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The 2024 law firm

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Usually, at the beginning of a new year, we look back at the trends in legal technology of the last year. Unfortunately, the reports that are needed to do that are not available yet. So, instead, with Lamiroy Consulting turning 30 in February 2024, we will have a look at the 2024 law firm, and at how law firms have evolved over the last decades. We will discuss a range of topics concerning technology and automation in the 2024 law firm, including artificial intelligence, communications. We will see how the cloud, remote work, and virtual law offices have changed law firms, etc.

Technology and automation in the 2024 law firm

Let us go back in time. The early 80s saw the introduction of the first personal computers and home computers. Word Processors had been around since a few years before that. They were found in only a very small minority of law firms at the time. The Internet as we know it, did not exist yet. By the time 1994 came, things had started to change, and a legal technology revolution was on the horizon. Fast forward to 2024. Law firms that don’t use computers or equivalent mobile devices are an endangered – if not extinct – species. Many operational processes in the law firm have been automated.

So, it is safe to say that over the past decades, technology and automation have transformed the legal industry in many ways. According to a report by The Law Society, some of the factors that have contributed to this transformation include increasing workloads and complexity of work, changing demographic mix of lawyers, and greater client pressure on costs and speed.

Two of the most significant changes has been the introduction of the internet with its cloud technologies and of Artificial Intelligence (AI). Most of the evolutions described below have been made possible by the Internet.

Artificial Intelligence

The introduction of Artificial Intelligence (AI) has been one of the main factors driving a substantial transformation of the legal industry. One of its main benefits has been that it notably improved attorney efficiency. AI plays a key role in tasks such as sophisticated writing, research, and document drafting, significantly expediting processes that traditionally could take weeks.

Communications

Law firms have moved from traditional methods of communication such as snail mail to more modern methods. These include email, client portals, and cloud-based communications, like Teams and SharePoint. They allow people to share documents with different levels of permissions, ranging from reading and commenting to editing.

Client portals have become increasingly popular in recent years, allowing clients to access their legal documents and communicate with their attorneys in real-time. This has made it easier for clients to stay informed about their cases and has improved the efficiency of law firms.

Cloud, Remote work, and Virtual Law Office

The legal industry has experienced a notable surge in remote work and virtual law offices. Much of this has been particularly accelerated by the COVID-19 pandemic. Virtual law offices, facilitated by cloud-based practice management software, offer attorneys the flexibility to work from anywhere, leading to increased flexibility and reduced overhead costs for law firms. The cloud has played a crucial role in this shift. It allows virtual lawyers to run fully functional law firms on any device with significantly lower costs compared to on-premise solutions.

Digital Marketing and Online Presence

The legal industry has also witnessed major changes in its marketing practices over the past decades, adapting to the internet era. Recent studies indicates that one-third of potential clients initiate their search for an attorney online. This emphasizes the importance of a strong online presence for law firms to stay competitive. Law firms now prioritize digital marketing through channels like social media, email, SEO, and websites. Whether marketing the entire firm or individual lawyers, a robust digital strategy is essential for establishing credibility and connecting with potential clients. Personal branding is crucial for individual lawyers, highlighting achievements and values, while law firms should focus on building trust through a comprehensive digital marketing strategy.

Billing and Financial Changes in the 2024 Law Firm

Another area where the legal industry has undergone significant changes is in billing and financial practices. In the past, law firms relied on traditional billing methods such as paper invoices and checks. However, with the advent of technology, law firms have shifted to digital billing methods such as electronic invoices and online payment systems. This has made the billing process more efficient and streamlined. In addition to digital billing methods, law firms have also adopted new financial practices such as trust accounting. Trust accounting is a method of accounting that is used to manage funds that are held in trust for clients. This is particularly important for law firms that handle client funds, such as personal injury or real estate law firms.

Over the last decades, alternative fee arrangements (AFAs) have also significantly impacted the legal industry. They did so by offering pricing models distinct from traditional hourly billing. AFAs, including fixed fees, contingency fees, and blended rates, have gained popularity as clients seek greater transparency and predictability in legal fees. A recent study identified 22 law firms excelling in integrating AFAs into their service delivery, earning praise from clients for improved pricing and value. The study underscores a client preference for firms providing enhanced pricing and value. This emphasizes how AFAs not only contribute to better relationships between law firms and clients but also demonstrate the firms’ commitment, fostering trust and credibility.

Legal Research and Analytics

Legal research and analytics have also been revolutionised over the last decades, making the process more efficient and accessible. We have seen primary and secondary legal research publications become available online. Facilitated by information and communication technologies, this has replaced traditional storage methods like compact discs or print media. This shift has not only increased accessibility but also allowed legal professionals to conduct more comprehensive and accurate research. Furthermore, the emergence of legal analytics has empowered professionals to enhance legal strategy, resource management, and matter forecasting by identifying patterns and trends in legal data.

Client Expectations

Another notable change is that clients’ expectations of lawyers have evolved significantly. A recent survey highlights that 79% of legal clients consider efficiency and productivity crucial, indicating a demand for more effective legal services. Additionally, clients now expect increased accessibility and responsiveness from their lawyers, prompting law firms to integrate new technologies such as client portals and online communication tools. Transparency in fees and billing practices is also a priority for clients, leading to the growing adoption of alternative fee arrangements by law firms. (Cf. above).

Globalization

Finally, globalization has significantly impacted the legal industry. It forced law firms to adapt to a changing global landscape and heightened demand for legal services across borders. Many European law firms, these days, are members of some international legal network, with branches in many EU countries. And a recent study highlights the emergence of a new corporate legal ecosystem in emerging economies like India, Brazil, and China. This presents opportunities for law firms to expand globally. In response to the globalization of business law and the increasing demand from transnational companies, law firms are transforming their practices. They do so by merging across borders and creating mega practices with professionals spanning multiple countries. This shift has prompted the adoption of new managerial practices and strategies to effectively manage global operations within these law firms.

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Legal IT

Legal Technology Predictions for 2023

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Towards the end of every calendar year, the American Bar Association publishes the results of its annual legal technology survey. Several legal service providers, experts, and reporters, too, analyse existing trends and subsequently make their own legal technology predictions for 2023. Some items stand out that most pay attention to. In this article, we will look at automation, artificial intelligence, cloud-native solutions, virtual legal assistants, data privacy and cybersecurity, crypto technologies, blockchain, and smart contracts. We will briefly pay attention to some other trends, as well.

Automation

Automation keeps being a major driver of change in many industries. The legal sector is no exception, even though it lags compared to many other sectors. Lawyers seem to take longer to catch up that automation is beneficial. It is making many processes in the legal industry faster, more efficient, and less expensive. Automation has proven to be successful in fields like legal research, e-discovery and document review and management. In 2023, we can expect to see this trend continue, with a renewed focus on automating the law firm administration and on the creation and review of legal documents. Automated workflows can be used to streamline legal processes, such as litigation support, e-discovery, and case management. Automation can also assist in organizing and tracking progress and regulatory changes, data collection, reporting, and communication. An increase in automation will help to improve the accuracy of legal processes, reducing the risk of errors, and increasing efficiency.

Artificial Intelligence

Artificial Intelligence is becoming ubiquitous. In many aspects of our lives, there now are AI solutions available that make life easier. In the legal sector, too, AI is starting to make waves. In all the above-mentioned examples of automation, AI is playing a crucial role. As mentioned above, AI has already been successfully assisting lawyers with legal research, with process and workflow automation, with the generation of legal documents, as well as with e-discovery. But those are still fairly simple applications of AI. It can do far more. These days, AI is also being used to digest vast volumes of text and voice conversations, identify patterns, or carry out impressive feats of predictive modelling. The virtual legal assistants that we’ll discuss below, too, are all AI applications. If properly used, AI can save law firms much time and money. In 2023, we can expect to see a more widespread adoption of AI in the legal sector. (More on Artificial Intelligence and the Law).

Cloud-Native Solutions

Cloud computing has been a game-changer for many industries. Previous reports had already revealed that lawyers, too, are more and more relying on cloud solutions. This should not come as a surprise, as Cloud-based solutions provide many benefits, including reduced costs, increased scalability, and improved data security. They help lawyers and clients share files and data across disparate platforms rather than relying solely on emails. Additionally, cloud-based solutions are more accessible, allowing legal firms to work from anywhere and collaborate more effectively with clients and other stakeholders. In 2023, we can expect this trend to continue. (In the past, we have published articles on cloud solutions for lawyers, on managing your law firm in the cloud, an on lawyers in the cloud).

Virtual Legal Assistants (VLAs)

In the past, we have talked on several occasions about legal chatbots. Chatbots have sufficiently matured to now start playing the role of virtual legal assistants. VLAs are AI-powered chatbots that build on basic neural network computing models to harness the power of deep learning. They use artificial intelligence algorithms to assist law firms with various tasks. Gartner predicts VLAs can answer one-quarter of internal requests made to legal departments. They extend the operational capacity of law firms as well as of in-house corporate legal teams. As a result, they assist in reducing lawyers’ average response time and producing distinct service delivery efficiencies. Furthermore, as VLAs are a form of automation, all the benefits of automation apply here too: virtual legal assistants can help to improve the accuracy of legal work, reduce the risk of errors and increase efficiency. At present, virtual legal assistants are still primarily being used in uncomplicated and repetitive operations. Recent breakthroughs, however, indicate that they are already able to take on more complex tasks and will continue to do so.

Data Privacy and Cybersecurity

Ever since the GDPR, data privacy and cybersecurity have become increasingly important. In 2023, we can expect to see an ongoing emphasis on data privacy and as well as an increase in attention to cybersecurity in the legal sector. (The examples of high-profile Big Tech corporations receiving massive fines seem to be a good incentive). Law firms have understood that they too need to make sure that they have robust data privacy and cybersecurity measures in place to protect their clients’ confidential information. Several law firms also provide their clients assistance with the legal aspects of data protection.

Crypto technologies, Blockchain, and smart contracts

The market of cryptocurrencies was volatile in 2022. That did not stop an increase in interest in the underlying crypto technologies. Experts predict rises in a) regulation of cryptocurrencies and crypto technologies, in b) the adoption of cryptocurrency, c) a growing interest in decentralized finance (DeFi), and d) an increase in attempts at cryptocurrency taxation. We are already witnessing an intensification in litigation with regard to cryptocurrency and crypto technologies. This trend is expected to continue. Litigation about NFTs, e.g., is one of the areas where litigation is expected to rapidly increase.

Experts also expect an ongoing interest in and an increased adoption of Blockchain technology. Blockchain can be used to securely store and manage legal data, reducing the risk of data breaches and ensuring the integrity of legal records. Additionally, blockchain can be used to automate many legal processes, such as contract management and dispute resolution, by enabling the creation of smart contracts. As we mentioned in previous articles, smart contracts can streamline many legal processes, reducing the time and cost associated with contract management and dispute resolution. They can also help to increase the transparency and accountability of legal transactions, reducing the risk of fraud and improving the overall efficiency of legal processes.

Other Trends

The ABA survey report noticed that law firms are spending more money on legal technology than ever before. In many cases, this involved investing more in tightening cybersecurity.

The trend to work remotely and to use video conferencing for virtual meetings that started during the pandemic is ongoing.

More than ever before lawyers pay attention to their own work experience, as well as to the user experience for their clients by making their law firms more client centred. There is an ongoing focus on work-life balance, not only for the lawyers but also for the employees of law firms. Law firms are finally starting to consider things like employee satisfaction.

While billable hours remain the most used fee model, there has been a noticeable increase in lawyers using a subscription fee model.

Finally, the trend that law firms are increasingly hiring people with hybrid profiles is continuing. By increasing cognitive diversity, law firms want to close the gap between professionals with knowledge of legal matters and those with enough legal tech expertise to manage the digitization and automation of workflows. Gartner predicts that by the end of 2023, one third of corporate legal departments will have a legal tech expert in charge of managing the digital transformation and automation of internal processes. Large law firms are also increasingly hiring lawyers that are familiar with business administration.

 

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Legal IT

Legal Document Assembly

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Lawyers produce documents, lots of documents. They write letters, warnings and exhortations, briefs, reports, contracts, etc. So, it shouldn’t come as a surprise that one of the first areas where law firm automation started was document assembly (also called document automation or document generation). In fact, lawyers have successfully been using document assembly for over three decades.

Document assembly is one of the four pillars of law firm management that can be automated to a large extent without the need for AI. The others are customer relation management(CRM) or contact management; the combination of billing, invoicing, and collections; as well as managing tasks and deadlines.

The principle behind document assembly is simple. You take frequently used documents, and create a template for them, that can then be used to create new documents by automatically adding the relevant data. It’s a standard feature in word processors. By using macros or elements built into the firm management software, or a combination of both, it is possible to integrate more advanced features like check lists (for which items to include), optional clauses, rules and calculations, etc.

There are many benefits to using document assembly. The most important one is that it improves productivity and efficiency. Typically, document assembly is a part of practice management software, which has access to the relevant data that have to be merged into the template. Creating a new document (or the basis for a new document) therefore takes a fraction of the time it would take to do the same thing manually. It also leads to less errors in the text than would be the case with manual input. And another way that document assembly increases productivity and efficiency is that, once the process is fine-tuned, it can easily be done by newly hired or junior staff, with minimal training.

Document assembly also helps increase revenue in other ways. By using commercially available professional templates for legal documents (or by swapping templates with other lawyers), you can widen the range of services that you offer. You could even use a client portal (like CICERO Web View) where you give your clients access to these templates. They have to fill out an online form to provide the necessary information that the system doesn’t have yet, and then they can create the new documents by themselves. You could also put some commonly used simple templates and forms online as a free service to attract new clients.

With the growing demand for Alternative Fee Arrangements (AFA), document assembly also offers a better way of controlling costs that benefits both you and your clients. With automatically assembled documents you can charge a fixed fee per document, rather than charging the client by the hour or minute. That way, both parties know exactly what they’re getting in advance.

As was illustrated above, it is possible the further improve productivity by using your standard documents in combination with online forms to capture the relevant data. If your client enters the data online, it saves you the trouble of having to do so. And don’t forget that document assembly can also be used to compose emails. By creating a set of standard templates for emails, you can further increase productivity.

Artificial Intelligence is already taking document assembly to new levels. There already is the example of an Artificial Intelligence system (Kira) that scanned documents to then extract the relevant data by itself that had to be merged into a (Hotdocs) template, generating a legal document all by itself. In other words, nobody had to look for or enter the relevant data as the Machine Learning algorithms were able to do it.

Machine Learning algorithms have also successfully discovered certain rules that are being used to combine or omit certain clauses in legal documents. And there are Artificial Intelligence solutions available that will review legal documents and point out certain problem they may have. They do it faster and generally more accurately than their human counterparts do.

Experts expect Artificial Intelligence to further disrupt how document assembly is being used. They predict that it will evolve in a way where a different approach will be needed, where more is automated, and more is tested and validated.

 

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