Law firms spend less than other comparable sectors on IT investment – just 4.1% of turnover, compared to consultancy (4.9%), and accountancy (5.1%), according to our latest research, How law firms measure up against other sectors.
Equally, displaying conservatism towards innovation as well as investment, a third of law firms have not been involved in any business innovations in the last two years, a considerably higher percentage than both accountants (22%) and consultants (19%).
While over half of law firms have introduced initiatives relating to the general management and operation of the business, more than accountants and consultants – possibly a response to the changes taking place in the legal sector – changes to IT infrastructure have focused on the introduction of new platforms, the merging of systems when offices merge, and general upgrading.
The Peppermint research takes a broad look at the professional services market andcompares the management practices of lawyers to accountants and consultants.
Businesses across the three sectors cited cost issues as the main inhibitor to increasing the amount of automation used for routine tasks. More than one in five blamed the pressure of work for automation improvements being left unimplemented.
More than 80% of firms in the three professional service sectors reported that they planned to invest in the next year to 18 months in innovations covering a wide range of areas, from general management and IT infrastructure, to business development and customer service.
Almost half of law firms said further investment in IT was a priority, with more than a third citing financial management/accounting and administrative support as ripe for improvement. About a third said sales and marketing was a priority, and one in five pricing and customer delivery.
In a positive sign of awareness of the importance of innovating, several respondents said they believed that investment in innovation could mean the difference between success and failure in the legal profession. According to one firm: “Innovation is survival in the legal sector – law firms unwilling to adopt new methods and new processes will fall by the wayside.”
In a similar vein, another firm said: “The best innovators are those that can anticipate future changes in the market, or respond quickly to current market changes. As a smaller law firm, we feel we can do this and be more flexible in our decision making.”
Innovations implemented by law firms ranged from structural – “exploring new options for business models that allow us to compete better in the current legal environment, e.g. ABS, outside investment” – to client-centric: “Our recent initiatives have concentrated on new models of service delivery and better ways of serving our clients.”
Specifically, almost half of law firms (46%) expect to invest in IT over the next 18 months, while 32% anticipate investing in sales and marketing, and 22% will look again at their pricing and customer delivery. However, saying and doing are two different things and what the Peppermint report indicates is that firms thrive in the status quo and have less appetite for risk than other sectors.
Any successful business needs to be brave enough to make decisions, embrace change and invest in technology for the longer term. Law firms are no different from other business sectors and if firms only looked outside of legal they would soon realise that.
A full copy of the research findings can be obtained here
ABOUT THE AUTHOR
Arlene Adams is the Founder & Executive Director of Peppermint Technology. Arlene is known for providing insight and vision, particularly in markets undergoing radical change. Drawing on her vast and varied experience, Arlene brings a fresh, enthusiastic and sometimes controversial approach to helping law firms succeed and grow in the volatile legal services market.