Peer group analysis recently published by HSBC in an annual report conducted on the legal sector, showed that spending on new cybersecurity technology was now the top priority for law firms.
Last year the survey showed Artificial Intelligence was the technology that firms were prioritising, however it has now slipped to fourth position – behind client collaboration tools and automated document production.
Whilst cybersecurity clearly comes out top, it it worth noting that HSBC appear to have improved the way they classify the responses in 2018. The 2017 published responses were grouped into only five categories – Artificial intelligence, Cyber security, Data analytics, Case management and Other.
In 2018 the responses were grouped much better and covered Cyber security, Client collaboration tools, Automated document production, AI, Data visualisation, Mobile apps, Big data & predictive analytics, Smart contracts, Robotic process automation, Blockchain solutions
Most interestingly, the survey indicated that the wider focus of firms over the next three years will be a shift from seeking out new innovative technology, to what HSBC describe as “business as usual” (BAU) systems.
As the survey sample includes 54% of the top 50 UK law firms, it may indicate that larger firms have already spent budget on new technologies and the focus has shifted from buying in new tools to ensuring that they are now making the most they can from them – part of which will mean making sure they are working as seamlessly as possible with other technology the firm is using.
It may also mean that firms take a hard look at their practice, case and client relationship management systems, with a view to replacing platforms that do not ‘play nice’ with other software. According to the report, 87% of the firms surveyed were considering upgrading their practice management system in the next three years.
The survey argues that historically the legal industry may have under-invested in new technology when compared to other sectors, and has been playing catch up. We may be entering a period of saturation for the larger firms whilst they take stock and ensure that they are making the most of the tech they have invested in. We will likely see a trickle down effect over the next twelve months, as other firms follow suit.
In terms of overall investment levels, the survey notes that it has consistently shown that:
“the average run rate of spend is 2-5% of revenues; this number is a useful guide and firms should track how they spend through a period of years. For those spending less than 2%, they need to consider whether this is sustainable in a highly competitive market.”
Abby Ewen, IT Director at BLM comments in the report:
“People are now thinking of investing in technology because of the strategic advantage it gives them, whereas before it was just a necessary evil. Why would you go out and borrow money to invest in keeping the lights on? You wouldn’t do that, but with some of the more transformational technology available now, it’s a different ball game.”
This sentiment is supported further by the survey showing that 63% of the firms surveyed now have at least one senior IT executive on their management board, up from 45% last year. The trend for technical expertise at board level is set to continue as more firms recognise the importance new technology is playing and will continue to play in the delivery of legal services.
Also published on Medium.