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Haste makes waste: Why rushing automation in legal may be worse than doing nothing at all

Ed BoalThe legal industry is entering its automation era. This month, Lord Justice Birss shared that he had used ChatGPT to write part of a judgement - the first known use by a British judge. Earlier this year,

Allen & Overy introduced an AI chatbot to help draft contracts and a Thomson Reuters Institute survey found that 82% of the lawyers it surveyed said they believe ChatGPT and generative AI can be readily applied to legal work, with 51% saying it should be applied.

Automation, of course, extends beyond AI and has huge potential in increasing the speed, and even accuracy, of traditionally manual tasks, freeing up firms’ time for more important jobs - such as securing new business and growing client relationships. As such, automation adoption could soon become a defining factor of legal success and elevate adoptees above their competitors.

The case for automation is strong. But how it’s implemented is another story. Thanks to the development of technology, there’s a host of new digital tools designed to make lawyers’ lives easier, yet rushing to embrace them all risks innovation saturation. Fall into this trap and firms could smother growth, not fuel it. 

How, then, can law firms tread the line between embracing transformative technology and becoming buried by it?


Where is innovation needed?

The legal industry, as a whole, has a reputation for being slow - even reluctant - to change. Due to the stakes and sensitivity involved in its work, this is understandable. But there is a growing appetite for automation, to assist with the huge amount of laborious, manual tasks that consume professionals’ time.

Take, for example, contract management. Drafting, reviewing and managing contracts represents an immense amount of time and, when completed manually, carries the risk of human error. It’s a perfect candidate for innovation: if firms can automate some or all of these tasks, they can dramatically increase their work efficiency, as well as increasing accuracy and reducing mistakes.

Then there’s legal research. Using machine learning and natural language processing tools, law firms now have the ability to search through vast amounts of data to find the information they need, uncovering insights and case precedents they would never have been able to unearth alone. It is argued that this allows lawyers to build stronger cases - an example of AI improving legal work, not jeopardising it.

Rushing into problems

With such advantages available, it’s natural to want to embrace innovation and automation as quickly as possible. But trying to digitally transform all at once risks spreading resources way too thinly and experiencing ‘transformation fatigue’: frustration, sluggish progress and individual benefits not being fully realised. This, then, decreases the motivation and justification for future change, leaving firms behind as the sector evolves.


How can law firms avoid this fate? Taking the time to sit down and assess all areas of the business, and identify which are most in need of innovation, allows firms to plan a phased approach to innovation that drives momentum rather than stall it. Flag those areas which are still dominated by manual work and legacy processes - these are fertile ground for automation.

For many, one such area is payments.

The paperwork and processes involved in transactions such as, litigation and arbitration payments, M&A deals and real estate arrangements are both complex and time-consuming. Whether it’s collecting stakeholder payment details or verifying payee identity to abide by Anti Money Laundering regulation or Know Your Customer rules, there’s numerous, laborious steps that suck lawyers into a quicksand of unbillable administration. Shieldpay’s recent payments report found that among the UK’s Top 100 law firms, almost 1 in 3 (32%) say KYC collection and verification checks take on average 4-9 working days. 1 in 10 say they take 2 - 3 weeks.

These processes not only divert precious time and resources away from higher level tasks, they carry with them serious financial risk. Breaking strict account rules comes with the threat of disciplinary action or a substantial fine and even doing everything by the letter has a cost - in the form of significant Professional Indemnity insurance premiums.

There’s also the impact on client relationships to consider. Deal drag is a key source of frustration for clients and with automation improving experiences in other industries, customer expectations have been raised in the legal sector too. Draw out the payments process and that’s the last you may see of a client’s money.

Improving payments efficiency

One way firms can improve their work through automation is through outsourcing the management of client accounts to third-party payment providers. Third-party payment providers offer law firms solutions such as escrow, and paying agent services to receive and disburse funds on behalf of a firm and their clients.

They use automation to offer instant transactions, encrypted for security, provide enhanced transparency of payments and take on the responsibility of KYC and KYB checks. This means confidence and trust around payments is high, risk and administration costs are reduced and operational efficiency is boosted, so legal professionals can spend time on the tasks that really matter.

Solutions like this have the ability to transform the day-to-day experience of legal professionals and automation offers a radically improved workflow for firms. But the desire to shake off outdated systems and embrace this new future shouldn’t become a barrier to progress itself. By honing in on the specific areas where automation can take on the burden of repetitive tasks and analyse data at inhuman speed, and thoughtfully planning a structured roll-out, firms can avoid the fate of transformation fatigue - and wake up to the new automated era.

Ed Boal is Head of Legal at Shieldpay. Prior to joining Shieldpay, Ed was a corporate technology lawyer for 13 years mainly advising fast-growth tech companies on corporate transactions, commercial agreements and data protection matters.

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