How the COVID-19 Pandemic Is Accelerating Digital Transformation

As the world reels from COVID-19 and its attendant economic effects, law firms everywhere face the need for employees to effectively connect virtually— and continue meeting the evolving needs of clients —while addressing a new set of pandemic-related legal issues. Firms must innovate in profound ways in the interest of business continuity, in a “new normal” working environment as they slowly but surely make their way back to the office.

A recent Intapp Pulse Survey revealed that 97% of law firm respondents enacted work-from-home policies at the height of the pandemic. We expect firms’ phased return to physical offices will continue during at least the next 6 to 12 months; some firm leaders, like those at Slater & Gordon, have decided to have their teams work from home permanently.

Throughout the last decade, law firms have faced pressure to become more efficient and meet rising client expectations. There’s no better time than now for firms to find new ways to deliver client services and reimagine the role of technology in enabling service delivery. To protect and sustain their margins, firms must future-proof their business models to effectively engage clients and deliver matters. A robust technology and digital strategy will enable firms to weather the challenges posed by the pandemic and emerge more resilient and better equipped to meet ever-evolving client and market conditions.

At the start of the pandemic, Intapp anticipated that law firms would manage immediate exposure to the pandemic through five waves of adjustments.

As anticipated, firms have completed the Reset and Re-plan transition phases and established new financial plans. Some common interventions have included withholding or delaying partner distributions, furloughing staff or implementing short workweeks, introducing stringent cash management measures, pausing cost-intensive projects, and ramping up resources in countercyclical practice areas (e.g., restructuring and insolvency). Although these tactics have addressed the immediate need for financial resilience, firms are now beginning to prioritize strategic investments that will deliver a seamless experience for partners and lawyers to better engage with clients.

How Digital Transformation Builds Resilience

Digital transformation entails more than simply adopting innovative technology solutions; it’s just as significant howthese solutions are adopted and what cultural change facilitates them. To cultivate a digital culture, law firm leaders and staff must learn to shift their mindsets and engage in design thinking to embrace digital ways of working. Although technology adoption creates opportunities, the ways in which a firm adapts to associated changes to its ways of working will ultimately determine the success of its digital transformation.

On a positive note, the pandemic has altered long-held perceptions of technology and removed long-standing barriers — both cultural and change-related —to technology adoption. Firms can now fully leverage new technologies by embedding an organic change model driven by continuous learning.

As a result of extensive research, Intapp Strategic Consulting has identified five key elements that underpin the digital transformation required of law firms as they progress through the Rethink wave of adjustment.

1. Client-Facing Technology — As we move toward increasingly remote ways of working, firms must reimagine the role of technology in staying connected to clients. Effective client-facing technology — such as online collaboration, teleconferencing, and e-signature tools — has made the secure sharing of documents a must-have feature to ensure business continuity and enhance an increasingly paperless matter-delivery process. To enable efficient and profitable delivery in the long run, firms also need to look at effective and innovative matter-delivery methods, such as client-facing portals with built-in workflows and secure transmission. A better understanding of specific client requirements, which are at times influenced by how they engage and interact with other service providers or their respective clients, must be a precursor to any future changes in firm engagement strategies.
2. Internal Operations Tools — Firms must invest in the right operational technology to grow margins, manage costs, and reduce matter-delivery risks. According to a 2019 ILTA survey, the most relevant and high-impact legal technology tools include document management systems (DMS), time and billing, case management, and accounting systems. Digital workflow automation tools — which perform tasks related to legal service requests, invoice approvals and contract review — can elicit vital efficiencies and budget savings. As building new relationships grows increasingly more difficult in the current climate, CRM can ensure lawyers stay connected to clients to tap into firm relationships and assess white space within those relationships. The Intapp Demand Impact Model indicates shifting legal service needs that firms can leverage to target the right areas. Finance functions can leverage shifting demand by embracing financial management systems (FMS) and practice-related data to identify resource allocation opportunities in high demand practices. For instance, firms like Finnegan and Plesner use experience management systems to effectively allocate resources across client matter lifecycle delivery work. Firms must articulate, document, and understand their client interaction journey, and highlight areas for service-delivery improvement, whether those are specific uses of technology or enhancements to current ways of working.
3. Strategic Cloud Adoption — For years, law firm chief information security officers (CISOs) have attempted to obtain leadership buy-in to transition to an increasingly sophisticated cloud architecture — an environment that can securely process large amounts of complex data. Firms are realizing there is no better time than now to seize this opportunity, especially as several technology vendors are gradually eliminating on-premises solutions from their portfolios. For technology leaders in professional services firms, getting the firm to move to the cloud is only one challenge. The current IT operating model can, in some cases, require an overhaul due to the evolution of necessary resources, skills, and responsibilities. The focus shifts from hosting and managing internal applications and infrastructure to managing commercially savvy cloud vendors and associated SLAs. Firms that embrace a carefully planned, integrated cloud strategy for important business functions can create more practical business continuity and growth plans. Law firms were already migrating to the cloud before the pandemic struck. Many of these firms work for clients that host sensitive customer, financial, and legal data in the cloud: A 2019 survey of more than 500 law firms by Fish & Richardson and ILTA showed that 78% of law firms stored client data as well as internal email and DMS data in the cloud, with another 8% planning to do so in the near future. Users can securely access a firm’s essential data and systems in the cloud, which prevents the severe business disruption and financial uncertainty that used to take place when lawyers cannot physically work in the office. Crises — like pandemics — will accelerate cloud adoption and serve as reminders that establishing cloud technology infrastructure can protect a firm from preventable disruptions and loss of revenue.

Cloud migration offers significant benefits:

• Cloud technology offers greater business agility, scalability, and flexibility than on-premises services, and enables effective remote working.
• Cloud vendors like Amazon Web Services (AWS) have incorporated heightened security measures to comply with stringent industry standards and regulations. AWS, for example, complies with GDPR, HIPAA, IRS 1075, among other standards.
• Cloud computing, as a turnkey solution, lowers technology costs by an average of more than 30% and involves zero hardware investments or long-term contracts. A 2017 report by the Information Systems Audit and Control Association found that 71% of companies achieved favorable returns on investment (ROI) by moving to the cloud.
• Some law firms — especially those that deal with a wide range of client-sensitive and heavily regulated data — are resistant to cloud-adoption due to security concerns. In reality, data can be very susceptible to cybercrime when stored on premises. If a firm stores data in 20 different locations, it will have to manage 20 firewalls and as many intrusion detection systems and related security software. Making a single firmwide policy change requires touching each of those systems. Large cloud service providers offer much greater security expertise than law firms themselves, and are certified to comply with regulatory standards. Additionally, cloud-access security brokers can help firms secure cloud applications, monitor use, and enforce firmwide policies.

4. Connected Firm Insights — As many staff continue to work remotely, firms that historically have relied on manual data capture and validation processes now find themselves increasingly challenged. We cannot overstate the need for a solid understanding of firm data holdings and storage locations. However, even a full understanding is only one side of the coin; Underlying root causes of data inefficiencies remain prevalent across most professional services firms. Experts widely agree that data-driven firms are more likely to acquire and retain customers, and, therefore, become more profitable.

Here are some features and activities that firms should consider to facilitate the transition to becoming a data-driven firm:

• Data Management and Governance — Against the backdrop of the current pandemic, it’s apparent that business leaders must clearly articulate how the firm intends to manage and utilize data. Although the IT function serves as an integral part of the process, business leaders must take responsibility for overall leadership and deployment of additional resources (e.g., appointment of chief data officers, hiring of data management teams, etc.) to better understand, manage, and govern firmwide data across the entire client lifecycle. Law firms, in particular, will continue to lose market share to data-driven legal service providers such as Big Four accounting firms and UnitedLex unless they better manage and harness the power of data to drive their businesses and improve client satisfaction and service delivery.
• Data Unification and Integration — Instead of relying on fragmented processes and siloed data sources, law firms must leverage the power of a connected firm and the insights derived from a unified data pool. Connecting the data between disparate ERPs, CRMs, other standalone solutions, and manual data stores will enable practice leaders, CMOs, and CFOs to effectively develop growth plans with a crossfunctional view of white space and client history.

5. Process Automation — The move to remote work will require law firms to reimagine manual, paper-based processes and embrace automation to bolster efficiency and streamline internal business processes. Firms with high-volume legacy processes can leverage robotic process automation (RPA) tools to accelerate time to value and reduce human error, thereby saving time and money. The key is to find low-hanging fruit — easily implemented RPA tasks — and determine if these processes are ripe for automation. Firms can review manual, labor-intensive processes to determine if they can be automated with existing technology or with scalable, standalone automation tools. In addition, firms can conduct a cost-benefit analysis of delivery across key client lifecycle processes to identify areas that are well poised for automation change. Law firm leaders must make a case for change at the outset, articulating what changes need to be made and why they’re necessary. Ideally, they will lead change by creating a dedicated change management team that sets clear goals and expectations among lawyers, and helps execute the changes required to achieve desired outcomes.

McKinsey proposes that 23% of the tasks that occupy lawyers’ time can be automated. By embracing automation, firms can divert time spent on repetitive tasks toward strategically building client relationships. Firms can use AI to perform complex, laborious legal tasks such as analyzing NDAs and agreements. Predictive coding can accelerate e-disclosure processes by using algorithms to rank the relevance of legal documents. Conflicts software with active intelligence can reduce time spent on conflicts clearance by up to 60% and save a typical large law firm between $6 million and $10 million during a 4-year cycle. Contract management technology can analyze existing contracts to identify missing clauses. One example: DLA Piper recently developed a rent-concession portal that drafts multiple rent-concession letters using virtually accessible contract automation technology.

How Intapp Strategic Consulting Can Help

The sector-focused Intapp Strategic Consulting team works with leading global law firms to operationalize business goals, develop technology strategies, and improve effectiveness of fee earners and staff. We help firms become more agile and resilient in the post-pandemic world with a variety of strategic offerings:

• Digital and Technology Strategy — Develop and tailor your digital and technology strategies that enable differentiating capabilities to drive the improved performance required by evolving business models.
• Technology Optimization — Determine the effectiveness of your innovation strategy across the client matter lifecycle to help meet the evolving needs of both clients and partners.
• Client Matter Lifecycle Review — Assess how you currently support the client matter lifecycle and your clients’ experience to prioritize improvement and address operational inefficiencies in process, policy, data, and technology.
• Cloud Adoption Roadmap — Plot a clear pathway to cloud adoption to help your firm remain at the forefront of the industry.