The PwC Law firms survey 2021 – what lies ahead for legal?
In its most recent annual law firms survey, ‘Facing the future with confidence’, PwC points us at several ways that law firms are (or should be) responding to the pandemic landscape, learning some lessons and preparing themselves for the future.
The first thing to note is how dramatically firms were wrong when predicting their own likely performance this year. Even after six months of pandemic, firms thought they would be facing a profit drop of up to 20%, but we can see they have in fact seen striking profit growth as legal services were in demand and several categories of costs fell away. Firms will have confidence to build on this success, and as international offices drove much of this growth, we may expect to see ambitious firms continuing to invest here.
In terms of office space and hybrid working – which is on everyone’s minds now – 48% of respondents expect their firms to reduce their office footprint, but critically keep the environment for true face time – with the main reasons said to be collaboration, team bonding and relationship building, client interaction and coaching/learning/development. Interestingly, firms said productivity and innovation were not priorities for office work. We’ve all lived through a lot of change now. However, with a world of billable hours and very long days in an office being the norm not so long ago, this is still a surprising early indicator of how different the world of law might look in the future.
Finally, quite an alarming point – cybersecurity in such a world. A full 90% of respondents to PwC’s questions say they are concerned about the impact of cyber risks, and with good reason. Three-quarters say their firms have suffered an incident due to the unintentional actions of staff members. Even given the risks that surround moving so many people into regular remote working mode, this is a scarily high number. Firms are aware of this, with their priorities for the year ahead showing a shift from ‘reduce cost’ to ‘reduce cyber risk’.
How are firms deriving value from their data stores and innovation projects?
It’s been said that data is the ‘new oil’ – potentially highly valuable but in need of processing and refinement. With many law firms sitting on mountains of data, and increasingly aware of the need to innovate in the arena of digital law, many are asking how they can leverage their data to provide clients with new legal products and services, alongside fresh management and business insights.
So, how can firms make sense of their systems, navigate their datasets and join them up into strategically and commercially valuable commodities? How are some businesses scanning the horizon for new opportunities, and which tools are available to map out firms’ banks of knowledge and data?
These questions were among those posed in Briefing’s recent webcast: How can firms harness data to drive strategic advantage? We heard from legal professionals at international law firms discussing their digital law journeys, including Dale Hodgkinson, head of strategy and architecture at Slaughter and May, and Fernando Antas da Cunha, managing partner at Antas da Cunha ECIJA, Portuguese branch of international law firm ECIJA. Lastly, we also had technological insight from Moacyr Galo, head of sa.global labs, who offered his perspective on the ways law firms could connect stores of knowledge and data to make better decisions about how to differentiate themselves in future.
Scanning the data horizon
At ECIJA, Antas da Cunha explained that legal design thinking has become increasingly important for the firm’s expansion in the Spanish and Portuguese markets – and that both data and commercial thinking have been crucial in that endeavour. “When you start talking with clients and ask what they really want, it’s like a puzzle. You have to bring together different products and expertise into one place.”
In 2016, he explained, the firm became aware of the opportunity to address client needs around the newly introduced General Data Protection Regulation (GDPR), an area of law which no law firm fully understood how to address. In order to capitalise on this opportunity, the firm created a tool that would give it a competitive advantage when addressing similarly new laws or emerging client needs. “We anticipated all the legal documents we had to provide to clients, but we built the whole project in one go, including the gap analysis, the action plan, monitoring processes and how we tendered it.” One outcome of this project, he says, was the ability to provide more services to bigger clients than before, and a team of people able to scan the horizon for new trends in the legal market, such as blockchain, cryptocurrency or cybersecurity.
At Slaughter and May, Hodgkinson said many firms add risk when they neglect the basics of data cleansing, considering it to be unmanageable. That’s a competitive problem for firms with a more mature business model, he said, as newer, more agile entrants to the market embrace new technology and are only just beginning to collect data they intend to leverage – so inevitably it’s more up-to-date. “We’ve got a lot more gatekeeper processes in place around data – which is good, because it helps keep the data in a more mature state due to lessons learned of old. But many firms drive forward without that clean data – so the question for mature businesses is how to stay agile with those more mature processes, and for agile, newer businesses the question is how to mature the management of data.”
Galo at sa.global added that law firms should keep an eye on the demand for more connected services coming from clients and general counsel. “Leaders in every industry want reduced costs at the same time as different services. That requires automated systems, making decisions in almost real time.”
However, he said, firms’ focus should be on not just using one technology but using the right ones to maximise intelligence available to the firm. He added that sa.global labs has been working on creating a legal knowledge graph, which he describes as an “ontology for legal knowledge”, using machine learning to understand the connections between data and knowledge silos within firms and present that in a way that lawyers will want to use. “User adoption is 80% of the success rate around leveraging new technologies – you don’t want to force adoption of technology that disrupts the way people work.”
Find out more about data and leveraging tech in the full webcast.