Business support

Introduction

For the third consecutive year, the top priority for business support is “improving the use of technology”. “Standardising and centralising processes” and “support improvements in legal service offering” also continue to be focus areas. Finance functions are focused on pricing, profitability and working capital improvement.

This year has seen significant activity around foundation IT, and digital and emerging technologies have also advanced. Firms need to focus more on objectives and metrics to measure progress in innovation; and for some, a higher level of IT investment is needed.

At a glance

Overall

  • Finance, Risk & Compliance and HR are considered the strongest performing functions across all firms in 2019, with IT falling two places to fifth. Both Finance and HR reversed a three-year decline in their perceived performance, strengthening their position as higher-performing functions.
  • Secretarial Services and Knowledge Management continue to be two of the lowest-rated functions. However, the perceived performance of Secretarial Services has improved considerably this year.
  • Procurement remains the only function that, on average, is seen as a weakness by Top 100 firms, despite a significant improvement in performance.
  • For the third consecutive year, the top priority for business support is “improving the use of technology”. “Standardising and centralising processes” and “support improvements in legal service offering” also continue to be focus areas. The priority of “data analytics” has fallen, reversing the trend of recent years, despite a 25% increase in the number of firms reporting that they have data analytic specialists. A question remains whether firms are getting the most from their data in order to improve decision making.
  • More than half of firms have delivered a “Time and disbursement capture”, “HR and L&D”, and “Mobile and remote access” project in the last 1-3 years and more than a third have delivered a Practice Management System or “Risk and compliance” project. Further, more than 30% of firms have a “Mobile and remote access”, “Pricing”, or “Data analytics” project underway.

Finance

  • The finance function’s top three priorities are pricing and profitability, working capital and business analysis/reporting. These priorities are reflective of the continued high fee income write off levels and widening gaps in year end and average lock up performance.
  • The continued focus on pricing has resulted in a narrowing of the “pricing performance” gap between importance and perceived current performance for all except one of the key pricing behaviours. What will be frustrating for many firms is the inability to flow these improvements through to the high level of fee income write offs.

Technology

  • Adoption of digital and emerging technologies has advanced again across all banding of firms. Adoption of more widely established technologies (e.g. mobile application, client collaboration tools, and automated document production) has progressed by at least 5% across the Top 100 since last year to between 53% and 74% of firms. Data visualisation and artificial intelligence (AI) technologies are established in half of Top 10 firms, and approximately a quarter of all Top 100 firms.
  • Law firms predict AI will be the most disruptive technology in the sector over the next 5 years, cited by 38% of Top 100 firms. This compares with process automation at 16%, blockchain and smart contracts at 9%, and data and analytics at 9%.
  • AI has started to mature most in Top 10 firms (50% established, 50% piloting); although smart contracts are less mature in these firms (0% established, 70% piloting). This compares to 16% for AI and 11% for smart contracts technology (established) across the Top 11-100.
  • Despite the progress on emerging technologies, capital spend is relatively limited. On average, Top 100 firms reported capital investment in emerging technologies of only £597k in the last year.
  • With the growing focus on innovation, new technologies, improvements in legal service offerings and associated investment, it is critical that firms have a robust strategy and metrics to manage the experimentation and change. The majority (65%) of Top 100 firms report that they have a clear and flexible strategy for realising the benefits of innovation - however, there is variation between bands from 80% of Top 10 firms to only 54% of Top 26-50 firms. Only 55% of Top 100 firms’ leaders have innovation-based objectives and a minority (42%) have agreed metrics to track the progress of innovation.
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Tony Hodgson

Partner, Consulting, PwC United Kingdom

Tel: +44 (0)7798 832312

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