Cyberthreats, Cost-Conscious Clients Loom Large in 2023

The end of the calendar year is traditionally an opportunity to reflect on the past and to look ahead – for opportunities and for danger signs.

In our corner of the legal services industry, four trends appear worthy of consideration at the present moment. They are:

• increased demands for technology adoption within legal departments and among their outside law firms
• heightened risks to law firm operations from cyber-attacks and new scrutiny of cybersecurity practices by federal and state regulators
• continued transition toward remote and hybrid work arrangements at law firms
• continued embrace of remote proceedings, from remote depositions to remote court hearings and other aspects of judicial operations

These trends have been taking shape for several years now, and they are well-known within the legal industry. Less appreciated, however, is the urgency for taking action in response to the changes taking place all around us. It’s been raining for a while now, but not everyone has reached for an umbrella.

In this post, we’ll suggest how law firms might constructively, and profitably, respond to the most likely legal industry developments in 2023.

Cost-Conscious Clients Want Tech-Savvy Lawyers

Clients have been demanding that their law firms make greater use of technology for several years now. The drum beat for more technologically adept lawyers will only increase in 2023.

According to the 2022 Wolters Kluwer Future Ready Lawyer Report (PDF), the criteria that corporate legal departments rank highest in evaluating outside law firms are “ability to use technology to improve productivity” and “efficiency and collaboration.”

Ninety-one percent of legal departments said that their outside law firms must learn to fully leverage technology within the next three years. By 2025, 97% will insist that their law firms report in detail how they are using technology to become more productive and efficient for their clients.

Ominously, the report indicated that the leading reason corporate clients would fire a firm is if the firm did not demonstrate efficiency and productivity.

The strategic use of remote depositions is a great way for law firms to demonstrate a commitment to minimizing litigation spending. Remote depositions shine in multidistrict litigation and in cases where key expert witnesses are located far from litigators’ offices. The cost savings are often significant. And in most cases, remote depositions can be scheduled sooner than in-person depositions, leading to an efficient and prompt resolution of disputed matters.

More Technology Means Greater Cybersecurity Vigilance

The increased use in technology within law firm operations brings with it increased cyber-risk, as critical business and client confidential information is digitized and shared among lawyers, clients, and outside vendors across the Internet.

The U.S. Cybersecurity and Infrastructure Security Agency and the Federal Bureau of Investigation formed the Joint Ransomware Task Force in 2022, holding meetings in September and December.

Congress called for the creation of the task force in the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA), a cybersecurity law enacted on March 15, 2022, that is sure to bring greater government scrutiny to ransomware and other computer hacking activities targeted at large companies and their law firms.

Very recently, according to a Reuters report, the U.S. Securities and Exchange Commission filed a lawsuit against leading law firm Covington & Burlington seeking information on 298 clients whose information was allegedly compromised in a cyberattack against the law firm. Covington reportedly advised the SEC that the number of clients involved in the attack was much smaller than alleged and that, in any event, attorney-client privilege prevents the firm from disclosing the identity of its clients.

Little surprise that, according to an Association of Corporate Counsel survey of chief legal officers (PDF), chief legal officers expect that cybersecurity will be the most important challenge to their company in 2023.

Many law firms invigorated their cybersecurity practices and reached for cyber-insurance to mitigate potential losses to hackers in 2022, a trend that will obviously continue in 2023.

One sound cybersecurity practice is to insist that all vendors handling client confidential information have their own cybersecurity house in order. Requesting that vendors open up their own information security practices to law firm scrutiny — the American Institute of Certified Public Accountants’ Service Organization Control reports (aka “SOC reports”), for example — should be part of every law firm’s due diligence when selecting vendors.

Significant Remote Work Is the Norm

Remote work arrangements were a contentious issue within the legal community in 2022, and it appears that 2023 will be no different. Some observers claim it’s futile for law firm leaders to demand that lawyers spend time in firm offices, while others say they’ve been successful in aligning their in-office routines with those of their top clients.

Kastle Systems, a provider of keycard access products for office buildings, reports in its Legal Industry Back to Work Barometer that law firms are doing better than other parts of the economy bringing personnel back to the office. Kastle reports that law firm office occupancy nationwide is 45.2% as of Jan. 4, 2023, while all other industries combined have 32.8% occupancy in their buildings.

Regardless of how successful law office managers are in luring personnel back to physical offices, the five-day in-office workweek is a thing of the past. Remote work appears to be a permanent fixture in the legal industry now and in the near future.

Here again, remote depositions and hybrid depositions align with modern legal practice. There’s no longer a need to travel to a downtown office space to conduct a deposition. Lawyers can be just as effective from their home office or wherever they prefer to conduct client business.

Remote Proceedings Multiply, With Calls for More

The year just passed saw court-created task forces in Arizona, California, Illinois, Maryland, Michigan, and Utah actively studying virtual justice issues and making recommendations to the judiciary in their jurisdictions.

The National Center for State Courts encouraged state courts to embrace remote hearings, and published in 2022 a Remote Proceedings Toolkit designed to help court administrators work through operational and legal issues that arise when court business is conducted virtually.

State legislatures are also looking at ways to promote the use of remote hearings in all aspects of the legal system, the NCSC reports.

Moreover, remote court hearings and remote depositions are broadly supported by lawyers, according to a recent American Bar Association survey. Litigators have conducted thousands of remote depositions and regularly represented clients in remote proceedings since the COVID-19 pandemic began. They’re skilled in these new advocacy environments  now.

Change is coming from so many directions. Heightened demands from clients to do more but charge less. A revolution in professional work habits. The growing threat of cyber-attacks. And a new place to practice law: the computer screen. 

We’re excited about the future of the legal profession. The technologies we have today, and innovations just around the corner, give deposition services providers the ability to provide better service, safely and securely, at less cost, to more clients than ever before.