Lawyers can profit from taking a deep interest in their clients’ affairs, not only to anticipate their legal services needs but also to appreciate — and adopt, perhaps — the clients’ approach to business and service innovation. Today, as the country is emerging from the COVID-19 pandemic, many businesses are responding to what they see as opportunities presented by new technologies and changing customer behaviors. Digital business development and digital service delivery are becoming the norm, and a gathering storm of digitally empowered competitors is beginning to wreak havoc in many parts of the economy.
The legal profession must be prepared to follow their example.
McKinsey: COVID Accelerates Digital Innovation
Early in the 2020 “lockdown” phase of the COVID-19 pandemic, consulting giant McKinsey & Company surveyed the attitudes of business executives as they stared into an uncertain future of social distancing and stunted economic activity.
McKinsey researchers found that 90 percent of business leaders believed that the COVID-19 pandemic would fundamentally change the way they do business during the next 5 years. Eighty-five percent believed that COVID-19 would have a lasting impact on their customers’ needs and wants during that same period.
These changes, they believed, presented huge opportunities for growth and innovation. Unfortunately, few executives thought their companies were prepared to rise to the challenge. Just 21 percent of survey respondents said that their companies had the resources, expertise and commitment necessary to pursue new growth opportunities. Instead of innovation, they were focused on cutting costs, increasing productivity, and implementing safety measures.
Fast-forward to 2021. According to McKinsey, the disruptive pressure of digital technologies gained strength during the pandemic, spurring forced, “sudden pivots” to innovation by forward-thinking businesses and, in places, their law firms as well. Sudden pivots observed by McKinsey researchers include:
Changes to sales models. The imperative of social distancing drove a rush to increased digital engagement and brought with it a silver lining for smaller law firms: With digital, smaller law firms are able to assemble a “perfect team” of talent for sales pitches. This makes it possible for smaller firms to match up against larger competitors.
New digital products. Across the country, businesses used digital technology to connect with customers who were no longer walking in their doors. Restaurants closed to in-person dining switched to direct-to-consumer “ghost kitchens.” Museums used digital to open their premises to a public that no longer was able to visit in person.
The legal profession responded as well. The number of remote depositions exploded. Zoom hearings helped keep court dockets manageable. A hot real estate market warmed to Zoom real estate closings. And drive-through will signings took place across the country.
Client demands will soon drive even more drastic tech-driven changes within the legal profession. For example, sobering predictions about the future of legal work from KPMG International include the rise of technology providers to replace traditional lawyers, the use of in-house staff for all routine legal work, and client demands to subject outside lawyers to performance metrics that include how much money they make for the client.
Changes in customer behavior. Consumers are familiar, and comfortable, with using videoconferencing technology for a wide range of formerly in-person pursuits. Religious services, telehealth, exercise classes, and many social activities with friends, family, and business associates now take place entirely online.
Clients are waiting for lawyers to more fully embrace technological change. A recent article in The American Lawyer argued that the lawyers who will succeed in the future are those who can “seamlessly integrate” with the technologies used by clients (e.g., AirTable and Slack instead of email) and align with their clients’ workplace culture and business goals.
New legal market entrants. Citing the example of automaker General Motors and vacuum cleaner manufacturer Dyson making medical devices, McKinsey researchers noted that the pandemic had broken down regulatory barriers that formerly protected businesses from outside competition. Lawyers interested in learning about the coming wave of new, technology-aid competitors to traditional law practice might review the Utah Supreme Court Office of Legal Services Innovation’s most recent report, which contains a list of nearly 50 non-traditional legal services providers and new technology-aided legal service offerings (PDF).
ABA: Tech Presents Opportunity, But Growing Pains Too
The innovations occurring in the business community provide a useful lens to view the American Bar Association’s recently published report, Practicing Law in the Pandemic and Moving Forward (PDF), which documented the views of over 4,000 ABA members from across the country. As we’ve noted before (here, here, and here), the legal profession’s experience coping with the pandemic left many lawyers with the conviction that remote work is not only feasible, but desirable, both from the perspective of the individual lawyer and the client. The pandemic de-stigmatized remote work and permanently changed the way law firms will operate in the future.
While most of ABA members’ post-pandemic reflections are inward-looking, reflecting the view that legal talent is each firm’s market differentiator, the report is nevertheless decorated with the recognition that technology will play a key role in the profession’s response to the public’s post-pandemic legal needs. Moving forward, ABA survey respondents would also like to see:
Engaged, Forward-Looking Leadership. Survey respondents indicated a desire for law firm leaders to map out a vision for their firm’s future and a plan for getting there.
Better Support for Remote Work. Lawyers are frustrated with the quality of the technical and administrative support from law firms. According to the survey, most want better technology and more staff supporting remote work.
Let Value Drive Compensation. ABA report authors say that the COVID-19 pandemic has presented law firms with a unique opportunity to reconsider and re-evaluate compensation policies, based on the true value lawyers are providing to the firm and its clients. The data is there, if law firm management is willing to review and act upon it.
Part-Time and Flex-Time Policies. Similarly, ABA report authors say the time is ripe to “seriously review and revise part-time and flex-time policies.”
Commitment to Diversity and Equity. Over 47% of lawyers of color said they felt stress at work on account of their race or ethnicity; 52% of women lawyers felt stress at work on account of their gender. Survey authors predicted an exodus of diverse talent if that situation remains unchanged.
In recent remarks at the American Bar Association Annual Meeting in Chicago, outgoing ABA president Patricia Lee Refo acknowledged the opportunity and challenge faced by lawyers as the country emerges from the COVID-19 pandemic.
“We must sort through what we have learned in this year and a half about the advantages, limitations, and pitfalls of remote proceedings and other technologies that hold the promise of expanding access to justice and lowering the cost of legal services,” she said. “That is simply imperative.”
We appear to have arrived at a unique moment in time, when digital technologies enable an apparently limitless array of new legal service offerings, and clients, newly conditioned to manage their personal and business affairs remotely during the COVID-19 pandemic, are not merely embracing digital technology but are expecting that digital technology will be harnessed to deliver better products and services. This is a moment that the legal profession can’t afford to miss.