More legal departments are asking prospective outside law firms about the type of technology they use and are also placing a high value on the answers they receive in the firm selection process, according to a recent report.
In 2020 and 2021, just 41% and 52% of in-house legal departments respectively reported asking the law firms they were considering to provide information about the technology they were using to boost productivity and efficiency, the Wolters Kluwer Future Ready Lawyer Report found.
This year, 70% of departments reported asking for that information and 97% of legal teams expect to do so by 2025.
“In just three years, technology has gone from a consideration by fewer than one-half of legal departments in evaluating firms to a key criterion for the majority,” the Wolters Kluwer report said.
Firm selection criteria
Law departments use an array of criteria to evaluate law firms, and Wolters Kluwer reported that a firm’s ability to use technology to improve productivity and efficiency has continued to gain importance.
This year, 32% of legal departments reported that the most important selection factor was a firm’s ability to use technology to boost performance, with a firm’s ability to understand client needs and partner with clients coming in second at 17%.
While price was the top factor for 19% of legal departments a year ago, just 12% said it was the most important factor this year.
Law firms also believe their ability to use technology is the top factor in which they are evaluated, with 24% saying it is, according to the Future Ready Lawyer Report.
“For the first time the ability to use technology to improve performance tops the list as the most important factor for both legal departments and law firms,” the report said.
Room for improvement
As legal departments increasingly seek out tech-savvy law firms, they acknowledge their current firms could do a much better job utilizing technology in their work.
For example, 83% of legal departments say it is important that a law firm use technology to deliver the best service possible, but just 40% say that attribute describes their current firms very well.
Similarly, 84% of departments say it is important that a firm be able to help them with legal technology selection and implementation, and again only 40% say their current firms do that very well.
“With pressure intensifying on legal departments, they have increased expectations for their law firms,” the Wolters Kluwer report said. “However, many say law firms are falling short.”
Nevertheless, most legal departments say that their relationships with outside law firms are better than they were before the COVID-19 pandemic.
Roughly 55% of departments say their firm relationships have improved, 42% say they have stayed the same and only 3% say they have worsened.
The Future Ready Lawyer Report is based on feedback from 751 lawyers in legal departments, law firms and business services firms across the U.S. and 10 European countries. The survey was conducted online from May 16 to June 3, 2022, by an international research organization.