What technology tools are growing law firms using? Clio, a provider of cloud-based legal technology, explored this in its recently released 2021 Legal Trends Report.
Last week we covered how the Legal Trends Report documented a change in client expectations, especially when it comes to communications. In 2018, only 23% of consumers were open to working with a lawyer remotely. Today, 79% of consumers say they look for remote options when hiring a lawyer.
This week we look at how the adoption of technology has contributed to law firm success. Clio’s research indicates that the adoption of technology has the potential to benefit firms in two significant ways: boosting efficiency and improving client service.
However, for some technologies that have seen high rates of adoption, the advantages from a business perspective may be declining.
Growing firms use online payments
Online options can streamline the payment process by offering quick and easy methods. Flexible payment plans can make legal services more attainable for clients who can’t pay a legal fee all at once, while also increasing firm collection rates, the report says.
According to the data, growing firms, or those that have seen a minimum of 20% revenue growth, are 37% more likely to use online payments. However, shrinking law firms, or those that have seen revenue declines by more than 20%, have been adopting this technology too.
This uptick may be due to growing client demand. According to the Legal Trends Report, online payments (66%) were rated as the preferred payment option by clients, followed by automated payments (61%), and payments via mobile app (61%). Mailing a payment (47%) ranked low on the list.
Growing firms use client portals
Client portals consolidate all information about a client’s case in one secure location, increasing transparency and providing a centralized communication platform for lawyers and clients.
While the adoption of client portals has fluctuated, growing firms have seen a spike in adoption over the past two years while shrinking firms’ uptake has been more gradual.
Clients would still opt for traditional forms of communication, like phone or in-person interactions, early in a legal matter and when communicating about key decisions. However, according to the Legal Trends Report, roughly 60% of clients said they prefer to receive quicker status updates via a secure client portal or video conference.
Growing firms use client intake and reporting software
The intake phase of a legal matter is critical. Solutions like client intake or client relationship management (CRM) software can help firms streamline this process, tracking potential clients, providing online information-sharing options, and helping staff manage the intake workflow, the report says.
Growing firms have been early adopters of this technology and are 46% more likely to use client intake and CRM software than shrinking firms.
When it comes to firm reporting tools, growing firms are twice as likely as shrinking firms to use tools that provide insight on key business metrics, like revenue generation, bill collection, and productivity.
This means growing firms are more likely to increase their revenues because they have access to information and insights that can help them assess performance and plan for ongoing growth over the long term, the Legal Trends Report says.
As part of its Legal Trends Report, Clio examines key performance indicators – utilization rate, realization rate, and collection rate — that can help improve firm performance.
When it comes to utilization rate, in 2020, the average lawyer billed just 2.5 hours (31%) of an 8-hour day. This indicates that lawyers don’t have enough clients to fill their day or that they struggle with inefficiencies that distract them from billable work, according to Clio.
Realization rates measure how much of a firm’s billable work makes it into a client bill. In 2020, the average realization rate was 84%. Clio says one cause for the unbilled time may be that lawyers are underestimating how long the legal matter will take and not charging clients for the additional time.
The average collection rate for law firms in 2020 was 89%, suggesting that some firms struggle to get paid. Given client preferences for convenient and flexible payments, Clio says firms that adopt online payment options may have an advantage in collecting payments and streamlining the process for tracking those who haven’t paid.
The Clio 2021 Legal Trends Report uses a range of sources to deliver insights, including data from Clio’s platforms, a survey of 1,056 legal professionals and 1,002 consumers conducted in May and June 2021, a multi-year study of over 1,600 law firms, and interviews with legal professionals. To read the full report, click here.
- Clio Legal Trends Report Reveals How Clients Want to Communicate With Attorneys
- Client Portals: A Tool of Convenience or Ethical Competency?
- Can Accelerated Tech Adoption Drive Consumers Back to the Legal Marketplace?
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The post What Technology Tools Are Growing Law Firms Using? appeared first on 2Civility.