Innovating the client experience
Law firms can offer much more than legal expertise

What gives your firm its competitive edge?

Human capital businesses often struggle to answer this question. "Our technology" hints at a lack of legal expertise. "Our people" hints at a greater problem. People are portable and walk out of the door every night. They are also not scalable. 

The correct answer in today's legal environment is, of course, top-notch legal expertise, and a culture of innovation, and a modern technology stack. But the latter is where firms are failing, according to lawyers.

A January 2025 LexisNexis survey found only 18% of private practice lawyers said their firm is fast or very fast at implementing new technology, especially AI. Instead, nearing three-quarters (70%) believe their firm is adequate, slow or very slow.

Only 18% said their firm is fast or very fast at implementing new technology.

This was also true when looking at responses from larger firms, where the number of respondents claiming their firm is fast or very fast at implementing new technology climbed to only 28%.

Firms have been relatively quick to evaluate, implement and integrate AI into their legal services, but lawyers are eager for their firms to continue pushing for greater AI-powered innovation..

Laura Hodgson, the AI Lead at Linklaters, says:

Responding to change and making use of data and analytics are also areas in need of greater innovation. Two-thirds (67%) of legal professionals said their firm is adequate, slow or very slow at responding to change, while more than half (58%) said the same about data and analytics.

Slaughter and May's Managing Partner, Deborah Finkler, says they are interested in anything which has the potential to make their client services even better.

"We are focusing our efforts on the practice areas where new technology can make the most difference – looking at how we can deliver legal advice even more effectively, and the technologies that can help us do this."

Bhavisa Patel, Director of Legal Technology at Eversheds Sutherland, says technology can enhance efficiency and effectiveness in legal work, as well as the client experience.

"Firms need to decide how to address the impact of technology strategically. Now more than ever, people are aware of technology and are far more open to adopting it."

Sluggish processes and systems slow firms down

Firms are pushing hard to meet the rapidly growing demands of clients, but many are being held back by sluggish systems and processes.

When asked how quickly their firm conducts legal research, for instance, more than half (52%) of private practice lawyers rated their practice as adequate, slow or very slow.

Drafting and reviewing legal documents was also considered a challenging area by many, with 45% saying their firm is adequate, slow or very slow.

Stop settling for slow legal research

Concerningly, more than a third (35%) said their firm is adequate, slow or very slow at delivering legal work in general.

1 in 3 firms are adequate, slow or very slow at delivering legal work

Simmons & Simmons' Chief Operating Officer, Darren Mitchell, says knowledge management is key for driving change in how his firm structures and utilises its core documents so as to enable the effective use of AI-powered tools.

Hélder Santos, the Head of Legal Tech and Innovation at Bird and Bird, believes the biggest areas for innovation are to the client experience, workflow optimisation, and legal drafting.

Funnily enough, in-house counsel are suffering from the same challenges. More than half (58%) of in-house lawyers rated their department’s legal research process as adequate, slow or very slow; 43% said the same of their drafting and document reviewing process. Only 14% said their department is fast or very fast at implementing new technology.

The innovation activities of a legal department should closely align with the organisation's current business goals, says Nick West, Chief Strategy Officer at Mishcon de Reya.

"One legal department's priority might be trying to drive productivity improvements into a high-volume contracting process, whilst another's might be creating a better "legal front door" due to an overwhelming number of requests."

A good way for external counsel to approach innovation, says West, is to look at process improvement and product or service innovation separately.

"At different times, one's efforts might be weighted more towards one type of innovation in favour of another," he explains.

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Much of what we focus on is creating the right culture for experimentation, moving quickly but deliberately, and getting the right people with the right skillsets on the pitch, says West.

Another interesting example of innovation comes from Tony Randle, Partner, Client Tech & Service Improvement at Shoosmiths.

"We identified that building legal tech, including AI, into legal workflows common to most of our practice areas will deliver the greatest positive benefits."

Rounding things up, investing in innovation for innovation's sake – foolish! Pinpointing areas of your business where change will deliver the biggest commercial reward – a game-changer!

In-house legal departments are up against three very real challenges in the next 12 months: compliance regulations (51%), changes to the law (50%), and rising costs (45%).

In-house legal counsel also expressed what they need from their external counsel in today’s legal market. At the top of the list was cost-effectiveness (74%), responsiveness and agility (67%), and, of course, specialist legal expertise (48%).

In-house teams need cost-effectiveness, responsiveness and agility, and specialist legal expertise

To summarise, in order for firms to remain competitive, they will need to deliver a superior, data-driven legal service, at the same cost or lower, and at pace – oh, and to keep clients informed of any legal or regulatory developments.

A General Counsel at an energy company says the biggest area of innovation that needs to take place is to the client experience.

A Senior Legal Manager at a global wine and spirit distributor says cost and relevance are the biggest areas in need of innovation.

If the legal work is of a good standard, she says, it will most likely cost too much of the budget to outsource in the first place.

Reassuringly, law firm lawyers have a clear understanding of their clients' needs, even if they can't always meet them. Their top responses to the same question was cost-effectiveness (73%), responsiveness and agility (68%) and specialist expertise (54%).

Hodgson from Linklaters says firms should be looking carefully at how technology might change the way they work with clients.

"Think about new ways of creating value, such as providing data-driven perspectives on commercial decisions and sharing insights with clients in a more dynamic relationship."

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Law firms are in the middle of a confluence of challenges, she says.

Innovation is exciting, but it's also risky

Taking on every good idea. Investing in every new solution. Reacting rather than responding. These commonly followed pitfalls leave firms exhausted, confused and out of touch, and that's without mentioning the financial burden.

Patel from Eversheds Sutherland says new ideas need to address a business problem first and foremost.

We always carry out thorough governance and due diligence before anything is tested, says Patel.

"We work hand-in-hand with relevant teams, taking a risk-based approach to ensure that whatever is being tested is reliable and safe, protecting both the firm and our clients’ data."

Finkler from Slaughter and May says:

Finkler says her firm is continually piloting new technologies and has a culture in which they can fail fast and learn quickly.

"We try things, establish which best fit the needs of our lawyers and our clients, and if necessary move on."

Santos from Bird & Bird says they mitigate risk by conducting thorough risk assessments which involve cross-functional teams to ensure a comprehensive evaluation.

Randle from Shoosmiths says his team of legal and tech experts "always undertake due diligence on all aspects, from data security through to functional accuracy."

Implementing innovation

In our era of innovation, launching a new product, process or tool and expecting your clients or employees to blindly adopt it is not a realistic strategy.

"We view the development cycle a bit like a series of concentric circles", says Simmons & Simmons' Chief Operating Officer, Darren Mitchell.

Initially the firm tests ideas in small groups to think about risks and mitigation strategies, says Mitchell. Then they widen the group to assess the options, develop the architectural plan and consider the wider impact on their technology estate.

"When we have a solution, we'd typically look to pilot; for example, we have AI champions who we use to spot the opportunities and to then help us hone and develop our solutions."

Finally, Mitchell said they would look to widen usage across practices, departments and offices.

This approach is similar across most of the firms we spoke with, revealing the new benchmark for how firms go to market.

A key focus for Slaughter and May at present is making sure they have the infrastructure and skills in place to realise the benefits of new technology more quickly, says Finkler.

"It’s not just about the tech itself – it’s about how we get it into lawyers’ hands and how they adopt it."

Randle from Shoosmiths says adoption is the pivotal piece of the jigsaw.

"Encouraging people to adopt new technology or new ways of working can be challenging due to resistance to change and a lack of understanding of their benefits."

It's vital to provide comprehensive training and demonstrate practical, real-world advantages to gain user acceptance and trust, he says.

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In a little over two years, we've seen AI adoption penetrate four-fifths of the legal sector. While most lawyers are using or planning to use AI, the demand for more is only continuing to accelerate.

At present, AI has completely revolutionised the business strategies of IT and tech (28%), marketing and business development (18%), client experience (18%), and product or service offerings (17%).

But in the next one to three years, private practice lawyers expect the following to take place:

• Firms will become more reliant on AI for legal research and document review (57%)
• Lawyers will need strong tech skills (47%)
• More flexible career paths will open up for lawyers (45%).

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Interestingly, there were a few obvious differences in answers based on the size of the firm. Respondents from larger firms are more likely to expect a shift towards more specialised or niche practice areas (65%), a greater adoption of alternative billing models (53%), and an increase in importance of technology skills (53%).

However, larger firms are also up against a unique set of challenges in the next one to three years.

Firms will become more reliant on AI for legal research and document review in the next 1-3 years

Keeping pace with new technology is, surprisingly, more of a challenge for large law firms, at 52%, compared to 36% of medium-sized firms and 33% of small and solo practices.

This is also the case for attracting and retaining clients, with 43% of large firm lawyers listing this as a top challenge compared to 37% of medium-sized firms and 34% of small and solo firms.

This could be AI levelling the playing field for small and medium sized firms, who are hoping to rapidly embrace new technology and gain a competitive edge. Equally, it could hint at a greater awareness of the risks of failing to innovate from those at larger firms.

"We are already seeing firms tell us they are both winning and losing work on the basis of their use of AI in their client-facing work" says LexisNexis' Director of Strategic Markets', Mark Smith.

Patel from Eversheds Sutherland says embracing innovation will provide a competitive edge.

As with much new technology, AI has exciting potential, but it isn’t a magic solution that makes us all better lawyers overnight, says Finkler from Slaughter and May.

"It’s going to take work and investment to see the benefits, and no-one will always get it right first time."

Finkler also warned of relying too much on the efficiency benefits of AI.

"Whilst that’s valid, I think it’s also quite a narrow view. For me, the most important test is whether this technology can allow us to deliver legal advice even more effectively."

It’s crucial we lay the foundations now to ensure these tools make the work better, and are seen as a positive by clients and our people alike, she says.

Mitchell from Simmons & Simmons suggests investing in legal operations, a long-accepted capability within client legal teams, which he says is quickly becoming accepted within law firms.

"Legal operations can drive change in the practice, including ensuring more efficient workflow, better alignment of technology to delivery higher quality, more efficient client outputs and deliver more robust pricing decisions."

One of the interesting observations from the first phase of law firm AI exploration, says Smith, is that there was no single silver bullet use case.

"The big wins really depend on a multitude of factors, from the size of the firm, the maturity of existing processes, the state of the firm's data, the sectors it operates in and the attitudes of its clients."

Lawyers want legal tech

Not investing in new legal technology will not only impact your competitiveness, it could also see your employees leaving.

If a firm failed to embrace AI, a quarter (25%) of all lawyers said it would negatively impact their careers, and 11% said they would consider leaving.

This escalated at larger firms, with one third (36%) of lawyers saying it would negatively impact their career, and one in five (19%) saying they would consider leaving.

One fifth of lawyers at large law firms said they would consider leaving if their firm didn't adequately invest in AI.

Larger firms face unique challenges in keeping up with technological advancements and client retention, yet they also have the potential to lead the way in adopting innovative billing models and flexible career paths.

As technology becomes more integral to legal practice, firms that fail to invest in new technologies risk losing their competitive edge and valuable talent.