Are SME law firms right to increase their tech spend?
We’re in an era when technology permeates every facet of our lives and the legal industry is no exception. This is backed by the findings of LexisNexis’ latest Bellwether survey of SME law firms, which found that their priority will be investment in technology to fuel organic growth plans, outranking recruitment plans and marketing / business development activities.
Amy Bruce, head of marketing at Osprey Approach, unpacks the Bellwether report findings against the lessons learned from Osprey’s Empowering Law Firm Leaders podcast, before sharing her thoughts on the direction of travel for the sector over the coming months.
Enhancing the client experience
According to the latest Bellwether Report, over half (56%) of firms have either spent, or are planning to spend, more on technology in the next 12-18 months to enhance their legal operations. Just 26% said they had no plans to increase investment.
Chris Bull, a leading legal consultant, who recently joined Amy for an episode of Osprey’s Empowering Law Firm Leaders (ELFL) podcast, believes that the figures- in part – reflect inflationary costs, rather than new tech spend, but says that firms “are doing more with tech [and there is] a lot more interest in practice specific and tools and technologies.”
One of the most compelling reasons for law firms to embrace technology is the potential to enhance the client experience. The Bellwether report found that 83% of firms say clients now expect responses in real-time. It follows that client-facing online portals for matter updates are among the most commonly cited areas for tech investment, providing clients with real-time access to their case information, fostering transparency and trust and improving client satisfaction and retention.
The survey also found that the use of Customer Relationship Management (CRM) and matter/case management tools is prevalent, with 74% of respondents utilising these technologies.
Technology can assist with the heavy lifting of client communications, providing automation and digital tools that make replying, updating, and collaborating with clients easier.
Simon McCrum, author of The Perfect Legal Business, and guest on the first ELFL podcast, said: “If I had a thousand adults in a room and I asked them who has used a lawyer, most would say yes. If I then asked them ‘how was it?’, typically most people say it was not a great experience.” Because of that wide-spread perception of law firms, Simon emphasises the importance of enhancing your client experience to stay competitive.
“If you could change that opinion, so that every time someone interacted with your law firm, it was amazing, then a number of things would happen… your happy client will become part of your salesforce and marketing.”
Overcoming financial constraints
Despite the clear benefits, financial constraints remain a significant barrier to technology adoption. The report notes that many firms are choosing not to upgrade to new technologies. This cautious approach is understandable but it also poses a risk: firms that fail to innovate may find themselves at a competitive disadvantage as clients increasingly demand more efficient and tech-savvy legal services.
To overcome these barriers, law firms can explore various strategies, such as ensuring existing systems are reviewed and optimised to their best advantage. This could include a critical analysis of how much of the system isn’t being used to identify missed opportunities, along with investment in staff training in collaboration with the supplier.
Sarah Charlton, CEO of SME law firm Eaton-Evans & Morris, advises that firms should align any tech spend with business strategy, so that any new piece of software will help them achieve their objectives: “Ensure the products you choose suit your business’s direction. Be focused on what you want to achieve and only procure solutions that are useful”.
Some firms may benefit from prioritising tech investments that offer the highest ROI, which includes CRM systems and client portals. Firms can also consider phased implementation plans, enabling them to spread the cost of new technologies over several years. By adopting a strategic approach, SME firms can balance the books against the need for innovation.
The role of Artificial Intelligence
Artificial Intelligence is another area where law firms can gain a competitive edge, although the Bellwether report – perhaps unsurprisingly – reveals an ambivalent attitude among SME law firms: 26% of respondents would consider the use of open AI sources instead of paid ones, while 27% are opposed, and 47% remain unsure.
There’s no doubt that AI tools will impact the legal sector in the coming months and years, enabling teams to implement it into automate routine tasks such as document review, legal research, and contract analysis. This not only saves time but also reduces the risk of human error. By utilising existing workflow automations, client-facing tools, or document production features – within case management software for example – firms can ensure they’re well placed to integrate AI in the future.
The future of legal technology
With the right legal tech in place, SME firms can yield significant productivity benefits, primarily by making non-billable activities more efficient. Those firms that embrace technology will be better positioned to navigate the challenges of the modern legal landscape and capitalise on new opportunities.
From enhancing the client experience to driving business growth and overcoming financial constraints, technology plays a pivotal role in the success of all modern law firms. As the legal industry continues to evolve, firms that prioritise technology investment will be well-equipped to thrive in an increasingly competitive market.
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