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Legal Technology

Compelling Need: Convincing law firms to invest in technology

· 5 minute read

· 5 minute read

In a two-part Q&A interview, we speak to RSM’s Michael Gerlach, professional services leader, who specializes in advising law firms and legal organizations in technology implementation

Over the past several years, law firms have been playing an increasingly necessary game of catch-up around leveraging essential technology to improve basic operational efficiency and effectiveness. And the global pandemic, which pushed firms into rapid remote working deployment, only laid bare this technology gap. Now, as the legal industry and some parts of the world begin to slowly come out of the pandemic-induced pause, law firms will again have to grapple with their technological shortcomings.

In a two-part blog series, the Thomson Reuters Institute (TRI) speaks to Michael Gerlach, Partner and Business & Professional Services Senior Analyst at the tax, audit, and consulting firm RSM. We ask him to offer his insight on first, the compelling need and new thinking that is urgently pushing law firms to address the technology question; and second, what tech tools and processes would benefit law firms the most?

Thomson Reuters Institute: In a recent article, you stated that “conditions are ripe for services firms to make strategic investments” with a focus on a digital transformation. Why do you think conditions favor those investments now?

Michael Gerlach: I think the environment is primed for shifts in strategic thinking. Many law firms realized another year of income growth in 2020 despite the pandemic; yet without challenging how firms operate, their top lines will begin to slow, and expenses will creep back to pre-pandemic levels.

General counsel’s budgets are continuing to be cut, placing further pressure on outside law firms; and with the advancement of alternative legal service providers (ALSPs), law firms are facing more competition. Clearly, law firm leaders will face many decisions over the next few years — and investment in technology is one option that definitely needs to be on the table.

Thomson Reuters Institute: What makes tech investment so central to the whole question of law firm sustainability and success?

Michael Gerlach: Exponential growth in legal technology has occurred over the last decade, along with a similar growth in the skills of law firm graduates and attorneys entering firms. In the past, firms may not have had attorneys with the appropriate skillset to fully utilize the technology to help the firm realize the best return on investment (ROI), but that is not the case now.

Michael Gerlach of RSM US

Today, firms have a great opportunity to realize the value of newer attorneys because of the skills they possess around data and technology. And if firms can collaborate with these attorneys to develop a program to train other attorneys on the technologies in which the firm has invested, there is a greater chance to recognize efficiencies and increase productivity.

Thomson Reuters Institute: A Thomson Reuters Law Firm Business Leaders Survey, published last November, showed that “insufficiently leveraged technology” was ranked as a much lower risk factor by law firms compared to factors like “underperforming lawyers” and “employees’ productivity”. What argument would you make to leaders to have them see the relationship between productivity and leveraging technology?

Michael Gerlach: Many law firm leaders’ responses in the survey seem to fall in line with traditional perspectives of law firm operations. Specifically, that risks to firm profitability fall solely on the shoulders of the attorneys who continue to be given the same training, tools, and resources that the attorneys before them were given.

Many of the respondents to the survey don’t truly understand how to fully utilize technology to actually increase employee productivity. However, this isn’t necessarily their fault — more often than not, technologies are purchased and implemented, but only to a basic level. Many attorneys don’t feel they have the time to appropriately learn how the technology can assist them in delivering better client service, which in the end will make them and the firm more efficient and more profitable.

Also, you have to take into account that many of the leaders making investment determinations haven’t had the opportunity themselves to upskill their own understanding of technology to properly visualize how such tech advancements can impact their firms’ operations.

Thomson Reuters Institute: The survey also revealed that the legal industry was seemingly divided on the value of investing in legal project management tools, with 26% of firms having no plans to use these tools at all. Given the seriousness of this situation, what can those who understand the need for these technology-enhanced improvements do?

Michael Gerlach: I think much of the difference of opinions has to deal with firms’ varying approaches to client service and the type of work firms are looking to pursue. If the leaders of a typical firm have the mindset that they want to serve a client in all aspects of its legal needs, there is more of an appetite for legal project management tools to assist the firm in these matters. However, if a firm is chasing transactions by practice, there is less of a desire to invest in such project management tools. In those cases, there is more of a focus on the expertise by attorney versus total client service.

I’m not saying one is better than the other; they all have pros and cons. It just depends on what the firm wants to do.

In the second part of this interview, we will ask Michael Gerlach specifically about the types of technology law firms may need most in order to better serve clients, save money, and promote efficiencies.