2. July 2019

The role of technology in the business model of law firms

At present, law firms are being inundated with offers of “innovative” software. There are advertisements of tools intended to revolutionise document automation, document research, work flows and collaboration with clients. Needless to say, many law firms are already investing in such software. But is this sustainable? Is this the way to a successful pursuit of innovation?

In my last blog posts, I spoke about strategy and process models. How does this fit in with the issue of technology? Is there a sensible sequence in which decisions concerning the strategy, the process model and technology should be made? Or can I simply go and introduce an interesting software, and hey presto! that’s the innovation with which the law firm will be successful in the future?

Let me put the cart before the horse and start with the result: if you want to successfully create a reliable business model, you will first need a clear-cut strategy, then devise a process model that is attuned to this strategy, and finally start thinking about the technology. In visual terms, a law firm’s business model looks like this:

Law Firm Business Model
Law Firm Business Model

First of all, I will have to commit myself with regard to the four essential strategic fields of action and decide what services I want to offer, what clients I want to work for, what my market territory should be and how I want to market my services.

In a second step, I will have to design my service provision process and the supporting processes in such a way as to ensure that they reflect my strategy as optimally as possible.

And only now will I look for the technical tools which are meant to help me prepare and implement the working processes in the law firm as efficiently, effectively and economically as possible.

In practice, however, we unfortunately often see that in the face of the current debate of legal technology, artificial intelligence, big data analysis and machine learning, law firms are under real pressure to invest. After all, they want to be modern and progressive! Law firm partners purchase the first software that happens to come their way as long as it is touted with the buzz words that sound so attractive at present. In the best possible case, such investments merely gather dust because no one in the law firm uses them. In the worst possible case, however, such a purchasing policy leads to breaks with the strategy, to additional complexity in the working processes and to unreasonable interfaces between analogue and digital modes of operation – which results in law firm members being frustrated and clients being annoyed.

Executive School Programmes:
Law & Management

Management for the Legal Profession

Business administration skills for lawyers subsequent to the EMBA

This is my very personal and practical advice: don’t rush into anything! Work on a convincing strategy for the future of your law firm and create a clever process model! Instruct a small team in the law firm to observe technological developments in the market and to evaluate software with which the working processes in the law firm, your client contacts and distribution activities can be supported in an effective way. Make your investments in digestible steps by trying out interesting technologies in areas which allow for small and quick successes. In this way, you can learn about, and feel your way towards, legal technology.

And to conclude: this blog post contains a warning against overhasty investments. At the same time, however, I would like warn against watching technological developments while standing idly by. Remember: markets are apt to change uncannily quickly – and the legal market is not immune to this, either!

Newsletter Signup

Please wait...

Thank you for signing up!

About the author
Prof. Dr. Leo Staub is a Titular Professor of Business Law and Legal Management at the University of St. Gallen. He also is one of the Directors of the Executive School of Management, Technology and Law of St. Gallen University where he chairs the division "Law & Management".