Most firms and legal departments, regardless of size, recognize the problems they face. But according to the latest Thomson Reuters (TR) State of U.S. Small Law Firms survey of 300 law offices, few are doing anything to address them.
The lack of action has been consistent with the results the organization has seen over the past three years. The TR report speculates that inactivity could come down to “analysis paralysis,” being too comfortable with the status quo, or not having a template of success to follow.
However, smaller firms and legal departments are the perfect breeding ground for legal innovation through smart technology and process improvement. They are more nimble, agile, and willing to adapt. They want or need to do more with less, and legal technology innovation is the great equalizer. Small investments in legal innovation and process improvement training will bring about significant returns.
Everyone struggles with profitability, lack of human resources, and how to attract and keep business. Other issues are:
A great deterrent to innovation is opportunity cost. Tackling innovation and doing tasks related to the business of law eat into time and earnings. Innovation is always being pushed aside for "when we have time." But this is short-sighted; delaying improving your processes allows current behavior to remain inefficient, burdensome and frustrating to all in the team. For instance, in the law firm setting, an attorney who works for ten hours may only end up being paid for six, or often times significantly less. Discounts and poor timekeeping practices add to the problem.
TR suggests that technological improvements can address many law firms’ biggest challenges while they achieve more efficient service for a better impression on clients. Automating processes may also alleviate administrative tasks and reduce costs to increase client value. The report suggests that law firms "be proactive." We agree.
Almost everyone surveyed says that they are willing to invest in technology. They acknowledge that technology innovation sets them apart from their competitors, but it goes further than that. Being on the cutting edge of technology innovation is what will keep may organizations viable. Yet very few are acting on this willingness and awareness because they are too busy or have no process map to follow. The solution to many of these issues is at your fingertips. If you lack the time or know-how, outsource the mapping and implementation of innovation initiatives to those doing this day in and day out. Just as you look for attorneys with particular expertise, such as patents or securities, look for attorneys with expertise in legal process improvement and technology innovation.
Much of the technology investment firms reported went to time and billing, conflict checking, case/matter management, and financial/accounting tools. Small law firms also sought to spend money on electronic signature tools. TR advises that law offices “would be wise to consider what sorts of technology will most directly help them to address the challenges they’ve identified in their own practices.” To start, we suggest that you get your e-billing and timekeeping processes in order. Get a document management system, which is the precursor to knowledge management and contract management. Get a preferred vendor list in place, which will save money to you and your clients. Review staffing models and use temporary staffing in times of need, rather than increasing costs with full time employees. Expansions and contractions in work are best handled in this matter. If you are a trial boutique, get your trial tool chest ready. Change management, design thinking and: training, training, training. Put aside the perceived opportunity cost. Think about the future returns you will get by taking small steps towards people, process and legal technology innovation.
All of these changes increase efficiencies, another area of concern for smaller firms. According to the report, 60 percent of small firms recognized their lack of internal efficiency. Improving efficiency can increase a law firm’s earnings and profit margins. Yet, only a fraction of smaller firms paid attention to profit as a key metric. According to the survey, a focus on becoming more efficient led to positive results for many small law firms. Forty-four percent of solo lawyers and 57 percent of firms with between 11 and 29 attorneys stated that increased efficiency was an important factor in achieving positive outcomes in the prior 12 months.
Be mindful that an integral component to the commitment to boost efficiency, is the adoption of business tools. Lean management tools such as Agile and Lean Six Sigma can make the difference between successful innovations and failed attempts.
Consultants and strategists are skilled at helping you get there. We usually begin with a Kaizen event or a series of strategy sessions among practice and business leaders to create the Karta (the innovation road map) of your priorities and goals. Hiring expensive full-time employees to carry out your innovation strategy, is tricky because real experienced proven talent is scarce and mistakes are costly. By outsourcing, through us, you can get the best legal experts, technologists, process gurus, data scientists, data analysts, and talented software engineers, that can then train your trusted employees to take the reigns. By leveraging our talent and expertise you will make significant gains, without the expense or commitment of bringing them on as staff.
Setting goals is an important step. The TR report referenced above shows that many firms do not set goals at all.This lack of initiative can lead to failure to adapt quickly to changes in the business climate. Awareness of the challenges ahead is the first step in addressing them. Like many firms, you can struggle to decide on the best way forward, keep the same course, or look to other firms that have set a precedent. But awareness is not enough, setting yearly goals is a must. A call to action must be made. And at the end of the year, a report with metrics that show the results of the innovation initiatives should be shared with everyone. That is also the time when lessons learned are discussed and continuous improvement strategies are considered again for the next year. Change management and innovation are a journey, but one worth taking.
And, yes, analysis-paralysis is all too common. But you don't have to go at it alone, we have spent decades focused on how to innovate legal processes. If you are thinking about innovating your practice, email info@kartalegal.com or Lourdes at lslater@kartalegal.com.
