Key transformation challenges facing law firms

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Key transformation challenges facing law firms

Law firms, large and small, are on the precipice of the most significant period of change to hit the legal sector.

Big name clients and solid results are no longer enough to remain competitive, with client demand, changing expectations of staff, and the advent of new technology and ways of working driving business transformation across the board. If you’d like to read more on this, check out my previous article: 3 reasons why law firms need to invest in change.

Despite the growing pressure for law firms to transform the way they operate and deliver legal services, the industry is still at the early stages of the change cycle and face multiple challenges delivering tangible transformation benefits to clients, staff and the business. This article looks at several of the key challenges facing transformation within law firms. Of course, each firm will have a different starting point, and a different journey depending on many factors such as client-base, industry specialisms, geographic spread, ambition and strategic vision. Some firms are figuring out what they need to do to remain competitive and relevant, whilst others are determined to be the pioneers of the future law firm. Despite this, these are the most common transformation challenges facing them all.

1. Finding the motivation for change

I do not want to get into a debate about how much or how little the legal industry has changed to date, suffice to say that law firms continue to grow in profitability, whilst operating fairly inefficiently, with a reasonably low demand for change. Change does not happen unless there is a motivation, not simply a rational case for change, but a ‘what’s in it for me?’ emotional reason. Finding that motivation within law firms is made harder by the change maturity of the clients, the partnership model encouraging autonomy rather than top-down management, and the complexity and established protocols of legal work. Every innovation and change initiative needs purpose, sponsorship and benefit. It is one thing buying a new technology, or investing in a new capability, it is quite another challenge to drive take-up and adoption.

Key places to find motivation for change;

Individual clients – proactively work with clients to offer innovative solutions to their business and legal issues.
Market pressures – identify market changes that require a response, such as new entrants, falling prices, new technologies.
Competitive advantage – find new value and revenue opportunities, that often emerge from new technologies and capabilities being combined with your own unique insights and know-how.
Talent retention and attraction – a growing motivator for change lies in the need to attract and retain top talent throughout the organisation, in a market where the needs of the workforce are changing; flexible working, career breaks and progression, new skills and roles, engagement in collaboration and innovation, as well as up-to-date technology and an innovative culture.
Regulatory change – sometimes you just have to do it, although the trick is to make it easy for people to comply.

2. Building a change culture

This one is more difficult to articulate, as it covers many tangible and intangible elements within a firm. The difference in a firm that is really committed to change and transformation is in the fabric and culture of the way the firm operates, from staff engagement and encouragement of ideas and initiatives, the design of new offices and the clarity of the business strategy, to the structures, skills and governance in place to deliver change.

Focus areas to kick-start a change culture;

Strategy – whether at business, division, function, or country level, there is a need to articulate what is important for the future of the business. Not always easy to do, but the process of creating a strategy will help to clarify where you are now, how far you are willing to go, what the critical success factors are and where the opportunities, threats and priorities are. This equally applies to the positioning of the global business, to the challenges facing a particular practice area or geography, as well as to the technology, HR, marketing or innovation functions.

Engaging all staff – I would advocate an explicit approach that encourages all staff to engage in innovation and change. At my last firm, this was a crowd-sourcing ideas platform where we ran innovation and improvement challenges both globally and locally. However, like all things, this type of approach must be visibly sponsored by the local and global leadership and must lead to tangible outcomes that are communicated across the firm. The best approach is to ask for volunteers to get involved in shaping and delivering the best ideas. A clear process is required to evaluate ideas, prioritise and provide funding and resources, otherwise the initiative will quickly fall into disrepute through lack of action.

Prioritisation and governance of the change and investment portfolio – in many industries the planning, prioritisation and governance of the change portfolio is an established capability. However, in law this is often quite immature, yet is essential to prevent a proliferation of fragmented initiatives that are competing for the same scarce funding and skills (such as IT project resources), as well as to provide focus on actually delivering benefits.

3. Invest in new capabilities

One of the critical transformation challenges is to help lawyers change the way legal work is delivered, through adoption of new technologies and new roles such as legal technologist, legal project manager, process designer, or resource manager.

The need for these new roles quickly becomes clear when you go into a firm without any of them. These new roles bridge the gap between lawyers doing legal work, and support staff providing the business infrastructure. Sitting close to the lawyers, these roles directly work with them to deliver the legal work in a way that provides greater value to clients, through understanding the work, sharing best practice, driving adoption and take-up, and providing professional expertise in the non-legal elements of the solution. As the legal industry changes, and routine work is increasingly automated or eliminated, clients will expect much greater collaboration across multi-disciplinary teams to deliver the solution, and this is the beginning.

Capabilities to create value for your firm might include;

Legal technologist – not an IT specialist, rather someone who understands how the legal technologies can be used to support legal delivery, what best practice looks like, and how to drive adoption.

Legal project manager – often a dedicated role on large, complex matters, where there is real value in professional project management rather than an expensive senior lawyer trying to do the best job possible. On the largest matters these roles are becoming chargeable to the client as the value is clearly visible. On smaller matters LPMs can help pricing, resourcing, planning and client reporting. LPMs can also lead training initiatives to up-skill the legal community and introduce the role of project manager more widely.

Process designer – there are limitless opportunities to improve the way legal work is undertaken, and re-designing the end-to-end process can identify ways to eliminate and simplify the work, and use technology where applicable to automate. This delivers lower production costs, often vital in low margin fixed price work. This process design capability is also attractive and offers a valuable service to key clients.

Resource manager – other professional service firms have long ago professionalised the way that expert staff are allocated to projects to maximise business benefits as well as match the development needs and ambitions of the individuals. The legal sector is now moving in this direction with the increasing introduction of the Resource Manager role, supporting partners and individuals to ensure the right people areinvolved in the right work. This approach brings benefits in talent recognition and development, utilisation management, and improved integration of people returning from secondments or maternity/paternity.

Innovation leader – a new role with many different remits, these specialists are involved in leading the challenge of engaging the wider organisation in innovation and ideas. Often includes supporting some type of innovation committee, and may involve running incubators, hackathons and crowd-sourced ideas platforms.

Data scientist – law firms hold a unique set of knowhow and data, from time recording and activity, to best practice contract clauses and insights. With the increasing availability of Artificial Intelligence and computing power, firms are recruiting data scientists to create client and business value out of the data held within the firm.

Change for law firms can seem like a leap into the unknown without the right expertise in place to own, shape and run the transformation. But with this help, firms can stay ahead of the competition as well as abreast of everything evolving in the industry, making the right decisions when it comes to technology and building a new culture fit for the future.

If you’d like to find out how Hydrogen Group and I are helping law firms to understand and implement change, please get in touch with me.

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"2025 and Beyond" Question and Answer session

26 Feb, 2024

Our webinar 2025 and Beyond: Why Your Hiring, Learning, and Culture Need to Evolve brought together thought leaders Enrique Rubio (Hacking HR), Lisa Skinner Källström (Teamtailor), and Hydrogen Group’s Dean Jennings and Michelle Miller. The conversation explored strategies used to tackle the challenges of the future workforce, shift organisational cultures towards lasting partnerships, and ensure teams are equipped for the age of artificial intelligence. _ The Q&A box was brimming! Our webinar offered participants the chance to consult our HR experts on addressing shifts in the people and culture realm as we approach 2024 and beyond. Interesting questions were raised, and we compiled them all to seek and reached out to our experts to get some definitive answers. For a recap on the webinar, check out our blog Navigating the Future: Insights from our Webinar "2025 and Beyond" So, here we are. Your questions - answered! - How can companies make people feel more secure in their jobs? Is it just a matter of increasing communication? Lisa suggested a shift towards a more sustainable approach. 'In recent years, we have seen many companies experience massive growth, and the need to get great talent onboard - hence offering extremely generous compensation packages. Unfortunately, many have now faced layoffs, and while the compensation and benefit strategies are not the sole reasons, I would like to propose a more sustainable approach for the future. [Increase benefits as the company grows, and as business results allow, we can increase pension levels or similar benefits – and discuss it internally! Open dialogue about results, investment choices, and their rationale fosters a sense of involvement among team members and signals the company's commitment to a sustainable direction.]' Dean echoed concerns about job security in today's volatile economy and advises, 'In today's uncertain economic climate, job security is a concern. However, by becoming indispensable and embracing tools like AI, individuals can enhance their value to employers, securing their positions for the future. Apart from using Chat GPT, what other tasks can be automated with AI? Lisa commented, ‘We’ve mentioned a few examples already, but I would look at all the systems your company allows you to use and question your suppliers on what features are or will be based on AI. For example, many applicant tracking systems allow the opportunity for AI to summarise CVs for an easy overview, generate interview questions and suggest more personalised replies to rejected candidates based on their CVs. Also, the opportunity for AI to transcribe an interview is an amazing tool which allows the interviewer to solely focus on listening and talking to a candidate as opposed to taking notes. As always, AI in these types of systems is not designed to make the decisions for a recruiter or business - but serve as an assistant to save time and work more efficiently.’ Dean added, ‘There are far too many to list. The AI directory https://aitoolsdirectory.com/ does a really good job of showcasing what does what and where you can find it.’ What is the impact of AI on employee engagement and how can HR teams use AI to promote engagement? Also, what precautions should professionals take when using AI? Dean offered his perspective by stating that ‘engagement and AI may seem contradictory, but there's a clear benefit when HR uses AI to streamline admin tasks, freeing up time for vital human interaction. Tools like Koios, for instance, offer Acoustic AI, helping HR understand team and individual personalities better, for more tailored approaches. Professionals must approach AI implementation carefully, ensuring ethical use to maintain trust and transparency in the workplace.’ How can we make sure our services stay personalised while using AI? Dean responded, ‘By leveraging AI to handle time-consuming tasks. The best thing about AI is that you get to choose what it does and what it doesn’t. If you feel strongly about human interaction to enable personalisation, you don’t have to let go of that – just embrace AI to make those interactions better. Get it to strip data in the background for you, or to type up your notes and actions as you have the conversations. The possibilities are endless, and they can be tailored to your needs.’ Within your businesses, have you experienced any resistance to the adoption of AI? How have you handled these objections? Dean responded, ‘A lot of the resistance I have seen has either been a fear of trying or a fear of being caught. There seems to be a negative connotation with AI, that if you get it to do something for you, are you cheating? The answer is a resounding no, you are working with the tools available to make yourself more productive for your organisation. Robot proof recruiter, if you haven’t read it, you should. Especially if you are a recruiter or if recruitment is part of your job role. I’ll spare you the details, but it is an amazing read that showcases the fact you can never take the people part out of recruitment - you’ll always be able to provide a better level of service than a robot (at least for now) and you need to focus on the parts of the process where human interaction is at its most vital and automate/utilise AI to get back time in your day to improve that social element of the process.’ Do you feel Employee Resource Groups will be on the rise with the future generation of workers? Dean replied, ‘A truly hybrid workplace cannot function effectively without the right technology in place. That doesn’t even need to be AI. For employees to feel a sense of belonging in a workplace, there should be a seamless experience that goes beyond just having teams up on 1 laptop in a room full of 30 people. Again, this will only advance with time ... my eutopia is to have my whole team (who are based in the UK + Thailand) sat around a virtual desk, on a beach with an interactive whiteboard we can utilise in real time via virtual and augmented reality. You may laugh now, but in the next couple of years, VR and AR tech will be the staple of hybrid working and teams coming together around the globe. This doesn’t take away from the in-person experience and nor do I think it should. It should be a tool that compliments real-time working solutions.’ How can we support older generation employees in the changing landscape? Dean offered his perspective, ‘AI is truly remarkable. It embodies the futuristic vision many of us had as children—computers and programs taking on tasks for us. For those uneasy about it, I believe it's a matter of not fully comprehending it or lacking the skills to use it effectively. AI has quietly become a part of the workplace, and many are still navigating its intricacies. The focus should be on empowering employees to leverage AI to enhance productivity and value to the organisation. Those who resist or fail to adapt won't be replaced by AI but by individuals who embrace change and view AI as a tool for greater contribution.’ How can we safeguard against the risk of AI stifling creativity in the workplace? Lisa said, ‘I would say the opposite, if we use AI for the more regular and routine tasks then we will have more time to use to be creative! For example, instead of spending hours on creating a presentation for an important project - let AI do this creating for you and spend the time on how you want to engage with your audience instead. Using ChatGPT to find easy tasks that I would previously have spent a lot of time on has been a big change in how I work and allows me find space in the day.’ Is there a regional divide across different parts of the world? Are Europeans more prone to appreciate safety/job security than Americans? Lisa commented, ‘My thoughts are that globally we have been through a lot in recent years, covid affected everyone regardless of location. After that, we had war in Europe for the first time in many years which had major effects on the economy, which I believe has made people appreciate job safety even more and value this in choosing their next employer. However, in some parts of Europe employees are still very protected by labour laws etc so I believe it is different from America where it is more common to have short notice period and less resistance from employers to terminate an employment.’ Expanding on the key themes discussed in our webinar, we're thrilled to introduce our Thrive Guide – a practical roadmap for building a thriving workplace. Within the Thrive Guide, discover actionable strategies to enhance employee engagement, foster diversity and inclusion, and implement flexible working models. Discover practical solutions to enhance workplace productivity and satisfaction. As our expert Dean Jennings emphasises, 'adapting to evolving workplace dynamics requires strategic initiatives.' This sentiment is echoed by other industry leaders in our webinar. In the Thrive Guide, these insights converge to offer practical solutions, providing a roadmap for organisations navigating change. Revolutionise your workplace. Download the Thrive Guide now!