Technology-driven profitability in the modern law firm
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1 Technology-driven profitability in the modern law firm
2 Executive Summary Interested to explore the link between automation - particularly the automation of drafting/precedents - and the commercial profitability and efficiency of law firms, we surveyed 100 senior UK-based solicitors at large practices. We asked them to share their impression of precedent automation, the efficiency of their current drafting processes and any potential scepticism they may have in relation to the implementation of automation projects. This report presents those findings, alongside expert insight on the business case for automation. The business of law has changed With an increasing number of leaders from the commercial sector taking over the running of law firms the requirement for firms to focus on innovation and efficiency gains is greater than ever before. A rolling project to identify and implement efficiencies is a necessary part of the modern law firm. Clearly one of the best ways to find a competitive edge is through the smart use of technology to save fee-earner time and to bring productivity gains. 86% of respondents to our survey agree that technology has become an increasingly important part of the modern law firm. Today there are a plethora of legal IT packages and solutions available, from process automation, decisions engines and e-discovery tools, to communication, collaboration and research tools. With so much to consider, it s crucial that IT investments are evaluated from a strategic perspective, with the overwhelming consideration being the business case for implementation. Ultimately, technology solutions that are adopted must add value to the business today, integrate with a firms existing technologies and be able to evolve in line with changing business needs, regulation and business practices of tomorrow. 2 Technology-driven profitability in the modern law firm
3 One clear area where technology can add significant value to a law firm is the automation of precedents. The complex and time consuming process of drafting from precedents has long been the routine, and often the headache, of generations of lawyers. 77% of senior lawyers who participated in our survey agreed that drafting is painstaking, error prone and takes a significant amount of their time. More than half also agreed that the time incurred in mechanical drafting prevents them from spending more face time with clients, and in negotiations, adding real value. However, drafting is also the backbone of every law firm and legal department. For top tier law firms, the quality of their precedents is a key differentiator and a significant intellectual property asset. The truth is many firms have yet to properly systemise their best drafting process. More than 1in4 respondents are still using a completely manual drafting process Only15% said their firm is using a fully automated drafting process Only12% of lawyers we surveyed said their firm didn t maintain its own precedent bank 39% said their firm maintains its own precedent bank across all departments 3
4 How does precedent automation work? Precedent automation is a process designed to save fee earners time in producing a first draft of all types of legal documentation by automating the routine, mechanical and logical aspects of drafting. Essentially, it is an analysis and systemisation of legal drafting, resulting in the maximisation of fee earners potential. There are many examples of automation, from simple mail merge applications (entering data) and minor manipulation of documents, to more recently, the emergence of sophisticated precedent suite automation (delivered as a web-based software-as-a-service platform). The user is presented with a questionnaire that collects relevant data and guides them through the document creation process. Based on input provided by the fee-earners and external data sources (where appropriate), the appropriate information and elements of the precedent content are automatically inserted into the final document, which is generated by the system and then returned to the user. Innovative new providers have started to offer precedent automation as a fully managed service. They resource the entire project, offering multi-skilled teams that will take responsibility for the initial precedent automation and ongoing maintenance allowing firms to gain all the benefits without the headache. This approach involves minimal involvement from both the in-house IT department and from busy fee earners/psls, whose time for projects such as this is very limited. What are the benefits of precedent automation? Automation facilitates the compelling combination of a better service delivery at a lower cost/higher margin. It allows fee earners to spend their time more beneficially and creates greater opportunity for delegation to junior, lower cost fee earners. It could even change a firm s recruitment strategy. This benefit can be calculated and quantified and the success of the project measured in true financial returns. The increased efficiency allows a firm to increase its recovery rate and volume while maintaining, or even decreasing, its overhead. 4 Technology-driven profitability in the modern law firm
5 Without document automation, a team might spend many hours manually drafting a large corporate suite of documents (such as an investment suite for example) and might then only recover a fraction of the time costs incurred. The senior lawyers who responded to our survey, on-average, typically expect to recover 62% of their chargeable time. 20% of respondents expected below 50% and only 22% expect to recover above 80%. With the latest precedent automation solutions and a fixed fee arrangement, firms are recovering the equivalent of five hours of fees in relation to a suite of documents that now takes in the region of 45 minutes to prepare. This massive increase in efficiency is allowing firms to significantly increase their recovery rate and volume while maintaining, or even decreasing overheads. As another simple example, imagine a complex share purchase agreement, significantly in excess of 100 pages, with tens of ancillary documents. In this scenario, two simple questions - How many Sellers are there? and Does the Target have subsidiaries? - can generate in the region of 1500 simple grammatical amendments to the suite of documents, which take hours to undertake using current manual drafting methods. Automating the entire instruction means this gross waste of time can be eliminated. One could of course maintain far more precedents for each document in the suite to achieve this result, but this quickly becomes uneconomic as the number of permutations increases. Manual drafting vs. CLARILIS Drafting time Manual Drafting Manual Drafting On average over 90% reduction in drafting time using CLARILIS Manual Drafting CLARILIS CLARILIS CLARILIS INVESTMENT AGREEMENT LONG-FORM SPA SETTLEMENT AGREEMENT 5
6 Only8% believe manual processes are worth the time that they take and are happy with them Automation also brings with it a series of soft benefits that give your firm greater control over its precedents, such as providing greater firm-wide consistency in drafting, better risk management, governance, built-in quality control, plus a consistent house style in line with the firm s brand. This all contributes to more intangible benefits such as brand reputation and client satisfaction. 70% believe an automated drafting process would help their firm and save time-related costs Executed appropriately, the ROI on a successful precedent automation project can be measured in weeks, by enabling firms to save (on average) 54 minutes of every hour on the mundane aspects of drafting. Only26% of respondents to our survey believed their firms current drafting process was highly efficient Scepticism from previously failed projects Despite the above, the current reality is that the vast majority of the UK s top 100 law firms just aren t successful at implementing meaningful automation projects. The legal industry is littered with examples of failed or failing precedent automation initiatives. As a result there is understandable scepticism. Through our survey we discovered that a third of respondents are sceptical to some extent about the benefit of precedent automation and another third aren t convinced either way. The most popular reasons for scepticism are concerns about the quality/accuracy of automated drafting (46%) closely followed by a belief that the implementation costs would be prohibitive (36%). A quarter of respondents held further concerns including about security. These are reasonable reservations that have to be addressed at an early stage in any automation project. 6 Technology-driven profitability in the modern law firm
7 It was no surprise to learn that 98% of respondents would welcome initiatives that significantly reduce the time fee earners spend on drafting documentation, provided that these initiatives are not detrimental to quality. Our experience tells us that the overwhelming reason that so many automation projects fail, is that firms significantly underestimate the resources required. In other cases firms have been let down by traditional approaches to automation, with projects typically delivered late (if at all) and well over budget. Today the best providers are offering to guarantee successful deployments through innovative commercial approaches. This revolutionary step is de-risking projects and building confidence in the market. Is precedent automation right for everyone? With the right set of circumstances the potential benefits are significant but automation is not suitable for all precedents within a firm and is not necessarily suitable for all departments. Some fee earners and firms may legitimately decide that automation is not appropriate for their firm, for example, if their work is not precedent based or if their use of precedents is infrequent. It should be noted in this regard that the complexity of a firm s precedents and the amount of bespoke drafting contained within final agreements drafted by a firm are not usually a barrier to automation. To determine whether automation is right for you, consider the following questions: Does your firm maintain its own bank of precedents? How frequently are those precedents used? (to identify suitable precedents) How long does a given suite of documents take to draft manually? How much time would the same drafting take if it were automated? This can be difficult to assess yourself, but experienced service providers have extensive knowledge in this area as this information is critical when identifying the best candidate(s) for automation. 7
8 What to consider next? A move to precedent automation can represent uncharted territory for many. Firms that embrace automation with the right implementaion strategy and technology will enjoy tremendous benefits resulting from a new competitive advantage and better cost recovery over firms that maintain the traditional manual approach to automation. To find out more about how Clarilis can help drive productivity in your practice, to arrange a demo, or to request one our whitepapers, please contact our team on , enquiries@clarilis.com or visit Further whitepapers from Clarilis: 1. The holy grail of precedent automation to build or buy? 2. Precedent automation is it suitable for my firm? 3. Clarilis managed service approach to precedent automation Clarilis six steps to intelligent drafting 1. Assess We begin every new client relationship with an assessment phase. We map your precedent bank, measure usage and understand the firm s drafting workflows to get a real world understanding of your practice. 2. Design Using the intelligence gathered in the assessment stage, we design an implementation strategy that delivers the greatest benefit to your practice and the maximum return on your investment. 3. Automate We work closely with your team to automate strategic precedents. Our expertise is in helping firms migrate smoothly to better ways of working, helping manage the culture and process change involved. 4. Familiarisation The platform has an intuitive interface. A first time user can become highly proficient with less than 15 minutes of familiarisation. Following familiarisation, our support team remain on call to provide any assistance that may be required. 5. Improve We regularly review your use of the automated precedents and where necessary recommend ways to further optimise your drafting. Iterative improvements ensure a rapid and sustained return on your investment. 6. Support Our background as practising lawyers means we have a deep understanding of the way law firms and in-house departments operate. This understanding allows us to provide your team with unparalleled service and support, ensuring you get the maximum return from working with Clarilis. 8 Technology-driven profitability in the modern law firm
9 Clarilis We are a team of specialist professional support lawyers and automation experts who specialise in the delivery of automated precedents through the proprietary CLARILIS platform. Traditional approaches to automation have placed a heavy burden on a law firms internal resources. In contrast, Clarilis fully managed service allows you to eliminate the significant financial and delivery risks associated with these projects, with an architecture that is a class above all other technologies currently in the marketplace. Unlike alternative approaches that can take months or even years to achieve an ROI, with Clarilis this can be realised in a matter of weeks. Clarilis Limited t: e: enquiries@clarilis.com
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