Key themes

Legal leaders answer the call for change in 2024

iManage recently joined with Affinity Consulting and CARET in engaging Ari Kaplan Advisors to perform research into how midsize law firm leaders are executing collaborative change, generating meaningful value, and creating a competitive advantage in a shifting market. In our analysis of the findings of that research, The Changemakers Report: How midsize law firms are achieving growth through adaptation, several key themes stood out to us as particularly meaningful for this industry segment.

They are:

How do legal leaders view technology?

Midsize law firms are investing in new technology

87% of the participants have improved their technology portfolio, and a majority (53%) were able to provide unique examples of implementing technology and realizing a result that exceeded their expectations.

Leaders responded positively when asked about the success of CIO technology recommendations to board and firm management, with nearly 84 percent (83.34%) choosing the two highest rates of adoption.

On a scale of 1-5, with 5 being the highest, what is the adoption rate of recommendations by the CIO to the board and the firm management


But how is that technology received? Law firms may experience resistance to new technology that stems from legal professionals' change fatigue or from a concern that it will make their role redundant or, essentially, replace them. Progress takes no prisoners, but these fears have some precedent in modern history and cannot be dismissed out of hand. 

Staff may perceive new technology as a threat

Legal leaders say the overall effect of technology in terms of eliminating roles, while real, is perhaps less dire than people believe. Only about a quarter (25.93%) of the respondents said technology has eliminated roles in their firm, while the balance reported no loss of roles.

 

While not eliminating full positions, many firms have increased efficiency using technological advancements. Upgraded systems in billing, accounts payable, client receivables, and practice management have automated many tasks and enabled leaders to gradually phase out certain administrative and clerical roles and reallocate those responsibilities. Similarly, transitioning to cloud services and automating processes like the help desk and e-discovery reduces the need for on-premises support services and certain IT roles.

But there is also potential for using technology to create new roles, and that might offset fears by presenting new opportunities. Growing firms take insecurities about job reduction due to the introduction of new technology seriously and are careful about reducing headcount. Changing the roles and responsibilities of staff members is generally preferred over eliminating headcount. For example, the role of Law Librarian might evolve into Knowledge Manager.

Firms emphasize maintaining a lean staff and may add new responsibilities to an existing role based on efficiencies achieved through technology. The aim of upgrading technology is to grow the business and expand services, not to cut back on staff.

What do leaders hope to achieve through technology?

The report found that 60 percent of firms leverage technology to enhance efficiency.

“The goal of efficiency is to support profitability. We deploy technology to help people work smarter and more efficiently, which could help us be more competitive and profitable.”

Law firm leaders set various goals to be achieved through technology initiatives. These include:

  • Increase efficiency through automation, centralized data, secure access, and faster search times.
  • Improve technology adoption with portable, user-friendly tools that integrate seamlessly into daily workflows.
  • Protect sensitive client data with robust cybersecurity protocols and strict adherence to compliance policies.
  • Enhance client transparency and satisfaction using technologies they recognize as advanced.
  • Empower professionals to focus on meaningful work by reducing non-billable tasks
  • Inform decision-making and track performance metrics using analytics.
  • Apply a long-term strategic focus that incorporates new technology, competitive fee structures, and shifting rather than replacing roles to retain talent.

    There are many paths to efficiency and midsize law firms are considering all of them, including the newest and perhaps most promising technologies that have emerged in recent memory.

How do midsize firms think about and approach AI?

Guardrails are needed

Most firms (70%) are not currently using generative AI. Where firms are using the technology, it is primarily either “unsanctioned,” in very early stages, or comprised of a few individuals experimenting with tools like ChatGPT. Others use legal research tools that incorporate AI components and are evaluating their effectiveness and accuracy.

“We have enhanced cybersecurity training as a result of generative AI, and we also have been educating our users on our standard policies governing the use of generative AI tools, adding handrails and guardrails to remain within the boundaries of acceptable usage.”

Are you using generative AI?

 

Has generative AI affected your firm's approach to change management?

 

Has generative AI affected your firm's approach to legal practice?

The need to weigh AI capabilities against its inherent risks, particularly in legal research and drafting, is at the forefront of AI conversations.

“The attorneys do not have the time to consider the technology because they are focused on their practice, but leaders think of how they work and highlight ways they can use it to serve their clients better.”

While receptive to using AI for administrative and business support tasks, like marketing, many firms take a dimmer view of its use in legal work. Some are setting policies to require human oversight when AI is used for content creation. Leaders concerned that the ethical implications and risks of using generative AI outweigh the benefits have no plans to fully implement the technology.

Leaders understand the need to erect guardrails to prevent unsanctioned use of generative AI and mitigate any associated risks. Some respondents say their firm has formed a committee to explore potential platforms and develop a strategy for future use, as well as to draft policies and engagement letters to guide usage.

Concerns, due diligence, and market pressures

“We are trying to help the firm stay ahead of the curve in technology that helps with client development and that clients recognize is as advanced as possible.”

Generative AI efficiencies are widely touted, and there is some anxiety about client expectations for firms to provide those savings. There is also, it must be said, some fear that peers and competitors could pull ahead using AI.

Firms in a due diligence phase are exploring AI tools and conducting pilots to identify how to effectively integrate generative AI into their practice.

And while firms are considering how they can clean and prepare their data for AI integration, they may lack the necessary resources for implementation. There is also some concern that new associates’ learning and skill development could be negatively impacted by an over-reliance on AI, particularly in legal writing.

The prudent course for midsize law firms may be to hedge their bets and develop a comprehensive generative AI strategy that includes guidelines for acceptable use to guide future adoption.

Proceed with due caution

"Some of the more senior lawyers do not see a need for this and are concerned that the risks outweigh the benefits, but eventually, I expect some of our more sophisticated clients will expect us to use it to increase efficiency.”

Many firms are taking a cautious approach to generative AI due to the risk factors iterated above and the necessity for continuous human oversight. Some firms do use tools with a generative AI component, such as LexisNexis and Westlaw, to help them find case law and analyze precedents. Firms may also use generative AI to draft correspondence and marketing content and create initial drafts for documents such as depositions and closing arguments.


Firms are exploring AI applications in:

  • HR tasks like performance reviews, onboarding, and training
  • Marketing tasks like press releases or content creation
  • Select business processes outside of legal work
  • Document review and management, e-discovery
  • Managing large datasets, such as in complex legal cases
  • The goal is to streamline content creation while maintaining a close eye on the results.

“The key is to start small and expand slowly while adapting the process for each group of users or use cases; prove that it works and continue to build on that proof.”

Is there a fear of generative AI at your firm?

Despite reassurances from firm leadership, skepticism and reliability concerns persist, along with the fear of the unknown and AI’s potential impact on professional roles and people’s livelihoods. People also wonder if generative AI might jeopardize interpersonal relationships at the firm, impact the need for knowledge transfer, or affect mentorship and professional development programs.

Leaders are generally unclear on the specifics of how generative AI will impact their work and the potential risks involved in its implementation. Fears run the gamut, including the most widely publicized flaw that it might produce inaccurate or untrustworthy results, so-called “hallucinations,” or that it could inadvertently reveal confidential client information, causing a breach of confidentiality. Mistakes and unintentional reveals could put the firm’s legal work and reputation at risk.

“We barely use AI, but we have asked our professionals to limit or avoid usage until we publish a formal policy with guardrails to prevent rogue usage that causes problems.”

Can law firms improve how they manage collective knowledge?

Draw on your knowledge for measurable impact

“We need to share best practices for knowledge management more often and organically.”

Respondents remarked on the essential nature of improving the management and sharing of collective knowledge. Some felt that collecting more information could help expand opportunities or commented that the value of finding and reusing high-quality knowledge may be the highest for smaller or midsize firms. One suggested sharing collective knowledge more broadly.

Other suggestions included:

  • Establish a dedicated knowledge management role.
  • Develop a formal knowledge transfer process.
  • Create a centralized, searchable database for valuable information.
  • Integrate generative AI with document management systems.
  • Capture best practices and access to exemplary documents.
  • Adapt knowledge management systems to remote work environments.
  • Launch a training portal for the firm's software tools.


Leaders are definitely thinking about how technology can help their organization advance in its knowledge aspirations and recognize that generative AI could provide some advantages. The power of combining external content with internal knowledge and tailoring that output to the firm or individual’s style and experience is attractive.


They anticipate seeing measurable impact when their firms start to integrate generative AI into their processes and tools. This technology has the potential to give firms the ability to draw on their collective knowledge to produce new content, and that is a game-changing prospect.

What are your greatest challenges and areas for growth?

Talent, culture, and technology set a high bar

“Talent is our most valuable asset because we sell our knowledge, so it is mission critical to use technology to attract and retain talent.”

Finding, hiring, and retaining quality talent has proven to be an ongoing pain point for midsize firms. Challenges include aligning work habits and expectations, as well as technology user preferences, across generations. Providing work-life balance and managing changing expectations among new hires comes into the equation, as well.

The effort to keep employees engaged in such a diverse, dispersed, or distributed workforce can be an uphill climb. Leaders work continuously to achieve productivity goals while fostering a collaborative culture that minimizes stress.

The rapidly changing technology landscape also affects productivity. This poses significant questions for law firm leaders in terms of change management, privacy and security concerns, attorney buy-in, and cost management.

Explore organic growth, mergers, and new business models

With the shift from a billable hour model toward more predictable flat-fee arrangements, midsize firms need to embrace technology and reengineer workflows to stay competitive. Evolving new tools like generative AI and Microsoft Copilot can potentially help them level the playing field and compete with larger firms.

"Clients want more self-service opportunities, collaboration, better communication, and access to their information; legal technology helps us provide all of this, and law firms can serve as information portals to their clients.”

To that end, firms can focus on enhancing their reputation and expanding into high-value work areas. Diversification in practice areas and strategic mergers with smaller firms may also be options to drive growth. There are expansion opportunities in the healthcare, real estate development, and commercial litigation sectors, including corporate M&A and trusts and estates, as well as data privacy and cybersecurity litigation.

Firms must balance growth initiatives with building or maintaining a positive culture and vision, however. Producing high-quality work requires training to optimize employee skills and professional development opportunities to attract and retain talent.  

More potential than pain, overall

We won’t diminish the anxieties midsize law firms face. However, all things considered, we think the opportunities far outstrip the concerns and that — to invoke a bit of a cliché — the future looks bright. We’ve tried to present a clear-eyed view of how industry leaders are thinking about technology, AI, collective knowledge, and the challenges and opportunities that are inspiring them, or keeping them up nights. In our next and final installment of our “take” on Ari Kaplan’s 2024 Legal Leaders Research, we’ll draw some conclusions from the data that may provide “next steps” for those who stay with us.

Making Knowledge Work

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