swim-with-sharks

Lawyers aren't known to be the most tech-savvy, but they should improve their understanding and use of technology to differentiate and improve their practice, unless they want a race to the bottom in pricing to compete.

A Wolters Kluwer Legal & Regulatory-conducted survey, “The Future Ready Lawyer,” found out of 700 U.S. and European in-house and private practice lawyers, only 34 percent said their organization is very prepared to keep pace with changes in the legal market.

Dean Sonderegger, vice president and general manager of legal markets, innovation at Wolters Kluwer Legal & Regulatory U.S., said technology can fuel the process to create deeper insights and specialized services to differentiate a firm's services and stay competitive. If they don't, Sonderegger said, they risk “race-to-the-bottom pricing if it's commoditized.”

He added the lack of tech preparedness is because of various factors, including tech's maturity and user-friendliness.

“When I think of foundational technology, things like client portals, time and billing, I think most firms are comfortable with those types of things,” Sonderegger said. “I think when you start getting into the challenges of predictive analytics, artificial intelligence, machine learning, I think those things are so new it's challenging for attorneys to understand, and in some cases the categories are evolving.”

Lack of technology knowledge, understanding or skills was the top factor (36 percent) for resistance to new technology, according to the survey. A close 34 percent cited organizational factors, such as a lack of overall technology strategy and a work culture that fears change/doesn't reward innovation, made them shy away from new technology. Following closely behind was cost and return on investment (30 percent).

While a firm's or legal department's commitment to technology is important, Wolters Kluwer found an attorney's age is also an influencing factor in tech preparedness. Notably, it found millennials are more likely to say they have a very good understanding of technology—their reported understanding of various technologies' impact on their practice all hovered under 30 percent, compared to Gen X and baby boomers plateauing at 19 percent.

Still, clients are a strong motivating factor in compelling attorneys of any demographic to adopt and leverage technology, although their insistence may not be straightforward.

Sonderegger said in-house's technology demands of its outside counsel aren't explicit. “They don't care how the work is done but the service and price that it's given at,” he said.

To meet that demand, outside counsel can leverage technology to answer those concerns and offer deeper insight through data analysis software. “The area that is on the wave and maturing is really the use of machine learning and AI technology to break down and understand the creation of analytics around data,” Sonderegger suggested.

Indeed, over half (61 percent) of respondents to the survey said they expected some or a significant impact with big data and predictive analytics, though only 23 percent said they understood it very well.

From the in-house perspective, technology can better enable corporate legal departments to solve legal matters without a third party and cut costs. “What's bound to happen with those enabled technologies are the things I can do in-house will expand [and] my ability to do things that I may have outsourced will get much better,” Sonderegger said.

He also noted the survey's “striking” similarity in challenges faced by law departments and firms in the U.S. and Europe. “The procedures and laws are local, but you see a lot of the commonality in challenges,” he said.

However, the survey did highlight one difference between U.S. firms and their counterparts across the Atlantic: Price was the No. 1 factor (37 percent) used to evaluate law firms in the U.S., according to the survey. In contrast, Europe's top evaluation factor for a firm was its ability to understand client needs/partner with clients (19 percent ) followed closely by price (18 percent).

Sonderegger said law firm pricing was viewed differently in Europe because, unlike the U.S., legal operations isn't yet a mainstay. He said pricing would likely become a bigger evaluation factor in Europe when legal operations are used more often.