Law Firms Behavioral Trends & Market Forecast

Part
01
of two
Part
01

UK Legal Sector Behavioral Trends

UK legal firms are implementing client self-service portals and virtual office spaces. 7% of UK law firms are using chats to interact with clients and 45% use it for internal operations.

UK Legal Firms — Trends

  • About 60% of law firms have experienced a cyberattack. As a result, top UK legal firms are focusing on implementing IT services like cyber protection.
  • UK legal firms such as Bates Wells Braithwaite are implementing IT services like client self-service portals which are automated, cost-effective, and profitable.
  • Some of the UK legal firms are adopting iManage Work 10 which offers virtual office space for law firms. This, in turn, increases mobility for the firms and lawyers to work anywhere.
  • Concerning IT services, around 23% of UK law firms are using web conferencing to interact with clients and 39% use it for internal operations. 7% of UK law firms are using chats to interact with clients and 45% use it for internal operations.
  • 81% of top UK legal firms use Cloud file sharing for exchanging documentation.

Area of Focus

  • Top UK legal firms state that technology is a challenge in the legal sector and most of them primarily focus on IT functions in the fields of HR and PMS. More than 50% of top UK legal firms also give priority to IT functions such as Risk & Compliance and Data Analytics.
  • More than 50% of top UK legal firms have adopted IT services such as client collaboration tools and automated/semi-automated document production and are more likely to focus on smart contracts, artificial intelligence (AI), and blockchain solutions in near future.

Technology Investment

  • Around 65% of UK law firms stated that they increased their investment in technology in 2017 from 10% to 20%.

Global Legal Firms — Trends

  • Global legal firms are also utilizing cybersecurity, virtual law firms, relationship management tools, and social media. However, they are not specific to purchase behaviors of IT services.

RESEARCH STRATEGY

Information on some behavioral trends around IT products/services in the UK legal sector is not available in the public domain. There is limited information and lack of parameters to derive trends with respect to purchasing behaviors and decision-making factors for IT products/services in UK legal firms. Therefore, triangulation was also not possible.

Initially, we searched for information on behavioral trends around IT products/services in the UK legal firms with annual revenue of at least £5 million in various UK legal market reports and surveys such as PWC, Deloitte, HSBC, McKinsey, Businesswire, and others. Most of the information was focused on general technology trends in the legal sector and not specific to IT products/services or purchasing behaviors and decision-making factors to derive further.

As there are no precompiled report/survey to determine behavioral trends around IT products/services in the UK legal firms, we took different approaches. We tried to look at the top UK firms and then tried to derive the information on purchasing behaviors and decision-making factors from their websites and related publications such as Allen & Overy, Clifford Chance, Linklaters, Ashurst, and others. But, information from these top UK firms is focused on technology sector lawyers from a client's perspective and nothing relevant to their purchasing behaviors or decision-making process.

Later, we tried looking for companies which provide IT products and services for legal firms with a motto of deriving insights on client purchase behaviors in websites such as Dataprise, Oosha, EBC Group, CTS, CNS group, and Nasstar. But, these companies are mostly focused on services offered and revenue generated from legal sectors.

As our last resort, we expanded the scope of our search. We explored global behavioral trends around IT products/ services in the UK legal firms in various global legal market reports and case study websites. We also tried looking for collaboration of IT services/products across UK legal industry to derive insights on the purchase behaviors of IT products and services in websites such as PRNewswire, Businesswire, Market Watch, Mintel, Law Society, United Kingdom Bar Association, The Bar Council, Forbes, Martindale, and others. However, we only found extraneous data.
Part
02
of two
Part
02

UK Legal Sector Market Forecast

Sixty-five percent of the law firms in the UK increased their investment in technology in 2017 by 10 to 20%, and the two technology prioritized by the legal sector are cybersecurity and case management. Nasstar is the UK’s leading IT provider of cloud and managed IT services to the legal sector in the country. However, even after exhaustive research, information on the market forecast specific for IT products and services in the country's legal sector could not be found in the public domain. Below are some relevant insights:

HELPFUL FINDINGS

INFORMATION TECHNOLOGY IN UK LEGAL SECTOR

  • Law firms are now under pressure to keep up with technology, and the legal sector is implementing tech applications to improve efficiency and productivity and modernize the legal practice. Cloud and tech services are now being developed "across all aspects of legal work," which will make law professionals focus more on work rather than paperwork.
  • According to the Law Society president, technology in the UK legal sector is mainly focused on efficiencies and automation, which makes the legal sector less mature in digital disruption. However, there were few notable technology growths within the space, which includes governance and compliance, legal project management, and contract management.
  • The most mature segment is the B2B legal services where the most established area includes IP management, e-billing, collaboration tools, and document management.
  • The Law Society president stated that there are barriers to adoption of technology in the legal sector, such as the partnership model, billable hours model, and risks around compliance.
  • Less than 60% of legal firms in the UK have formal IT budget and 25% have no IT security policies in place.
  • The UK government is committing to reform the legal system to apply technology that will transform the UK legal sector with its HMCTS reform programme.
  • The HMCTS reform programme is a court reform created and designed to bring new technology and other modernization to how justice is administered in the UK. The Ministry of Justice is investing £1 billion to change the system and processes of UK courts and tribunal system.
  • Part of the changes includes using cloud technology to bridge "traditional processes and a digital transformation" for the UK legal sector.

SPENDINGS ON IT-RELATED TECHNOLOGIES BY LAW FIRMS

  • HSBC surveyed UK's top 50 law firms to identify how much they spend and invest in technology where it shows that 65% of UK law firms stated that they increased their investment in technology in 2017 by 10 to 20%.
  • Of these investments, however, only two of the IT-related technologies are prioritized, which were cybersecurity with 50% and case management with 20%.
  • Additionally, the survey shows that respondents "frequently mentioned they are investing in technologies that streamline the pre-trial eDiscovery process."
  • Also, based on the study, it shows that many of these legal firms are investing in technologies to improve their document management system and connectivity that will enable staff to work flexibly and remotely and have the ability to collaborate with clients and other colleagues.

IT COMPANY PROVIDING IT SERVICES TO LEGAL SECTOR

  • Nasstar is the UK’s leading IT provider of cloud and managed IT services to the legal sector.
  • According to Nasstar’s 2018 Annual Report, their revenue reached £25.667 million, of which 20.77% or £5.332 million came from the legal sector. The legal sector ranked second where their revenues generated from.
  • However, comparing the 2017 and 2018 legal sector revenue, it showed a decline growth rate of -4.62%.

RESEARCH STRATEGY

To determine the market forecast for IT products/services in the UK legal sector, we reviewed the definition of information technology and the common IT services/products offered to the UK legal sector. This helped us to identify which types of technologies under IT are being adopted and embraced as well as identify any information for future development and changes in the UK legal sector.

We commenced our research by looking at market analysis, trends, and segmentation reports from third-party intelligence and analytics companies providing market forecast and projection analysis such as PR Newswire, Businesswire, Market Watch, Mintel, and other similar companies to find a market forecast for IT products/services in the UK legal sector for the next 12-18 months. However, most of these sources only provide information on the IT industry as a whole, and some of them were of the global market.

Next, we looked at the UK law and legal professionals/firms organizations such as Law Society, United Kingdom Bar Association, The Bar Council, and Ministry of Justice to find any updates and developments relevant to the legal sector in the UK. These sources provide country’s legal regulations, resources, fact sheet, and other future development reports in UK’s legal sector and we were hoping to find information or statistics on the adoption, future development, or initiatives on legal sector's perspective that will provide visuals on the penetration rate of IT within the space. However, there were limited information found in these sources that directly pertains to information technology because the majority of the sources commonly referred to technology in general, which also includes AI, machine learning, and blockchain. Nevertheless, some information were included as helpful findings.

Lastly, we searched for top-performing IT companies providing products and services to the legal sector, such as Dataprise, Oosha, EBC Group, and Nasstar. We were hoping to find from their websites, press releases, and annual reports their current and previous years' financial performances generated from legal sectors to gather a clear picture of how the industry is moving to provide an intelligent forecast since market projections are literally assumption-based on the movement of a specific market. However, most of the companies found were private and did not provide annual reports. For the accessible annual reports, only Nasstar has recent annual reports, which includes the breakdown of revenues according to industry. While this cannot encompass the whole IT industry in the legal sector, we deemed it useful and added them as helpful findings. Below is our calculation of the percentage of revenue of Nasstar coming from the legal industry:

CALCULATION:
  • Percent of Nasstar's revenue coming from the legal sector: £5.332 million / £25.667 million = .2077 or 20.77%
  • CAGR of Nasstar's revenue in 2017-2018: (£5,332 (2018)-£5,590 (2017))/£5,590 = -.4615 or -4.62%
The lack of information that would directly answer this could be because most of the information refers to technology in general, plus as it stated, legal and law firms are the slowest adopter of technology among other sectors.
Sources
Sources

From Part 01
Quotes
  • "100% of Top 10 and 40% of Top 11-25 firms view technology as the key challenge facing the legal sector over the next 2 years."
  • "While many IT functions continue to focus on the need to replace core systems (e.g. PMS and HR), more than 50% of Top 100 firms are either planning to or have already commenced projects relating to Risk & Compliance or Data Analytics"
  • "Adoption of more conventional technologies has progressed since last year, with more than 50% of Top 100 firms now having adopted mobile apps, client collaboration tools, and automated/semi-automated document production. There is a significant gap in maturity between these technologies and more emerging technologies, such as Artificial Intelligence (AI), Smart Contracts and Blockchain Solutions."
  • "As last year, 80% of Top 10 firms are piloting AI and this could relate to an expansion of pilot projects as firms seek to more widely consider AI technology. "
Quotes
  • "Security is a growing concern for today’s top law firms, as cybercriminals continually develop new tactics to compromise business data. In fact, according to a recent PWC survey, more than 60 percent of law firms have experienced a cyberattack"
  • "Building on security concerns, more firms will turn to automation to help them adhere to compliance with GDPR, Anti-Money Laundering regulations and KYC, while increasing the rate at which they can accept new business."
  • "As firms look to drive greater efficiency, profitability and service differentiation, many are tapping into the power of automated self-service portals. "
  • "Moving into 2019, firms will also be turning to automation to help streamline business processes across the firm, from contract review to client collaboration. Workflow is a widely beneficial way to centralise, standardise and scale-up processes whilst improving compliance and gaining efficiencies"
  • "The introduction of iManage Work 10 is a prime example of how legal technology providers are coming up with new solutions to make it easier for lawyers to work anywhere, and within a single user experience."
Quotes
  • "From a law firm perspective, over half (66%) of UK law firms worry that failure to keep up with digital advances will affect productivity, billable time and client response rates, with SMEs (61%) slightly less concerned than larger law firms (71%). Half of all law firms (49%) also worry about falling behind the competition."
  • "Web conferencing – 39% of UK law firms use web conferencing internally but less than a quarter (23%) are using this facility for liaising with clients Chat – 41% are embracing chat in-house with an almost equal uptake among SMEs (37%) as larger firms (45%). Only 7% overall are using Chat when communicating with clients"
  • "Instant Messaging – 28% of law firms are using IM peer-to-peer but less than half of these (10%) use it to engage with clients"
  • "Cloud file sharing – over three-quarters of SMEs (76%), and 81% of large law firms use cloud file sharing platforms to access and exchange documentation from wherever or whenever, but just 1 in 5 are using these systems to quickly and easily share papers with clients"
Quotes
  • "Last year, 65 per cent of the law firms surveyed reported they expected investment in technology to increase in the coming years with 56 per cent of firms planning to invest between two and five percent of firm revenue. "
From Part 02
Quotes
  • "Law Society president Christina Blacklaws said: “A range of drivers is accelerating development and adoption of lawtech, from an escalating need for efficiency, increasing workloads and complexity of work to client pressure on costs and shorter turnaround times."
  • "“Some of the most notable growth areas are legal analytics, legal project management, governance and compliance and contract management."
  • "“Lawtech in the UK is largely focused on efficiencies and automation rather than on delivering ‘new types of law’. "
  • "The business-to-business legal services market is the most mature, particularly within large law firms, where AI and machine learning-driven applications are ubiquitous. Some of the more established areas include collaboration tools, document management, IP management and e-billing."
Quotes
  • "The UK government has set out its commitment to reform the legal system in the HMCTS reform programme. What’s more, the Law Society has joined forces with Barclays to open a legal tech incubator, which they hope will transform the legal sector."
  • "A popular choice in legal technology is software that streamlines standard business practices and improves productivity. For example, lawyers can now automate scheduling, billing and document management."
Quotes
  • "The legal sector is among the 60% of British businesses that have already made a move to the cloud as part of efforts to operate in a paperless environment."
  • "The Government is committed to investing more than £700 million to modernise courts and tribunals, plus over £270 million in the criminal justice system. This vision is to see the digitisation of the legal sector so that it works better for everyone, including judges and legal professionals. "