Innovation. It’s a term that has forced its way firmly onto the agenda of law firms large and small. A term that’s overused and under-defined. But what does innovation actually mean in the legal sector, an industry that has traditionally been somewhat slow to embrace new ideas? How is it defined in real terms and how does this vary between different sizes of firm?
Trying to answer these questions, and many more, was the main driver behind Travelers’ recent Innovation in the Legal Sector report.
Given our strong presence in the legal sector, we’re perfectly placed to shed light on all the opportunities, and challenges, that are now opening up. Exploring everything from becoming more efficient and more profitable, to developing exciting new revenue streams.
It’s fair to say the results were as varied as they were fascinating. It’s clear there’s no single notion of what innovation actually ‘is’ or means. But we can all agree that it’s critical to the future prosperity of a sector going through an unprecedented period of change.
What does innovation mean to law firms?
For some, innovation is all about offering greater value to increasingly demanding clients. For others, it’s about addressing increasing demands for flexible working opportunities. And for another group, it means focusing on the regulatory aspects of evolving risks, like the impact of cyber attacks for example.
The answer varies from one firm to the next. But one factor that touches on everything is the increasing influence of technology over how the profession works and how it delivers legal services.
A greater focus on technology
While the legal sector may have been slower than others to recognise the importance of technology, it’s finally an issue that seems to be moving out of the basement and into the boardroom, as we move inexorably towards a more digital future.
In fact, 37% of surveyed firms said technology was their most innovative initiative in the past three years, and a significant 83% agreed that law firms are increasingly adopting new technology.
Improving efficiency, accuracy… and risks
One of the main reasons law firms are investing in technology is to enable remote access. In fact, many saw this as the key driver, leading to a proliferation of technological solutions to ensure remote working in a safe and secure way. Just one example of this is the introduction of two-factor authentication process – to help keep firms’ systems secure when users access them remotely.
A large number of firms also said they had adopted technology or software to improve the efficiency and accuracy of case, document, billings, conflicts and risk management.
Unfortunately, as investment in these technologies increases so does the proliferation of online threats, with the result that risk management around cyber security in particular has become a major concern for many.
How meaningful is this innovation?
While there is a clear move towards technological innovation, which has had a huge impact on the way law firms are run, the solutions currently being adopted are perhaps at the more conservative end of the innovation spectrum.
At the more extreme end of the spectrum are genuinely cutting-edge innovations, like artificial intelligence (AI). A fairly simplistic definition of this exciting advance is to describe it as a new set of technologies capable of extracting and interpreting relevant information from lawyers. The net result is an effective stripping out of the more labour- and time-intensive elements of legal work.
With only 8% of surveyed firms currently using AI, it’s still very much a niche application. But it’s more a case of ‘when’ not ‘if’ for many, with 45% saying they would use AI in the next two years. This figure climbs to 69% when the survey hones in on the top 25 firms ranked by revenue.
So it certainly appears as if the pace and intensity of innovation is only set to increase in the future.
Overcoming the barriers
More often than not, the will is there to adopt new technology but it’s a reality of business that the budget isn’t always there. With 37% of respondents citing cost as the biggest barrier to overcome, one possible interpretation is that technology should increasingly be seen as more of a long-term investment, rather than a short-term expense.
The next big obstacle was uncertainty over the benefits new technology will deliver and questions regarding how it will complement existing technology and work processes.
But these are all concerns that can be overcome or protected against with the right expertise and experience, which is changing the skillsets firms are seeking.
Forward-thinking risk management
Innovation brings many benefits and rewards but, inevitably, new or evolved risks too. One particularly pressing example is the increased likelihood of user error as technology becomes more and more advanced. Fortunately, these risks can be mitigated with a combination of careful planning and specialist knowledge.
As a leader in solicitors’ PI insurance, Travelers is in a privileged position to spot trends from firms of all sizes. Combined with insight from our colleagues specialising in other industries, we’re uniquely placed to help enhance our clients’ knowledge of how to innovate, without exposing themselves to unnecessary risks.
We’re constantly reviewing market trends and amassing a growing wealth of data, such as the findings of our Innovation in the Legal Sector report. And we’re more than happy to share our learnings, as well as how we can deliver thought leadership on the issues that affect you.
To discover more, simply download our full report at travelers.co.uk/innovation.
James Jack (pictured above) is head of professional indemnity, Travelers Bond and Speciality Europe.