by Richard Hodkinson

Legal CIOs face unique challenges

Nov 23, 20118 mins
CareersFinancial Services IndustryIT Leadership

Law may be perceived as a back water sector, one that’s possibly viewed as being off the pace when it comes to advanced use of technology. Without a doubt, law firms offer up some unique challenges.

The sector

There are more than 10,000 firms making up the legal sector, the smallest being sole practitioners and the largest being global business with thousands of people the largest turning over £1bn. But even then, unless you have much to do with lawyers, law firms are hardly house hold names. Traditionally, law firms have existed as partnership owned and run by the equity partners but in later years, some have become too large and sophisticated that directors and even CIOs and the like have been hired to run aspects of the business on behalf of the partners. Law firms have developed to meet the demands and the risks of the markets with many moving to LLP status to contain risk for the owners. What’s interesting still about partnerships is that capital markets cannot be accessed to raise finance for growth. More recent shifts in the regulation governing the legal sector facilitate business structures that move the practice to a model more akin to other professional service sectors. Such changes are known as alternative business structures (ABS) which amongst other things allows non-lawyer participation in equity and the new business to access external investment through the usual vehicles – private equity or IPO.

Over the years I have been involved in law, the sector has seen a lot of turbulence. Many ministerial reviews have focussed on  moving law firms forward in terms of their accessibility and affordability – access to justice is a regularly used phrase describing this level of intrusion. Around the side of that, a number of other regulatory changes have continually hit law firms who, often with limited resources, have to respond to stay compliant. An example is the Ministry of Justice’s recent cuts in Legal Aid and referral fee arrangements in the last 18 months which push lawyers to change processes to comply or improve efficiency.

The changes in the sector from a regulatory perspective have changed the landscape of law dramatically over the last decade particularly. Merger activity is now common place. Law firm failures are less frequent but now a possibility and spin off businesses which are separately branded and performing commodity ‘pile it high’ type services such as debt recovery or remortgage work or joint ventures.  The framework of regulation and the infiltration of process guru’s and high grade technologies has had an effect on the progress of law firms coming from the dusty aloof and occasionally pompous position to something most people would recognise as being dynamic and very commercially focussed. The game is changing rapidly – legal services are becoming packaged and very accessible in the same way financial products have over the years.

The culture

Working in legal is an acquired taste and actually quite tough. Firms have a fair representation of prima donna’s and their inflated ego’s often makes them a sought after commodity but tricky to handle. These are knowledge workers. Expectations are often off the gauge coupled with little realism and tolerance often in short supply. What’s interesting and different to other sectors is that product and the route to market is the same person – the partner. Contrast this with many other sectors where the product, the marketing and the selling is done by different people building mutual respect for different skills within the business, a trait not always seen within legal. Back office teams such as IT have therefore to put in overtime to be seen as more than a necessary evil but a serious ‘value adder’.

The constitution is also worth a mention. The people you appeal to and impress are also the shareholders – it’s their cash. They are not faceless shareholders in their thousands but a small group of owners who need to be convinced they are getting value around business as usual and receiving the best and most appropriate guidance to sustain their personal wealth and reputation.

Dealing with legal technicalities

Reputation is everything to a law firm. System failures, back office processes, bad press for being non-compliant and lack of technical originality among other things are a perpetual preoccupation. Keeping polished and well ahead of the market rivals is something individual practitioners and firms pride themselves on and the responsibility is passed down the line. Principle metrics are profits per equity partner which attracts the right ambitious lawyers and consequently a rich client following.

The technology

Addressing many of these factors is the role IT and process specialists play. Short of IT being a service department, IT really has to deliver. A very strong service ethos has to pervade everything that’s done or produced.  IT teams lean heavily on the suppliers.  Purveyors of technology to the legal sector are not vast and at the application layer as the products tend to be specialised rarely transgressing the border to other sectors.

Process enginessuch as case/matter management systems, document management tools and accounting systems which are specific the solicitor’s accounts rules are the key systems for a legal CIO. A number of other supporting products build the IT portfolio such as cost recovery systems, dictation tools and document packages. Putting this mix of technologies together is a standard fare for most firms and without which they fail to function correctly. So where do you go from here to make a difference?

Client engagement and process efficiency would be major drivers to making a firm different from the rest. To do this, looking to other sectors such as financial services or FMCG is a help in understanding how products are created and promoted.

As many people sense, there is an omnipresent reluctance to want to engage a lawyer and cover the bills. Ergo improving efficiency and hence the bill to the client is a popular driver. Case management systems are regularly heralded as the must have tool and are work flow toolkits with a client and matter emphasis. These engines generate standard document sets, schedule diary events or trigger other activities. Many allow SMS alerts to be issued and key milestone events to be seen by clients via a secure extranet capability. Workflow as a concept crosses sectors even though the tools changing flavour.

Large multisite and international firms have challenges around consistency of the legal product. Case and document management seeks to force practitioners to behaviour the same way on every matter. Subliminally and linking to a point made above, these systems are a convenient mechanism for extracting and storing knowledge of process and thereby reducing the exposure to any fee earner foibles and effectively ‘dumbing’ down the legal process.

Larger firms need partners across nations to collaborate better and unified communications tools such as Microsoft Lync to bring knowledge workers closer together with live document sharing, audio visual experiences combined and client federation.

Unified Communications: Coming of age?

Depending on the type of law being practiced, other interesting tools are required to support litigation. Autonomy type information management tools for mining thousands of documents are required to make large complex cases an actual possibility to pursue. The size of some cases, for example Serious Fraud Office work frequently appears in a number of ring binders which can only be assimilated using high end tools which search and allow annotations and redactions to build concise material bundles of key evidence. Allied to this, secure data rooms are used to share and exchange material for both sides in a case and this activity couple with tools to mine key materials is usually known as e-disclosure.

Techniques more familiar with other financial services and FMCG such as call centre systemsand the like also make an appearance in practices that are more Private Client orientated, particularly those businesses that specialise in high volume, low value road traffic incidents often seen advertising on TV.

Cloud computinghas not drifted by without making an impact and the legal sector too is starting to benefits. Other hot topics such as; e-commerce, unified communications and BYOD are very topical for this sector being dominated by generally wealthy, gadget rich knowledge workers. It is often the scale of these businesses that can stop economical adoption of high end technologies but there is still a very strong appetite to explore what IT can do to differentiate.

Not many technologies pass the door of a progressive law firm without there being some level of applicability. This often overlooked backwater actually has more going on that first impressions may suggest. There are great opportunities starting to emerge and still to come for those willing to take a risk and use their corporately acquired skills to educate and guide lawyers into a market place that is being turned on its head and beginning to resemble FMCG and other rapidly moving sectors.

About the author:

Richard Hodkinson is IT Director at Manchester based law firm DWF LLP.