Digital Transformation For Law Firms
Many of the UK’s industries have long-since made the shift towards more digitalised processes, investing in areas such as AI-powered solutions and cloud-based infrastructure. However, the legal sector is one where traditional paper-based systems are still common-place. That now is changing at pace with more and more firms embarking on a digital transformation; in fact, this 2023 study by Thomson Reuters states that 83% of legal professionals believe it is now highly important or central to their strategy. As a result, firms that haven’t “kept up with the times” could be at risk of being left behind.
This article will explore the benefits and challenges that law firms may face when embracing a new era of technology. We’ll provide you with expert tips on how to overcome potential obstacles, helping you to avoid some of the pitfalls experienced by peers before you.
Contents:
- What Is Digital Transformation in the Legal Industry?
- What Is Lawtech?
- How Is AI Transforming the Legal Sector?
- 6 Examples of How Law Firms Digitalise Their Processes
- What Are the Benefits of Digitising Processes?
- What Are the Challenges of Digitising Processes?
- How Can Firms Successfully Implement New Technology?
- Need More Support?
What Is Digital Transformation in the Legal Industry?
Digital transformation in the legal sector refers to the strategic adoption of digital technologies and cloud-based workflows within law firms and in-house legal teams. These technologies are designed to automate and streamline traditional processes, improve firm-wide collaboration, and deliver a stronger client experience.
82% of law firm leaders are proactive in looking to digitise wherever it makes sense to do so, representing the significant rise in importance across the sector. However, for many, they are making the shift because they feel they have to in order to remain competitive.
What Is “Lawtech”?
Lawtech is a term that describes the technology which supports, supplements, or replaces traditional methods practised by those in the legal sector. The “lawtech sector” provides law firms with access to online legal services through cloud technology.
In 2018, the LawTech Delivery Panel was formed as an industry-led, government-backed initiative. Sponsored by the Ministry of Justice and supported by the Law Society, this panel encourages technological innovation across the legal sector, particularly for UK-based lawtech firms.
How Is AI Transforming the Legal Sector?
AI in the legal sector is huge, despite still being in its early stages. Currently, it spans from client-facing chatbots that handle in-bound basic queries, to more sophisticated back-office tools for document review, contract analysis, and eDiscovery. These AI-driven processes are powered by natural language processing (NLP) and machine learning (ML).
AI is becoming more useful through predictive analytics for case outcomes, monitoring important regulatory changes, and even detecting money laundering patterns by flagging unusual transactions or activities. Collectively, these applications can free up legal staff from routine tasks, sharpen risk management, and improve both firm-wide compliance and client service.
6 Examples of How Law Firms Can Digitalise Their Processes
There are many ways that legal firms can digitalise their processes, including:
Cloud-Based Practice Management
Law firms can move case files, calendars, accounting, and document management to secure cloud platforms, enabling access anywhere and anytime for relevant members of staff. Popular examples of cloud-based practice management include Clio and Insight Legal.
Document Management
Applications such as Microsoft 365 Copilot (previously known as Microsoft 365 Office) allow for real-time editing of documents, reducing bottlenecks and drafting errors during the handling of contracts and other important documents. This can help firms become more efficient and keep clients happy with the level of service.
E-Signature & Secure Client Portals
Integrations with apps such as Adobe Acrobat Sign speed up approvals, while dedicated client portals offer clients transparent access to matter updates, invoices, and secure messaging, improving satisfaction and trust.
Blockchain Technology
One of the more complicated areas of digital transformation, blockchain provides a decentralised, tamper-proof system for recording transactions and asset transfers. By automating execution and verification, law firms can cut costs and improve transparency.
eDiscovery Software
These platforms use AI to identify, collect, and review electronically stored information (ESI) from legal matters. eDiscovery software can automate time-consuming and repetitive tasks such as reporting or data redaction, to save valuable time and resources.
Conflict-Checking Software
Conflict-checking tools automatically cross-reference new matters against existing and historical clients, opposing-party, and practitioner data to flag potential ethical or business conflicts. Through real-time alerts and databases, legal professionals can keep risks to a minimum.
What Are the Benefits of Digitising Processes?
Some of the best benefits for firms that use law-based technology include:
- Increased Efficiency: New solutions, such as cloud-based practice management software, can cut administrative time and costs. This leads to better operational efficiency, since staff can focus on prioritising more important tasks.
- Stronger Client Experience: 80% of people in a recent survey said they would be more likely to engage with a firm that provides a personalised service. Lawtech can personalise client experiences through self-management and ease of communication.
- Reduced Human Errors: Outdated legacy systems that require manual data entry are prone to human-made mistakes, which could affect legal outcomes. Lawtech systems can increase precision and accuracy, improving the quality of service.
- Competitive Advantage: Firms adopting new technology are more competitive than those that are hesitant to do so. For example, digital transformation offers improved data-driven decision making, which can improve firm-wide efficiency.
What Are the Challenges of Digitising Processes?
Although digital transformation for law firms is beneficial, there are some initial hurdles which may hold legal businesses back. Let’s take a look at these common challenges and, importantly, how to overcome them…
Resistance to Change
For those who have always worked with paper-based workflows, changing to digital processes is often met with scepticism and a resistance to change; they may see these tools as a threat, rather than a positive change.
To overcome this, the benefits of digital transformation must be clearly communicated by leadership teams, helping to build momentum within those who are less keen. Engaging the team in the process can not only help reduce single-person dependencies, but also enables the team to feel more engaged with the process, as opposed to it feeling like something which has been forced upon them.
Time & Cost Considerations
Implementing digital solutions often involves upfront investments in software licenses, hardware upgrades, and process redesign. Therefore, firms must plan for the initial costs and short-term productivity dips during the rollout phase and set realistic timeframes to capture long-term return on investment (ROI). Additional staff may need to be outsourced, especially when digitally archiving large amounts of documentation, and regular reviews should be scheduled to check the success of the technology and if they are aligning with the firm’s goals.
Understandably, the time and cost concerns for digitising processes may be off-putting for smaller firms. However, it is important to consider the bigger picture; time lost to manual processes represents missed opportunities for new business and proactive client advising. Over time, the cumulative loss of inefficiency - measured in hours, costs, and client dissatisfaction - usually becomes far greater than the investment in new technology.
Lack of Training
Without proper training, even technology that is easiest to use can fail. Insufficient training can lead to improper use, or even outright rejection of the new system. Tailored, role-based training and ongoing support are necessary for user confidence and the most efficient use of digitised processes.
At PDA Legal, we can support you with access to a wide array of training courses specifically designed to support your teams during digital transitions. Training can range from increasing their awareness of cyber security considerations to refreshers in GDPR and how digital processes introduce new aspects which they will need to be aware of.
Integrating Legacy Systems
Many firms use outdated software which can’t integrate with modern lawtech services. This is a frequent challenge during mergers and acquisitions, and the amount of work in aligning legacy systems and data migration can be vast. Therefore, this needs to be factored into your digital transformation plan early on, as more time may need to be spent on backups, mapping data migrations, validity testing and more.
Regulatory Compliance
As you well know, legal practices are bound by strict data privacy, cybersecurity, and professional-conduct rules, which can sometimes complicate digital adoption. Therefore, firms should primarily consider UK-based technology which is compliant with the Solicitors Regulation Authority (SRA) Code of Conduct. To ensure GDPR compliance, firms must also complete a DPIA (Data Protection Impact Assessment) before digitisation begins.
Necessity for “Wet Signatures”
Certain areas of legal practice still require ink-on-paper signatures for some important documents, which may create bottlenecks further down the line. Therefore, firms might need to operate hybrid processes - where e-signature platforms are combined with physical handling protocols - so that digital efficiency isn’t sacrificed.
Risk of Complacency and AI Errors
Over-reliance on AI for review or compliance checks can lull staff into a false sense of security, allowing subtle errors to slip through the net. Firms need to maintain robust controls for “human-in-the-loop” validation (where humans intervene to validate AI outcomes as being right or wrong) and involve regular audit trails, which are important for catching AI-introduced anomalies. As you’ll discover in this article, AI will sometimes even fabricate information!
Use of External or Outsourced Providers
Although outsourcing parts of digital transformation can accelerate the adoption process, concerns may arise about the confidentiality of the supplier’s work. Law firms cannot pass on their obligations to external providers; responsibility for the quality and integrity of the work of suppliers still ultimately falls on the shoulders of the law firm itself.
Therefore, it would be for firms to establish clear service-level agreements (SLAs) and contractual safeguards to protect client data and levels of service. Similarly, firms should maintain controls to assess the knowledge, quality, and execution of the supplier’s work, and whether they are using AI should also be taken into account.
Scalability & Future-Proofing
Digital transformation that meets the current needs of a firm may not be suitable in three years, if it hasn’t been designed for scalability. A modular, cloud-friendly platform might be regarded as desirable, as it allows for flexibility and efficiency in design. Therefore, it could be wise to consider solutions that are not rigid; instead, they should ideally be flexible to handle changing needs and regulations.
To save time and effort in the years to come, lawtech solutions should be as “future-proof” as possible. Smart document tagging and classification should be used so that key documents can be easily identified, accessed, or removed from a firm’s database. This may involve the auto-assigning of metadata, such as client names or case numbers, or the organisation of files into groups based on predefined patterns or rules. This can be especially useful for filtering AML/CDD data, for example.
How Can Firms Successfully Implement New Technology?
Although every firm has a unique risk profile, and different needs and expectations, there is a not uncommon route that can be helpful for implementing new technology. This includes:
- Assess Current Tools & Processes: Start by mapping out existing software, workflows, and manual tasks to establish a clear baseline of what you use and where bottlenecks exist.
- Identify Needs & Set Goals: Define specific objectives, such as enhanced case management portal access, and evaluate how and why your current tools may not meet these targets.
- Choose Compliant, Compatible Software: Select UK-based or UK-hosted platforms where possible, ensuring strict compliance with the SRA’s Code of Conduct.
- Train Employees & Update Risk Assessments: Arrange role-based training, and update your data privacy and cyber-risk registers to account for new policies, controls, and procedures (PCP).
- Communicate with Firm-Wide Decision-Makers: Keep partners, practice-group heads, and IT governance committees informed about costs and timelines to establish transparency.
- Monitor Performance: Track agreed metrics, gather feedback, and make ongoing adjustments to optimise efficiency over time. If the system isn’t working as it should, flag this as early as possible!
Need More Support About Compliance Through Digital Processes?
At PDA Legal, understanding risk management and compliance is our priority. We appreciate that, as technology becomes more sophisticated and widely used, there will be greater scrutiny about how this technology can ensure compliance.
Our team of compliance experts will support and guide you through the regulatory and practical aspects, towards the planning, execution and monitoring of the activity.
This can include; data protection support, consultancy on cyber security, and training to support your team during or after the migration project.
Contact us today for a free, friendly and no obligation chat.
