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ANALYSIS: Firms Are More Prepared to Use Legal Tech in 2020

July 17, 2020, 8:02 PM

Law firms and in-house legal departments agree that outside counsel must increase use of legal technology to be more efficient. Bloomberg Law’s Legal Operations Survey (2020) found that three-quarters of in-house respondents expect their outside counsel to increase tech use, and more than 80% of firm lawyers said their clients have this expectation. But tech is not a primary factor in choosing which outside counsel to hire.

Law firm respondents are more aligned with the in-house community on this question than in last year’s survey, which found law firms lagging in their understanding of expectations on tech use and efficiency.

Our 2019 survey revealed a 14% gap between law firms and in-house respondents: 87% of in-house respondents said they expected law firms to increasingly use tech to be more efficient, while only 73% of firms said their clients had this expectation.

It appears that in 2020, law firms have caught up on this issue, with 82% of them acknowledging that clients expect them to increase tech use to promote efficiency.

Three-quarters of in-house respondents said increased tech use is expected of outside counsel. About the same number of respondents—73%—said their legal department’s demands on outside counsel to show value have increased.

Firms Improve Tech Preparedness

Law firms have also improved their preparedness to use technology since last year.

In 2019, fewer than half of law firm respondents said they were prepared to meet client demands for increased technology use. This year, more than three-quarters said their firms are prepared to increase their use of legal technologies.

This is a huge jump from last year, and reflects that law firms better understand that legal technology is popular and that they may need to prepare for client demands to use more tech.

Tech Isn’t the Top Reason for Outside Hiring

While clients may have high demands with respect to legal technology, tech use is far from the top criteria for in-house departments when selecting outside counsel.

Personal recommendations and firm reputation are still the top cited reasons for hiring a law firm. Only 2 in 5 in-house respondents said innovation was important, and fewer than one-third said integrating technologies was important.

This focus may change, however. With increased attention on efficiency, in-house departments are likely to begin requiring more information about tech use in their legal matters to ensure cost savings through outsourcing and automation are being realized.

Our 2020 Legal Technology Survey is currently open for responses and will delve further into outside counsel technology use, in-house expectations, and other topics.

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