As members of one of the most technologically stymied industries, law firms have found that a sophisticated adoption of legal tech is more complicated than signing onto a new workflow management software or aggregating data to track key performance indicators (KPIs) of practice areas.
With so much “technical debt” built up over the years, firm leaders and tech executives say these changes have necessitated a fundamental reorganization of their legacy systems.
One of the most visible signs that technology is becoming central to the legal business model, according to legal tech executives and law firm leaders, is the addition of business professionals outside of legal to firms’ top management to run a firm’s tech-enabled operations as a single business entity rather than a partnership of disparate practice areas.
This evolution can be seen in Philadelphia’s native legal community, where firms like Pond Lehocky Giordano and Ballard Spahr have installed new C-suite roles to help scale the firms’ growth by harnessing workflow management systems.
“So many firms are seeing themselves as businesses who practice law, rather than just a law firm,” said Texas-based consultant Bill Biggs, who started in the newly created role of chief team and culture officer at Pond Lehocky last month after working with the firm as an outside consultant on knowledge management since January.
Many such professionals are onboarded to bring a new perspective to a boardroom that up until recently has been attorney-dominated, said Paul Giedraitis, founder and president of client relationship management software Orgaimi. Giedraitis said many tech-enabled functions have historically been subordinated to a firm’s IT desk but are now being brought in at the senior leadership level to coexist next to heads of strategy.
“They’re thinking about strategy more than purely about managing books [of business] and growing revenues from a certain client,” Giedraitis explained. “Firms are realizing they have to approach things more like one single business and they’re hiring roles to make those changes. Law firms are becoming less like partnerships and more like businesses that are technology driven.”
Case in point, Pond Lehocky’s leadership team said the firm now views itself as a corporation in its hiring practices. In the years leading up to the pandemic, Pond Lehocky CEO Shawn Lehocky said his firm saw explosive demand growth that necessitated upgrading technology to allow the firm to handle the influx of new cases.
But Lehocky said the shift to remote work showed leadership that its training programs and hiring strategies weren’t keeping pace with its rate of tech advancement. Because they kept their internal processes the same, Pond Lehocky’s leadership was forced to reckon with the question of which processes should be automated.
“We had better technology with the same processes, so we asked ourselves: how would we build the workflow based on what we know we could do without handcuffs of the old system?” Lehocky said. “We used the adoption of new technology to redo the business flow from top to bottom.”
Evidently, the answer for firm leaders was training, reasoning that a lack of a repeatable and scalable training system would force the firm’s rainmakers to spend too much time training new recruits instead of delivering value to the firm. Lehocky said the goal of bringing on Biggs was to “build a knowledge management system and training protocol that allow people to be more efficient at their jobs.”
Harness Data
At Pond Lehocky, an exercise led by Biggs has been to develop a list of the most important KPIs for department leaders to track for each of their team members. Thus, KPIs like the volume of new cases coming in, the speed of their movement through the pipeline, win rates and average client fees have become central to the firm’s business decisions.
“We used the knowledge base and skill sets that we have to see what are the most efficient ways to move a case through to victory,” Lehocky said. “We evaluate every part of the case across the board to see, how does the case flow and how do we use those data points to automate reports?”
Over the next six months, Biggs said he anticipates working on KPIs for each team member of the plaintiffs firm to keep track of each of the departments’ productivity. “It’s basically the score, to use a sports analogy,” Biggs said. “We want to know what our score is.”
When firms implement centralized data management software, Ari Treuhaft, chief operating officer of legal practice management software company Litify, said firm leaders often realize that what they’re after isn’t just a new place to store data but a better way of doing business altogether. He said firms are realizing they need to have their data house in order to leverage any of the available tools.
“If you are in the market to buy new software, those firms have restructured their entire company in the process,” Treuhaft said. “They’re not just looking for a place to store their data; they’re looking for a way to run their business better, and part of that is leveraging data. You want to make sure your business is correctly set up before that.”
Law firms perhaps can be forgiven for being slow to the tech party, according to Sean Monahan, director of the legal transformation and innovation practice at HBR Consulting. Monahan said available tech offerings haven’t historically fit the varied and hyper-specialized needs of the “matrixed” practices that constitute a law firm, especially one that employs the term full service in marketing materials.
“Each lawyer has their own needs, and the technology doesn’t always encompass them,” Monahan said. “I think that’s one issue that is sort of driving that difficulty in adopting technology overall.”
Asked why technological innovation is now taking place so fast in the legal industry, Monahan said lawyers “are realizing tools that are available can move the needle on delivering value for clients. Once they see the value of things like data to drive business decisions to drive relationship with a client, they want technologies that are trying to leverage that.”
Meeting demand for legal services
According to Giedraitis, law firms’ use of technology picked up in the aftermath of the 2008 recession when the industry saw a rise in reporting systems to manage profitability and track financial performance of key client accounts. But he said in the last couple of years since COVID-19, firms have redirected their tech efforts to meet the rise in demand for legal services, the same that led to 2021’s profitability explosion.
“There’s been this huge shift from not just about growing client relationships or getting the most out of them in terms of profitability; it’s actually about meeting demand,” Giedraitis said. “That switched the focus to things like, ‘How do we retain the right talent to be able to do the work?’ and ‘How do we understand analytically the best skills and experience additives of our workforce so we can market them more efficiently to various opportunities, RFPs, pitches and clients?’”
This has led to the development of tools that deliver transparency in pricing for legal fees and a more deliberate approach to staffing cases, according to Giedraitis.
“The business of law is finding ways for partners to cross collaborate with each other and compare notes about clients,” he said. “There are opportunities for practice areas handling contracts and transactions to compare notes and see what the big-picture needs are for a corporate client.”
A similar evolution can be seen at Philadelphia-based Ballard Spahr, whose client value and innovation team developed a service for financial services clients to manage their licensing status across various jurisdictions.
The team is overseen by chief client and innovation officer Melissa Prince, who reports directly to the firm’s new chief operating officer, Debra Lawrence, former chief strategy officer at Morgan, Lewis & Bockius. Lawrence said what drew her to Ballard was the presence of a client value and innovation team, which she said provides clients with cost prediction tools to gauge how matters will play out.
Mark Stewart, chair of Ballard Spahr, said the executive director role was rebranded as chief operating officer to reflect the “increasing importance of business professionals in the success of ours and other law firms,” from everything including cybersecurity to delivering greater client value.
“The top administrative position at our firm has evolved into response, and the title chief operating officer is an acknowledgment of the breadth and depth of that role,” he said. “As we move even further in the direction of a strong partnership with our business professionals, we are fortunate to have a COO who intimately knows the operations of a large firm and can coordinate these important responsibilities while protecting our culture.”
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