The challenges and opportunities of digital transformation on the strategic, economic and operational structure of services firms, specifically in the legal industry

Abstract

Like many others, the legal industry is currently facing pressure from a number of new economic imperatives and technological developments. This forces law firms to adapt to the digital transformation in order to preserve and enhance their competitive advantage. In this thesis, we define and analyze the concept of digital transformation and in order to successfully develop a digital strategy, we then analyze the legal market. Regarding demand, the main trends are the stagnating demand for law firms’ services, despite growing demand for legal services, and the pressure from clients to get lower fees. Regarding supply, the main trends are the tendency towards liberalization and the exponential development of technology which, thanks to the unbundling of legal matters into individual tasks, have enabled a number of alternative providers to perform many tasks more efficiently. Based on this understanding of the market we develop our vision of the ideal business model for a law firm, with a value proposition comprised of new ways to deliver legal expertise, through services as package legal information and self-service legal tools. Then, by comparing this vision with the realities of initiatives lead by leading law firms we can formulate recommendations for law firms looking to successfully manage their digital transformation. We recommend that firms expand their understanding of their client's needs by adopting a more client-centric approach, that they develop solutions allowing them to produce practical, actionable and user-friendly answers to clients' challenges, that they adapt their pricing methods based on the nature of the output expected by clients rather than based on the input necessary to produce it, and finally, that they adapt their organizational structure with more IT and project management specialists as well as more support staff such as IT specialists and paralegals.