legal tech law artificial intelligence machine learning small law firm

Top 4 Takeaways from Altman Weil’s Annual Survey

July 10, 2018 | by Lisa Cumming

chart-close-up-data-590022

Altman Weil, Inc. has released their Law Firms in Transition survey for 2018, and it offers a number of insights about why law firms have been slow to incorporate new technology into their practices.

HISTORY OF THE SURVEY

Altman Weil conducts their survey annually, and their insights are intended to provide guidance for the practice of law in North America. The survey began in 2009, when many law firms faced an uncertain future as a result of the Great Recession in the United States. Billable hours were drying up; clients were not only pulling back, but also demanding large discounts on legal work; senior partners saw their retirement plans disappear, and young associates were often casualties of cost-cutting measures. The Altman Weil survey compiled and analyzed data on the ways that law firms were responding to economic uncertainty in order to “provide clear, credible information that would facilitate law firm planning and operational decision making.”

THE SURVEY TODAY

On the tenth anniversary of the survey, Altman Weil warns that law firms are facing an entirely new threat. But rather than resulting from economic uncertainty, this new threat has emerged from the rapid pace of technological change and an accompanying explosion of new possibilities for applying technology to the legal sector. The threat of disruption, combined with an attitude of complacence among law firms since the end of the recession, leads Altman Weil to believe that many firms are operating under a false sense of security. They don’t feel the urgency to prepare themselves for impact of technological advancements in the legal sphere.

“In reacting to the last crisis, they fail to recognize the next,” reads the survey.“ Most law firms continue to plan for short-term, incremental improvements in performance, while deferring or slow-walking more forward-looking actions to address long-term, systemic threats.”

KEY TAKEAWAYS

From Altman Weil’s survey of 801 law firms with 50 or more lawyers, Blue J Legal has compiled a list of four key takeaways — in bite-sized form — that relate specifically to law firms and their adoption (or non-adoption) of new technologies.

1. There’s a gap between bigger and smaller firms when it comes to innovation

Over 75 percent of smaller law firms (between 50 and 99 lawyers) say they’re not actively engaged in creating special projects and/or experiments to test innovative ideas or methods. This, compared to around 64 percent of firms with between 500 and 999 lawyers and almost 85 percent of firms with over 1000 lawyers who say they’re actively seeking out innovation.

More large law firms (those with more than 250 lawyers) also reported that they’re budgeting time and/or funds for innovative projects and/or experiments: 55.2 percent of firms with under 250 lawyers and 75.3 percent of firms with over 250 lawyers.

Larger law firms may have more money to put behind innovative projects and experiments, but the capital behind and investment in an innovative project doesn’t have to be overwhelming. Adopting software like Employment Foresight and Tax Foresight won’t come at a substantial cost to the firm, especially given the value that AI brings to lawyers on a day-to-day basis by increasing productivity, improving margins, and demonstrating a commitment to adopting new technologies that serve the interests of clients.

2. About half of law firms with 50 to 999 lawyers say their law firm is not “clearly and specifically differentiated” from competing firms

On average, 50 percent of firms with fewer than 1000 lawyers say their firm doesn’t stand out in a saturated market. In this competitive climate, leveraging technology can be a quick way for firms to distinguish themselves in the eyes of potential clients. Blue J Legal has written on how utilizing AI-powered software like Employment Foresight and Tax Foresight can help a small or medium-sized firm stand out from their competitors.

3. Firms see technologies that reduce the need for lawyers and paralegals as a potential threat 

25.6 percent of law firms surveyed say that they’re losing business to technologies that reduce the need for lawyers and paralegals, and 54.4 percent categorized these technologies as a potential threat. Broken down, 23.4 percent of law firms with fewer than 250 lawyers and 31.6 percent with more than 250 lawyers say that technology is taking away their business.

While some technologies can replace some aspects of what a lawyer does, a piece of software will never be able to fully replace a human lawyer. By embracing and using these new technologies in their practices, firms can help their lawyers work smarter. In particular, AI can do a lot of heavy lifting with regards to legal research. Adapting to technological change shows customers and competitors alike that a firm is forward-thinking and willing to embrace innovations that might help their clients.

In the late 1970s, accountants experienced a massive shift with the introduction of VisiCalc. And yet the net number of accountants didn’t decrease. In fact, there were actually more accountants undertaking more dynamic and creative tasks than ever before. This is precisely what new technology does: it may replace some traditional human duties, but it also opens doors for new opportunities. This is especially true with AI. It doesn’t replace lawyers; it validates their instincts by supplying them with data to support their professional hunches.

4. Law firms recognize that the tech boom is bringing permanent changes

About 85 percent of the firms surveyed agreed that more commoditized legal work and increasing competition from non-traditional service providers will be permanent trends going forward. That said, there’s a big difference between knowing that changes are coming and actually preparing for those changes to arrive.

The Altman Weil survey shows a general recognition that change is on its way, but it also shows hesitancy among a large percentage of firms to adopt new technologies and methods. If those same firms were to embrace innovation, it would give them the tools they need to take advantage of change, rather than simply survive it like during the Great Recession.

Blue J Legal offers a suite of tools powered by AI that gives lawyers a data-backed edge for their professional opinions. By utilizing innovations like Tax Foresight and Employment Foresight, lawyers can easily harness the power of tailored and case-specific knowledge, as well as highly accurate AI-generated predictions.

It’s understandable that many lawyers are apprehensive about adopting new technologies in their practice. It’s a pivotal decision.

But the use of AI in law will only continue to expand, and waiting or delaying adoption could mean years of playing catch-up with competitors, or even obsolescence. Given that a large number of firm leaders already recognize that their practice doesn’t stand out from the pack, perhaps welcoming new innovations in legal technology should become a priority.

Tags: legal tech law artificial intelligence machine learning small law firm

POPULAR

Subscribe to our newsletter