A report by IT services provider Prism Solutions says law firms are under enormous cost pressure as more work is automated and driving down the cost of tasks such as document searches.
The report states that “New, disruptive players are entering the legal space, and law firms are now under threat from accountancy firms and alternative service providers who can offer legal services in a more transparent, simplified and fixed-fee manner whilst delivering superior client satisfaction.” Two-thirds of law firms surveyed say they are “concerned” about the threat posed by accounting firms and alternative service providers, with 45 per cent saying they consider them a major threat. Prism said when the UK allowed a wider array of professional services firms to offer legal services in 2007, it paved the way for accounting firms to take them over. The report explains, “New entrants and disruptors to the legal sector are likely to grow.” Referring to the recent ALM Intelligence report “Elephants in the Room Part I: The Big Four’s Expansion in the Legal Services,” Prism highlights “the Big Four, the world’s largest consulting and accounting firms - consisting of Deloitte, PwC, KPMG and EY - could draw an annual revenue of $30 billion from legal services, were they to fully expand into the legal market.” up. The report notes, “All four have reported double digit year-on-year revenue growth in recent years, and there is the temptation to see the Big Four as just “another new competitor” in the already crowded market.”
The report states that productivity continues to be a major issue affecting the legal world, citing the instance of time wasted searching for past emails and documents, “This inability to retrieve important communications is costing law firms in excess of £50,000 per lawyer per year. Not only does this represent a serious information governance failure, but the time wasted searching for documents and past emails is not billable time and directly cuts into a firms’ profit margin.” The report is not convinced by the solutions sought, stating “Worryingly, some law firms are still purchasing software which was written decades ago when security was not the critical factor like it is now. Not only does this mean that firms are finding themselves at risk of rapidly rising support costs, but it also excludes them from accessing new services.” The report argues, “Elevating law firm productivity won’t happen overnight. It requires the evaluation of your currently employed methods and systems and then implementing processes, policies and strategies to create a happy and healthy work environment for staff which will have a direct positive impact on your bottom line. Do not lose sight of the ultimate goal – when law firm productivity improves so will the level of client satisfaction.” The report concludes with a question, “So, are you ready to future proof your law firm?” The report can be accessed here.