Law firm success in 2022 will be shaped by some key ingredients, the most significant being the role of technology in how firms retain legal talent and obtain new clients. In this article from a leading IP software lawyer the key factors law firms will need to succeed are outlined.
Domenic Leo* Three key trends that are likely to have the biggest impact on law firms in 2022 are:
- an increased focus on client and staff retention;
- continued investment in technological tools and innovation; and
- the heightened globalisation of business, putting intellectual property in the spotlight.
In September, quit rates reached record highs of 4.4 million people, a whopping 3% of all US citizens, as employees re-evaluated their priorities when it comes to their career. According to a study by Wolters Kluwer, 76% of law firms will focus on talent acquisition and retention during the next few years.
Law firms must differentiate themselves to attract both key talent and clients and will most likely do this through another key trend: technology. As we have seen as a result of the covid-19 pandemic, employees are making strategic career moves, and firms must stay up to date with the latest technological offerings and tools to remain a competitive prospect.
Lastly, both the rise in technology and the globalisation of business have put intellectual property in the spotlight, and this will continue in 2022. As new ideas and innovations arise, leaders are focusing on their intellectual assets rather than their physical assets as a source for competitive advantage. The time is ripe for firms to use innovation to fill that need.
When I started out in the industry, there was very little recognition of what intellectual property was or its inherent value to corporations, law firms and industries at large. Now it is a lynchpin to everything you see.
Now that intellectual property is ‘mainstream’ and executives, as well as the general public, are more aware of its value, the industry will grow even more dramatically.
As more companies capitalise on the insights afforded to them from intellectual property and realise the benefits, we will see intellectual property play an even bigger role in driving corporate decisions in 2022, driving its importance for law firms as well.
Managing data overload and accelerate digital transformation
The key technology focus for law firms in the upcoming year will be predictive analytics and metrics, as well as having the tools that enable data and predictive analytics.
Within three years, 91% of legal departments will ask prospective firms about their technology use – a 10-point increase over 2020. A major driver will be the goal of understanding the business of law and not just focus solely on the practice of law, which predictive analytics can help to provide.
Previously, one of the biggest challenges for law firms was collecting data for use in streamlining operations and driving decisions, but now, as an industry, we have too much data.
Over the past few years, I have seen a shift as law firms struggle because of an overload of information and data. They are unable to digest and normalise the valuable data that they sit on to make decisions and drive value.
Law firms need to start using technology in the way that corporations would to drive the business of intellectual property and business law. I recommend that law firms invest in tools to better measure and understand their business, including data and analytics technologies to collate and analyse data.
Firms must find actionable information in that overloaded data set to drive true business decisions.
Valuing AI’s Role
AI is also a great idea for law firm technology but is still in its early stages. AI has a place in the world of legal services but its true worth and value to meet business goals has not yet been realised. I predict that there will continue to be AI innovation on both the trademark and patent sides next year.
Another big challenge in 2022 will be accelerating digital transformation. I estimate that 75% of law firms know that they need to improve their path to digital transformation, but less than a third have taken action. Firms are providing legal services but are not leveraging the technological solutions to drive transformation forward.
These solutions involve an investment, which means spending the necessary money to meet client demands, and while some law firms may show resistance, the winning, competitive firms understand the value adds these technologies add to their business.
One trend that we are seeing is corporate clients demanding law firms operate in a similar fashion to them internally. Clients understand cost, anticipated margins and risk and pricing in a certain way and expect law firms to do the same. This is requiring firms to rethink and change how they do business with their clients.
Technology can fill this gap, making it easier for law firms and their clients to do business while making it easier for firms to adapt, ultimately addressing the growing need for increasing client acquisition and retention.
A main priority for law firms in 2022 will be data security and privacy.
Law firms have a responsibility not only to their own businesses but to provide their clients with the assurance that the systems and processes they are using provide the best available protection. Clients are increasingly interested in understanding the type of mechanisms and systems that their vendors are using to protect data – seeking guidance and advice to increase their knowledge.
When it comes to data security and technology advancements overall, the key is not just to do it quickly but to do it correctly.
Remaining a competitive employer
The ability to work remotely has provided law firm employees the flexibility to take care of their family, work flexible hours and get their jobs done. For remote work to continue working efficiently, law firms must invest in the necessary technology to offer the best workplace set-up to complete their work.
Prospective employees who walk into a firm that does not have the necessary technology or a firm that requires you to come into the office will find alternative options. It is essential to find ways to increase happiness among employees.
In a global context, many people are changing their jobs if they do not feel fulfilled in their role or voluntarily quitting amid the so-called ‘Great Resignation’.
Associate hiring decreased nearly 50% between 2019 and 2020, according to the NALP Foundation for Law Career Research and Education’s survey of 126 law firms.
Fast-forward to 2021, many firms are far from cutting back on hiring and are instead scrambling to attract and retain associates, as recent headlines on associate compensation have indicated. Staff retention is a big challenge in the IP industry especially as it takes a long time to train someone on the uniqueness and nuances of IP law and how we operate.
The unrealistic solution would be to pay employees more money and work them less hours. Employees want to learn on the job and increase their marketability, so the realistic solution is to implement better training, provide work-life balance and accentuate the professional aspect of why people are engaged in the legal industry.
Ultimately, most people want to feel fulfilled, be productive and contribute to earn money. To be truly productive, law firms need to arm people with the tools that support their infrastructure and provide improved training and better access to information.
The future looks bright
I am excited to see law firms invest in innovation and new tools to drive the business of intellectual property in 2022. With the challenges and ills that law firms are facing, innovation in these areas can be a panacea, solving issues such as client and employee acquisition and retention. These types of tools and the data that they can impart will help firms make better-informed decisions faster and drive their business forward.
Domenic Leo is a U.S. lawyer with over 30 years of experience growing and developing IP software and service companies. He is currently Vice President and General Manager, Law Firm at Anaqua, responsible for the company’s law firm growth and strategic initiatives.