For the past few years, many law firms have put off major technology decisions, as the dot-com implosion, a cooler economy and budgetary constraints provided justifications for delaying, or retreating from, new initiatives. 2003 will be different. A variety of factors are coming together in a way that will jolt firms into making overdue buying decisions and gaining control of increasingly unfocused technology budgets.
For many firms, technology spending has grown to be a significant portion of the annual budget. Unfortunately, in altogether too many firms, management does not have a clear understanding of what technology dollars are buying and whether those dollars are being well spent. What is understood, however, is that there are growing internal and external pressures for firms to bring their technologies in line with current business standards, often at the prodding of major clients. The tension between these factors will come to a head this year.
Looking in the crystal ball, here are highlights of the major technology themes and trends for lawyers and firms to expect in 2003. These issues should be on every firm's agenda.
Hardware Buying Time Is Here Again
Many firms made their last significant equipment purchases in 1999, when businesses of all types replaced old hardware in anticipation of Y2K problems. Now, in turn, those 1999 machines are old, with a fraction of the power and capacity of even the lowest-priced computers available today. That aging hardware hinders lawyers' ability to work effectively, and can even contribute to retention and recruiting problems. Consequently, 2003 should bring a new round of hardware buying.
Equipment upgrades will also be driven by what lawyers now use at home. Traditionally, lawyers had better, faster and more powerful computers at work than at home-but these days, the reverse is more common. In addition, scanners, color printers and CD-writable drives are standard features in most home systems and lawyers want the same at work. Many lawyers complain about the decrease in power and features when they move from their home to their office systems. We can expect this phenomenon to lead to dissatisfaction and demands for upgrades in the workplace.
Another consideration is the increased mobility needs of today's lawyer. Shouldn't all lawyers have a notebook computer, probably with a docking station, perhaps even as their primary office computer? Certainly this is true for litigators. Most lawyers can also make a case for PDAs, wireless devices, wireless access or other specific items. You don't want to let aging equipment embarrass your tech-savvy lawyers or diminish your firm's reputation in the eyes of clients who have state-of-the-art equipment.
Firms will need to consider serious investments in new hardware this year. With budgets tight, many will also need to find ways to control costs, such as by leasing equipment or looking into refurbished or secondary market equipment.
Old Software Has to Be Replaced
A surprising number of firms are using software that is five or more years old. Clearly, that raises questions about program compatibility and vendor support. Older versions of some programs -such as Internet Explorer, to name just one-also raise significant security concerns.
And what about the user's productivity? Newer software tends to have many improvements, better usability and important features unavailable in older packages. For example, Microsoft Word XP includes a number of lawyer-specific features developed in connection with an advisory board of lawyers-yet, despite those features, law firms have been surprisingly slow in upgrading to Office XP. As more lawyers become aware of enhancements in features, there will be greater pressure on firms to upgrade their software.
As will be the case with hardware, office software upgrades will be driven by what lawyers now use at home. Any recent purchaser of a computer will have the newest versions of standard software. Lawyers are increasingly frustrated when their office software lacks features of the programs they use at home.
In addition, practitioners are increasingly aware of highly useful and valuable programs for presentations, calendaring, litigation management and other specialized software for lawyers. The 2002 AmLawTech Survey indicates, for example, that more than 50 percent of the largest law firms now use CaseMap as a litigation strategy tool. An increasing number of trial lawyers and their clients consider such sophisticated programs to be essential for modern litigation.
Firms will need to audit their existing software, ongoing license costs and actual usage of specific programs, and then look into new packages. Gaining control and streamlining choices will be essential. At the same time, firms will need to learn what current products can improve lawyer productivity and what their clients and competitors are using. Only then can you make wise choices about which software to move to, different licensing options and the costs involved.
As technology accounts for a bigger slice of the budget, the dollars spent and choices made must be subjected to solid business analysis and decision making. In other words, if you don't know what you are getting for the dollars that you spend, hadn't you better find out? The idea of return on investment (ROI) has been a huge issue for non-legal businesses for several years. Law firms, in general, have not taken a similar approach.
To measure ROI, a firm needs to develop standards and methods to quantify and analyze results. There are resources to help in measurement and analysis. An audit of current projects and review by an expert would likely save most firms thousands of dollars just by eliminating redundancies, unused software and dead-end or unnecessary projects.
In simplest terms, you want bang for your buck. Technology must either save you costs or help you produce revenues. If you don't measure, you can't know if it is accomplishing either end.
In 2003 firms will take a variety of approaches to ROI. Most firms need at least the following:
- A high-level technology audit of existing systems and projects
- Corresponding education of decision makers
- Full analysis of current projects and proposed initiatives, with careful attention to their costs
As part of the ROI analysis, you can consider options such as outsourcing, leasing and purchasing refurbished hardware as ways to get control over your technology budget.
Failure to Plan Is Planning to Fail
One key sign of a firm committed to technology is the presence of a strategic planning group that integrates technology decisions with the firm's business plan and goals. In many firms, a complete restructuring of existing technology committees will be in order. Your committee may need an expanded profile, more decision-making power, a more streamlined process or new energy and fresh ideas.
Planning will become much easier with ROI standards in place. At the same time, client needs and requests will definitely force firms to consider new initiatives. Strategic technology planning will need to become a larger part of firms' strategic business plans.
We can also expect to see more of a "portfolio" approach to technology planning. In this approach, a firm takes a diversified strategy of creating a reasonable mix of low-risk, low-return and high-risk, high-return technology investments, much in the same way that one diversifies financial investments. This approach balances the risk and return of a firm's entire technology "portfolio."
As a result, 2003 will be a year in which a wide variety of old and new technologies will be tested. For example, we might expect firms to address older ideas, document assembly in particular, as well as client-driven initiatives, such as extranets and knowledge management. All this planning will happen upon a bedrock of greatly increased attention to security issues.
The Focus Shifts to Lawyers First
Use of technology in law firms has, essentially, developed in three stages. First, secretaries and staff got the best equipment and software and the lawyers were almost an afterthought. Next, technology became almost exclusively the domain of IS departments, which determined what was appropriate for the lawyers and most stable for networks. In those two stages, practitioners with specific needs were often neglected because they did not fit the firm's technology template. This year heralds the third stage of law firm technology: the lawyer-focused stage.
Word XP, for example, is designed with features that would benefit lawyers more than secretaries. Other tools that could improve the productivity of lawyers more than staff include PDAs, laptops, scanners, wireless devices and the like. In some of these cases, implementing and maintaining the technology might even make the job of the IS department more difficult. But, as many lawyers have complained, shouldn't the firm cater first to the technology needs of its lawyers and, thereby, help them service clients in the best ways?
This lawyers-first stage requires that firms educate lawyers about the tools that are available to them, as well as thoroughly research and make choices that are appropriate for individual practitioners.
Neglect the Web at Your Risk
Here's a simple test. Enter your firm's name into a search engine such as Google and look at the results. Those search returns are a measure of your Internet reputation, or your "Web presence." Now, take a look at your favorite Web sites, the ones you use frequently. Think about why you like them and how they are useful to you. Next, visit your firm's site. See the difference?
Law firms that don't "get" the need to manage and control their Web presences will pay the price. Clients that regularly use Web and e-commerce strategies as a part of business will oblige their law firms to understand and adopt similar strategies-or the clients will go elsewhere.
In 2002, there were a large number of substantial redesigns of law firm sites. Yet there is still quite a way to go. This year will witness another significant round of site upgrades, as well as increased use of extranets and client-centered, or personalized, approaches to Web sites.
Clients Speak Up
The unrelenting theme throughout the year will be client-driven technologies. Most of the firms with really interesting technology initiatives have undertaken such efforts at the request of clients, or as a result of seeing a client need that could be filled.
Consider how clients' desire for document compatibility forced the sea change of law firms moving from WordPerfect to Word. Clients also largely drove the early use of e-mail at many firms. Today's clients also are doing cool new things with technology. They see the benefits, especially cost savings, and want to bring those benefits into play to manage increasing legal costs (which in no small part result from the failure to use productive technologies). In particular, companies that are considering going to flat fees for legal services are expecting greater technological efficiencies in their law firms.
In 2003, firms should expect increasing client pressure to adopt new, compatible and more capable technologies. The firms that anticipate and prepare for this trend-and know which options are available-will end up in the best positions.
Don't Drift to the Sidelines
Firms that do not wisely navigate technology decisions this year are likely to find themselves at a distinct competitive disadvantage. You can no longer sit back and let technology developments happen "elsewhere" while your firm slips farther back in time. Aging stocks of hardware and software should be replaced. Technology budgets and decision making that seem out of control should be focused and an emphasis placed on ROI. Client needs should put a premium on excellent strategic technology planning and careful attention to cost issues. Finally, the primary focus should be on which tools are best for lawyers.
Beware: Firms that drift through 2003 without addressing these issues are likely to find themselves on the side of the line with the technology have-nots-and that, certainly, is not a place that any firm should choose to be.
Dennis M. Kennedy ( firstname.lastname@example.org) practices intellectual property and information technology law in St. Louis, MO. He writes and speaks frequently on technology and Internet topics and was named the 2001 "Techno-Lawyer of the Year" by TechnoLawyer.com.
ABA Legal Technology Resource Center: www.lawtechnology.org
Law Technology News (free registration required): www.lawtechnews.com
FindLaw's Modern Practice: http://practice.findlaw.com
ABA Law Practice Management Section's Law Practice Today: www.lawpractice.org
Dennis Kennedy's Legal Technology Primer: www.denniskennedy.com /ltprimer.htm
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