A new report from Clio, a provider of cloud-based legal technology, suggests a surge in law firm productivity as the integration of technology within the legal sector deepens. The report, which cites the emergence of generative AI, points to potential growth in the efficiency of law firms.
Jack Newton, CEO and Founder of Clio, remarked on the shifting dynamics of the legal world.
“The past year has presented a unique set of challenges and openings for law firms, from contending with inflation to adapting to technological innovations. Technology, particularly generative AI, is reshaping the legal sector, emphasizing the importance of serving clients efficiently.”
According to the 2023 Legal Trends Report, legal productivity is markedly high. The average legal professional now brings in more revenue for their firm than they did in 2016. Legal professionals are managing more cases, logging more billable hours, and earning more for their firms. Technological solutions, designed to streamline administrative tasks, have played a significant role in these productivity gains.
The report also introduced a new metric, “Lockup,” to assess the financial health of law firms. Lockup measures a firm’s effectiveness in billing and revenue collection, aspects crucial for business growth. While there have been improvements in billing processes, room for growth still exists. Many firms still face challenges during the “lockup” period, which pertains to the interval between performing billable work and actually receiving payment for it.
A trend identified in the report pertains to online payments. Firms that have embraced online payment platforms tend to experience faster bill settlements, significantly reducing the waiting period for payment.
The report also delves into the potentially transformative role of artificial intelligence in the legal realm. Most legal professionals are at least aware of AI’s capabilities, and many acknowledge its potential in enhancing legal service delivery. Yet, there remains a degree of caution. Concerns revolve around AI’s reliability, potential risks to client confidentiality, and the ethics of its application.
AI’s most common application within legal practices is for legal research. However, lawyers remain divided on AI’s role in client communication, with many expressing reservations about potential errors and the ethical implications of relying too heavily on AI for such tasks.
Newton further commented on the industry’s evolving relationship with AI. “It’s paramount for the legal sector to establish a sustainable, responsible relationship with AI. The insights from this report serve to guide the legal tech industry in navigating this changing landscape.”
The 2023 Legal Trends Report is accessible on Clio’s website.
