‘This is adapt or die time’: Tech-savvy law firms make nearly 40% more in revenue than old-school ones — here’s how new tools are helping lawyers get ahead
- The 2020 Legal Trends Report, released today by legal tech company Clio, shows how shifting customer preferences has accelerated law firms’ adoption of technology, and highlights the benefits to doing so.
- The report found that law firms that use client-facing technology like online payment systems and client portals earned nearly 40% more revenue than firms that don’t.
- Firms also generated around 30% more new casework per lawyer, despite initial declines in business during the beginning of the coronavirus pandemic.
- “There’s been a tectonic shift in how law firms are thinking about technology,” said Clio’s CEO and cofounder, Jack Newton.
- Visit Business Insider’s homepage for more stories.
Law firms that have quickly adapted to surging technology demands during the pandemic are faring better than firms that have been slower to adopt, new data shows.
The 2020 Legal Trends Report, released today by Clio, one of the largest legal tech companies, found that firms that employed three types of client-facing technologies — electronic payments, client portals, and client intake and customer relationship management (CRM) platforms — earned nearly 40% more in revenue in August compared to firms that didn’t.
In total, firms that use this tech collected $19,541 more revenue per lawyer in 2019, and are projected to collect $37,622 more revenue per lawyer in 2020.
In addition, it found that these firms generated an average of at or above 27% more new casework per lawyer from May to August than their less tech-savvy counterparts. The correlation between technology use and business performance underscores shifting client expectations and the resulting need to innovate amid a “new normal,” said Jack Newton, CEO and cofounder of Clio. Clio is a cloud-based software platform that helps law firms manage cases and client relationships.
“Some law firms have adapted to this new reality of the pandemic much more effectively and quickly than others,” Newton told Business Insider. “This is adapt or die time.”
The Legal Trends Report uses aggregated and anonymized data from tens of thousands of legal professionals in the United States that use Clio’s platform, as well as surveys of legal professionals and consumers. This year’s report focused on the effects of the COVID-19 pandemic on the legal industry’s push toward technological innovation.
Despite initial declines in business at the start of the pandemic, law firms that have adopted tech are recovering more quickly
The legal industry was hit hard during the onset of the pandemic: the number of new matters dropped 30% compared to the previous year in April, and 25% in May, according to the report. Additionally, law firms collected 8% less revenue in April compared to April 2019, and 13% less the following month compared to May 2019.
Most law firms saw a substantial recovery in business by June, but as the coronavirus began to surge across many states in the US, new matter creation dropped slightly in August to 6% less than August 2019. Consequently, firm revenues have also been adversely impacted, clocking in at around 5% less in August than the previous year.
However, the Legal Trends Report identifies key areas of opportunities for law firms by demonstrating how technology use can benefit their businesses.
Firms that used electronic payments like PayPal, Clio Payments, and LawPay collected 16% more revenue per lawyer in August than firms that didn’t, according to the report, underscoring how online payment systems make it easier for clients to pay their bills upfront.
Similarly, firms that used client portals generated 17% more new casework per lawyer in April compared to firms that don’t have such technology, illustrating how these platforms help support the transition from in-person to remote client services.
Online client intake and CRM solutions also led to better year-over-year performance, gaining around 10% more new matters than firms without this type of software.
The benefits are boosted when firms use all three technologies: they earned nearly 40% more in revenue in August compared to firms that didn’t, and generated an average of around 30% more new casework, per the report.
Ultimately, it boils down to what customers want, and adjusting to the new landscape, which Newton doesn’t think will swing back to pre-pandemic times.
“There is no returning to normal. We should be looking at this as an opportunity to create a better normal, to create a world where legal services are more accessible,” he said. “And I think it’s a huge opportunity for law firms that lean into that line of thinking.”
The pandemic has produced a “tectonic shift” in consumer demand and the adoption of technology by both clients and lawyers
Newton remarked that he was the most surprised by how much the coronavirus pandemic has accelerated the adoption of technology on both clients and law firms.
“If you asked me what year the report was from, I’d say 2035 — that’s the kind of data we’re looking at,” he said. “It’s 10 years of digital transformation compressed into just a handful of months.”
According to the report, 83% of legal professionals viewed cloud technology as necessary to the survival of their law firms. Now, 85% of law firms now use software to manage their practice.
The move toward innovation by what’s been historically regarded as a slow-adopter industry is compelled by the fact that online interactions between clients and businesses have become a baseline requirement due to the pandemic.
For example, half of consumers surveyed for the report said they prefer Zoom meetings over an in-person meeting, and 69% prefer lawyers who can share documents electronically. Overall, 58% of consumers said that technology is more important to them than before the pandemic.
Security is especially a big factor when it comes to storing and sending documents electronically, resulting in a move toward the cloud, which is a safer and more streamlined way of managing data than relying on in-house systems. Now, 79% of law firms rely on the cloud to store their firm’s data, per the report.
“It’s going from something that innovative firms were using as table stakes to a necessity that any firm that wants to survive and thrive during the pandemic must have,” said Newton. “There’s been a tectonic shift in how law firms are thinking about technology.”
(the headline, this story has not been published by Important India News staff and is published from a syndicated feed.)