State of the Industry 2017: Financial Results
Revenue generated by alternative legal services may still be a drop in the ocean for big City law firms but in 2016-17, that revenue notably became material for many firms, with many having launched home-grown tech tools.
In our report we speak about the latest set of financial results to senior management at law firms including Clifford Chance, Freshfields Bruckhaus Deringer, Herbert Smith Freehills, Pinsent Masons, Macfarlanes and Mishcon de Reya, all of which are winning business as a result of new delivery models.
Progress is being made in delivering better value to clients, in automating routine legal services, in project managing work and in using technology-led solutions such as document review tools used to create client efficiencies.
But what really jumps out is the number of firms that over the past year have built internally developed, revenue generating, tech-led products that are in some cases forming the basis of entirely new business lines.
Key findings include:
Clifford Chance saved £15m in operational savings last year thanks to its ‘continuous improvement’ programme that includes using Kira Systems, Contract Express and a range of ‘best delivery tools’. It’s Clifford Chance Dra@ft document automation tool has exceeded €1m in its first full year of operation, with 2000 licences sold to eight or nine different clients.
Herbert Smith Freehills alternative legal services arm ALT grew by around 7% in the past year and generated over £30m in revenue. It is the in the process of developing two home-grown tools as CEO Mark Rigotti tells us: “We are tilting towards business-driven solutions that are developed internally at the coal face.”
Pinsent Masons’ alternative legal services businesses now contribute “well into the seven figures” as it expands its flexible legal resource Vario into areas including data protection.
Mishcon de Reya has over the past year developed its own data extraction and visualisation tools within the real estate department and is doing significantly more work with Contract Express to automate contracts, with plans to share that data with clients for a fee.
The innovative firm is about to launch its own brand management business and over the past year has launched Mishcon Cyber Intelligence to gain an an advantage in litigation, as well as startup venture MDR LAB.
Macfarlanes has developed tech-led tools for clients in the financial services regulatory field, for example in helping them to get to grips with MiFID II.
Freshfields Bruckhaus Deringer’s Legal Services Centre, which has expanded out from Manchester to Europe and Asia, has reached 100 staff. While there is a strong focus at the firm on using technology to streamline its services and provide better value, joint managing partner Stephan Eilers tells us: “Moving the firm into areas such as information services that do not generate a client relationship and which offer an isolated legal product is not the space where we should compete.”
And we speak to Accenture, where client lead David Potts, who specialises in technology and outsourcing, says that law firms must have a clear strategy for their tech capability, commenting: “People are dipping into tech but you really need to understand where it is taking you and have a clear strategy and work towards where you see yourself in five years’ time.”
This report first appeared in our monthly Legal IT Insider newsletter – you can download it or sign up for your free monthly copy here: http://www.legaltechnology.com//latest-newsletter/