A key path to improving law firm productivity is to increase billable work product output without increasing either headcount or hours.
Like most industries, large law mainly does this by either outsourcing tasks that can be done less expensively by someone else, re-engineering certain work processes or by applying technology, especially automated workflow tools that boost efficiency at several stages of a matter’s lifecycle. Examples include drafting tools that speed the creation and formatting of documents and verify citations, knowledge management (KM) technologies that allow firms to repurpose relevant firm work product, and analytics-based business development tools that help firms to identify growth opportunities.
For this year’s recent International Legal Technology Association Conference (ILTACON), we created a special report entitled Productivity, Efficiency and Technology, looking at law firm technology investment — a primary lever to enhance law firm productivity. According to Peer Monitor data, productivity has largely been in a downward trend for the last three years — a trend that continues in 2015.
This presents a challenge for firms in an era when pricing pressures are increasing and clients are pushing for greater efficiency and value in the delivery of legal services. But it also presents unique opportunities for firms looking for a competitive edge amid changing and challenging client expectations.
Technology Spending Trends
Technology makes up about 8% of overhead expenses for the typical large law firm, or around $20,000 on an annual per-lawyer basis. So far in 2015, technology spending is increasing about 2.2%, although that is less than the nearly 5% growth seen in 2014.
Applying Technology to Improve Productivity, Competitiveness
Achieving greater efficiency and productivity is becoming a priority for today’s law firms. Declining productivity is limiting firms’ profitability and hampering their ability to meet clients’ increasing demands for greater value and lower costs. As the 2014 ILTA Legal Technology Future Horizons report concludes, “Information technology is absolutely critical to strategic survival and future growth in a rapidly changing and highly competitive business environment.”
Technology, properly applied, can be one avenue for firms to address these issues, increasing productivity and putting firms in a better position to meet clients’ needs.