The Legal Services Act and Change
With the Legal Services Act 2007 (LSA) coming into force on 1 October 2011, the gates have been opened for other players to enter the market for the first time, transforming the legal landscape.
Against this backdrop, law firms are faced with both challenges and uncertainty. The recently announced findings of a report by Baker Tilly reveals that 83% of those surveyed believe that their business will change significantly in the next 18 months. The Act requires innovation, a change in mind-set and a re-think of business objectives. This is already beginning to happen – 50% of respondents in the Baker Tilly survey have either changed their plans or expect to due to the LSA.
Firms are therefore reviewing their business models as more competition enters the market place. There is a growing belief that a multi-disciplinary practice (MDP) is the future business structure of legal professional services organisations. The changes would add up to a mammoth shift in how the legal sector operates – and as the report points out, technology and the changing nature of work will also need to be taken into consideration:
‘The future competitiveness of businesses will depend on their ability to innovate and implement change enabled by technology. This revolution is leaving no person or organisation untouched.’
The Impact and Technology Enablers
The research points to three major forces reshaping business by 2020: the explosion of business-ready, self-service technologies; the growing influence of tech-savvy and a self-sufficient workforce; and a business world and workplace totally unlike those of today.
Regardless of law firms’ future plans, the ability to demonstrate operational efficiency, compliance and corporate governance will be crucial in being perceived as attractive businesses. This means that practices will need to do more than just be good at law, they will need to be equally good at collaboration, project management and financial planning. Efficiency and competitiveness is everything in the post-LSA world.
Achieving synergies and cost efficiencies in the day-to-day operations of practices will become an imperative. The need for these capabilities will be more pronounced as the shift in the payment structure from an hourly invoicing model to a fixed fee becomes the norm. Given the potential varied scope of professional services offerings, law firms will need to consider technology that is broader than the traditional practice and case management systems used up until now.
It is predicted that legal practices will become dependent on workflow-based enterprise resource planning (ERP), alongside HR technology, as the full impact of the LSA is felt. Adopting the mind-set of large enterprises, law firms or MDPs need to consider implementing workflow-based ERP systems that encompass everything from client management, case management, resource planning, HR, finance and accounting, compliance, reporting, and business intelligence.
Furthermore, these systems will have a sophisticated web-based API (application programming interface) which will make it easy to interface with these software solutions, linking them together easily. Software in the cloud will be able to integrate with other cloud-based solutions or with on-premise products. The ability to link and interact with many different web applications – whether free or commercial – will eventually become the norm.
The bottom line is that tight, seamlessly integrated systems will enable much greater efficiency, productivity and improve decision-making. They can help identify patterns and similarities across regulatory requirements and reduce duplication of effort, delivering cost efficiencies in managing exposure to risk and non-compliance. In addition, they can ensure that firms always maintain audit trails of all transactions, billings and payments in adherence with the various country-specific and industry-specific legislation.
This will become more pertinent than ever before as non-industry specific personnel (ie non-lawyer) become ever more involved in running these businesses, ensuring that corporate policy is enforced and guesswork reduced. From a human resources perspective, HR systems can help forecast budgets, identify the need for new skills, meet staffing needs, and ensure that professionals with the right expertise are allocated to clients – this is especially important given the SRA’s move towards a more qualitative style of measuring professional conduct and service delivery to customers.
Technology Trends
The growth of cloud computing should be no surprise, along with the hybrid model, allowing firms to choose how they want their systems to be delivered in a way that works best for them. It is the flexibility that is important – one size will not fit all.
Mobile cloud in particular, is an interesting trend, which looks set to ‘accelerate the consumerisation of IT’. Business users will become more reliant on non-pc devices such as tablets. In essence, mobile cloud will pave the way for the ‘Internet of Things’, where technologies will allow everything to be connected to the internet. And it is this connectivity that is key.
The report predicts that by 2013 mobile phones will overtake PCs as the most common web access device in the world and there will be 50 billion connected devices by 2020: ‘Business users will bring in devices like their smart phones or consumer apps and use them for work purposes. They already do this today to address the challenges and opportunities they see in supporting customers, streamlining internal collaboration and simplifying their work life.
‘When business executives can use dropbox.com to synchronise work information between work, home and mobile devices, they will. Over the next ten years, these self-service technologies will become even more powerful and easier to use, and increasingly tech-savvy business staff will be even more comfortable taking advantage of them.’
And there is no doubt that this will happen more and more – particularly as Millennials (or Generation Y, born between 1980 and 2000) will make up 45% of a business’ workforce by 2020, becoming entrenched within the management of firms. And we have to remember that their world is one of constantly improving digital technology – they are true digital natives; technology is second nature. Software such as dropbox.com and other productivity tools and IT will be implemented by these tech savvy individuals to help them more effectively carry out their roles; they will select their own mobile phones too regardless of whether IT supports that model. IT departments need to reassess their own approach to such changing environments and how they positively respond to this.
Considering the LSA is set to commercialise and commoditise the legal sector, it needs to open itself up to the changing forces of technology, how they might impact on firms and how they could shape the way that they operate and interact with their clients and business partners in the brave new world.
Conclusion
The legal sector is only too fully aware of the need to be prepared for the new opportunities and challenges it faces – and future technology and the changing nature of the workforce are also part of this.
Technology will play a central role in supporting legal firms, providing the structure and framework within which they operate. With every change comes opportunity to evolve and grow; it is those firms that embrace these changes head on that will be the success stories of tomorrow.
To obtain a download of ‘The future of technology’ report, visit http://theaccessgroup.com/ft
Dee Caporali is Sales Director for Access Select, the HR software arm of Access UK, the provider of business management and accounting software.
