7 Ways The Legal Industry Is Undergoing Disruption (Must Read)

legal industry disruption

With the rapid advancement of technology over the past fifty years, many industries and sectors have undergone massive disruption to a point where the way they conduct business today is entirely different than only decades ago. One industry that has seen little progress over this time is the legal industry where the manner law firms deliver legal services today remain nearly the same as how it was done fifty years ago. However, this will not remain the case for many years to come!

The legal industry is now under significant pressure to change and adapt to the new technological realities of today and to remain competitive, lawyers will need to roll up their sleeves and embrace this new reality. In this article, we will look at seven significant ways the legal industry is undergoing disruption.

We will cover the seven areas where technology is changing how things were done in law firms:

  1. Accounting and billing
  2. Document automation
  3. Document management
  4. Electronic discovery (e-Discovery)
  5. Legal research
  6. Legal practice management
  7. Case management
  8. Conclusion

Let’s get right to it.

1- Accounting and billing

Accounting and billing is what lawyers and legal professionals care about the most as their profitability and margins are dictated by how many billable hours the firm can invoice its clients. 

Law firms and lawyers typically need to manage their general commercial account, trust accounts, keep track of their billable and non-billable hours, disbursements and client invoicing. If the billable time is not invoiced or the billable disbursements are not passed on to the client, then the firm will encroach into its own margin and capital.

While this can be done manually or by a bookkeeper, there are many legal accounting software products out there that can help simplify this process and resolve your pain points hampering your ability to invoice on scale. 

Law firms leveraging a legal accounting platform can cut down their back office costs and increase their lawyers’ productivity. Productivity can be enhanced as your lawyer will not lose time navigating a complex internal accounting system and setup and will therefore have more time to render value-added legal services. The right legal accounting software can drive cost savings and increase your profitability. 

If your lawyers are spending many hours in a week managing accounting related tasks and activities or you have a team of accountants, bookkeepers, clerks and other accounting professionals spending their day doing manual work or data entry, then you should seriously consider an accounting software product for your law practice.

The money you spend will be well spent!

Should you wish to embark on a software-searching journey, we suggest that you consider the following features that should be available in the software you may consider to leverage:

  1. Overall user friendliness 
  2. Integration with your client relationship management system (CRM)
  3. Cost for the license so your accounting staff and lawyers can use the platform
  4. Ability to handle trust account operations
  5. Easily track billable and non-billable time
  6. Track billable and non-billable expenses
  7. Relevant report generation and analytics
  8. Ability to track distribution to partners
  9. Storing receipts electronically
  10. Backup and recovery capabilities 

You may add to this list any other important elements, features or capabilities you consider important for your software to include. 

2- Document automation

Document automation is a fun and exciting area where the legal industry is going through a transformation with the use of technology. When we say “document automation” or “contract automation” we are referring to the process by which we use technology to assist us in drafting a legal document or a contract.

In most cases, the document automation platforms will require the user to answer simple questions based on which it will generate the legal documents or contracts. This can be quite powerful as you can have a non-lawyer or a layman user generate highly complex legal documents.

The legal industry is no doubt impacted by the widespread use of document automation platforms. Lawyers and paralegals are losing ground. What used to be billable time in drafting legal documents and contracts is now handled in a matter of minutes by a software application. Legal tech start-ups founded by non-lawyers are entering the document automation space and taking business away from legal professionals. For law firms, lawyers and paralegals to survive, we are now “forced to innovate” and find other ways to show value to our clients. 

Document automation software platforms are beneficial for several reasons:

  1. you expedite the contract drafting process where in matter of minutes you can draft a contract that would have otherwise taken you hours to put together
  1. you minimize risk of introducing human errors into your contract as the software solution will eliminate the human factor from your contract generation process 
  1. you can produce tailor made contracts suited for your specific needs and purpose and avoid including unnecessary legalese and non-essential contractual clauses thereby simplifying your negotiation cycle  
  1. you can better control your contract templates by being able to push updates to the software in real-time giving end-users the assurance that they are always using the right template at any given time
  1. you can empower anyone such as a business person, support staff or a clerk to generate legal documents safely and without having to resort to a lawyer or an expensive legal professional 

In essence, documents and contracts represent a major component of legal practice and you want to remain ahead of the game by adopting the right technology to support your business, execute quickly and scale with your clients. You can avoid repetitive work, save time and produce a far better legal work product through document automation that could have been done otherwise.

The document automation technologies are evolving very quickly and can either represent an important risk to your practice or a great opportunity. If you do not embrace the technological transformations in this space, you could see the revenues you used to generate from contract and document drafting services vaporize while other law firms and savvy non-lawyers fiercely compete with you in this segment.

Today, it is time for you to start transforming your legal practice and law firm operations by leveraging automation technologies.

3- Document management

Document management systems offer ways for lawyers and law firms to receive, process and store documents and contracts electronically. There are many ways that you can refer to this process, you can refer to this as digital document management, content management systems, enterprise content management system, digital asset management, document workflow management or even records management systems.

A document management software will allow you to centralize your contracting process and achieve a greater level of control and efficiency. Traditionally, you used to file, store and archive your paper files, a lot of paper files, in a secure physical place. Now, you can achieve the same objective using a cloud-based application. You could scan your paper records and file, organize, manage and archive them electronically on your cloud-based application or an on-premise document management system you’ve deployed. 

Document management innovations enable law firms and legal operations to drive significant cost savings and increase productivity by allowing easy access to historical documents, search and indexing capabilities and manage access, privileges and security. 

Where document management systems shine, they enable you to:

  1. store and retrieve data
  2. increase security and control access
  3. manage your workflow 
  4. stay on top of your document versioning
  5. perform searches and index your documents
  6. integrate with your other software systems

If your law firm continues to push paper, spends time shipping, storing, archiving, ordering and moving paper from one place to another, then you are a good candidate to consider an overhaul of your document management processes. 

With the technological capabilities available today, at a fraction of the cost of a traditional document management process, you can increase the security, efficiency and overall output of your firm by adopting a solid document management system. 

Technology is definitively and permanently disrupting the legal industry and forcing us to change our ways. We must act as change agents, take a holistic look at our legal practice and operations and make the necessary changes to remain competitive and to ride with the technological wave as opposed to stand against it.

4- Electronic discovery (e-Discovery)

Electronic discovery is the legal process through which companies and law firms handle litigation matters, regulatory investigations and manage access to information requests, among other things. With the ever increasing volume of electronic communications, documents, messages, emails, images and other electronic exchanges, you will need to analyze a massive volume of electronic data in the context of a litigation or a regulatory audit.

Having a software system to support you in processing such a large volume of electronic material can save you thousands of dollars if not hundreds of thousands of dollars in larger and more complex cases.

The e-discovery process involves several stages that can easily be automated and handled through a software application. These stages are:

  1. the identification of electronic documents and material that could have a potential impact on a court case or an investigation. During the identification phase, you must scan and process all your electronic documents to identify those that could potentially be relevant for your needs.
  1. once the relevant material is identified, you must preserve your documents if you anticipate an imminent litigation or anticipate a legal dispute. With an e-discovery software, you can put a “legal hold” on a matter and ensure that your organization does not inadvertently destroy data or material that was subject to a legal hold or preservation obligation. 
  1. the next stage is transferring the preserved material to the legal professionals who will go over the identified material and evaluate its relevance. Depending on the nature and complexity of the matter, there could be a lot of material transferred to the legal professionals for review. That’s when you realize that you need a software solution to help with the process. 
  1. once the legal professional receives the material, it is now time to load it in a document review software so the material can be further analyzed. In this stage, the use of a software solution can greatly simplify this step as you may have thousands, if not millions, of records to process. 
  1. when your material is loaded into your document review application, you are now in position to review your documents and do your triage. You will further analyze if the material is relevant or may be discarded for the moment. The review process is an iterative process where you do your initial pass and may need to do future passes in case you need to leverage a material that was not perceived as relevant in the past. 
  1. finally, we get to the point of filing or producing the electronic material that was identified during the e-discovery process. In this stage, you will either hand over the document to the government or regulatory body, leverage the document in the context of a legal proceeding or provide it to a data subject or an individual. 

No matter what may be your use case, an e-discovery software tool is a powerful tool to help you plow through millions of records in minutes or hours as opposed to days or weeks. This tool will be more useful for mid-sized and larger law firms or the legal operation of multinationals.

5- Legal research

Legal research is another area in the legal industry that has undergone significant change, disruption and transformation over the years. Legal research used to be a long and tedious process where lawyers used to go to legal libraries and search for case laws and statues in printed books and material.

Today, with the aid of legal research software, you can find the relevant legal information, case laws, doctrine or any other legal material to support your case and help you draft legal procedures accordingly. The legal research software will help you access searchable legal information and material so you can quickly find and identify what’s relevant for you.

A good software solution will provide a rich set of features and functionalities. To help you identify these features, you should consider the following abilities offered by your legal research software:

  1. manage and curate a database of legal information
  2. offer a solid database of legal information
  3. provide analytics to interpret the information found
  4. provide updates on the legal and regulatory changes
  5. offer search filters and capabilities

The legal research software can be an essential tool for some firms or legal operations but a “nice to have” for some others. If you are operating within a large organization or law firm, you may want to consider having a legal research software tool to help you reduce your legal spend and save time.

There are some legal research software applications that go into the realm of artificial intelligence, natural language processing and state-of-the-art technologies. You will need to assess your needs and narrow your choices in terms of software vendors. Depending on your needs, you can find a software solution that provides you either the basics or more functionalities suited to your needs. 

As lawyers, we are paid to find legal solutions to our client’s questions and find creative avenues and legal paths to help our clients navigate the world. Legal knowledge is therefore a golden commodity. Access to legal knowledge is not only important but highly strategic as we are in the business of law and knowledge of the law. In the past, a lawyer in a large law firm had a competitive advantage over others as he or she had access to a private library with researchers and librarians. With legal research software solutions, that competitive advantage has now been chipped away. 

In today’s legal markets, any sole practitioner having access to a legal research software tool can tap into as much legal knowledge and firepower than any large international law firm. This puts a large law firm directly in competition with a sole practitioner or small law firms in their ability to quickly access legal information and knowledge to support their case. 

6- Legal practice management

Legal practice management is the operational process that allows you to manage your day-to-day legal operations and business. A company that manufacturers a product will have operational processes to manage its products and a law firm must manage its client cases and matters, the prized asset of the firm. 

The law practice management is comprised of many sub-elements such as:

  1. case and matter management
  2. calendaring and docketing 
  3. conflict checks
  4. task management
  5. billing and invoicing
  6. document management
  7. process and workflow
  8. client portal and interface

Where in the past you managed your legal practice manually, employed an army to perform your practice management tasks, today you can achieve the same result using a law practice management software at a fraction of the cost and with greater speed of execution.

A legal practice management software provides a more complete set of features and functionalities spanning over many areas of the legal practice. Depending on your software vendor of choice, you may have some vendors strong in one area while others in other areas. This makes the selection process important as you want to capture as many processes in your practice management system as possible so that you can leverage one single software solution while minimizing any external manual effort.

You can find different types of software solutions depending on your needs. You can have a vendor offering you a cloud-based system or you may want to host the system on-premise. Some systems operated through the web while others offer apps that can be downloaded on your smartphone. 

The practice management software space has evolved to a point where you have many options out there and can leverage a software solution that is designed to meet your needs out of the box. Your best strategy is to define your business pain points and see how the software can help resolve your unique challenges. If you can get a thirty or sixty day trial, you should first test-drive the software so that you are comfortable with your choice.

7- Case management

Case management is how you track and store all client related data. The type of information and data you will track about your case can be things like appointments and scheduling history, contact information, invoicing and billing information. 

To be efficient, you want to have your case data in one centralized location so you can easily access your client information and be able to record additional information in the same central repository. 

Case management is not an easy task. You may have information about a case in many different areas, different regions and in the hands of different people. There could be dozens or hundreds of data points that you need to keep track of so you can have a well-documented, centralized and up-to-date repository.

This is where using a software technology will greatly enhance your ability to track, record and get reporting on your clients. One great advantage in leveraging a case management software is how you can track all your client information in one place, be able to view the information, generate reports and make decisions based on relevant data. You can also track the progress of any other metrics important for you so you can provide different reporting to management, employees and other stakeholders.

If you are using the good old fashioned paper-based system to track client information, you are most definitely a candidate to consider case management software. If you already have a case management software, you may want to look at what’s available in the market and assess whether your current solution offers you the features and functionalities that you need in resolving your pain points. There are many options out there and you can find a good solution with some preliminary research.

You can follow some of the below guidelines to help you identify what’s suitable for you:

  1. is the case management software user friendly?
  2. does it integrate well with the other software solutions that you use?
  3. can the software scale if your organization grows over time?
  4. do you get relevant and useful reporting from the system?
  5. can you adapt the software in-house or can it be customized for your specific needs?

There may be more questions that you may have so feel free to engage with your software vendor and ask them the relevant questions. One thing is for sure, if you are operating in a legal practice where you have dozens and hundreds of client matters, you will need to seriously consider a case management software to help you centralize your case management processes. This can be done quickly and at an affordable cost.

8- Conclusion

legal industry disruption

Technology is transforming the legal industry.

Lawyers and legal practitioners have no choice but to look at what’s out there and adapt.

You should immediately plan for the modernization of your practice or legal operation by leveraging available technologies to your advantage. 

Fast technological evolution means that you should consider your options now and plan for the  short-term, mid-term and long-term organizational strategy. A lawyer can no longer assume that by opening a shop, the clients will come and pay based on a traditional hourly rate. That used to work in the past but now clients will come and expect a lot more value for the money they spend with lawyers knowing that they can use software solutions to give them the basics.

You can optimize your legal practice by adopting a software solution in any of the areas that we’ve covered in this article. This can be a project that you can undertake at this very moment. If you don’t start it now, we urge you to review your overall legal practice and consider how you can make these changes as soon as possible to enhance your business processes and provide more value to your clients.

We hope that this article was useful and that you’ve enjoyed reading it. We also hope that you will operate a successful legal practice that can be fulfilling for you and rewarding for your clients.