Technology is important to law firms, at a minimum it can help to increase efficiencies, mitigate risk and decrease labour costs. What is often overlooked by many firms though, is how technology can be used to gain competitive advantage, facilitate alternative revenue streams and attract new clients.
Opportunties
Focusing on how technology can reduce costs is the most common application of technology in traditional law firms today. The types of technologies that help improve efficiencies, typically fall into the category of ‘sustaining technologies’. Sustaining technologies do not fundamentally change what can be facilitated. An example of a sustaining technology in a law firm might be a faster photocopier or a lighter laptop. Most firms focus on how technology can aid them to do what they already do better, while fewer firms consider how technology can provide new opportunities. The types of technologies that present new opportunities are referred to as ‘disruptive technologies’ because they disrupt the use of an existing technology in a way that facilitates a new approach. An example of disruptive technologies include what USB drives were to floppy disks or the iPod was to the Walkman.
What stops most firms
The challenge in seizing the new opportunities is not in gaining access to the technologies that are needed, they already exist, the challenge is in adopting a strategic commitment to explore a path less travelled. To invest in an approach which challenges the way things have been done in the past, to get the commitment of a typically risk adverse group and to embark on something that may itself eat away at traditional legal services, seems illogical and is what Clayton Christensen terms ‘The Innovators Dilemma’.
For firms prepared to explore different approaches, the reward is high. Successfully tapping into new revenue streams, providing new services to existing clients or ascertaining an entirely new type or range of clients, can increase profitability far beyond what is possible through cost cutting alone. Firms that focus solely on using technology to reduce costs in place of increasing revenue, will find it exponentially more difficult to find new ways to reduce costs over time. To compound the difficulty, while many firms continue to focus purely on reducing overheads, their more progressive counterparts will be busy finding new ways to attract more of their current and future client base.
Disruption in the legal sector
The digital disruption that has impacted on retail, music and most other industries is very real. Whilst it has not always been this way, we are each familiar with accessing movies, buying goods, booking travel or undertaking research online. There are many examples of firms that are already well progressed in establishing innovative legal service offerings. These legal service offerings and other variants, will either directly or indirectly impact on traditional law firms over time. Australian based offerings such as LawPath, Legal AU, Nexus Law Group, Hive Legal or Law Choice Australia are each working examples of alternative legal service delivery models.
Embracing the change
With the desire to do so, there is nothing stopping a traditional, well established and well regarded firm from also exploring additional ways of meeting their clients legal services needs. For a general practice firm, providing one or more approach to different types of legal services does not mean discarding an existing client base, nor does it remove your ability to offer tailored and personable advice and services to your clients. In the end it has nothing to do with technology at all, it is about the value that you provide your clients and finding innovative ways to do that; no change there.
Image courtesy of Renjith Krishnan at FreeDigitalPhotos.net
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