However, keeping up with new tech tools was recognised as a major threat to small firms. The results - in the latest LexisNexis Bellwether Report 2022 - should prompt practices to consider seriously what tech they should consider investing in if they want to survive.
The annual survey - of 345 small law firms and solo lawyers - revealed that almost half of firms did not have any plans to implement any of at least ten tech solutions specifically listed in the survey. These ranged from legal research tools and case management tools, to document drafting tools, online client portals and advanced automation/AI tools.
The key barrier to implementing new tech is the lack of time, but firms also cited lack of technical expertise and budgetary constraints. While 8 out of 10 firms had already adopted teleconferencing tools – which comes as no surprise – no more than 6% had adopted AI robots and chatbots. The most likely tech tools firms are planning to implement include legal research tools, content management systems and e-verification signature tools.
At a cost
But legal tech, we know, is costly and this presents a clear challenge for many smaller law firms who lack the financial clout of the larger firms. In fact, more than a third of those surveyed estimated that technology was their biggest operational cost in the past year.
The survey also highlighted the struggle many firms are experiencing in managing existing workloads and streamlining administrative responsibilities. These are the very areas where tech would bring huge benefits, but if firms cannot afford the costs of implementation – where does it leave them?
The stark answer is, they risk losing out to the competition. A report from Arden consultants refers to the “poor management and outdated operating models of many law firms” and a suggestion that up to 30% of all firms could be forced to close or merge in the near term (partly because of market disruption from the growth of the legal consultancy model). And figures from the Solicitors Regulation Authority show that in recent years there has been an annual net reduction in the number of firms following firm closures and consolidations.
So it’s perhaps surprising that, despite many of these challenges to the small law firm sector, more than 9 in 10 firms appear ‘very confident’ or ‘quite confident’ in their future (that said, there was a 15% drop in the number of firms who said they were growing, compared to the previous year.)
“With a multitude of challenges on the horizon”, the report concludes, “law firms cannot afford to be complacent.” But it also sounds a note of reassurance - law firms that address the tech challenges “will thrive in the next wave of digital transformation”.
Beware more cyber risks
While implementing new technologies will help drive your practice forward, it also brings with it increasing cyber risks as practices become ever more depending on technology. It’s important for all firms in relation to both existing and new tech tools, to be reminded of the importance of looking after your data.
We all know about the risks: phishing emails, denial-of-service attacks, spear phishing and malware.
But just as we’ve become well versed in these forms of cyber-attack – along comes new threats, such as a new generation of ransomware that both encrypts and steals data. The SRA is now exploring these and other new threats and is seeking firms’ views on what they believe are the key cybercrime risks to them in the next year.
Firms must undertake regular cybersecurity risk assessments and properly document them. This should be done by a specialist in cyber risk management. Robust measures should then be implemented to control the risks. Firms are reminded of the ICO’s Cyber Essentials framework and information and guides on the Law Society and SRA websites.