Similarly, Farrer & Co is creating an integrated business environment by linking together all its existing best-of-breed applications, including its practice management, document management and customer relationship management systems.

It's all about the data

At the crux of all of this is data. It is today's business currency, with most organisations' success being closely associated with their ability to move, change, manipulate and use data to manage and run their operations. With so many different technology systems deployed in law firms, data is stored in multiple locations.

This not only diminishes the integrity of data, but also its usefulness. Workflow-led technology can enable law firms to re-engineer, streamline and automate business processes across all their technology systems so that the need for manual intervention for repetitive administrative tasks is minimal, duplication of tasks is eliminated and, most importantly, all data is available via a single interface.

This essentially means that workflow technology can formalise processes to execute tasks, define steps and escalation paths to ensure fail-safe execution and use a single method of data capture across the different technology systems so that there is a standard view and delivery of information across all functions of the firm.

As an example, consider the function of reporting. A number of firms use disparate practice management and accounting systems. This means that there is more than one repository of data within the organisation, making real-time and accurate reporting hugely difficult, timeconsuming and inefficient. However, by integrating the technology systems and streamlining the underlying processes, there can be 'one view of the truth'.

To truly do away with inefficiencies, firms must consider re-engineering the underlying processes across every aspect of their business. For example, in human resources, the process employed for new joiners can be automated and honed to ensure that fee earners have training and tools at their immediate disposal, making their function billable within a reduced amount of time.

In business development, the bid and tender management process can be streamlined to ensure that only the most appropriate personnel and references are included. Using embedded analytics, the team can then also calculate if the prospect would be profitable in the long term. By streamlining processes, the finance department can provide clients with a transparent view of fee structures in real-time, safe in the knowledge that all information is accurate and fully auditable.

This brings us to the issue of compliance. Aside from the frustration of entering data into systems multiple times and the ensuing inefficiency, disparate repositories of data are also a compliance risk. By streamlining all data processes and methods of data capture, there can be inbuilt, fail-safe checks to ensure regulatory compliance at all times. Because workflow technology is rules-based, it can ensure that corporate policy is enforced, reducing guesswork and personalisation of business practice by employees.

There is commercial merit in firms re-engineering their businesses. In fact, this argument applies not just to the legal sector, but to organisations across the board. Interestingly, only recently the United States Patent and Trademark Office (USPTO) announced its plan to achieve 3% annual efficiency gains in patents processing through the re-engineering of management and workflow processes.

With the economy showing signs of perking up, law firms should seize the moment, optimising their processes to address their own individual pain points and risks, leaving them poised for the new economy.

Bob Hadingham is platform director at LexisNexis Practice & Productivity Management.