[ad_1]
Last month, Wolters Kluwer published the “Future Ready Lawyer Survey 2022,” a global survey to examine how client expectations, technology, and other factors are affecting the future of law across core areas and how legal organizations are prepared to address them. This will be the first in a series of articles covering the results of the survey, trends we’ve identified, and takeaways that legal professionals should consider as we look to the future of the industry.
This is the fourth consecutive year that Wolters Kluwer has conducted the “Future Ready Lawyer Survey,” conducting quantitative interviews with more than 750 professionals in law firms, legal departments, and business services firms across the U.S. and 10 European countries. Over time, it has provided timely perspective on factors driving change across the industry, with benchmark data on both pre- and post-COVID trends in the profession, and assessing organizations’ readiness to face those changes.
This year’s survey was conducted with the backdrop of volatility. While we’re largely past the worst moments of the pandemic, we are now entering a world of geopolitical uncertainty in light of the conflict in Ukraine and tensions in other parts of the world. We are experiencing inflation in most of the world and may be looking at a full-blown recession in the coming months. Despite the potential of an extended economic downturn, we are still seeing talent shortages. We are living in a world influenced by “VUCA” factors — Volatility, Uncertainty, Complexity, and Ambiguity. Continued technological change and increasing regulatory pressures are affecting consumers and businesses alike — and while this presents a very good opportunity for the legal industry, legal professionals must be prepared to take on the challenges that come with it.
Pressure Is Driving Change
With this VUCA backdrop, the survey found that legal professionals are pressured today by perpetual and pervasive change and a continuation in increased expectations for both in-house counsel and law firms. This continues to impact the relationships between clients and firms. Clients are happier with their firms, but at the same time, nearly one in three clients (32%) reported they are very likely to switch firms. This is up from one in eight in 2020.
Legal tech funding has been hot for the past few years, hitting a record of $9.1 billion in investment in 2021. Many might think that new technology is the driver of change in the legal industry — but it is my view that the pressure and increased expectations on legal departments (and hence their outside firms) is the key driver to the tech adoption we’re experiencing. Technology is advancing, but I would argue that the pressure for change is at the core of change in the industry.
With this theory in mind, the other key findings of the survey are perhaps more explainable.
- Technology is a top performance driver. Almost all (97%) of corporate legal departments will ask law firms to describe the technology they use to be more productive and efficient, up from 70% two years ago. Also, 91% of legal departments expect firms to use technology to be more productive and efficient. The need for technology is even affecting law firms to the point that 88% of attorneys in firms believe this to be important to their clients now. So there is a growing consensus here that didn’t exist as much just a few years ago.
- Who does the work is changing. 86% of in-house counsel report greater in-sourcing of legal work. The same percentage expect greater use of alternate fee structures that are not tied to billable hours. The expectation to use Alternative Legal Service Providers (ALSPs) went to 84% from 68% in the past two years.
So we have more pressure overall and an emerging consensus on technology as a top performance driver. Who does what work is changing, and the terms on how work is contracted is evolving. ALSPs are an increasingly viable option for some work, and nearly one in three in-house attorneys is very likely to switch firms in the coming year.
The Pressure Is Particularly Felt By Law Firm Professionals
Based on the survey’s results, the pressure is really on law firms — and while this is true, we do need to view change in the context of an increasing demand for legal services. The pandemic and VUCA environment have driven a lot of demand for legal services. 2021 was a phenomenal year for law firms; the LegalVIEW report conducted by Wolters Kluwer’s ELM Solutions business reported that the mean legal spend in large corporate legal departments went up 36% last year, meaning more money was spent with outside firms. 2022 is shaping up to be a very good year too, and that puts pressure on firms to keep up with demand as talent is in short supply. Efficiency drive by technology would seem to be an answer.
But only 35% of law firm attorneys think their firms are very prepared to address technology change. (I will discuss in a future article what may be behind this.) And what if the economy tanks? Will technology-savvy firms be more competitive if a pivot is required based upon changing economic conditions?
Good News: Leadership Resistance To Technology Change Is Waning
In past surveys, leadership resistance to change was cited as one of the inhibitors to technology adoption. In 2020, respondents said that the difficulty of change management and leadership resistance to change was the biggest barrier to implementing change for both corporate legal departments (65%) and law firms (53%). But in this year’s survey, leadership resistance is no longer on the radar. This is a very good sign.
This suggests to me that firms now see the need for greater technology use, and their leadership has the appetite to support technology projects. The key moving forward will be the effective adoption of technology to drive results in support of clients.
Technology projects almost always require change in how people work and the processes around technology. It is very common for a good technology to be deployed but not achieve adoption. This is particularly the case when there isn’t executive sponsorship from the top.
Organizational issues were cited (43%) as a reason why law firms resist new technology.
My advice to legal professionals is to ensure that leadership understands that supporting the deployment of technology is a great step forward, but the real need is for leadership advocacy in the adoption of technology. Helping leadership understand how to advocate for change in process and skills to enable successful outcomes is going to be key.
We’ve crossed over from the pandemic to a new normal — but that new normal is perhaps not what we were expecting. In the face of global volatility, uncertainty, complexity, and ambiguity, the legal industry must adapt to change. That change will require flexibility, agility, and a holistic view of change to keep pace.
Both law firms and law departments can leverage talent, successful deployment of technology, and change management to relieve some of the pressures they are experiencing. Using the results of the “Future Ready Lawyer Survey 2022,” I’ll share some insights on that next month.
Ken Crutchfield is Vice President and General Manager of Legal Markets at Wolters Kluwer Legal & Regulatory U.S., a leading provider of information, business intelligence, regulatory and legal workflow solutions. Ken has more than three decades of experience as a leader in information and software solutions across industries. He can be reached at ken.crutchfield@wolterskluwer.com.
[ad_2]
