Image Credit: REUTERS/Kim Hong-Ji
In an unprecedented year, the small and medium law firm market has largely managed to adapt and in many cases thrive, according to our survey which asked 90 firms about their views on the competitive landscape and their use of technology. Most felt the market was quite steady, but with a slight decline which continues the pre-COVID-19 trend. Reductions in demand in some practice areas have often been offset by increases in others.
Increasing importance of technology adoption
The role of technology has increased in importance in this survey compared with last year, as law firms showed they could work in new ways due to COVID-19. Working practices have adapted to home working and online service delivery with relative ease. IT systems were key is enabling law firms to shift to remote working almost overnight.
However, technology investment is not only about streamlining working practices and enabling people to work from home. It is also seen as a support for growth and to improve competitive edge. Increasingly, fee earners understand the potential of technology to provide value to the fee earner and improving the client experience, rather than detracting from it.
There is a need for collaboration between IT specialists and lawyers
While our survey respondents saw the clear benefits of a variety of technology solutions, the survey showed a mixed picture about how confident firms felt in using and choosing them. Respondents said they were confident in their back-office systems to provide insight into financial and performance metrics, but less than half said they had the tools to cost and price work accurately.
- Only 44 percent of firms have invested in automation to improve processes and productivity and only 30 percent use client collaboration technology, which is an increase of 7 percent since the last survey, but still a low adoption rate.
- 46 percent say they have a high level of technology expertise within their firm—a 6 percent increase since the last survey but still less than half. However, 41 percent of firms intend to invest in tech solutions in the next 12 months.
Download your copy of the UK Small and Medium Law Firm Market 2021 report.
While the use of technology to automate and collaborate has increased, the rate of adoption among small and medium-sized law firms is relatively slow. The internal expertise to understand how a solution can make a difference to the firm and its clients is key. Those that intend to invest are eyeing automation, workflow, and collaboration technology to provide that sweet spot of greater efficiency with an improved client experience.
Outlook for the competitive landscape
Into this mix, the competitive landscape remains tough. Our respondents told us that their biggest commercial threat is coming from online service providers, which pose a threat to a service industry that relies on personal relationships to secure work. What those firms are seen to do differently is to provide a great online experience while running efficient processes.
Law firms are now focusing on the same pressures that they had pre-COVID-19—managing high fixed expenses and increasingly demanding clients, regulatory change, and talent shortages. Many respondents also fear the reduction in demand is on the horizon for when Government measures for alleviating the immediate impact of COVID-19 are withdrawn.
The top two areas of focus for our respondents are controlling costs and focussing on growth. The most successful firms will continue to rely on technology to enable them to respond to market fluctuations and meet client expectations. Entrepreneurial firms will go further than automating existing processes or shifting them online; they will identify opportunities that these solutions bring to access new markets and develop new offerings.
Download your copy of the UK Small and Medium Law Firm Market 2021 report.
