by Sean Kearns, Editor-in-Chief, Longitude
Modernity isn’t always front of mind when you think of law or accountancy firms, but perceptions of professional services are changing.
Firms have accelerated adoption of digital and design principles, whether through acquisition or by developing new in-house skills. Among management consultancies, the addition of specialist agencies reflects a desire to appeal to buyers beyond their traditional base. Amid sector cross-over and consolidation, clients of professional services firms expect a digital experience in line with the standards they receive elsewhere.
According to research among clients of professional services firms conducted by Longitude, a Financial Times company, a majority (65%) of respondents agree that digital service delivery is one of the most important factors when they select a partner.
Firms have made sizeable investments to ensure that they can compete on digital. The research suggests it is beginning to pay off. Asked to rank the quality of service delivered by the professional services firm they worked with most frequently over the past 12 months, a majority of respondents say that the use of digital technology/applications for service delivery has been of high quality, with close to a fifth (17%) given the highest possible rating.
The innovation imperative
Smarter use of technology and smoother digital experiences can deepen relationships with clients but, on their own, won’t be enough to sustain long-term strategic partnerships. According to the research, a quarter of respondents (25%) said that a “lack of innovative approach” had caused them to end a relationship with a firm.
Firms are expected to modernise and innovate their entire operations – from onboarding to analytics – particularly when clients themselves are taking bigger risks on digital transformation.
“We have automated much of our client-facing processes and services so that we can be ubiquitous with our clients across Tax, Audit and Advisory,” says Anton Ruddenklau, who is KMPG’s head of digital & innovation for financial services. “As with our clients, we remain a work in progress.”
According to a majority of respondents, modernising digital infrastructure will be an important strategy for their organisations over the next 12 months, particularly as remote and hybrid working become the norm.
This places greater pressure on professional services firms to adapt their operating models to fit. Indeed, according to the research, 49% of respondents say that professional services firms have been too slow to modernise their practices or processes.
In response to client need for greater flexibility, a number of firms have created new platforms and designed alternative services as a part of a broader mission to embed innovation. Others have created multi-disciplinary teams, which include legal and technology specialists.
Pinsent Masons was voted Most Innovative Law Firm in Europe at the FT Innovative Lawyer Awards Europe 2020. Senior Partner Richard Foley said on receiving the award: “We don’t have a department for innovation at Pinsent Masons and that’s quite deliberate. We have a mindset, a strategy, a purpose, a code and values that nurture innovation by encouraging all of us to be bold, champion change and find that spark."
The desire to institutionalise such thinking is a wider trend within legal services. Peter Hirst, Senior Partner at law firm Clyde & Co, believes leading firms must develop these new technology tools for themselves, either by nurturing capability in-house or working with suitably skilled partners. His firm has an innovation board that is tasked with steering new projects to improve client service and is working with two leading universities on innovation projects. “We’re introducing artificial intelligence, we're introducing fraud protection measures, and we're introducing blockchain contracts,” he says. “Many of these are cutting-edge.”
Another legal firm, Allen & Overy, has been running Fuse since 2017. It describes the initiative as a “tech innovation space”, where “A&O lawyers, clients and start-ups come together to explore, develop and test legal, regulatory and deal-related solutions”. It welcomed its fourth cohort earlier this year.
Across the professional services industry, firms are looking to widen their scope beyond the traditional limits. In their quest to provide strategic guidance, above and beyond technical advice, some are looking to exploit data and market intelligence.
“We have an enormous amount of client data, which, anonymised, is hugely valuable,” says Clyde & Co’s Peter Hirst. “We now have our own data lab and we’re building tools that can give clients the power of our insight.”
The professional services industry is built on relationships. The leading firms are looking beyond digital service delivery to create a culture of innovation – and in doing so, a deeper sense of affinity among their clients.