How law firms are starting billable work faster with Xapien

_{Nick Morgan, Head of Legal Professionals • February 26 2024}

The onboarding process can significantly impact the client’s experience with your firm.

PWC found that 65% of clients would reconsider their choice of law firms based on poor onboarding experiences. On the flip side, a study by McKinsey found that a well-executed onboarding process can improve customer satisfaction by up to 30%, increase cross-selling opportunities by up to 20%, and reduce onboarding time by up to 60%. 

Despite this, a remarkable 53% of lawyers have expressed a lack of confidence in their onboarding systems, according to Thomson Reuters. 

The issue stems from the depth of due diligence needed for client onboarding. Today, basic compliance checks aren’t enough — you need to know a client’s source of wealth, who they’re connected to, and their online media footprint. This sophisticated research takes time and often delays the process when done manually. It also has financial implications. 

One metric we’ve heard from an international law firm is a substantial £16 million in partner fees lost to onboarding. And in the wider landscape, a quarter of companies have lost out on a business deal as a result of their law firm’s slow onboarding process, according to Encompass Corporation.

This clearly highlights a direct correlation between onboarding and both revenue generation and client retention. The question is how do firms turn this around?

Read more: How legal firms can start billing clients quicker with AI-enabled taxi reports

Increasingly complex due diligence

The regulatory risk space is quickly growing, so firms need more comprehensive due diligence processes to keep up. However, they often lack the capacity and resources to do it. 

Moral alignment

Recent geopolitical events and a growing emphasis on ESG criteria highlight the importance for law firms to conduct more comprehensive due diligence into clients’ backgrounds. However, adding ethical considerations to onboarding makes due diligence more complex and time-consuming, possibly causing bottlenecks.

This involves more than just assessing legal risks and sanctions; it includes evaluating clients’ adherence to ethical standards and societal expectations. Especially since the demand for moral alignment is growing among clients, legal professionals, and the public.

Read more: Strengthen AML risk management by learning the story of clients

Evolving regulations

The legal landscape is undergoing significant changes all the time, with new regulations introducing more stringent measures against economic crimes. 

In the UK, for example, the Economic Crime and Corporate Transparency Bill has raised the stakes with unlimited fines for violations and a new corporate criminal offence for failing to prevent fraud. If the Solicitors Regulation Authority (SRA) uncovers a firm or individual’s failure to prevent or detect economic crime, it can also issue unlimited fines.

These regulatory changes, along with challenges from the UK’s autonomous sanctions regime and specific sanctions related to Russia, complicate client screening and compliance efforts for law firms. Manually checking all of this can lead to more onboarding delays.

Quickly onboard clients without compromise

In response to these challenges, law firms are increasingly turning to technology to speed up onboarding, particularly AI. 

AI provides law firms with upfront insights into potential clients, cutting the time needed to assess risk from hours to minutes. It automates online research, streamlining onboarding and efficiently distinguishing between low-risk and high-risk clients. High-risk clients can be directed for additional checks, while low-risk clients can be confidently onboarded sooner.

Read more: 20 questions to ask: Law firm buyer’s guide to compliance tools

Rapid risk assessment

Traditionally, assessing a client’s risk profile requires lots of manual effort, including extensive background checks and compliance verifications. 

This process was not only time-consuming but also prone to human error. With AI tools like Xapien, law firms can automate this initial due diligence, getting a comprehensive view upfront into a client’s background, affiliations, and potential red flags.

Read more: Seven best legal client onboarding KYC software in 2024

Streamlined decision-making

AI tools like Xapien not only accelerate the risk assessment process but also provide structured data that supports quicker decision-making. By highlighting key risk factors and offering insights into their implications, these tools enable partners and analysts to make informed decisions without sifting through volumes of data manually.

Differentiating client workflows

AI in client onboarding allows for differentiated workflows based on risk profiles. Quickly confirming low-risk clients means firms can initiate billable work sooner. While more time can be allocated to high-risk clients, ensuring compliance with the regulator’s expectations.

Start billing clients faster with AI

Lawyers only bill around 2.6 hours of their work, with the rest consumed by non-billable tasks like onboarding checks. AI significantly reduces the time and resources spent on due diligence, so fee-earners can shift their focus to more valuable work. This improves efficiency and increases revenue.

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