The legal profession is notoriously slow to change. In an article titled The Impact Of COVID-19 On How Law Firms Do Business When It Is Just A Memory, author Stephen Mabey opens with a statement by founder of the World Economic Forum, Klaus Schwab: Law firms have never rushed into anything” (a widely accepted and occasionally ironic statement). He went on to say that “the fourth industrial revolution would result in a fusion of technology that would blur the lines between physical, digital and biological spheres.
With the fourth industrial revolution strongly representing a fundamental change in the way we live, work and relate to one another shaped and enabled by extraordinary technology advances, it makes one wonder why law firms have been so resistant to change. With some law firms still writing cheques, posting letters and sending faxes, the unashamed avoidance of technology has been a widespread theme across the global legal fraternity. Until now.
Planning for an unknown reality
Covid-19 has propelled the world into unimaginable turmoil. Several months into the pandemic wreaking global havoc, individuals and organisations alike are having to plan for their “new normal.” This series of adjustments to lifestyle, spending patterns, work habits and reliance on technology is reshaping our expectations as both consumers and business leaders.
At a time when people are fighting to survive the illness itself, the financial fallout from a ravaged market, political upheaval and other existential crises, it is difficult to fathom what our post-Covid-19 reality will look like. And yet, this is something that organisations around the world are having to plan – and change – for.
Law firms are not precluded from these changes. In a Forbes article titled Covid-19 Will Turbocharge Legal Industry Transformation, Mark A. Cohen asks How will Covid-19 change the legal industry and what will it look like? The Short answer: the coronavirus will turbocharge legal industry transformation. It will propel law into the digital age and reshape its landscape. The entire legal ecosystem will be affected—consumers, providers, the Academy, and the judicial system. Digital transformation has been a C-Suite priority for years, but the legal industry has scarcely taken notice and is unprepared. The coronavirus will change that. It will produce a swift, comprehensive, top-to-bottom re-imagination of the legal sector.
This is a scary notion for the majority of law firms who maintain laggard systems and fear swift and substantial change. But within this required transformation lies scope for greater relevance, sustainability, security and client service – and a significant opportunity for growth.
The new normal is here to stay
The lockdown drove employees in all sectors from their offices to their living rooms and dining-room tables. Lawyers were not exempt. Most businesses were forced to embrace cloud technology and video conferencing software. Clients and service providers alike were largely pleased with the timesaving, collaborative and efficient nature of these systems.
After Covid-19 ends, having employees work from home will become commonplace. But this doesn’t mean that law firms should only adopt video conferencing software. Without a physical presence in the office, it will be more important than ever to embrace digital transformation. Law firms will find their operations improved by embracing technology such as e-discovery solutions, contract management systems and online file storage software.
There will be many that hope that these technological changes (and improvements) to the legal industry will only be temporary. But they would be wrong. Clients have a very different mindset and a greater urgency to solve a growing list of complex challenges.
In the aforementioned article The Impact Of COVID-19 On How Law Firms Do Business When It Is Just A Memory, Stephen Mabey highlights some of the reasons that the new technological normal for law firms is here to stay:
- Due to widespread financial constraints, many law firms and clients will need to downsize physical office space, placing further emphasis on the need for virtual legal services
- Clients were already comfortable conducting many of their professional services online (banking, investments, travel) and there will be a raised expectation that all professional service industries, including law firms, will adopt the requisite technological solutions to make this a primary form of engagement
- The backlog at the courts will likely need to be dealt with through technological solutions such as online document submission, electronic signatures, online court hearings etc, forcing law firms to make use of technology to align with these requirements
- The forced exposure to cloud computing has and will open many firms’ eyes to its benefits, including the ease of transition from office to home computing, heightened cybersecurity, reduced equipment needs… reduced office space requirements, reduced disbursements to clients (travel, accommodations), etc.
When life gives you lemons
The potential that legal technology presents and its ability to support this new legal evolution is self-evident. The automation of documents, delegation of routine tasks to computers and the ability to effectively run a legal practice remotely will save time and cost for both legal practitioners and clients. Law firms should be eager to pounce on advancement for the betterment of the practice in the long term, not just as a temporary measure.
Those law firms who upskill and adopt a forward-thinking mindset will find opportunity. Those that do not embrace the positives of technology, may well become redundant. It’s time to take this bitter Covid-19 lemon and make lemonade.
The question is how?
There is a unique combination of cashflow constraints and opportunity for growth facing most law practices, and particularly corporate and commercial law firms. Issues such as decreased billable hours and the inability of clients to pay outstanding accounts are just some of the challenges being faced since lockdown. This can place severe pressure on a firm’s ability to sustain overheads while investing in the technological infrastructure required to meet the general need for online and virtual working practices.
Conversely, there is a clear need for these firms’ services. In an article titled How COVID-19 Impacts Law Firms, the author illustrates this increase in business by stating that Business owners will seek attorneys to help them incorporate or legally protect their business. Lawyers will be tasked with helping business owners make decisions about tax status and deciding which entity they want to create, be it a sole proprietorship, limited liability corporation, or partnership. Clients will need help with operating and membership agreements for who’s responsible for capital, P&L, stock, voting shares, and other concerns. And that’s just the tip of the iceberg.
But what happens if you don’t have sufficient liquidity to capture this opportunity?
Many law firms are not in a position to cover both overheads and expansion – particularly given the current economic landscape. Third party funders such as Taurus Capital offer South Africa law firms a working capital facility that can be used to sustain firm running costs during periods of decreased cash flow as well as a means to capitalize on the significant growth prospects arising from this pandemic.
As a financial partner that understands the intricacies of running a commercial law practice first-hand, Taurus Capital are expertly positioned to facilitate law firms’ investment in the infrastructure required to ensure their firm’s advancement and longevity.
Contact Taurus Capital today to see how they can assist you or visit https://tauruscapital.co.za/commercial-firm-finance/
This article was written by Alicia Koch for Taurus Capital.