October 23, 2020
3 Ways Legal Advisors Can Sustain Profitability in Uncertain Times
BY STEVE J. TIE SHUE, SR. DIRECTOR - PRODUCT MARKETING
Leadership teams at law firms of all sizes have spent much of the year in strategic planning sessions pulling capital and operating expense levers to preserve margins. For transactional practice groups – M&A, restructuring & insolvency, capital markets – some decisions have been a direct response to the market impact on deal flow. Other responses have been driven by how their clients have reacted to the market – including a push for more alternative fee agreements (AFAs).
Although some presume there’s little individual lawyers can do to impact a law firm’s bottom line, advances in legal technology prove decisions in transaction management can bolster productivity and improve work product while reducing reputational risk to drive profitability and client retention. Here are three best practices for M&A legal advisors on every deal.
1. Insist on data rooms with integrated productivity tools
Up to 20% of legal fees are written off annually due to onerous client billing requirements and almost as many M&A deals are invoiced under AFAs. As such, it is imperative for legal advisors and their matter teams to avoid spending more time than necessary on low-value work at high-risk of being questioned by clients.
Data rooms with in-app tools like Q&A management, user analytics & reporting, and OCR search capabilities can cut worktimes in half compared to standalone solutions and manual processes. This ensures efficiency in completing some of the most administrative elements of transaction management.
2. Embrace artificial intelligence and machine learning to improve work product
AI/ML-enabled technology has experienced significant headways within law firms over the past couple of years. A key learning for early adopters is accepting that AI/ML solutions don’t replace human expertise – they enhance. Consider some recent Datasite enhancements as examples.
Smart Categories suggests topics for document tagging during data room preparation to ensure files are appropriately organized for review during due diligence. Similarly, Redaction AI uses pattern recognition to bulk mark selected documents in a few clicks. Both capabilities offer peace of mind to legal advisors that a large volume of data has been thoroughly parsed and reviewed to help inform their client recommendations and related work product.
3. Don’t gamble on data security and content management
There have been a number of high-profile data breaches and cyber-attacks involving law firms recently. This has understandably spiked anxiety within the legal community as the reputational risk of such events can be catastrophic to client retention and new business development.
Regulatory compliance considerations, including GDPR / CCPA, necessitates ironclad security of transaction data regardless of deal size. However, legal advisors should take this governance one step further to ensure the platform used for transaction management offers granular user and content access controls as well as real-time logs tracking data room activity.
Legal advisors often thrive on market unpredictability. It keeps things interesting. However, they thrive even more on delivering stellar work product that leads to career-long client relationships.
Click here to schedule a demo to learn more about how Datasite helps law firms proceed with confidence during uncertain times.
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