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Legal IT Roundtable – A Consultant’s Perspective

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August 2015
Categories: For the Business Leader, For the IT Leader
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I read a very good article this week in Law Gazette. Journalist Joanna Goodman reported on the Law Gazette’s recent Legal IT Roundtable.

There didn’t appear to be representation or comment in the article from a technology consultant, so as a provider into the legal sector I wanted to fill the gap and provide that viewpoint.

Goodman’s article is wide-ranging, covering: matter management, cloud services, business continuity, and innovation and agility. The audience was a good spread from small to large firms. I’ve provided extracts from the article below and provided responses (although I highly recommend your read the original article too).

Feel free to provide your own views in the comments section below the article.

General Views on Technology Value

Some early comments in the article say:

While for some smaller and niche firms IT has levelled the playing field, helping them grow their businesses and extend their market reach, for others it remains a major challenge.

Attitudes towards IT were shaped more by levels of IT literacy than the size or location of the firm

Whereas the larger firms represented at the table have dedicated IT functions, the roundtable heard from some small firms and sole practitioners whose business operations and structure were shaped by technology. Others still consider IT an uncharted minefield.

These comments show that the field is wide open, from the technology savvy to the uninitiated. I would argue that for the latter there is an urgent need to at least get up to speed, as without technology, firms will struggle to compete.

Rather than seeing IT as an unfortunate but necessary support cost, the opportunity is to look at your business and determine where technology can enable you to do things faster, cheaper, or of better quality. The ideal of course would be to find technologies that enable you to achieve all three. Let’s look at some examples here:

  • Cheaper: You could use technology to enable you to north-shore your back office operations. This means moving non-client facing work to lower cost centres, such as the north of England, or even overseas. With collaboration tools and cloud-based software you no longer need to see location as a constraint
  • Faster: Clients can be provided with portals to access and share documents. You could use digital signing of documents. These steps reduce transaction time and provide efficiency.
  • Better Quality: Technology can help with things like Legal Project Management. In turn this enables alternative fee arrangements to be more successful, or even simply viable. Better quality need not mean solely from the perspective of the client. You might improve internal quality by being more efficient and effective on fixed fee engagements.

Matter Management

Although IT literacy varied dramatically among sole practitioners and representatives of small firms with no dedicated IT function, every firm was using some form of practice management or matter management system. Issues and challenges identified mostly concerned selecting the best system for the business.

There’s a vast array of IT systems and solutions. At the same time there’s no clear industry definition as to what makes a document management system versus a matter management versus a practice management, etc. etc. Its no wonder the choice is confusing to firm leaders. I always advise that you start with what you do know, which is your requirements. Using simple approaches, such as a MoSCoW Analysis will enable you to more effectively and accurately identify your requirements. The benefit of a MoSCoW analysis approach is that equally allows you to identify and document requirements that you will not be providing.

Gordon Turner related that he had implemented a system that was too complex: ‘This was a mistake for my sole practitioner business. I get all these reports, when all I need are basic management figures.’

This is a common issue, especially when dealing direct with a software vendor. I liken it to financial advisors of old. When they were tied to a particular providers product set, they would shape your problem into the solutions that they provided. Often this is not helpful. But combined with the challenge of vast choice, its difficult to know where to start. The best approach (and granted, as a consultant I would say this) is to have very well defined requirements, and to seek external help and guidance. The benefit in using a consultant is that we’re not tied to your business. We have no hidden agenda or politics and bureaucracy to be concerned with. This often means we can see the wood for the trees. We’re also gathering and shaping requirements on a daily basis, and skilled at interpreting and translating clients needs into vendor solutions.

Again, the MoSCoW approach is useful here.

Simon Clarke, IT director of Michelmores, which has offices in London, Exeter and Bristol. ‘Traditionally, law firm IT has been driven by the IT department rather than by business needs. In many cases we invest in technology with a lot of functionality, but we don’t leverage it because we haven’t identified our business needs in the first place.’

This statement sums up perfectly the challenge for IT departments across most all sectors. There has been a divide in many businesses between IT and the business. Often they are both at fault too. IT is driven to reduce costs and so aggressively centralises. This pulls IT staff back away from the end-users. The end result is a situation where IT is choosing solutions with little or no business engagement – which quite frankly seems bonkers!

However, technology has become too integral, and too important to the business to leave it in the hands of technologists. Those same technologists that the business rarely spends any time engaging with to explain what the business is all about, and what its unique challenges are.

There a big movement on this issue, and I think it can be racked by looking at the language used by IT. Once upon a time we looked to ‘align IT with the business’. This was the first obvious sign that at some point we’d drifted apart. Then, having failed to align by trying to do it all at once, we started to focus on ‘IT-enabled business change’. This time we had more success as we tackled individual needs and projects. Today’s rhetoric is, ‘There’s no such thing as an IT project, only a business project’. To me, this is the right way to think. However, it will take concerted efforts by both business and IT folk to start to put effort into understanding each others unique challenges. For IT to become really effective, firm’s much address how to bring IT into the picture, and into business decision making.

Jan DeCerce, IT and operations director at City firm Lewis Silkin, added that IT professionals in law firms know what is available – and is worth investing in – because they keep in touch with each other and leverage their collective knowledge.

I see this is a double-edge sword. The legal industry is unique amongst the many industries that I’ve consulted in, in that it is the only industry where people don’t change jobs! If you look at the average tenure of IT leaders in the legal sector it can often be measured in decades! I know of no other industry that is like this. And yes, whilst there may be some networking amongst law firms, I see very little engagement with IT leaders in other sectors. I believe this is one of the reasons why the legal industry is often seen as a technology laggard.

It was generally agreed that the answer would be to follow Mostert’s example and employ an independent IT consultant. Warren Spencer, managing director of Blackpool firm Blackhurst Budd, set out the rationale for employing a consultant: ‘If you don’t use a consultant, how much of your own chargeable time will you waste trying to find out about a subject that you’re not expert in? An independent consultant will identify all the technologies that you require, and then set up a beauty parade of vendors so that you can choose the best solution for your business.’

This is a valid point and probably accounts for a third of the value that an independent IT consultant can bring. Greater value is in the understanding of peers in the sector, and trends in other sectors. This provides the ability to bring true innovation. To understand your business from an outsiders perspective.

To maximise the value of engaging an IT consultant I recommend that they engage with staff throughout your business. Don’t limit their engagement to senior staff only. Innovation often comes from the coal face, not the boardroom.

Siddhartha Mankad, chief operating officer at City technology boutique Kemp Little,said, ‘It’s not about finding an IT supplier to answer your problems,’ Mostert added. ‘Rather, it’s about understanding your business requirements and finding someone to marry that to the technology.’

This nails the challenge on the head. Requirements should start from the business, before technology solutions are even considered. If you start with known technology solutions we’re back to the issue of shaping your problems inside a known solution.

What frustrates Mankad most about practice management and matter management software is that you end up buying most functionality at least twice. ‘If I buy a matter management system, it will have time recording, document management and billing as well as an element of CRM [client relationship management]. I’ll then buy a CRM solution, a document management tool and a business analytics tool because that is what law firms do. I haven’t yet come across a legal-focused practice management or matter management vendor that is willing to say, “All you need from us is this single piece of software and you don’t have to pay for all the extraneous elements that you’re going to buy again anyway’.’’

On the one hand I can see the point here, but I don’t believe its the right way to look at it. There’s bound to be overlaps in systems capabilities. The important thing to do is not be drawn in to using every component of every system that you use. You may be one of the lucky few who finds a single system that meets all requirements, but that’s rare. What’s important is that you identify needs, and identify integration capabilities and opportunities.

If your document management system provides workflow, and so does your CRM, decide on which one to use and stick with it. May be you need both for different elements of your business. You need to accept that you will have systems which overlap in capabilities. It should not be seen as a wasted expense, otherwise you’ll be looking for that panacea product that does everything. But would it do everything to the level of quality that you desire?

Roe noted: ‘Whereas larger firms can spread the cost over a larger number of fee-earners and benefit from economies of scale, sole practitioners and small firms pay higher unit costs. We need to find the providers that are interested in us, and we also need to think about our budgets. We don’t want to pay more for a system with a lot of bells and whistles that we don’t need.’

Rob Martin of Thomson Reuters commented: ‘There are more and more cloud-based products available that address the needs of small firms. Small firms and sole practitioners should not have to be IT consultants, and they should not have to do the same type of “beauty parades” that larger firms do.’

I think there’s some validity in this statement. You have to determine if there’s a return on investment for a small firm to go to trouble of a ‘beauty parade’. The reality is that technology is a compromise. In the same way that a risk mitigation is acceptance, sometimes you have to accept that technology isn’t quite perfect.

When you implement an IT system you should expect to adapt your business processes, as much as the technology needs to adapt to your business. In the world of cloud you don’t have the same freedom of customisation that you might be used to, so accepting business processes will need to adapt is an essential step in embracing the cloud.

‘If I were a sole practitioner, I wouldn’t look at anything but cloud-based software,’ DeCerce observed.

I couldn’t agree more. If you set up a new business today, how could you possibly justify the expense of on-premise IT? As a large business, the decision between cloud and on-premise is much more nuanced, and you’re more likely to have a hybrid model mixing on-premise with both public and private cloud (although I should note that I don’t believe in ‘private cloud’).

Cloud Services

The most popular cloud service among UK law firms is Mimecast, a subscription-based email management tool which includes a searchable archive, a spam blocker and anti-virus capabilities.

Steve Sumner, director of IT at Cambridge firm Taylor Vinters [my old boss in fact], explained that Mimecast was a secondary service between the internet and a firm’s email storage services that provides security, back-up and business continuity. For example, in the event of an outage, people can access their email remotely via any internet connection.

I was configuring Minesweeper at Taylor Vinters over 10 years ago, so that shows that the legal sector is not new to cloud-based services. In fact, back then they weren’t even called ‘cloud’ services. Where the cloud has advanced is that it is no longer about infrastructure services, but applications that are very much tangible to the end-user.

Large firms, which are considering Office 365 and other cloud services, are necessarily slower to change, as they have to address regulatory and client issues across the board. So the growing acceptance of cloud services presents smaller practitioners with an opportunity to blaze a trail. While Spencer argued that most firms with fewer than 10 practitioners would not be able to budget for cloud services, Clarke responded that the monthly cost could be as low as £7.99 per user for all the Office 365 services.

This is an intriguing statement. Small firms with less than 10 staff are prefect candidates for cloud-based services. Paying for services ‘as you go’ must surely be better than capital expenditure?

Scottish firm Inksters moved its entire IT infrastructure into the cloud four years ago when the firm had fewer than 10 people. Brian Inkster added: ‘We just had the Glasgow office, and it enabled us to easily open satellite offices in Wick and Portree without any server or hardware issues. Moving to the Rise datacentre enabled the business to expand in a way that would never have been possible if we had to set up servers and PCs in Wick and Portree.’

It’s great to see real-world examples of where cloud-based IT enables a business to expand. Often IT leaders become emotionally attached both to their physical IT assets, and their IT staff headcount. The modern IT leader focuses his efforts on providing tangible business value, not on how many staff or pieces of hardware he is in charge of. If anything, move your IT to the cloud and you can boast that you’re in charge of a much larger team!

Turner was among those who felt that more guidance was needed for sole practitioners around the choice of vendor in the first place, and that vendors were not listening to the needs of small firms and sole practitioners.

This is a common problem, and one that’s not going to be resolved any time soon. The challenge for a cloud-provider, or a provider of anything really, is to get new clients and shift units. Often you’re dealing with a sales person who has commission to earn, likely tied to sales volume. The vendor’s delivery team that follows is responsible for client and customer care, and meeting needs and requirements.

Vendors will listen to large majority as that is a commercial reality. Small firms should be open eyed to this. It goes back to realising that when you engage with a cloud-based system you a small fish in a big pond. Unless you’re a big fish in that pond, you’re opinion probably counts for less than it did before.

So is this a problem? It depends on how you look at it. The benefit you get form the cloud is that any updates on the system are likely required by a greater number of people. This might identify opportunities in your business services that you wouldn’t otherwise have been aware of.

Clarke set out the issue: ‘The resounding message is that there’s a lack of information for small practices about what is the best direction for them to take, and potentially the need for a list of cloud-based technologies that will deliver all the services they need.’

The best current list of technologies used by law firms is on www.legaltechnology.com. However, they only chart the top 200 global and UK law firms. The cloud is ever evolving, with new solutions appearing on an almost weekly basis. The big vendors, such as Thomson Reuters, are now producing cloud-based solutions focused on the smaller firms. There’s also Microsoft’s Matter Centre, although I understand that the release date has been used back to next year. For someone to provide an up to date list there needs to be a clear ROI for them as it would take a lot of effort to develop and maintain.

Should the Law Society be providing more guidance, particularly around cloud services, where regulatory issues come into play? Not necessarily, Inkster observed: ‘A reputable legal software provider should make sure that everything is compliant.’

This is an interesting perspective, I don’t think its the responsibility of a software vendor to define what the legislative requirements are. Although I do believe the vendor should be able to state if their system are compliant. However, I suspect compliancy would be based on a specific set of parameters. For example, Microsoft Windows NT 4 was compliant with Level C2 security clearance. However, for a Windows NT4 machine to be compliant it couldn’t be connected to a network! Not especially useful, and perhaps an example of the challenges in making the software vendor responsible for compliancy.

To take an example of a similar legislative requirement we can look at PCI DSS (Payment Card Industry Data Security Standard – a set of standards that must be met if you take payments by credit or debit card). We’ve helped a number of clients to outsource card payment services to compliant solution providers. Perhaps the SRA could take guidance from the payment card industry as to how to develop relevant standards.

Clear guidance would help both law firms and software vendors. As DeCerce voiced in the roundtable, ‘It would help if the SRA were a little more prescriptive and set out clearly what firms can and cannot do. It might make sense for the regulators to include an IT professional on any relevant committee, in order to clarify technical issues.’

Business Continuity

The discussion turned to the tools that support efficiency and client service. Following the incident in April when an underground electrical fault caused a 36-hour power outage in the Holborn area (right in the middle of me delivering a webinar on behalf of Microsoft and the ACCA to 200 attendees!), Lewis Silkin is replacing its on-premise datacentre with a private cloud. DeCerce explained that this would avoid any recurrence of the outage that the firm experienced due to the Holborn fire as people would be able to log on to the firm’s systems remotely.

I’ve developed data centre strategies for many organisations and on a local, national and global scale. I’m not sure the statement above creates the right understanding. The primary reason organisations move their data centres out of city-based offices is to reclaim expensive real estate to use for fee earning staff. Second to this is the fact that a data centre will be much better run and managed by an external organisation whose business is to run data centres.

The obvious challenge when moving the data centre off-site is that your wide area network links become that much more critical. You now run the risk of your network links going down in two different locations, so you could potentially have doubled the risk! The fire in Holborn is one of those real-world examples of a disaster that is simply unavoidable. It should be remembered that risk is balanced against cost, which is often a reflection of probability.

Off-site data centres are typically the right thing to do for a host of reasons, and business continuity plays a part, but it is not as simple as saying your DC is off-site, therefore you’re safe.

The model described by Steve Sumner is a good model, by having 2 replicated data centres, each providing resilience for the other, there is a high level of protection.

Innovation and Agility

‘We can’t outspend the big firms, but we can out-innovate them,’ Hajek argues.

I couldn’t agree more. I work with firms from 15 staff through to Magic Circle, and being small is definitely a competitive edge. With so much focus on ‘Agile’ methodologies at present, and the concept of ‘fail and fail fast’, smaller firms are much more able to take this approach. Perhaps this is in part due to the smaller investments at stake.

Hajek does not consider his case management system as a differentiator, although it is an ‘efficiency leveller’ with bigger firms. The differentiation comes around client service: ‘Where smaller firms can be more nimble and innovative is using other software, for example marketing software, which helps to automate the business. I use Hubsoft, which means my website is open 24/7 and I can be instructed while I sleep.

I would agree here too. It is unlikely that any legal sector specific solution is going to provide a differentiator in the mid to long-term. Especially if they are cloud-based systems, where your competitors have the same access to them as you do. The challenge and opportunity is to use the right combination of software that can make a unique difference to your business.

A way we help clients to do this is to simplify they way they look at their business. In my view a professional services firm only does 4 core things: 1) marketing to generate leads, 2) sales to nurture leads and convert, 3) delivery of matters/projects, and 4) operate the business. The more connected these four things can be, the more effective the business can be, and thereby the greater chance of being able to differentiate.

With clients now in the driving seat, and pressures on fees become the norm, firms need to provide innovation in service and in fee structures. Technology is nearly always the enabler to do this.

‘Designing our IT function around the needs of the business includes understanding our clients and developing IT tools that enhance client service. For example, our mobile phone app gives clients access to their key documents and financial information on demand.’

This goes back to the point I was making earlier. I recently presented to a Lawnet audience at a Microsoft conference on how to develop your IT Strategy. I presented 3 big ideas to improve your IT Strategy, one of which was to immerse the IT team in with clients. How often does a firm get the IT guys in front of the client? There’s no better way to find out what will make a difference than to observe and engage.

Roe added that small practices like his and Turner’s differentiate themselves by their specialist knowledge and personal service. In terms of technology, however, Roe and others underlined the importance of sole practitioners understanding the risks inherent in IT, such as ransom software and the need for encryption – as well as the opportunities, such as those presented by cloud computing.

Much of the discussion in the article focuses on IT providing efficiencies and differentiation, but Roe makes a good point here. Small firms need to consider how they manage their IT assets, and this needs to be both those assets that they own, and those that they subscribe to i.e. cloud services. Firms will benefit here from having an IT support provider that can manage the infrastructure layer (servers, storage, desktops, etc.), through to authentication and security. With this approach standards can be set for which new cloud-based services much meet to be viable. New services can simply be plugged in, and the security will be mostly taken care of.

The challenge for firms of any size is to ensure congruency across solutions. There’s no point offering the business a certain degree of up-time, or response when there’s a problem, if these service levels are not matched by the chosen cloud solutions. This is where the discipline of Service Management comes in.

A gap in the market

Some argued that although straightforward systems are available, particularly in the cloud, law firms are almost always looking to customise the systems to their own working practices, rather than adapting their working practices so that they can benefit from an out-of-the box system, as many commercial legal services providers are doing.

This again goes back to the point I made earlier – when adopting cloud-based systems you must accept that you don’t have the same ability to customise software as you might have done before. There’s a good chance that the business process needs to be adapted to align with the software.

In reality, this is not a bad thing. We worked with one magic circle law firm where they had such a big backlog of system change requests that even a simple change to their website took weeks to action. Limiting the amount of customisation of software may in fact prove more efficient to the business, rather than less. However this is a big cultural barrier, especially as lawyers are for the most part used to getting what they want. But in my experience this culture change challenge is not limited to the legal sector.

For the more tech-savvy firms, technology clearly is a differentiator, helping firms offer extra services and expand their practices, in the way that Stephens Scown and Inksters have done, or expand their market – as Hajek has done at Clutton Cox. For smaller firms and sole practitioners who are less IT-literate or who cannot spare the time, the answer may be to bring in the experts – hire a consultant and/or go for a managed service so that they do not have to deal with IT issues and can get on with being a lawyer. But this may mean changing long-established processes so that technology can bring more efficient business processes as well as enhancing client service.

I would posit that technology is wholly essential for today’s law firm. There’s not a business process I can think of that isn’t touched by technology in some way. As Goodman points out, hire an expert so that you can get on with being a lawyer. This is absolutely the right approach. As an IT consultant running a business I don’t spend my time trying to become an accountant. And even if I had a passion for it, I wouldn’t spend my time doing something that doesn’t contribute to bringing revenue into the business. Yet with technology, perhaps as it is exciting and can be addictive, people are often tempted to do things themselves.

I wouldn’t go so far as to say you shouldn’t touch it at all. In fact, I think it is essential that the business is deeply engaged in technology decision making. But to get real depth of understanding I think it’s more appropriate to seek the views of experts. Much like people do when they engage a lawyer!

 

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