How a tentative approach to cloud is leaving law firms behind

As market challenges continue across the legal sector, 83% of Top 10 law firms are focusing on cloud modernisation and migration as their primary IT strategic priority for the next 1-2 years. Yet, despite this ambition, PwC's Law Firms’ Survey demonstrates a mixed picture with progress on cloud varying greatly across the sector.

Most law firms have transitioned some key applications for practice management, document management and people systems to the cloud, but there are significant legacy data centre migrations that many firms need to undertake to fully move to the cloud.

GenAI: an imperative to transform?

Embracing cloud technologies has never been more important - from infrastructure and platforms to applications, cloud is a critical enabler of transformation and key for driving value from technologies such as generative AI (GenAI). A unified data platform is crucial for leveraging the AI opportunities that give firms a competitive edge across time recording data, CRM data, financial performance data and legal documents. But, with so many organisations storing data across multiple systems, drawing on a complete data set is near impossible for most firms. To operate effectively, this needs to change.

69% of Top 100 firms believe GenAI will positively impact revenues, yet only 38% have done anything with the new technology. Action needs to reflect this ambition and with effective cloud and data migration at the heart of GenAI, firms need to make cloud and data a priority. Taking a ‘wait and see’ approach will hinder firms’ ability to capitalise which will make them less able to transform and to manage rising costs and the uncertainty ahead.

So what is holding them back?

The challenge of cybersecurity

Cybersecurity concerns are particularly heightened for law firms in a sector where client confidentiality and personal data are of paramount importance.

This year’s Law Firms’ Survey found that 85% of Top 100 firms are extremely or somewhat concerned about cyber threats.

As reliance on technology grows, being mindful of risks and taking steps to mitigate them is crucial. This should not be a barrier to adopting cloud but rather an incentive to heighten and improve cybersecurity.

Developments in this space are encouraging. As cloud-based technology evolves, so too does its cybersecurity. We are seeing increasingly stringent protections with data integrity checks and audit reports now mandatory. End-to-end encryption also ensures that third parties cannot access information shared between systems and devices but that only intended recipients will be able to view this data. Further, cloud providers are continually investing and improving in cybersecurity with 24/7 surveillance, high quality security infrastructure and dedicated teams for support so that law firms can be increasingly assured that their data is secure.

Cloud technologies and effective data management also play a role in improving cybersecurity within organisations. Security issues may already be rife with data stored in a number of places and with organisations relying on outdated systems and processes. With cloud, increased protection and greater visibility improves security.

55% of Top 100 firms highlight standardising and centralising processes along with improving data and analytics as significant areas of focus. Despite fears across the sector, firms are, on the whole, increasing cybersecurity spend and we are also seeing growing recruitment for dedicated Cyber Security Chiefs within organisations.

Upskilling to drive value

Firms are also grappling with senior leaders who have a limited understanding of technology and cloud which inevitably leads to fears around security, costs and the value that new technologies offer. It can feel like a huge mountain to overcome and even just knowing where to start can be difficult. Turning to trusted partners to help educate, provide guidance and increase confidence can be hugely beneficial as firms venture into the unknown.

Every transformation requires upskilling across the business to ensure sufficient understanding and to drive effective implementation. This could be on-the-ground training to optimise the use of technology, actively developing GenAI systems such as Harvey or recruiting trained professionals to support new technologies. Implementing innovative technology is only part of the solution: a human-led, tech-powered approach is key. Without effective training and upskilling, organisations will not be able to drive real value or realise the full potential of cloud technologies.

Invest now to save in the future

Despite 44% of Top 100 firms reporting falling profits, firms across all bandings have increased their spend on legal technologies this year. While encouraging, ongoing cost pressures may challenge future investment in technology.

But organisations must focus on the value of becoming cloud-powered, with investments in this space saving money for the future. For instance, cloud migration reduces maintenance costs by eliminating on-site servers and the technical support needed to maintain. In this way, moving to cloud saves organisations money in the long run, despite the initial investment.

Firms want to provide their people with the right tools, and their clients with a seamless service but this is only possible by investing in technology to drive innovation, cost efficiency and competitive advantage for firms. Investing in a robust and future-proofed strategy is essential for realising the benefits of technology and cloud and we are already seeing the benefits of this in other industries.

Organisations that have already reinvented their business through cloud modernisation report fewer barriers to success, realise value at twice the rate of companies with outdated systems and are expecting to see continued revenue growth of 15% or higher.

These benefits are likely to continue in the next 12 months. 51% of EMEA businesses expect to achieve improved profitability while 50% anticipate cost savings demonstrating ongoing value that cloud technology can bring.

Firms can no longer afford to neglect cloud and data

From implementing the right infrastructure to upskilling business leaders, successful cloud integration requires significant transformation. For an intrinsically risk averse industry, a tentative approach to cloud has been understandable but firms that are slow to act will be quickly left behind.

Compared to other industries and other professional services, the legal sector is lagging behind when it comes to cloud. Firms need to embrace technology to remain competitive for their clients, but also for their own people too. Cloud enables more remote work opportunities that meet the needs of a changing workforce and changing market. If firms are unable to provide workplace flexibility they will fall behind while others gain this competitive advantage.

Now is the time to take bold steps to embrace technology and drive results for law firms that organisations in other industries are already realising.