Small and midsize firms are not investing enough in technology, exposing them to the danger of losing tech-savvy clients.
The warning has come in a LexisNexis report which has found that SME firms need to place higher value in efficiency measures if they are to keep hold of clients. The company’s latest Bellwether Report, The Race to Evolve, reveals that small to medium-sized practices view active use of new tools and technologies as the second highest driver of efficiency. Yet 81% of these firms spend less than 10% of their turnover on legal tools, and 58% of firms are spending less than 5% on them.
The research finds that while 92% of lawyers assert that continued investment in technology is no longer optional, they often do not value efficiency that technology provides highly enough to invest. This is despite clients ranking lawyer efficiency as one of the key ways lawyers can add value to the legal process.
Most lawyers interviewed who use legal tools agree they make a difference; with well over half stressing that the contribution is significant. 30% of non-users agree that investing in legal tools would significantly increase their efficiency. However, 49% of lawyers consider their law firm’s efficiency to be average, with 36% rating their firm’s efficiency to be above average, suggesting that they don’t see the need to make immediate changes in this area. The report proposes a holding pattern has emerged, whereby firms have identified the changes necessary to improve efficiency but have not yet made the leap from words to action.
Ratings were mixed as to which activities lawyers considered the most important drivers of efficiency in their law firms, but “not dabbling outside your practice area” emerged as the frontrunner (41%) – higher even than investing in new technology (17%).
LexisNexis said it as not surprising therefore that 95% of those interviewed for the report said that they refer enquiries outside their specialism to other firms. The company said that with 75% of firms actively involved in generating new business, investing in the right tools and processes may give more firms the opportunity, resources, skills and procedures, to start accepting more of the potential business that comes directly to their doors.
“Law firms must align their working practices with that of their increasingly tech-savvy and informed client base,” said Jon Whittle, market development director at LexisNexis.
“One of the problems is getting lawyers to take a long term view. While their firms may be thriving now, if they don’t take a commercially savvy, customer-centric, progressive view of the business and invest in solutions that drive efficiency today, this will not be in the case in five years.
“It’s clear from our research that those firms that are investing are far outpacing those who aren’t, and this isn’t going unnoticed by their clients. While it seems many law firms understand where the gaps are, there is a push and pull phenomenon between traditional and modern working practices, and a disconnect between words and action. Ultimately, while many lawyers are still charging by the hour they are not understanding the value of their time – and this needs to change.”