The term „Legal Tech“ was widely unknown in Europe a year ago. This has changed significantly due to wave of Legal Tech related articles, conferences, blog and communities (like ELTA and LegalPioneer). By now, most lawyers and law firms will probably have heard of Legal Tech, and have started to realize that the legal industry is most likely not immune to digitalization and significant other changes in the next five to ten years. Indeed, there is little doubt that digital tools and technologies will profoundly affect and change the way business is being conducted in the legal industry.
This realization normally leads to next questions: How can we deploy Legal Tech? Which tools should we implement? What are the best tools on the market? I would, however, suggest that these questions are too short-sighted. Digitalization is not primarily about the question which tools to use, but a strategic framework on how to generate new business models and products through the use of data and technology. In this post, I will point out what it means to become „Legal Tech ready“ and which steps should be followed by lawyers and law firms to re-think their businesses in the era of digitalization. This post will take a look at what digital business transformation or digitalization means and outline the journey that organizations must undertake to avoid digital disruption, to realize the benefits of digitalization, and to maximize value by using digital technologies and new business models. In short, this post aims to hash out a conceptual framework on how to become „Legal Tech ready“.
Obviously, this post cannot cover all aspects of this change or transformation process; not even 10% of it. There is no easy manual, no one fits it all solution. To move a (legal) business from manual to digital is certainly not an easy task. It is not an endeavour achieved overnight. To the contrary, a digital transformation is a long, challenging process that requires, first of all, the willingness to change and then, secondly, to experiment and take action.
# First step: It’s not about tools, it’s about (change) process
According to Gartner’s IT Glossar digitalization can be defined as „the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.“ Digitalization is fundamentally about change, namely organizational change. Digitalization is not primarily about the use of software, but rather the organizational change related to people, processes, strategies, structures, and competitive dynamics.
The study on „Digital Business Transformation“ gives a striking example: „The importance of organizational change is well illustrated by Kodak’s fall from its position of market dominance, and its ultimate demise. It cannot be claimed that Kodak was not innovative. The world’s first digital camera was develop by the company in 1975 and it made major investments in digital capabilities throughout the 1980s and 1990s. Kodak failed primarily because it was not able to make the necessary adjustments to adapt to new markets and changing customer requirements. The company was encumbered by legacy infrastructure, people, and knowledge that became increasingly obsolete, and was not willing to make tough choices early enough to adapt to changing market demands. In other words, it failed to enact sufficient organizational change.„
This example clearly shows that a clear change process is necessary to win the digitalization game. Therefore we need to understand what must be transformed and how to make the required changes. We need to have a strategic view on things, a roadmap, before jumping to conclusion, i.e. implementing a random assortment of software and digital tools. This strategic change process needs to start with the end in mind: How could and should a current business model be changed or adapted that is build on a foundation of digital technology?
# Second step: Create a vision – why is there a need to transform the current business (model)
There needs to be a clear understanding of why change is necessary. As Simon Sinek puts it: „Start with why„. Digitalization can be motivated by a number of factors. The impetus for change can stem from consumers who require better, faster and cheaper products and services. The impetus can also come from new competitors in- and outside the legal industry. The motivation for change may also originate from certain technologies or tools that are deployed by (existing and new) customers. However, this source of motivation normally only depicts a lack of strategic vision. The digital transformation process should be guided by intrinsic motivational factors and not by mere external ones.
To engage in a digital transformation process there needs to be a clear vision of why a stakeholder in the legal industry wants to be digitally transformed. Curiosity about new things is certainly helpful, but not sufficient to guide the transformation process.
These questions will help you sharpen your vision
- What is our vision of our services in 5, 10, 20 years?
- What added value to we create for our clients?
- How do we want to win pitches in the future?
- How can we differentiate ourselves from competitors?
- What impact does the digitalization in our industries have on the legal industry?