A growing number of firms are turning to cutting-edge technology to improve their performance in areas such as financial management and service delivery. At The Lawyer’s Business Leadership Summit in September, HSBC’s head of professional services Simon Adcock will discuss the level of investment firms are currently making in technology and how increasing this investment can pay dividends.
Technology investment levels among the UK top 100 firms is thought to average around 3 per cent of their annual revenues, a figure that has shown minimal growth in recent years.
“If we consider that number against the level of bank debt provided to firms, which has grown by approximately 30 per cent over five years, it suggests that the investment has been made in people and premises ahead of IT,” says Adcock. “Given the highly competitive market, and consistent feedback from in-house GCs about the need for greater choice over legal service delivery and ultimately price, technology should be a higher investment priority for firms.”
Systems that set you apart
There are several firms using technology as a differentiator, either in terms of industry-specialised advice, new products or service propositions, says Adcock.
“There is significant opportunity for more firms to place technology at the heart of their strategies, and make investment decisions over a longer five to 10-year horizon,” says Adcock. “All too often, firms view the technology budget as a cost and manage it by reference to the amount spent in the previous year, rather than a forward-looking projection of the spend required to deliver business priorities.”
As one example of a firm taking a bolder and longer-term investment approach, Adcock highlights a major five-year financing HSBC recently signed with one UK firm for a technology and offshoring project which, he says, will yield “transformational results” in respect of its business services and support performance.
From a financial management perspective it’s clear that enhancing a firm’s technology can also enhance its performance. RPC, for example, is currently using a range of technology-based tools to help improve its financial management.
RPC’s CFO Steve Rowan and IT director Julie Berry both echo Adcock when they argue that financial management requires “robust technology, sound change management, data integrity and well-directed resources”.
“It is doubly important during periods of uncertainty to have access to reports on WIP, bad debt and profitability,” adds Rowan. “These are fundamental to sound financial management.”
As Keystone’s finance director Ashley Miller adds, technology is at the heart of how the firm supports its fee-earners to manage their financial position and by doing so, Keystone’s.
“We use significant system automation, reducing the need for them to spend time doing manual administrative tasks and enabling them to focus on the legal work,” adds Miller.
Critical role of finance and IT
This increasing intersection between technology and finance is not something that has escaped HSBC’s Adcock’s notice.
“In the last 12 months we’ve seen a far greater level of debate between the finance and IT functions within firms about how they should procure their kit,” Adcock reveals. “Reflecting the ongoing shift towards open plan offices and agile working, technology is required in order for this to be effective. Firms have been buying a far greater number of laptops and devices, and the volumes often no longer make sense to pay from cashflow.”
All too often, firms view the technology budget as a cost rather than a forward-looking projection of the spend required to deliver business priorities
Leasing is an effective means of financing the investment in line with the expected life of the laptop, adds Adcock, and it also ensures that the kit is replaced at the appropriate age.
Adcock says that HSBC’s leasing proposition also includes the option to have laptops safely wiped of all data at the end of the lease.
“Given cyber security concerns this has been a popular feature,” claims Adcock.
As for artificial intelligence, Adcock believes this new technology is still at a very early stage.
“There are a handful of firms that have partnered with tech names which is very encouraging and shows strong intent for future investment,” Adcock says.
Keystone’s Miller says that while everybody agree that AI is the future, there are still very few practical offerings available or coming to market that offer real benefits.
“It’s a case of watch this space, but we do expect to see offerings soon,” adds Miller.
Similarly RPC’s Berry confirms there are a number of interesting initiatives, such as Ravn’s work in the insurance market around legal costs against claims costs.
“We’re also investigating the value of certain AI technology that can be used to sift high volumes of data and which can produce intelligent reports on financial metrics,” adds Berry. “We look forward to the legal technology suppliers developing new AI-based modules to assist in all aspects of financial management.”
Clearly this is a market where it does not pay to stand still.
“Given the capacity of the big four accountants to invest in these programmes, it’s important that traditional law firms engage now while the concept is still in its infancy,” says Adcock.