With the recent mass layoffs from the likes of Google, Amazon, and Twitter, it’s easy to imagine a looming (or existing) economic downturn. Some practices are relatively recession-proof. But, all firms would likely benefit from asking what they will do if the demand for legal services decreases.
Somewhat counterintuitively, we’ve also seen a decreased appetite for outside investment in legal technology products. After a slew of acquisitions over the last few years, it appears that private investment is starting to dry up. Which makes some sense. On the whole, attorneys are likely going to spend less money in the near future. Meaning, they will likely spend less on their technology.
Yet, in order to compete in a recession, technology is just the thing lawyers should be doubling down on.
Small Firm Legal Technology
There are two ways to compete with other lawyers in an economic downturn. Lawyers either need to win the existing pool of potential new clients or expand the market they can serve. Legal technology, and technology as a whole, can help with this.
Most lawyers know that technology can help firms automate tasks and increase efficiency. Although they aren’t always implementing appropriate procedures, they are aware of the capabilities, nonetheless. Investing in technology that helps increase productivity lowers the cost of doing business. This, in turn, means that a law firm can either decrease its prices or increase its margins.
Increasing Client Satisfaction
In addition to enhancing productivity, technology can help law firms increase their client satisfaction. Whether a firm attracts clients through referrals or Google reviews, happy clients generally lead to more clients. Using client relationship managers (CRMs) to track and delight current and potential new clients can easily be the edge one needs in a competitive market.
Broadening the Market
Perhaps more subtly, technology can also help firms expand their market. No, we’re not talking about using Bankruptcy software to break into a new area of law (although that has value). Here, we mean providing value that current clients didn’t necessarily know a firm had.
Many times, this means productizing current services, like, offering automated residential leases. This can act both as a source of a steady income and as a lead magnet.
Other times, this can mean educating clients about what a law firm can really provide. Could a law office be a place where local businesses get together in Mastermind sessions?
Investing in Legal Tech
No matter what approach a firm takes to prepare for economic uncertainty, one thing is clear—technology can help. We never recommend simply throwing money at software companies. But tightening the belt should not come at the expense of efficiency, productivity, or security. In fact, as one can see from above, this is the time to do more with technology, not less.
If you’d like to learn more about how to choose legal technology, check out our Field Guide to Buying Products and Services. There, you can learn about different types of legal tech, what they are used for, and which ones might be right for your practice.
Last updated February 8th, 2023