Legal CIOs face unique challenges

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?

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