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Compelling Need: What legal tech should be on your radar?

As the legal industry in the US and some parts of the world emerges from the forced hiatus caused by the global pandemic, law firms are grappling with some of the same issues they faced prior to the lockdown. Most importantly, these problems include the technological deficiencies of many law firms themselves.

In a two-part blog series, the Thomson Reuters Institute speaks with Michael Gerlach, Partner and Business & Professional Services Senior Analyst at the auditing and consulting firm RSM US. In the first part of our interview, we asked him to share his insight into the new thinking that is urging law firms to address the technology issue. Now let’s understand which technical tools and processes law firms would use most.

Thomson Reuters Institute: Last November, Thomson Reuters published a poll asking for steps to improve the performance of law firms. The majority of the law firms that responded said they planned to emphasize greater use of technology to cut costs. In your opinion, which areas or types of technologies can lead to the greatest cost savings?

Michael Gerlach: I recently spoke to the management team of a customer who made significant investments in their company’s digital technologies around five years ago. They told me that their company had never been more efficient and that they had accelerated revenue growth using much of the data they had collected about their customers and their own internal operations.

Michael Gerlach from RSM US

In addition to basic back office technologies that law firms can buy or subscribe to that deal with topics like accounts payable, payroll, etc., we often meet with clients to discuss the following technologies:

Project or Legal Management Tools – Clients look for full client servers to handle all of their legal affairs, but while many lawyers excel at exercising the law, they are not always the best project managers. Project management tools help lawyers ensure that their clients’ needs are met across practices.

Business Performance Management Tools – These valuable productivity and data analysis tools give business leaders a much deeper understanding of how their businesses make money, which service offerings offer the highest profit margins, how productive their attorneys are in different areas of activity, and how best to allocate resources .

Customer Relationship Management Tools – These can help law firms and partners manage their customer relationships and cultivate new ones in a variety of ways, most notably by identifying new business opportunities.

Data and Data Feeds – Law firms have not yet begun to fully understand the data they have on their systems, and even then how to use that data. Once you have an effective data governance and reporting strategy in place, there is a great opportunity for greater profitability by identifying diverse and potentially new perspectives.

Thomson Reuters Institute: With the tremendous increase in home work, tools and platforms for collaboration have been discussed more intensely. Now that companies are looking to return to the office sometime this year, what do you think of investing in this technology?

Michael Gerlach: These platform operability tools are table stakes. They enable a new wave of legal practice and are mandatory for companies to attract not only law students but also career changers looking to advance their careers. Also, in order for companies to stay competitive, a fully cloud-based platform is required that allows your lawyers to operate from anywhere in the world.

Thomson Reuters Institute: In ours, we saw a surprising statistic on how law firms use Alternative Legal Services (ALSPs). Approximately 30% of law firms use ALSPs to advise the firm’s legal technology, compared to 44% for large firms. How did ALSPs develop their own legal technology in a way that law firms want to use it? And what value are companies trying to derive from this advice from ALSPs in order to get better results from their own technology investments?

Michael Gerlach: There is a lot to relax with this question. Obviously, ALSPs have invested in a solution that can, in theory, provide some legal services cheaper and potentially more efficiently than larger law firms. The largest investments have usually been made by private equity or venture capital firms, who bear the risk of loss associated with the technology. ALSP’s founders are typically technology-minded entrepreneurs who have identified a need for a more efficient process or tool and have the ability to accelerate and streamline the development of the technology.

Law firms, on the other hand, typically do not have the resources, and may not have the knowledge and skills, to develop this particular technology.

As a result, law firms are banding together to see if the new technologies actually work in their favor – or more precisely, some kind of test run. When successful, there is more data going back to the partnership to get support for a new technology investment. While ALSPs might ultimately be seen as competitors, in my opinion they were an open door for companies to experiment with alternative legal services.

Thomson Reuters Institute: Finally, let’s talk a little about your company’s activities. During the last webinar that explored the intersection between talent and technology, you mentioned the RSM Eminence program. Can you describe the program?

Michael Gerlach: Our Industry Eminence Program is really a recognition of everything that is happening in the world of technology and innovation and that we as a company see the opportunities for companies to thrive.

It is important to understand that our job has to change. If we are to be successful and maintain our position in the market, we need to change our old audit tax hats and make them more advisory. To do this, we need to expand our knowledge. We need to do more than just take our old accounting and tax auditing courses on which we built our careers and think about learning Python and Tableau and other business intelligence tools.

We need to be able to do our audits once they have been optimized by advancing Artificial Intelligence because there are companies that come out on the market and say that we can get your jobs done much faster and much cheaper.

Hence, the industry needs to be able to understand how to analyze data and really become advisors to their clients as opposed to compliance reps who end up just ticking one box for clients. In our Eminence program, we do. We give our analysts access to the media and research tools they need to really understand what is happening in their ecosystems and, more importantly, what to focus their efforts on in order to make conversations improve with customers.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which are committed to integrity, independence and bias under the trust principles. The Thomson Reuters Institute is owned by Thomson Reuters and operates independently from Reuters News.

Thomson Institute

The Thomson Reuters Institute brings together people from the legal, corporate, tax, accounting and government communities to stimulate conversation and debate, understand the latest events and trends, and provide essential guidance on the opportunities and challenges facing theirs World today.

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