Technology set to have the greatest impact on law firms over the next five years

The global legal profession is facing a period of unprecedented change with technology set to have the greatest impact on law firms over the next five years, according to a report published today by accountancy and business advisory firm BDO LLP.

BDO’s Law Firm Leadership Survey, which polled the managing partners and senior partners of 63 Scottish, UK and international law firms, revealed more than 80 per cent of participants pointed to technology as the factor most likely to have the greatest impact on their firm. Within every geographic group, law firm leaders were twice as likely to select technology as any other single factor, and 94 per cent of considered technology a strategic priority for their business.

One managing partner of a global law firm said: “Technology has been changing the world for a long time. Why should law be any different?”

Only one of the Scottish law firm leaders surveyed thought that artificial intelligence (AI) will have the greatest impact, compared with a fifth of respondents in other parts of the UK. Forty-two per cent of Scottish participants said that it would lead to greater efficiency and productivity whilst overall, many survey respondents believe it would replace the work of lawyers, or strip out a significant layer of work and revenue from law firms.

This will, in turn, bring about changes to their resourcing mix, business models and financial structures at law firms. However, many said the effect of AI was unpredictable and its scale still largely unknown.

The research also found that many of the larger and more global firms were more likely to be pioneering new technologies to stay ahead of the competition. Equally, there were as many firms who wanted to carefully observe the competition before investing in new tech solutions. Being a ‘fast-follower’ is potentially seen to be a strategically smarter move than investing large capital in new technology while the market is still trying to understand the changing client demands.

One Scottish legal leader commented: “We don’t want to be another Betamax, we would rather be a fast follower.”

When asked what the greatest challenge their firms face in keeping up with the pace of technological change, 50 per cent of Scottish respondents said that time and resources were the greatest challenge compared with 13 per cent across the rest of the UK. Cultural change was seen to be less of a barrier for Scottish firms with 17 per cent citing it as a challenge compared with 29 per cent of other legal leaders.

Martin Gill, lead partner at BDO LLP in Scotland (pictured), said: “Scottish law firm leaders are agreed that the pace of change in the legal industry is accelerating.“

One of the key challenges of technology today is how to fund the investment in technology, in the partnership model, in order to keep up to date with the competition.“

“We are seeing several pioneering solutions entering the market. Law firm leaders are either embracing this transformation or they are waiting to see what the competition is doing. It remains to be seen who will be the winners and the losers.”