Australia and US-based legal practice management software provider Smokeball recently published a report, How Technology is Changing the Legal Industry in 2023 (report 1). The report makes a strong case for law firms to adopt tech and offers an interesting snapshot of tech use by smaller law firms. We analyzed this report, together with another Smokeball report entitled Behind the Times (report 2), which looks at the largely negative impact on US law firms of not adopting new tech. Though clearly designed to promote Smokeball’s own products, the reports contain valuable insights into trends in legal tech use among firms in key markets. In this article, we provide a comparative analysis of the two papers and draw conclusions on how technology influenced the legal industry over time.
For report 1, Smokeball surveyed 200 law firms with 50 or fewer employees — probably based in the US or Australia — to understand how technology has changed their work. For report 2, Smokeball surveyed 151 law firms in the US with 30 or fewer employees, to understand how tech helped these firms navigate pandemic-related challenges — including hiring and remote work.
Careful tech investment
Law firms are “still conservative” in their tech investment, report 1 notes, with 77% of the firms surveyed using five or fewer unique software solutions. This conservative approach helps to reduce the chance that “software clutter” and “tech fatigue” will negatively impact company workflow, it argues. But it also means that firms need to be highly selective, ensuring the tech they use is fit for purpose.
Certain legal practice areas use more tech
The amount of time spent using tech varies depending on legal practice area, report 1 notes. Among the firms surveyed, those focused on business, estate planning and family law spent the most time using software — with some three in ten spending at least 75% of their time using tech. By contrast, firms focused on real estate or personal injury spend 10% or less of their day using software, the report adds. 23% of firms working in estate planning and 29% of firms working in family law spend 90% or more of their day working in software.
What tech is used?
Some of the tech most popular with law firms is widely used within the broader professional marketplace, report 1 shows. 61% of the survey respondents use Zoom or videoconferencing, while 53% use the MS Office Suite. But other popular tech has a clearer legal focus: 61% of respondents use legal research tools; 47% use document management software; 43% use legal accounting software; and 34% use practice or case management tech. When it comes to the least widely used software, only 11% of the survey respondents use trial tech and only 10% use reputation management tech.
Covid-19: a tech turning point
The legal profession has traditionally been slow to embrace technological advancements, notes report 2. But with the pandemic spurring the transition to remote work, most firms understand the need to adopt new digital tools to support their operations. 89% of the law firms surveyed adopted at least one new form of tech due to the pandemic. These firms reaped the benefits of increased client acquisition, higher billable hours, and improved efficiency.
Revenue increase
Firms that added new tech during the pandemic saw a remarkable increase in billable hours, report 2 tells us. 44% reported an uptick between 2020 and spring 2022 and 52% said it “allowed them to take on more clients.”. By contrast, only 25% of non-adopters saw any increase in billable hours during the same period. It would be interesting to see how reported revenue increases correlate with new tech adoption, with particular examples of which tech has spurred the increase in firms’ financial performance. Though innovative, proactive firms will undoubtedly be more likely to increase their revenue, other factors — like attracting high-caliber staff through new tech adoption — could also be contributing to their success.
Hiring quality candidates
Tech adoption has an important link to business growth and attracting high caliber candidates, report 2 shows. Law firms that adopted new tech were more likely to have zero open positions (25% compared to 50% for non-adopters). New hires in tech-adopting firms tended to seek career growth, work-life balance, and new challenges. Meanwhile, non-tech-adopting firms struggle to attract “modern” candidates and are less likely to increase salaries for new hires, report 2 tells us.
Flexible work
The majority of firms surveyed in report 2 had recognized the growing preference for remote work, adopting hybrid working models. But non-tech-adopters are less likely to offer remote or hybrid work options (only 38% compared to 74% of tech-centric firms surveyed). As employees increasingly prioritize work flexibility, this has an impact on satisfaction and retention.
Employee burnout
There seems to be a correlation between new tech adoption and attempts to address the tricky issue of employee burnout, report 2 suggests. Leaders at non-tech-adopting firms were less likely to understand the effects of burnout on their staff, indicating a lack of proactive measures to address the issue. By contrast, firms that embraced tech reported a higher awareness of and engagement with the burnout conversation.
Conclusion
Legal tech has played a crucial role in enabling law firms to shift to increased hybrid and remote work — essential for firms wanting to “enhance their employer brand and meet changing client expectations,” report 1 notes. And though covid-19 may have spurred the shift to remote or hybrid work environments, firms must recognize its permanence and adapt their tech accordingly, report 2 adds. Non-adopters risk falling further behind and missing out on growth opportunities. Using legal tech should ultimately be a priority for any firm wanting to build efficiency, streamline workflows, enhance client communication and ultimately up its profits. Collectively, the Smokeball reports serve as a wake-up call for law firms that have yet to embrace new tech, with its myriad benefits.
Authors: Lucy Marx, Vojislav Bajić