The technology divide: Lexis Bellwether report identifies growing ‘haves’ and ‘have nots’

LexisNexis UK has today (23 October) published its latest Bellwether Report – ‘The Race to Evolve’- which reveals that while active use of legal processes, tools and technologies are identified as the second highest driver of efficiency in small and midsize firms, 81% of these firms spend less than 10% of their turnover on legal tools, and 58% of firms are spending less than 5%.
The research, conducted among 149 firms of around 20-30 lawyers across the UK, finds that while 92% of lawyers assert that continued investment in technology is no longer optional, they often do not value efficiency that technology provides highly enough to invest. This is despite clients ranking lawyer efficiency as one of the key ways lawyers can add value to the legal process.
Speaking to Legal IT Insider, LexisNexis marketing development director Jon Whittle said: “A thousand of these firms startup each year and many are made up of ex top-tier lawyers who are competing with their former employees.
“Given that a lot of these firms are small startups in growth mode, I would be expecting at least 20% of turnover to be spent on legal tools. If you benchmark them against other professional services companies such as accountants, those other companies spend a lot of money on technology.”
He added: “My real challenge is the quantity and what they are buying. They tend to buy stuff to help them do the lawyer bit but there is very little comprehension of the value of investing in technology to help improve the quality of their relationship with the client.”
Ratings were mixed as to which activities lawyers considered the most important drivers of efficiency in their law firms, but “not dabbling outside your practice area” emerged as the frontrunner (41%) – higher even than investing in new technology (17%).
It is interesting to note the divide developing between firms that do embrace technology and those that don’t. Whittle says: “Firms that use technology tools value them very highly and say they greatly improve their efficiency but we’re starting to see a divide between the ‘haves’ and the ‘have nots’. Those that don’t use technology don’t see the value. It’s that level of disconnect that gives the impression that the have nots will increasingly fall behind.”
Often lack of investment comes down to a fear of the unknown and in the report out today, 73% of respondents conceded that adapting to change is not their strength but that it is no longer optional.
“They don’t invest because they don’t understand and lawyers don’t like things they don’t understand,” Whittle says.
Law firms must align their working practices with that of their increasingly tech-savvy and informed client base, Whittle says in an announcement out today. “One of the problems is getting lawyers to take a long-term view. While their firms may be thriving now, if they don’t take a commercially savvy, customer-centric, progressive view of the business and invest in solutions that drive efficiency today, this will not be in the case in five years.
“It’s clear from our research that those firms that are investing are far outpacing those who aren’t, and this isn’t going unnoticed by their clients. While it seems many law firms understand where the gaps are, there is a push and pull phenomenon between traditional and modern working practices, and a disconnect between words and action. Ultimately, while many lawyers are still charging by the hour they are not understanding the value of their time – and this needs to change.”
The Bellwether Report 2017 is the fifth annual report in the series and explores the current and future state of the legal landscape from the point of view of independent law firms. This report, The Race to Evolve, is the second and final report in the Bellwether 2017 series and is based on 10 in-depth interviews followed by an online survey among 149 lawyers via the LexisNexis databases.
Note: Given Lexis’ breadth we would ordinarily expect a higher number of firms to be involved in an online survey and the full report, which can be accessed here appears to be directly linked to signing up to trial Lexis products.
Update 10.20am 23/10/17: Lexis says the link sent out is wrong and this is the ‘clean’ link with no selling:
Lexis also says that it deliberately limits the number of respondents to around 150 commenting: “The volume is enough for statistically robust analysis and enables us to ensure the sample is representative geographically, across experience and different sizes of business. Analyzing more respondents increases the cost of the market research considerably and makes no real difference to the shape and nature of the results. ”