Applying RPA to Law Firms
There is undoubted consensus that the legal industry is undergoing a great transformation – accelerated by the impact of the Legal Services Act (in the UK) coming into force, but originating with a number of other factors that require law firms to adopt a more commercial approach to doing business.
These factors are well-documented elsewhere – the credit crunch and subsequent recession reduced the size of market in many practice areas; new market entrants emerging under the ABS cloak; more sophisticated legal services buyers forcing downward pricing; increased regulatory requirements; and mergers and acquisitions distracting from day-to-day service provision.
Also well-documented are a range of strategic and tactical remedies available to law firms – an assortment of practice management technologies, better marketing, hiring experienced business developers, adopting different pricing mechanisms, mergers, legal process outsourcing, creating teams of transactional paralegals, mapping processes and so on.
Despite the considerable strengths that top law firms enjoy, such as existing relationships, reputation, and high quality work from high quality people these might not be sufficient to defend against more nimble, technology-savvy and process-focused competitors from within and new to the legal sector.
One intervention that has not yet reached the legal sector is Robotic Process Automation (RPA), a recent technology getting more and more traction, particularly in financial services and business process outsourcing. This paper explores how process automation can contribute returns not only to address the factors commented on in the pwc report, but in support of a range of other benefits.
Introduction to Robotic Process Automation
In the delivery of legal services there are elements of predictable, repeatable work that can be undertaken whatever the matter type or practice area. Even in highly specialist practice areas there will be elements of matter management (e.g. file opening, interim and final billing, client reporting) and legal process (e.g. due diligence, searches, e-disclosure) that can be delivered more routinely and are therefore candidates for Robotic Process Automation.
To date, the deployment of Robotic Process Automation has been most successful where one or more of the following applies:
Tasks that are:
- Structured, rules-based, repeatable, and computer-based.
- Access one or more systems, across organisations, to complete a process.
- Perform decisions or undertake checkpoints before a subsequent decision is made.
Situations that are:
- Highly regulated.
- Irregular workloads and volumes.
The implementation of Robotic Process Automation has the added advantage of being relatively quick to effect and achieve payback. The automation is delivered through virtual FTE’s (many users of this technology describe them as robots) performing the defined tasks.
Initial deployment of existing processes can be within weeks with no additional applications or databases required. Typically, the processes are defined and iteratively deployed by the function that owns the process and not IT, thus overcoming typical roadblocks of quick scalability, data confidentiality and audit, and IT backlogs.
Legal Services Potential for Robotic Process Automation
Taking some typical activities from the management of a matter, there are some high level activities that can be performed through Robotic Process Automation:
- Automatically receive and review new instructions; access disparate systems and populate them with the necessary data.
- Assess the parameters of a case and estimate the number of hours to complete.
- Offload repetitive and routine matter management tasks.
- Auto-populate MOJ forms ensuring accuracy and consistency throughout the life of a case.
- Provide alerts about upcoming case deadlines, WIP thresholds and fixed fee breaches.
- Provide operational agility by managing variations in demand without the need to recruit or release people.
- Evenly spread client billing over the month and year by responding to clients terms of business, and undertake billing activity based on programmable triggers.
Legal Services Benefits of RPA
The challenge for law firms in a market of declining profits will be to create an operating model with an appropriate cost base that still meets the client demands of quality, value and outcome. Much of the pressure on the cost base will be directed at the support areas. A PwC analysis of declining law firm profitability highlighted 3 principle factors affecting margins: pricing, the activity of fee earners, and the cost base. The PwC survey highlights this, with firms recognising the need to do a number of things, as illustrated below.
With payback typically within 6-12 months, Robotic Process Automation can support the top 2 change priorities for law firms, while directly addressing the third priority.
Improve the use of technology:
- While process automation itself is a technology solution, its implementation can lead to a reduced requirement for expensive integration of software and data. With the robots “integrating” data at the presentation layer there is no need for complex or expensive IT integration projects. It will interact routinely with, and across case management and practice management systems.
- No coding or scripting is required, it is configured by the people undertaking the work on a day-to-day basis and the discrete process objects (tasks) created for one process are re-usable for any others.
Standardise business processes and ways of working:
- This is the very essence of process automation – a tool designed to mimic a human and to interact with disparate systems in-house, with suppliers and even with clients.
- An improved in matter management can positively impact lock-up and improve cash flow – prompt billing, reduced write-downs, and enhanced collections.
- Improved client satisfaction through timeliness, consistency, quality, accuracy and auditability.
- Improved operational data to track cases and monitor fee earner performance, and for providing better analytical insights.
Existing users of process automation in other business sectors have built their process automation business case on direct cost saving assumptions, but have found that the resulting indirect benefits are just as marked. In a law firm these benefits are likely to be:
- Enhanced capability and better responsiveness to new opportunities will lead to competitive differentiation, particularly for early adopters.
- Improved compliance in highly regulated industry, for SRA related compliance, and also for any other audits such as ISO accreditation.
- Revised behaviour and observance of internal policies: for example, reduce the prevalent behaviour of fee earners across the sector to bill in the final week of the month and in the final month of the year. This will reduce the workload pressures that typically delay receipt of cash.
- Upgraded operational data to track cases and monitor fee earner performance, and for providing better analytical insights into all areas of the business.
In an unrelenting buyers’ market and with increased downward pricing pressure there will be continued prominence given to commoditising as much legal and support work as possible. The legal sector is at a stage that other industries have found themselves in over recent years, with technology and external events shaping major transformations in pharmaceuticals, entertainment, and travel for example.
Ray Kurzweil, now Google’s Director of Engineering, is a technologist and inventor (flat-bed scanner, text-to-speech synthesizer to name but two of his inventions) who spoke at the LawTech Futures conference in London in 2013. He pointed out that while human intuition is linear, technology progresses exponentially – exemplified by the transformation of the pharmaceutical industry into a “knowledge industry”, and by the extraordinary growth of mobile telephones as the technology device of choice in Africa.
His belief is that the legal industry is on the verge of becoming a true knowledge industry, predicting more automation of routine tasks, but more significantly, the development of complex algorithms to process the ever-increasing intricacy of legal issues. Robotic Process Automation is a step further than has been seen before in law firms, and not far behind the first generation of robots described in this paper are technologies that can already understand the semantic context and content of language.