Financial Technology in Law Firms: The Digital Transformation

This week I thought we would talk a little bit about financial technology in law firms and, and really talk about the digital transformation because we are actually in a place now. I think that in today's world we're finding that for sure things are moving in the right direction. I actually think the pandemic helped with law firms because they were really truly behind and now we're starting to see a push more towards the legal industry undergoing a profound transformation and it's really driven by advancements in financial technology. Technology and also embracing digital solutions. So we're not so paper-centric in the law firms. Thankfully, that helps us as remote bookkeepers to really move forward with that. And technology is really helping shape how law firms manage their finances in their practices. We're able to give them with cloud-based data, be able to give them more data, more AI-driven analytics in today's world. So Let's just talk a little bit about some statistics. I love good statistics. So 73% of law firms now utilize cloud-based tools. Incredible, right? I mean, it wasn't that long ago when the number was like 39%. So this is a really big leap towards the future. It helps the firms to stay competitive. So if you work with a law firm that you know still does everything by snail mail and mails everything out, you're realizing how much different it is when you work with a firm that actually does do all of these things and does everything online. It's much more efficient. So 60% of firms have implemented a formal cybersecurity policy or practice. That's key. You want to ask that question if you're working with a law firm to see if they've thought about it, if they've implemented any rules around that. We've done it in our firm, the accounting firm, and it's been eye-opening. We get professionals to come in and talk to our team, our staff, talk about the different ways that— Mm-hmm. You could get hacked or taken advantage of. And have the policies in place, have the security system in place for sharing logins. Those are important things as a bookkeeper when you're working with a firm you need to have. But also law firms, 60% have implemented that. 48% of lawyers now rely on AI-powered research tools. So research tools are going to save them a ton of time, right? That's the beauty of AI, can read a lot of data fast. It's what you're seeing now more with the AI and— Mm-hmm. Working with the medical industry and how they're able to actually figure things out that they couldn't figure out on their own because they're able to really incorporate a large amount of data. So it's really, really interesting how that's working out. So the other part of this, when it comes to finances and operations, we're able to streamline a billing process for our clients, use automated billing solutions and systems to make sure we manually, you know, we reduce any manual errors. That's usually where errors come into play when you start to use technology. It will help speed up the invoicing. And it should improve collection rates if you start to implement ways that the client can click on a link and pay the bill. Really important. We love Confido Legal. It's great if you have never used it. It's great. It works great with trust accounting and AR if you want. Improved accuracy in the time tracking is another place. There's a lot of real-time tracking tools out there. Talked about that last week. Lawyers can really capture more billable hours and reduce their revenue loss. So the, the, The study was talking about how little of the hours, like 2.5 hours a day, were actually billable with law firms. We wanna improve that, we wanna make that better. And I think it's really ticked forward. That might've been an older study. It's really moved forward and become even better. Are you gonna get better financial reporting? So the more tools you use, like LeanLaw has a ton of reports that we can track all sorts of things in the legal tech. That's gonna help with your reporting. It's gonna help you learn your KPIs to help you understand your metrics, basically. It's gonna give you a lot of data that you may never have before when you were in some of these manual systems like Abacus. Important to know. Also, increased security measures. So a lot of the fintech solutions often include robust encryption. So that's important. It helps with cybersecurity. It protects your client's financial data. So the attorney's financial data is protected that way when you have a good system in place. And you want to leverage those tools to help really help optimize operations and build stronger relationships with the law firm's clients. And there's really, if you talk to anybody, there's a lot of growing concern around security. We're all worried about it. 25% of all law firms in 2023 actually experienced some kind of a security breach. That's crazy to me. Cybersecurity threats continue to evolve. They get better. Some of those emails that used to be like, oh, I can tell by the grammar that they really were fake. Now they look real. If they have a video, they look real. Sometimes they can really mimic things that you said or did or wrote. So know that that's a thing and you need to really be careful of that. Protect your client data has to become the top priority in respect for us to our clients being the attorneys, but also the attorneys protecting their clients' data. So it's important to invest in technology. We don't, we don't always like to spend money on certain tools, but for sure having a cloud-based practice management system is going to be your friend. It's going to help you out a lot. Having automated billing solution as a law firm is suggesting that to a law firm. If they're doing things manually through QuickBooks, talk to them about maybe getting something more automated, something like LeanLaw. That's very simple to do the billing. You know, a lot of clients like the secure portals, make sure that they're, they're actually secure, they can't be hacked. And then integrated payment solutions like Confido Legal, really gonna be helpful in the future for you to be able to get paid quicker. Really, a lot of the trends we're seeing in legal technology is we're seeing an increased adoption of the AI solutions. People aren't as afraid as they were before. There's more greater emphasis on cybersecurity. Some firms are actually integrating some blockchain technology, which is pretty awesome. And then a lot of firms are including, and especially immigration firms, including being able to pay by phone or texting is involved. So that's important as well. So I think the digital transformation of the legal industry is definitely underway. And financial technology is probably at the forefront of this evolution. And improving your billing capability and accuracy is really, really important as a firm owner, a law firm owner, and for the bookkeeper as well. So knowing that you want to provide that exceptional, really exceptional value to your clients, that's important. So all of these things lead up to that. So I hope this was helpful and we'll see you all next week. Bye now. Bye.