Why investing in legal technology will give you the competitive edge

The legal sector is facing greater pressure to remain competitive, from client demands for faster delivery, regulatory scrutiny and growing operational overheads.

Firms are increasingly looking to technology to improve efficiency, compliance and client satisfaction, with over 60% of large law firms exploring the potential of artificial intelligence (AI).

The right systems can transform how a firm operates, but the cost of the initial investment often overshadows the long-term benefits.

Firms can take a more strategic approach to investing in their business with new technology.

Making the case for investing in legal technology

The need for firms to invest more in technology has been driven by several factors in recent years.

Hybrid working

From digital-first client communications to cloud technology adoption, the hybrid working model has increased the need for law firms to invest in technology to deliver exceptional client services, even when away from the office.

AI adoption

Solicitors are looking to AI to free up their time for more strategic work.

With 62% of solicitors in the UK intending to use AI within the next 12 months, the technology is being used to improve workflows, facilitate research and take on administrative tasks.

Flexibility

Demand for flexible working has increased.

Research shows that 63% of legal professionals want flexible work hours today, compared to 22% before the pandemic.

Technology is vital for teams who are not in the office, especially in areas like operations, client data and compliance.

The gains to client experience are already clear, with firms seeing:

• more streamlined matter management
• faster client onboarding and identity checks
• tighter compliance
• more accurate reporting

Overcoming barriers

The case for investing in technology has never been stronger, but firms may still have doubts.

One of the main reasons that firms might not be keen to adopt new technology is the cost.

Law firm budgets are often under pressure. Upgrading technology could seem like it would cause further strain.

There may also be concerns about the disruption when introducing new systems – from potential downtime to training staff.

For some firms, a lack of in-house expertise makes it harder to evaluate the options and integrate new systems effectively when they do make a decision.

Tradition can also play a part, with the familiar ‘we’ve always done it this way’ mindset holding firms back.

Without addressing these barriers, firms risk losing top talent, clients and revenue.

Choosing the right technology for your firm

Before investing in new technology, it’s crucial to map out the main problems you want to solve for your firm to make sure you choose the right option.

Bring heads of department and key decision makers into the conversation early to align on priorities and assess the return on investment.

For managing partners and finance directors, it’s essential to make sure the tools align with firm-wide key performance indicators such as:

• profitability
• billable hours recovery, and
• compliance audit readiness

If possible, carry out a pilot test on one department area before rolling out the technology across the entire firm.

This helps assess its effectiveness and identify any issues without disrupting the whole business.

Funding your investments strategically

Many law firms are exploring ways to invest without financial worry.

Finance solutions, such as those offered by law firm specialists like Shire Professions Finance, have become a popular way for firms with cash flow concerns to spread the cost of their investments.

Firms can proceed with their upgrade with fixed monthly repayments agreed upfront, while preserving working capital for operational overheads and other business priorities.

Specialist finance providers understand law firm cash flow cycles and can structure firms’ funding accordingly.

Repayment schedules can be mapped out against efficiency or revenue forecasts.

Reviewing the impact

A technology upgrade can be a great growth opportunity for any law firm.

Regularly assessing the impact of any new technology to see what has worked well – and what hasn’t – can help teams review and continuously improve their systems and workflows.

Once new technology or a tool has been rolled out across the company, these review processes will help show its impact and keep teams invested:

• tracking adoption rates, productivity gains, client feedback and retention, and reduced turnaround times
• building a continuous improvement cycle to review, refine and train your teams
• sharing successes internally to encourage buy-in for future innovations and upgrades

Why now is the time to invest

Now more than ever, investing in technology is key for law firms to maintain a competitive edge, retain client trust and improve operational efficiencies.

While the initial upfront cost may be seen as a barrier for some firms, with careful financial planning, firms can invest in technology that will support long-term improvements without the cashflow strain.