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Why do we need legal tech?


Legal technology has been around for a while now but law firms interest in it significantly increased after the 2008 recession. Around this period, many commercial clients reviewed how much they were spending on outsourcing to law firms, and subsequently reduced their spend. The clients were no longer prepared to outsource work to law firms on pre-recession hourly rates, leading to the retention of less complex legal work. In-house legal teams swelled as work traditionally outsourced to law firms could now be done more cost efficiently in-house.

Legal work is still outsourced to law firms but there is less flexibility on how they charge their clients. With a greater pressure on how much they charge clients, the equation for profitability switches to making the legal work quicker and cheaper to carry out. This is especially the case where hourly rates have been replaced with fixed fees. Clients appreciate this as it provides certainty over the cost of legal services.

This is where legal technology enters the stage.

Legal technology now makes lawyers’ lives easier, assisting them to provide legal services in a far quicker, and more cost efficient way than ever before. The addition of technology can make each matter more efficient and therefore more profitable. Many firms are now embracing technology for this reason and a great number of firms actively promote how innovative they are in their use of technology.

The UK legal market is saturated, meaning that all the firms are vying for the same work to a greater or lesser extent. The bigger the firm the bigger share of the market they are hoping to realise. Legal technology is increasingly seen as a way of differentiating firms from their competitors, and the effective use of that technology ultimately allows them to be more competitive when it comes to pitching. Firms that fail to embrace technology risk being undercut on cost when pitching for new work. From a marketing and brand perspective it may also make those firms look less forward thinking.

If law firms do not embrace technology, it will be the client that suffers in the short term as they will be paying for inefficient work. But it will be those law firms who suffer in the longer term as the client will instruct another firm who quotes more competitively. Clients are aware of the available technology and will expect law firms to use it to deal with their instructions as efficiently as possible.


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