Alternative Legal Management/Finance Summit and IT Conference

Three of the Kites (Rachel, Jon and Paul) were at this year’s Alternative Legal events which hosted Managing Partners and Finance Directors from Monday morning to Tuesday lunchtime and IT Directors from Tuesday morning until Wednesday lunchtime. Tuesday morning’s overlap exposed the former audience to the technology issues vexing the latter and all three days were well attended with a whole host of law firms (mostly small to mid-tier) and legal IT suppliers in attendance.

The themes ranged from law firm ownership models, hybrid working and the aspirations of tomorrow’s lawyers to cyber attacks, outsourcing and the now ubiquitous discussion concerning the future promise or menace (depending on your viewpoint) of AI. On the financial side, sessions looked at the importance of having the right metrics and some of the tools that can help to surface these.

An early theme, which we came back to either explicitly or by reference to other areas, was that of law firm ownership. For some time now, the long-established idea of lawyers staying with one firm throughout their career and aspiring to Partnership and a share in the equity has been eroded by increased job mobility across the sector and the reluctance of trainees and junior lawyers to put their social lives on hold whilst working all hours in order to set a path to the top table. The shift here has seen a change in approach with some law firms working harder to sell their vision to those coming through in order to encourage longer-term commitment. Others have turned the ownership model on its head, extending this to all members of the firm to increase the motivation for success which can then be shared more equitably – we heard how this had positively affected profits at one firm.

Trust came up a number of times with leaders urged to earn this through deeds which matched up to words. It was also suggested that leaders no longer need to demonstrate expertise in every field and should spend more time listening to the views and ideas of others across the firm and communicate plans and strategies more broadly. Some feel that there is a need for lawyers and support teams to collaborate more closely with each other in an effort to improve client service. Those lawyers coming through the system at their firms craved more creativity and flexibility in careers rather than being pushed towards specialisation for the next 30 or 40 years.

The pandemic has had a significant impact on the changes in working practice with many topics now on the table which may otherwise have failed to get sufficient traction. One group suggested moving employees to a 4-day week but struggled to identify any alternatives which would satisfy the needs of those clients which demand access to resources 5 days a week. Another challenge here is how to replace the model of trainee seats for mentoring newcomers to a firm which includes the need to align with Partners who may want their own hybrid-working patterns. This was not to dismiss the notion but to flag the fact that changes such as this will need a good deal of engagement, consultation and reflection.

The operational impact of March 2020 was highlighted by one speaker who noted that he went from having a single office in London to 950 (home) offices overnight. The ability to switch to remote working undoubtedly saved a number of businesses although the demand for computer equipment increased lead times dramatically and often hampered the transition. As people have returned to offices, with their dogs in some cases (!), Microsoft Teams is eclipsing Zoom as the virtual meeting of choice not least as it is included within most Office subscription models. Printing, which collapsed during lockdown is now rising again and adding to overheads although is unlikely to reach pre-pandemic levels.

The SRA’s workplace policy came under the spotlight in a Samoan Circle (an approach that facilitates the discussion of difficult topics) and elsewhere with old, white men often viewed as being on the wrong side of debates on equality and diversity. Whilst there is still much work to do in order to ensure that people are recruited on their abilities rather than their gender, colour, orientation or religion, it is important not to marginalise people just because they represent the orthodoxy. However, the above point about trust is important here – it needs to be earned and maintained.

The subject of careers resurfaced in relation to AI with concerns that many roles may disappear over time with the creation of document content likely to be the first to feel its full force. An industry specialist advised lawyers to become more comfortable around the technology (which I took to mean understanding the impact of any ‘black boxes’ used in their firms before allowing these to impact client work) but also advised them to lean into their traditional values – many clients still choose to buy from their most trusted advisors in 2023. One point regarded an AI engine which analyses scans of infants’ eyes and can predict, with 100% accuracy, the gender of each baby… but doctors do not know how it is able to do this! There is no magic here, just volume, speed and the ability to spot patterns which have so far evaded human analysis – applying the same technique to the likes of mammograms, which is currently the subject of research projects, could prove lifesaving.

However, some firms reported that they had already blocked ChatGPT whilst its use is investigated/evaluated, although we were told that changes anticipated over the next year are likely to be seismic and may nullify any efforts made by pioneering firms to this point so there is a need to be shrewd with any time and money invested here. It may also be that rules will be set out by the SRA and others to control the use of AI although we are still waiting for a ‘gold standard’ to emerge. We also heard how one firm has a data science team of five which analyses the firm’s information, albeit without any specific impact on client services at this point. Whilst such options are likely to be beyond the reach of many smaller firms at this moment, some fresh thinking could be applied to help level the playing field, eg collaboration with other firms (subject to competition rules as my colleague Melanie would point out).

Continuing with the ever-growing impact of technology, we heard about a cyber attack that stopped one firm from using IT for 10 days on the advice of insurers. The firm had taken sensible precautions against such attacks but was vulnerable when an automatic Microsoft patch failed to be applied – for the want of a nail…. This was a harrowing and, at times, emotional presentation which contained excellent advice including the need to have backups completely isolated from the firm’s systems to ensure they are available if the worst happens – without this, the firm might have struggled to survive. It was also clear that many prescribed plans would not help as firms have to deal with what is in front of them at that moment and it is hard to predict in advance of an attack what this will be.

Many firms feel safer outsourcing such problems to a third-party supplier although, if going down this route, it is important to find a trustworthy partner that provides a good fit for your firm. From our experience, some firms are too quick to swap suppliers when the arrangement starts to struggle. The problems are often with the way the relationship is managed rather than being wholly with the supplier and, on this score, we heard of monthly reviews to check that key SLAs continued to be met whilst another suggested contracted benchmarks to allow costs to be compared with other suppliers after three years. One other option to defuse the potential flashpoints is to have systems and data held in a common cloud platform (eg Azure, AWS) which the firm has full ownership of but which the supplier manages. In this way, if there is ever a major falling out between the parties, the firm’s data remains securely under its control.

An excellent session (facilitated by me, what can I say!) considered the changing PMS market with cloud computing leading to supplier consolidation and, ultimately, a reduced choice for law firms. We heard from three suppliers who each covered their own vision for the future whilst grappling with the commonly felt issues of integration (especially with document and case management systems) as some firms move to separate systems to replace a single, full practice solution such as Axxia or Envision. Other speakers covered the need for better (ideally live) financial data reporting and we heard about Microsoft’s Power BI tools BI alongside third party packages, with some of the latter now integrating Power BI functionality to maximise their offering. One seasoned Finance Director advised planning for the future by creating a 3-year strategy (detailed for the first year, higher level for years 2 and 3, and re-forecast every 6 months), defining both strategic and targeted KPIs, checking progress against benchmarks, building in tolerance levels and review, review, review. All of which was presaged by asking firms to be sure they know what kind of law its clients want.

Overall, we felt that the event (which also covered areas such as sustainability) was a real success both for law firms and suppliers alike. 3Kites made a number of new connections and we have some key points to follow up ranging from system replacements (for PMS, case, HR and DMS) and project managing implementations to Fractional IT Directors and reviews/strategies in the knowledge management arena. We hope this short summary has been useful and that you will be able to consider 3Kites when planning future projects.

If you’d like to know more about how 3Kites can assist your firm, then please contact laura.howells@3Kites.com.