The alleged LegalTech revolution of the legal industry

How quickly everything changes again. Until recently, at every event in the legal field, you could hear how digitisation threatens lawyers. Jobs are disappearing, costs are being reduced. In short: the fat years are over. Lately, everything suddenly sounds like this again: lawyers will not run out of work, but it will become more complex. So this is good news for the law firms? We venture a look ahead and give some tips on how to set themselves apart.

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The alleged LegalTech revolution of the legal industry
legaltech digitalization automation efficiency law firm lawyer lawfirm legal knowledge management
Digitization / LegalTech

How quickly everything changes again. Until recently, at every event in the legal field, you could hear how digitisation threatens lawyers. Jobs are disappearing, costs are being reduced. In short: the fat years are over. These dark predictions have now disappeared again. For example at the Legal (R)Evolution event this week in Darmstadt. The tenor: the work will not run out for lawyers, but it will become more complex. So this is good news for the law firms?

We venture a look ahead and give tips on how law firms can skilfully move through the revolution. Let's start from the outset: Those who have the wrong strategy or no strategy at all will do without. This has only a limited connection with technology in the first instance.

In the future, not fewer but more lawyers will be needed

The legal sector is building on this. The regulatory environment is becoming more complex and the need for advice is increasing. The input of legal advisors is now in demand in all business processes. Developments in the area of data protection (GDPR) are just one example of many. So much for the thesis on which the new optimism is based.

So the legal departments of companies never get bored. However, many legal departments do not respond to the increased demand for advice by increasing the budget for external counsels, but rather by expanding their internal capacities and competencies. To the chagrin of the law firms. The theory that there is more work for lawyers may therefore be true. However, it can be assumed that a substantial part of this work will be done in-house by the firms. There will be a smaller slice of this new cake left for the law firms.

So what can law firms do to remain competitive in the age of revolution and digitalisation?

There is no doubt that the technology will have an impact on the market. All tasks that can be automated will be done by machines in the next few years. This will certainly include tasks that were previously performed by law firms. Technology offers opportunities to gain efficiency and improve the quality of advice. But there is nothing revolutionary about that. Every industry is subject to constant change and work changes over time.

It is equally clear that alternative providers (Alternative Legal Service Providers) will also enter the law firm market. They are cheaper, more flexible, more specialised and more efficient than many traditional law firms. Changes due to emerging competition - this too is nothing new and a natural process in any industry.

As always, the rule is: Whoever stops will disappear.

It goes without saying that competent, external advisory services will continue to be of great value to both corporate and private clients in the future. Law firms need future-oriented strategies and business models. The focus is on the uniqueness of a law firm and the formation of a functioning strategy around the core competence, in which all elements are coordinated. It's like a machine: the various individual parts are interlocking gears that must work together so that the big machine can run. 

It's about questions like:

  • How is your law firm different? From other law firms? From "robots"? From alternative service providers?
  • What is the core competence of your law firm?
  • How do you use this core competence for the client in the most profitable way?
  • What skills are you and your law firm possibly still lacking that need to be bought or acquired?
  • How can this competence be communicated in a targeted manner?

The law firms must find this delimitation indicator. It's not so easy, but any firm can find that certain something. In the following we give two starting points, which are not an effective strategy in themselves, but can be integrated into a concept.

1. law firms as a strong partner and close companion - not just saying it, but making it effective!

I hear time and again that law firms want to be a strong partner for their clients. Often it is understood that way: We are specialists and as such we provide impeccable advice. But that is not the end of the job. Quality is a prerequisite that is not very useful as a distinguishing feature. This will be a prerequisite for all clients in the future.

Real partnerships start where you effectively create something together. This includes, for example, being prepared to share certain risks. That strengthens trust and that is traditionally an essential part of the relationship between the lawyer and his client. It goes without saying that we are talking about measured risks and not such risks:

As an example: The debate about hourly rates and alternative pricing models is well known. If I, as a law firm, charge my client for all the hours spent on a project, I do not take any risk. All my expenses are covered and the entire cost risk lies with the client. However, this has nothing to do with partnership. Why not invest in a partnership and share part of the risk?

This may not work everywhere. But there are enough areas of application to set yourself apart from other providers through innovative pricing.

Note: A retainer with 20 indications when the retainer is not valid and the effort is charged additionally is not a new pricing model. This is usually simply a differently packaged model, in which the costs are also charged by the hour.

2. away from the management of the law firm by the partners: to manage the law firm as a professional enterprise.

It sounds a bit daring, but in my opinion the restructuring of the classic law firm structures would be a clear differentiating factor in order to stand out from the competition. So far there are hardly any law firms that have been able to break away from their partnership structures.

Partnerships make decisions in committees and sub-bodies. These are usually formed by different partners of the law firms. Accordingly, the committees are made up of lawyers who are more or less well suited for the specific tasks. It is only for certain functions such as accounting and marketing that large law firms employ specialists. However, the partnerships do not like to give up the operational management and decision-making authority of the law firm. This distinguishes them from other companies that are managed by CEOs, CFOs, COOs and CIOs. The shareholders have no direct operational decision-making authority.

You may think now:


But: this change in the organization of a law firm would be a strong signal, which I am convinced that corporate clients in particular will respond to it with great appreciation. Of course, this only works if it is implemented correctly. CEOs have the right decision-making authority and manage the firm. They sit at the table with their clients. Many doors would open for clients. The legal departments of companies are now taking a close look at their suppliers and want to see that they are organized in an efficient and optimized way.

Digitalization and LegalTech are important components, but the success of a law firm begins on another level: with the right strategy!

In essence, therefore, it is not about digitisation. At least not only. It is just a reason to rethink your own strategy. Like any other company, a law firm must constantly consider how expectations in the market will change in the future and adapt its own services and processes accordingly. Clients' expectations. Expectations of business partners. Expectations of the workforce. It is all about strategy and marketing, i.e. the products offered, the right target group, communication and the integration of the target groups into digital marketing.

It goes without saying that technology is an essential part of the way lawyers of our time work. But if you rush into these new tools without thinking about the big picture (i.e. the company strategy), you won't be happy with digitalization either. LegalTech is there to support the implementation of the company strategy in the best possible way.

  1. Find your focus, your specialization and differentiation from the competition
  2. Form a future-oriented (marketing) strategy for your company
  3. Go for it!
Do you need support in starting to develop the right strategy? No problem: We are happy to support you. Simply emailor call: +41 61 554 55 74.