Business support

Introduction

Consistent with the 2017 survey results, the top three priorities for business support are ‘Use of technology’, ‘Improvements in legal service offering’ and ‘Standardising and centralising of processes’. Speed of technological change is clearly of great concern to the sector. Although more firms are researching and piloting new tech there is still significant gap between established/conventional technologies and emerging technology. It is critical that firms continue to leverage new technologies that enable them to disrupt their traditional business and operating models. 

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At a glance

Overall

  • Finance and Risk & Compliance continue to be perceived as the two strongest performing support functions in 2018 and IT has overtaken HR as the third strongest performing function.
  • The top priority for Business Support remains ‘improving the use of technology’. Interestingly, ‘standardising and centralising processes’ is still an important priority but is now ranked third, with ‘supporting improvements in service offering’ gaining in importance as the second highest priority.
  • ‘Data analytics’ has significantly grown in importance for the second year running and is now the fourth highest priority for business support functions. In 2018, 68% of Top 50 firms have data and analytics specialists in place (averaging six specialists per firm).
  • It is becoming increasingly common for law firms to employ specialists within business support to enhance the capability of functions. In the current year, there has been a significant rise in the deployment of specialists, particularly in Top 10 firms where all now have ‘Resource & Capacity Management’, ‘Digital & Emerging Technology’, and ‘Strategy, Business Innovation, and Transformation’ specialists in place. It is, of course, more difficult for Top 51-100 firms to make these sorts of investments, with no more than 17% of these firms having specialists in any area.

Technology

  • While many IT functions continue to focus on the need to replace core systems (e.g. PMS and HR), more than 50% of Top 100 firms are either planning to or have already commenced projects relating to Risk & Compliance or Data Analytics.
  • Adoption of digital and emerging technologies has increased across all bandings compared with prior year. Firms continue to recognise that these technologies will play a key role in both client service and efficiency, with ‘client experience’ and ‘operational efficiencies’ remaining top drivers for adoption. Compared with the prior year, firms in the Top 26-50 and 51-100 have significantly increased their interest across the full suite of technologies through research and pilot projects.
  • Adoption of more conventional technologies has progressed since last year, with more than 50% of Top 100 firms now having adopted mobile apps, client collaboration tools, and automated/semi-automated document production. There is a significant gap in maturity between these technologies and more emerging technologies, such as Artificial Intelligence (AI), Smart Contracts and Blockchain Solutions.
  • As last year, 80% of Top 10 firms are piloting AI and this could relate to an expansion of pilot projects as firms seek to more widely consider AI technology. As in 2017, the Top 11-25 remain the most mature users of Robotic Process Automation (RPA) with more than half having established or begun piloting this technology.

Finance

  • The main priorities for the finance function are pricing and profitability, working capital and process efficiency. 
  • With regard to firms’ management information (MI), accuracy, breadth and granularity of reporting remain broadly satisfactory. However, accessibility and levels of automation remain key areas of focus for Finance, along with the ability of the function to provide insight from MI to management.
  • Given the prioritisation of working capital for finance functions, write-offs of WIP remain a key challenge for all firms. 60% of Top 10 firms in the last year wrote off between 15% and 20% of their fee income. If we assume for these firms an average write off equating to 17.5%, this amounts to £159m of lost global fee income. 
  • The extent of fee income written off in Top 26-50 firms is also significant, with all firms writing off at least 10% of fee income and 57% writing off more than 15%. The survey revealed ‘not billing for changes in scope’ and ‘inaccurate estimates’ to be the most common causes for fee income write offs.

Contact us

Tony Hodgson

Partner, Consulting, PwC United Kingdom

Tel: +44 (0)7798 832312

Alyson Reeves

Director, Consulting, PwC United Kingdom

Tel: +44 (0)7740 242664

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