Utilising Process Automation in the Legal Industry
Overview
There is undoubted consensus that the legal industry is undergoing a great transformation –
accelerated by the impact of the Legal Services Act coming into force, but originating with a number
of other factors that require law firms to adopt a more commercial approach to doing business.
These factors are well-documented elsewhere – the credit crunch and subsequent recession
reduced the size of market in many practice areas; new market entrants emerging under the ABS
cloak; more sophisticated legal services buyers forcing downward pricing; increased regulatory
requirements; and mergers and acquisitions distracting from day-to-day service provision.
Also well-documented are a range of strategic and tactical remedies available to law firms – an
assortment of practice management technologies, better marketing, hiring experienced business
developers, adopting different pricing mechanisms, mergers, legal process outsourcing, creating
teams of transactional paralegals, mapping processes and so on.
An effect of dealing with both the drivers of change and the implementation of change has been an
erosion of profits. The trend in UK law firm net profits can be seen from details published in the pwc
“Law firms’ survey 2013”.
Trend in UK net profit margins
40
38.6
38.5
36.3
35
37.0
37.1
36.0
36.5
32.8
30.7
30
29.1
30.3
26.1
28.0
26.3
38.6
25
22.6
2008
2009
26.1
26.1
24.4
25.5
24.4
23.4
20.0
23.7
22.0
2010
2011
2012
2013
Top 10
Top 10 (excluding change in partnership models)
Top 11-25
Top 26-50
Top 51-100
The report states: “There are three principal factors that impact margins: pricing, the activity of fee
earners, and the cost base. It would appear that outside the Top 10, it has become increasingly
difficult to manage these challenges. Premium pricing linked to complexity of work, supported by
brand differentiation, is a contributing factor to the margin gap, as are economies of scale afforded
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by size. Increasingly, however, it is focus on more effective use of fee earner time and efficient back
office processes that is driving margin improvement for larger firms.”
Despite the considerable strengths that top law firms enjoy, such as existing relationships,
reputation, and high quality work from high quality people these might not be sufficient to defend
against more nimble, technology-savvy and process-focused competitors from within and new to the
legal sector.
One intervention that has not yet reached the legal sector is Process Automation, a recent
technology getting more and more traction, particularly in financial services and business process
outsourcing. This paper explores how process automation can contribute returns not only to address
the factors commented on in the pwc report, but in support of a range of other benefits.
Introduction to Process Automation
In the delivery of legal services there are elements of predictable, repeatable work that can be
undertaken whatever the matter type or practice area. Even in highly specialist practice areas there
will be elements of matter management (e.g. file opening, interim and final billing, client reporting)
and legal process (e.g. due diligence, searches, e-disclosure) that can be delivered more routinely
and are therefore candidates for process automation.
To date, the deployment of process automation has been most successful where one or more of the
following applies:
Tasks that are:



Structured, rules-based, repeatable, and/or computer-based.
Access one or more systems, across organisations, to complete a process.
Perform decisions or undertake checkpoints before a subsequent decision is made.
Situations that are:



Highly regulated.
Irregular workloads and volumes.
Transitional.
The implementation of process automation has the added
advantage of being relatively quick to effect and achieve payback.
The automation is delivered through virtual FTE’s (many users of
this technology describe them as robots) performing the defined
tasks.
Initial deployment of existing processes can be within weeks with
no additional applications or databases required. Typically, the
processes are defined and iteratively deployed by the function
that owns the process and not IT, thus overcoming typical
roadblocks of quick scalability, data confidentiality and audit, and
IT backlogs.
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Process Automation:
• is a virtual machine driving
existing software in the same
way a user does;
• operates and brings together
other application software
through the existing
application’s user interface;
• is driven by instructions, either
user-defined or machine
developed through pattern
recognition.
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Legal Services Potential
Taking some typical activities from the management of a matter, there are some high level activities
that can be performed through process automation:







Automatically receive and review new instructions; access disparate systems and populate them
with the necessary data.
Assess the parameters of a case and estimate the number of hours to complete.
Offload repetitive and routine matter management tasks.
Auto-populate Ministry of Justice forms ensuring accuracy and consistency throughout the life of
a case.
Provide alerts about upcoming case deadlines, WIP thresholds and fixed fee breaches.
Provide operational agility by managing variations in demand without the need to recruit or
release people.
Evenly spread client billing over the month and year by responding to clients terms of business,
and undertake billing activity based on programmable triggers.
Legal Services Benefits
The pwc analysis of declining profitability highlighted 3 principle factors affecting margins: pricing,
the activity of fee earners, and the cost base. Process automation can have a direct impact on these
factors:
Pricing
Whether undertaking a cost-based or value-based pricing approach, the price should be supported
by the definition of unit cost per matter type by practice area, and a pricing model with in-built
sensitivity analysis. Process automation provides the ability to undertake defined tasks in a
predictable, repeatable way, 24 hours a day if necessary, with no unplanned absence, at a consistent
cost.
There is also the attraction of being able to offer a service not only at a lower price than the
competition, but at an improved margin - the headcount savings through specific process
automation typically translate to about 20 “robots” to replace 30-50 people with certified capability
in 3-6 months.
Fee Earner Activity
Utilisation and the creation of an optimum level of revenue capacity is a key driver of law firm
profitability.
For complex work, process automation at its most basic can remove routine tasks from fee earners
and generate greater utilisation and fee earning capacity for work that requires more judgement and
generates higher revenues.
For more transactional work, process automation can ensure that work is undertaken at the
appropriate level of fee earner, secretary, support or robot, and can even be set-up to handle some
of the transactions independently of fee earner involvement, further reducing staff costs and
decreasing the strain on expensive office space.
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The scalable nature of the technology also means that more work can be done without a linear
increase in fee earners.
Cost Base
The challenge for law firms in a market of declining profits will be to create an operating model with
an appropriate cost base that still meets the client demands of quality, value and outcome. Much of
the pressure on the cost base will be directed at the support areas. Again, the pwc survey highlights
this, with firms recognising the need to do a number of things, as illustrated below.
What are the top three priorities for Business Support
in the next 12 months?
Improve the use of technology 81
Standardise business processes
74
and ways of working
Reduce cost 56
Increase the level of business
partnering support 40
Reduce the level of transaction
20
partnering support
Centralise or share resource 17
With payback typically within 6-12 months, process automation can support the top 2 change
priorities for law firms, while directly addressing the third priority.
Improve the use of technology:


While process automation itself is a technology solution, its implementation can lead to a
reduced requirement for expensive integration of software and data. With the robots
“integrating” data at the presentation layer there is no need for complex or expensive IT
integration projects. It will interact routinely with, and across case management and practice
management systems.
No coding or scripting is required, it is configured by the people undertaking the work on a dayto-day basis and the discrete process objects (tasks) created for one process are re-usable for
any others.
Standardise business processes and ways of working:



This is the very essence of process automation – a tool designed to mimic a human and to
interact with disparate systems in-house, with suppliers and even with clients.
An improvement in matter management can positively impact lock-up and improve cash flow –
prompt billing, reduced write-downs, and enhanced collections.
Improved client satisfaction through timeliness, consistency, quality, accuracy and auditability.
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
Improved operational data to track cases and monitor fee earner performance, and for providing
better analytical insights.
Indirect Benefits
Existing users of process automation in other business sectors have built their process automation
business case on direct cost saving assumptions, but have found that the resulting indirect benefits
are just as marked. In a law firm these benefits are likely to be:


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Enhanced capability and better responsiveness to new opportunities will lead to competitive
differentiation, particularly for early adopters.
Improved compliance in a highly regulated industry, for SRA related compliance, and also for any
other audits such as ISO accreditation.
Revised behaviour and observance of internal policies: for example, reduce the prevalent
behaviour of fee earners across the sector to bill in the final week of the month and in the final
month of the year. This will reduce the workload pressures that typically delay receipt of cash.
Upgraded operational data to track cases and monitor fee earner performance, and for
providing better analytical insights into all areas of the business.
Conclusion
In an unrelenting buyers’ market and with increased downward pricing pressure there will be
continued prominence given to commoditising as much legal and support work as possible. The legal
sector is at a stage that other industries have found themselves in over recent years, with
technology and external events shaping major transformations in pharmaceuticals, entertainment,
and travel for example.
Ray Kurzweil, now Google’s Director of Engineering, is a technologist and inventor (flat-bed scanner,
text-to-speech synthesizer to name but two of his inventions) who spoke at the LawTech Futures
conference in London in 2013. He pointed out that while human intuition is linear, technology
progresses exponentially – exemplified by the transformation of the pharmaceutical industry into a
“knowledge industry”, and by the extraordinary growth of mobile telephones as the technology
device of choice in Africa. His belief is that the legal industry is on the verge of becoming a true
knowledge industry, predicting more automation of routine tasks, but more significantly, the
development of complex algorithms to process the ever-increasing intricacy of legal issues. Process
automation is a step further than has been seen before in law firms, and not far behind the first
generation of robots described in this paper are technologies that can already understand the
semantic context and content of language.
Peter Clarke is a highly experienced consultant in operational transformation (process management,
shared services, sourcing) who has worked for major UK law firms and for global consulting and
sourcing organisations.
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