Lawyers are getting digital

Given our market position, we are well placed to gauge the appetite for innovation among UK law firms and assess benefits and risks.

So much has been said about innovation in the legal sector in recent years. Looking at the diverse range of law firms with whom we work closely, it’s certainly true that the legal profession is undergoing an unprecedented period of change.

So, is innovation causing this change – or is it simply an effect?

What are the real challenges in an increasingly digital age, and how do we overcome them? More to the point, what does it actually mean for law firms?

According to the Cambridge dictionary, innovation is defined simply as ‘the use of a new idea or method’. But nothing could be that simple in the legal world.

So we have decided to find out what innovation really means for those out there forging ahead in this exciting new landscape – and also to set out how we as a PI insurer can help facilitate positive change.

To develop a broader understanding of innovation in the legal sector, we undertook an extensive piece of research and talked at length to more than 150 UK law firms, from the Magic Circle to sole practitioners. And we included insights from managing
partners, executives and risk managers to complete the picture.

The result is the Legal innovation and risk management report, which can now be downloaded free by any law firm by visiting travelers.co.uk/innovation.

Of course, there are other industry reports on innovation, but this is different. Pushing the boundaries with the likes of new technology or flexible working brings with it a new set of risks, so this report also analyses what these firms are doing to mitigate those risks.

Not surprisingly, innovation has proven every bit as difficult to pin down as we thought.

Nevertheless, looking at the challenges facing law firms today, it soon became evident that the need for innovation is more important than ever. Particularly in the area of technology.

Slow adoption rates
For instance, the report found 87% of law firms are generally slower to adopt cutting-edge technology compared with other industries. And 97% agreed that the rate at which new technology is adopted varies considerably among law firms.

It also found that among those who are prioritising technology, smaller firms are typically focused on upgrading IT systems for the likes of financial management, client acquisition and document management, while, at the other end of the spectrum, larger firms are making forays into cutting-edge technologies like artificial intelligence.

Clearly, on the evidence of the report, more progress needs to be made with technology across the board. In an increasingly digital age, technology will be key to enabling law firms to do more for clients and to become more efficient.

Certainly, the pace at which technology is changing is exponential, and it’s increasingly clear that those who keep up will be better able to meet their clients’ changing requirements.

It does feel like we are reaching a tipping point with legal tech in particular. IT systems are becoming more sophisticated and capable, while the courts also allow disclosure in litigation to be done by predictive coding, meaning the end of huge and costly teams trawling through documents.

We could soon see lawyers using super computers to help with research and analysis, especially within larger firms. And as costs start to fall, smaller firms could themselves start to utilise this same technology and offer a greater variation of services within the market.

One trend right now is how technology is increasing the speed at which business is being handled. And while technology comes with built-in checks and safeguards, the insurance sector is increasingly seeing that liability arises from user error rather than system failure.

As technology advances, so too should a firm’s risk management and mitigation processes – and that’s where we can help.

Against this background there is an increasing role for insurers to be facilitators in an increasingly technological legal world – a world, of course, that is anything but risk free.

That’s why firms should, for example, treat technology, particularly when hosted by third-party providers (software, case management systems, cloud hosting,
anti-virus software and so on) with an increased level of care. It’s imperative to make sure that a sufficiently robust approach is adopted to protect confidential information of clients and employees.

Disaster recovery procedures and processes should also be put in place to deal with any technological fallouts.

As this report proves, it is important to support evolution in the legal sector, especially when it comes to delivering services in more progressive, productive and efficient ways.

And the good thing is there’s no need to go it alone when it comes to innovation. Insurers are always there to help their clients but there are other places to look for advice.

There are some excellent papers available from the likes of the Organisation for Economic Co-operation and Development, along with other government website publications from the Department for Business, Innovation and Skills.

Also, other business professionals, in particular accountants, have broadened their offering to provide helpful guidance on innovative ways of delivering legal services.

That said, regulatory bodies and trade associations, namely the Solicitors Regulation Authority and The Law Society should be treated as a starting point. Any quality marks or accreditations relevant to the firm's business unit should be able to provide some assistance.

Employing experts
With the advent of Alternative Business Structures, firms should also consider employing or consulting with experts from different backgrounds to determine how innovation could be applied within their organisation.

The rewards can be great with innovation, but equally so can the risks. And the cost of future proofing systems can be considerable. So you have to be sure the right protection is in place, secure in the knowledge that the insurer will respond in the right way in the event of a claim.

We are constantly reviewing market trends, backed up by a growing wealth of data, which put us in a great position to help inform our clients’ own learning about how to innovate without exposing themselves to unnecessary risk.

Our new report is just another step in this ongoing journey to deliver thought leadership on the issues which matter in an evolving legal sector.

For more information on Travelers’ offerings including ‘free to ask’ risk management and other consultancy services, go to  www.travelers.co.uk/brokers

This is part two of a two-part series on legal innovation. Read part one on the innovation lessons to be learnt from lawyers.