To buy or build: Legal Tech After the Pandemic?

Law firms are embracing technology, but should they buy in new tech or build their own innovation in house?


Photo by Andrew Neel on Unsplash
Photo by Andrew Neel on Unsplash

LONDON (Within the Law) - After months of hibernation, offices and their workers are emerging, blinking into the light of day. For many, the first point of business is to find an open pub. Once that’s out of the way, there’s the issue of getting back to work, but this raises questions. 

As the government urges people back to the office, businesses face a very different landscape, one in which many staff are still operating remotely. To cope with the new normal, law firms are investing in technology. The question is, do they build it themselves or hire an outside firm to do it for them? Both options have issues.

New normal 

The success of remote working took the legal profession by surprise. Before the pandemic, it lagged behind other industries which were acceding to demands for flexible working patterns. The nature of the law, so the theory went, demanded face to face meetings and for sensitive documents to be held securely on site.

As it turned out remote working has gone better than most experts could have imagined. Most legal workers say it has improved their work-life balance. Almost half are dreading going back to the office. Firms such as Allen & Overy have suggested staff will work remotely for around 40% of the time.  

However, sustaining such an approach needs changes in process, attitudes, schedules and, more than anything else, technology. 

High tech future 

The hybrid workplace is going from a nice to have to an unavoidable reality. This presents quite a conundrum for the legal sector because historically it hasn’t been very good at tech. Prior to the pandemic investment in technology plateaued. Data from the Lawyer and HSBC showed that the number of law firms spending 5% of their revenue or more on technology fell between 2017 and 2019. At a time when everyone else was talking about ‘digital transformation’ the legal sector was backing off. 

The pandemic changed everything. Like it or not, technology was the only way to keep things going. The question became not ‘should’, but ‘how’ should you invest in technology. 

Ultimately it’s a balance between building it yourself or having third parties do it for you. On the one hand building in house provides control over the technology and a degree of security not otherwise available. On the other, third parties offer levels of expertise that most law firms lack. 

By and large, according to the Lawyer, firms have opted for the latter. This is partly due to the sector’s historic discomfort with technology, but also down to the wealth of technology available from third parties. 

Building it yourself 

Going the DIY route are giants such as Deloitte who have invested heavily in workflow automation and a host of digital legal solutions. Others have been investing in innovation labs building capacity to embed technology at every layer of the business. 

Doing so, though, requires substantial resources and internal expertise, not every law firm can acquire. Deloitte can take such an approach because it has deep enough pockets to afford the infrastructure and recruit personnel. 

For other firms, even at the magic circle level, financial and human resources are more constrained. That leaves the options of third parties. 

Buying in 

The good news is that there are plenty to be found. The legal tech sector is on the rise providing a host of options such as the cloud, automation, AI and remote collaboration. Many are also turning to meeting room services allowing seamless collaboration between office-bound teams and remote workers. 

This is leading towards large high-resolution interactive screens with the capacity to share documents securely between multiple participants. Firms are also having to consider the technology used by remote-based professionals. Having someone working from home whose internet connection is slow can be frustrating and spoil the experience for everyone. 

With the notion of home working becoming a permanent feature, firms are beginning to invest in employees’ home work stations to bring their own IT up to scratch. 

Cloud adoption is on the rise. Solutions which can integrate with office allow for the sharing of documents such as contracts or agreements. Staff can remotely edit documents avoiding duplication whenever they like and from wherever they are. 

Security 

Against this firms must weigh considerations of security. Law firms deal with high levels of sensitive client data. They have a responsibility to keep that information safe and secure. Building innovation in house provides a measure of control over that data. 

Third parties present an inherent risk in that data may be vulnerable should that party experience a problem. Any freelancers or contractors employed by the firm could also represent a security risk if their own infrastructure is not as secure as the firm’s. 

Having staff working remotely also increases the number of endpoints coming into the system. Each of these must be secured a situation in which staff use unsecured personal computers to access systems, potentially undermines even the tightest security mechanisms.

The hybrid future 

Both choices have their benefits and risk. However, practical considerations are pushing law firms to lean towards buying in. While it potentially increases risks, the benefits can’t be ignored. Like it or not, the world of hybrid work is coming.

(Written by Tom Cropper, edited by Klaudia Fior)

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