Lawyers and IT solutions in the age of cloud computing

‘The first rule of IT is never adopt early – let someone else suffer the pain before you put your hand in the bathwater,’ advises Luigi Salzano, Pannone’s IT development manager. ‘When a product is new to market, it is incredibly foolish to implement it straight away.’

He adds: ‘In general, legal IT suppliers are desperate to get their software out into the marketplace because they operate in such a niche market with relatively low margins, so versions one and two may well be incomplete. Wait until the teething problems have been ironed out before you make your move.’

Bearing that ‘rule’ in mind, which IT products are law firms and in-house legal teams currently considering to support their legal services? This is an especially topical question as lawyers consider the concept of cloud computing – putting more services on the web outside the norms of PCs and servers.

Fewer, bigger providers
Consultant Neil Cameron has been advising law firms on strategic and tactical IT issues since 1986. He recently carried out a survey of law firm spending and found that, over the last two years, most firms had delayed projects, but are now talking about restarting them in 2011.

He says the recession forced the market to consolidate, leaving the main players such as Thomson Reuters, LexisNexis, IRIS and Tikit, who have been ‘hoovering up’ IT products. ‘This is probably beneficial,’ he says, ‘as the market was too fragmented and some of the smaller software houses didn’t have the resources to spend on R&D to keep their products up to date.’

Cameron says there are different families of products for different types of law firm. ‘The large, multinational law firm will have to buy Elite, Aderent or SAP. The middle-sized firm will be looking at LexisNexis or IRIS, while the high-street firm will be buying Perfect Software. To put it in perspective, some of those systems will cost £1,000; others will cost half a million pounds just for the software.’

The legal market is attractive to suppliers because it is small and identifiable, but there are high barriers to entry. ‘Lawyers resent paying money for software,’ Cameron notes. ‘They argue about the price and then they whinge like hell when they think it doesn’t work – half the time because they haven’t spent enough on training.’

Law firms certainly provide as good a test environment and as demanding a client base as you will find, says Derek Southall, head of strategic development at Wragge & Co. ‘They punch above their weight in terms of the kudos they bring to a product if they take it,’ he adds. ‘And if a supplier can sell a product to an in-house lawyer responsible for mitigating risk and driving compliance through their business, it can act as a great Trojan horse to get their product pushed out into the wider business.’

Southall chairs the Legal IT Innovators Group, which publishes standards and guidance papers for law firms and their clients. The problem for law firms is not fear of change or innovation, he argues, but ‘the sheer volume of options out there in the market which you need to work through to find the right strategy to meet your needs and the diverse needs of your client base’.

So what are law firms doing? Two innovative practices are happy to outline their IT programmes for Gazette readers.

Pannone is planning a complete desktop refresh next year, with: Office 2010; Microsoft’s Sharepoint 2010; LexisNexis’ new matter management system DNA, waiting until they were happy it had matured sufficiently before using it to upgrade their Axxia system; and Windows 7. Salzano explains: ‘The first three are about improving efficiency. As we are rolling out a swath of new systems, we decided to update the operating system as well, given that Windows XP is approaching end of life.’

They are also putting in a hosted client access solution. ‘Microsoft will host a Sharepoint solution for you – it is not free but it is cheaper than buying all the hardware and software and it gives us complete security of continuity of service.’

The firm uses Interaction for client relationship management, which LexisNexis will integrate with DNA. ‘Interaction gets excellent results, though that is dependent on the data that goes in. We also use a Tikit module called Reaction, which allows you to leverage the data you hold in Interaction to send out mail shots to clients, which adds lots of value.’

The firm uses Epoq’s Rapidocs software for intelligent drafting and co-authoring documents with their private clients. ‘We have also looked at Hotdocs,’ says Salzano, ‘which is a fun bit of software that can run through Sharepoint. The software “interviews” clients and they can interact with the documents and see the changes as they work on them.’

Optima Legal is the UK’s largest volume legal firm specialising in property, legal recoveries and litigation. It has grown through acquisitions, which has meant inheriting a number of different systems.

IT director Steve Nattress explains: ‘Systems which have been developed within one environment needed ­rethinking in a multi-site, multi-jurisdictional business. We have spent two years developing a new solution, using the tool set provided by the Singularity business process management system, and using our internal resources to build a new platform.’ He adds: ‘The key was to develop a system that worked effectively across a multi-site environment and introduced a workflow capability. We are almost at the point of rolling it out and we are likely to use it for the majority of the property products we bring to market.’

This has, Nattress believes, proved ‘transformational’ in terms of the ability it gives the firm to continue meeting client requirements for turnaround times.

The firm has installed the Salesforce customer relationship management system as a cloud application. ‘It is a great product,’ says Nattress. ‘It took some learning to get the best out of it, as you have to put in consistently good quality data. We deliberately chose to keep it simple and not to integrate it with our case management systems, though that remains an option.’

They also use two third-party packages: Liberate, supplied by Linetime, for their debt products; and in their Scottish office, Visualfiles supplied by LexisNexis.

Kit for clients
In the in-house sector, key demands are for management information, e-billing, and matter management systems, with the main suppliers including Datacert, CT TyMetrix and Serengeti.

Southall observes that Sharepoint is now being used in an increasing number of legal departments to manage matters. ‘It is often in the company’s enterprise licence so you don’t have to ask for more budget to get your hands on it. It is very adaptable, with a workflow and collaboration tool. It can also provide an intranet and document and email management system.

‘I am not on a commission from Microsoft but it genuinely stacks up,’ he maintains. ‘If you were starting a law firm from scratch, you would look at this very carefully for your document management system. With Microsoft being one of the largest cloud providers, using Azure and 365, it potentially brings huge cost benefits and flexibility.’

Another product type which is gaining traction is intelligent drafting, which is increasingly being used in areas such as divorce, wills, employment and shareholder agreements, where solicitors often give the client a questionnaire to fill out to identify the key issues.

Epoq’s Directlaw platform uses Rapidocs online document automation software, backed up by sophisticated legal document content, to produce accurate first drafts.

Grahame Cohen, Epoq’s founder and chief product and technology officer, explains: ‘It offers flexibility for clients. They are given access to Directlaw’s questionnaires from the law firm’s website to fill out in their own time. The form updates as they fill it in so they only have to answer questions relevant to their situation. It almost goes back to the days of the scrivener who would take down the key information for the first draft which they would then hand to the solicitor.’

There is a misconception that ‘online’ means cheap, he says. ‘This is nothing to do with cheap. Firms that successfully use this technology are not trying to compete on mass low price. They are using it to maintain their competitiveness by reducing the amount of time it takes to complete the work, thereby radically increasing their recoverable hourly rate.

‘The system can issue the bill online which can be paid by credit card, so it reduces the cost of doing business. It also handles compliance. When the client returns the document it takes them through a Rule 2 process which saves time and cost.’

Another area that firms will need to investigate if pressure builds from clients is e-billing.

Corporates and consumers of legal advice want e-billing, says Cameron, because it gives them the power to manage and control their legal spend. They can compare the value they get from law firms doing similar work, while the system will reject any bill which is not compliant, even if it is an innocent mistake. ‘Why would law firms want to help them do that? But, in the end, if the client wants it they will not have a choice.’

Pannone’s Salzano says it does not currently have an e-billing solution. ‘A year ago, a client threatened to take all their suppliers off the panel unless they integrated with an e-billing solution called Tradex. It was an interesting product and we were working on it when the supplier dropped the requirement.’

Cost is inevitably another key factor. However, Cameron says: ‘Business as usual’ upgrades have to take place. Most firms are looking to upgrade to Office 2010 and Windows 7. While many firms skipped a version of Windows and Office, you cannot skip two. And some may have tried to save money on their software licences by cancelling their Microsoft select agreements, so they will find it difficult to afford to move to 2010 because they will no longer have access to free upgrades.’

Some cloud provision is being supplied relatively cheaply over the web. ‘However, you need to be careful about cost, liability and how critical that service line is for your business,’ says Southall. ‘You cannot skimp on essentials. You need to know every core system has a proper contractual and support base behind it.’

Epoq’s Cohen says Directlaw is ‘very scalable and carefully priced. We work with sole practitioners to firms like Russell Jones & Walker. The base starting cost is £299 per month – on average firms are paying about £450 a month’.

For sole practitioners, scalability is crucial. Lawumi Biriyok, chair of the Sole Practitioners Group, explains: ‘Sole practitioners don’t need the entire range of the Encyclopaedia of forms and precedents, for instance, and the SPG has worked closely with people like Sam Howard at Lexis Nexis to ensure we just have the relevant bits on CD or online.’

SPG committee member Karen Purdy adds: ‘Accounts and risk management software have also been tailored by IT firms so that it is relevant and affordable for small firms. My Cognito software gets great write-ups by lawyers.’

On the horizon
So what do the experts identify as the new trends? Pannone’s Salzano says Saas (software as a service) is an emerging theme in legal IT, whereby vendors essentially offer hosted versions of their solutions. ‘The obvious advantage to this approach is low initial outlay and this might suit smaller firms, although I don’t sense legal IT Saas apps is gaining huge traction as yet.’

For Southall, Saas has merged into cloud services, with the biggest players buying up data centre space. ‘The cost and organisational advantages are becoming so great it is difficult to imagine the cloud won’t get traction in the future. It will certainly give smaller firms the opportunity to punch above their weight.’

His tips to watch are developments by LexisNexis and Thomson Reuters; the range of cloud legal services/systems being provided by third parties such as Rocket Matter, a legal productivity software; true productivity apps that dive deep into legal processes; and applications that learn from how lawyers work.

‘With the onset of the Legal Services Act,’ Southall says, ‘it is easy to identify at least 30 delivery models without any effort – the challenge will be in choosing the winners.’

Whatever your choice, Nattress sounds a cautionary note: ‘Salesmen will tell you about all the fantastic things you can do if you buy their product. What is crucial is that you meet your objectives, and you don’t overly complicate things or risk making your systems less reliable because you have tried to be too clever.’

Grania Langdon-Down is a freelance journalist