Three Ways Technology Can Combat Demand Mobility for BigLaw Firms
A recent Thomson Reuters study found that many corporate clients are shifting their retainers away from their go-to BigLaw counsel in favor of mid-sized firms promising quality work at more efficient rates. The reason? To trim and optimize their legal spend.
This shift in spending, known as ?demand mobility,? has been nagging larger firms for much of the past two years. While the Am Law 100 increased their billable rates by 7.3% in 2023, inflation has undermined profitability. The industry?s largest firms actually saw their realization percentages decline for at least five consecutive quarters, cutting into profit margins. In contrast, the total hours midsize law firms billed out increased an average of 2.8% year-over-year.
To help combat this drift, BigLaw partners should reexamine their operations and see where technology solutions can lighten the load, create more efficiencies and trim invoices. With the right tools and partnerships, firms can become leaner and more competitive on pricing.
1. Uncover Problems and Optimize Workflows
With many general counsel (GCs) under a mandate to accomplish more with less, BigLaw firms must reimagine their processes to impress in-house clients. A good starting place is to examine current workflows throughout the firm to determine whether leveraging technology solutions can improve efficiency and produce savings for clients.
Of course, firms will be flying blind if they don?t know what workflow problems they should address first. Those in charge of the firm?s technology initiatives should talk with partners, associates and client stakeholders to single out common time drains and task completion roadblocks. They should also work with the firm?s billing staff to conduct invoice audits to identify time-consuming task entries and common write-off requests from lead account partners and clients. This data can help guide a firm?s decision makers in making the right the technology investments.
For example, AI-enabled assistants such as Helm360’s Termi can eliminate billing-intensive tasks such as locating documents, synthesizing data from various sources within the firm?s systems and assembling reports. Termi also allows attorneys to query client billing and account information with one quick chat message and put an end to endless back-and-forth emails with staff. This frees everyone up to focus on higher-value work and slims down invoices.
Addressing these kinds of details can have a major impact. Partners at global law firms who have used Termi to augment their billing workflows have said:
- ?Termi worked very well. Being able to see the bill on the phone is excellent.?
- ?The time saved in the billing process is where it comes into its own. Termi just shortens the cycle.?
- ?Overall, Termi is amazing. It?s much easier for me to deal with things. I can approve bills first thing or last thing at night more easily.?
- ?Termi is very easy to use, and I didn?t even make it to the training. It offers huge time savings.?
What is the result of shifting technical gears this way? Less time earmarked for drudgery. And, ultimately, much happier GCs eager to defend a firm?s value to their C-Suite colleagues.
2. Improve data quality, IT system stability
Though it can definitely improve efficiency, the technology supporting a firm?s systems may also create costly hidden problems if not deployed and maintained properly. This usually involves either data quality issues or software instability and can result in higher firm overhead and the need for ever-higher billable rates to pay for staff time.
Many issues that arise in this context involve data quality issues or software instability. For example, a badly handled data transfer from legacy software to enterprise-level Elite 3E or ProLaw will negatively impact all of a firm?s operations. Mismatched or incomplete data is the bane of law firms everywhere, and it can happen very easily.
Thankfully, there are solutions to help a firm clean its data, keep it pristine and save attorneys from expending billables to address data integrity problems. Helm360?s best-in-breed Digital Eye, for example, leverages AI and battle-tested validation scripts to automate data discovery and cleansing. Interactive reporting not only pinpoints inconsistencies but also provides exact solutions. From preparing data sets for major projects to keeping address information up to date, programs like Digital Eye save time and money while making maintaining data quality an easy lift.
Similarly, thorough testing is needed before firms roll out any new systems or implement upgrades. This has traditionally been a laborious manual process, requiring endless hours from IT staff. Helm360?s 3E Application Testing, however, transforms this task from a multi-week slog into a manageable (and repeatable) to-do an internal team can complete in hours. Backed by a best-in-class test script library, this next-generation solution makes implementations, upgrades, mergers and basic system validation faster, easier and worry-free.
While quality data and optimized IT systems seem separate from the billable work done for clients, they contribute ? or detract ? from a firm?s overall profitability. A firm running on bad software and faulty data will see inflated line items for IT staff compensation and reduced productivity. It also directly affects a firm?s ability to compete on cost. Ensuring pristine data and systems that run smoothly will no doubt enhance a firm?s competitive position.
3. Optimizing project budgeting
Proper project budgeting can go a long way toward cementing the confidence and loyalty of clients and referral partners. As The American Lawyer has reported, BigLaw is facing substantial pushback from clients on how much they bill, cornering partners into writing off time just to keep the peace. While write-off decisions may sound like an issue better left to rate negotiation teams and attorney training, technology software and consultants can help legal teams develop well-researched budgeting solutions that keep client expectations in line.
For one, law firms could consider looking outside their bubble for expert guidance on how their budget proposals stack up to peer firms. For example, Helm360?s enhanced billing support team has decades of legal sector knowledge and experience working for and within varied law firms. A team with this background can help identify opportunities to scale back work and conserve resources to meet a client?s budget parameters. In reviewing a firm?s billable entries for particular matters, they can pull from their knowledge of successful billing concepts and processes to mitigate client pushback and even share software recommendations that can help firms reduce invoice bloat.
While bringing in outside perspectives can help, AI-powered assistants can handle some heavy lifting too. By unleashing a tool such as Termi into a BigLaw firm?s decades of case data, partners can quickly identify, compare and summarize billing patterns from similar cases. These tools can also point out common task buckets that have gone over budget ? whether it be memo drafting or research ? while flagging others that might require more resources based on the unique facts of a client?s new case or transaction.
Defeating demand mobility to drive profitability
The shifting cost priorities of general counsel are motivating many to seek new relationships with firms outside the Am Law 200. While this trend is not a knock on the enhanced capabilities BigLaw firms can offer, it should motivate managing partners and executive committees to find new ways to reinforce their value.
While leveraging legal technology is just one piece of solving this complex equation, it is significant. By using cutting-edge tools and partnering with experienced tech personnel to expedite legal work, mitigate software downtime and optimize budget proposals, larger firms can improve their rate competitiveness and fend off demand mobility. All, of course, without sacrificing the quality of their work product and representation.