What opportunities and threats will 2020 present to the legal sector? And to maximise those opportunities and to mitigate these threats, how will investment in legal IT be affected in 2020?
As the march of technology into every aspect of solicitors’ practices and Barristers’ Chambers continues, we share with you our predictions for the year to come, including:
- the need for investment in unified communications and business process integration with third parties
- why the cyber security threat isn’t going away anytime soon and why you should improve your technological firewall in 2020
- the expectation of a boom in legal IT investment among smaller firms to match the spending of the top 100.
Unified communications and business process integration
Unified communications (UC) is an area of legal IT which we foresee continuing its already rapid roll-out among legal firms in 2020 because of the coming perfect storm of:
- clients becoming even more demanding wanting contact on the platforms of their choice at the times they want
- an increase in the number of clients approaching non-legal firms for legal services and the need for these firms to sub-contract part of the workflow of a case to a traditional legal practice
- the downward pressure on fees forcing legal firms to look at ways of streamlining business processes and internal/external communication with clients and third parties
UC describes the integration for internal and external use of different methods of communication including but not limited to:
- PSTN, mobile, and IP telephony,
- instant messaging,
- conferencing (video, web, and audio)
- data sharing
- desktop sharing
- messaging services (for example, fax, email, SMS, and voicemail),
- and so on.
For maximum effectiveness and ROI, the UC package adopted by a legal firm must also interact seamless with a its standard business processes and the software it uses to standardise those processes.
There is a bigger picture here though. Other companies are attracted by the amount of money generated by the sector and they want a part of it.
Solicitors, barristers, and their firms are likely to become more marginalised in coming years through a combination of the marketing power of others and by advancing technology.
And they’ll likely need to cooperate with these third-party organisations even though they’re responsible for eroding their traditional client base.
Branded networks/franchises are growing in number. There continues to be aggressive expansion through acquisition in the legal sector as leaders hunt for lower overall fixed costs.
These organisations will take advantage of their high revenue base and improved cash flow to market their services to a wider audience.
They will be able to achieve significant discounts on their marketing expenditure through bulk buying and by employing the more talented advertising agencies to promote their services to reduce client acquisition costs.
It’s the same with the emergence of legal services being offered by household names like the AA and Saga which leverage the significant power of their brands. Lead generation and marketing companies are also looking to exploit the power of the internet to capture clients’ eyeballs and to divert enquiries their way.
Many legal firms are likely to find that a growing proportion of their work is as sub-contractors to household brands, lead generation and marketing companies, larger competitors, and branded networks and franchises. That’s because they don’t have the advertising budget or knowledge to win the battle for client attention.
Technology is an even bigger game changer for the sector
Consider LegalZoom and Axiom Law. They both successfully use technology to offer both consumer and corporate legal services for much lower fees. And, as LawKick notes, legal IT “has [still] barely even scratched the surface”.
Google has spoiled us all. Many people, when they have a legal question or concern, now turn for answers to the internet now instead of calling a law firm. Technology’s aim is to circumvent the need for significant human involvement in as many areas of law as possible. Over time, it will chip and chip away until the involvement required is absolutely minimal or even not needed at all.
The automation of the legal sector is underway and what seems impossible to us now will be everyday in 10 years’ time.
There is likely to be intense pressure on the standard legal firm model in the next few years because of the changes we’ve described. There will be job losses in the sector, according to the Law Society in a report in the Times – “’the legal services market will need to adapt to a more deregulated environment, stronger commercial pressures and increasing adoption of technology’ if managing partners want to be managing anything by 2027.”
However, for many firms, this presents their leaders with an opportunity. They can sub-contract niche services which are less likely to be automated because of their complexity to third-party providers. Firms can then leave behind those activities which generate less impressive fees or which are particularly vulnerable to automation like conveyancing, wills, and family matters. Lower fixed costs are always a good thing.
The more integrated your communications and business processes are with these third-party organisations, the more likely they are to introduce and sell your most profitable and complex legal services to clients you don’t attract directly yourselves.
By doing that, you might stay ahead of the competitors and still maintain a healthy profit margin.
Your data will still be as valuable and you will become an even bigger target in 2020
Your human firewall will still be, ultimately, your firm’s strongest (or weakest) line of defence against cybercriminals. According to the NCSC, 60% of solicitors’ practices and barristers’ chambers were the subject of a cyberattack in 2018 – a 20% jump on the number reported for the previous year.
Most of the threat to law firms next year will come from “impersonation attacks, payment diversion fraud and business email compromise attack”, according to Lawyer Monthly.
The need to keep your staff, contractors, and clients as cybersecurity-aware as possible still remains but there are technical solutions (like threat intelligence source providers, multiple detection engines, content automation, and real-time fraud detection) that can be employed to prevent as many social engineering attacks as possible from having to be dealt with by your staff.
Investment in and shoring up of your technological defences is likely to be a key trend in legal IT in 2020.
Smaller firms will invest more in IT to catch up with larger firms
And, on the subject of investment, the PWC Annual Law Firms’ Survey 2019 uncovered some interest statistics on cyber risk and IT investment within the sector.
Each of the top 10 firms experienced a phishing attack in the previous twelve months, three quarters a malware attack, and one quarter either confidential information leakage or loss, at least one DDoS attack, or network intrusion.
The fact that one in four firms suffered a network intrusion is a worrying trend because this is not really something that your non-IT staff can protect you against – this is a detection problem which needs to be handled by your IT team or outsourcer.
Firms outside either the top 10 or 25 legal firms spend a much smaller proportion of their fee income on IT, highlighting, in PWC’s opinion, “a need for some firms to increase their level of IT capital investment”.
According to the author’s report, they are concerned that:
- the level of executive level risk ownership is too low,
- crisis management is not a high priority, and
- firms outside the top 10 are not prepared properly to respond to a “cyber security crisis”.
We agree and we urge senior partners in all firms to work on this as quickly as possible. It is nowhere near as painful, costly, or complex as you might imagine – a successful cyber attack is the very definition of painful, costly, and complex. We’d appreciate the chance to demonstrate this to you with a free consultation.
Be IT- and cybersecurity-ready in 2020 with Sprout
The legal sector is undergoing seismic change and this change seems certain to continue well into the future. To what end point? No-one is quite sure because many of the current and accepted methods of working would have seemed unthinkable at the turn of the century. We hope you enjoyed our speculative peak into the next 12 months ahead of us and it’s given you food for thought.
To speak with one of our team on IT and cybersecurity issues for the legal sector in 2020, please call Sprout IT today on 020 7036 8530 or email us.