Practice Management

ABA TECHREPORT 2017

Dan Pinnington is vice president of Claims Prevention and Stakeholder Relations at the Lawyers' Professional Indemnity Company. He helps lawyers avoid malpractice claims and succeed in the practice of law. Contact him at dan.pinnington@lawpro.ca

Ian Hu is counsel for claims prevention at LawPRO (Lawyers’ Professional Indemnity Company) in Ontario, Canada and is a member of the Law Practice Today Editorial Board. Follow Ian on Twitter @IanHuLawPRO.

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This year marks the 10th anniversary of the release of the first Apple iPhone. In just 10 short years mobile phones have become ubiquitous, essentially becoming physical appendages for many people. They have fundamentally changed the attorney-client relationship. Clients now expect attorneys to be just one text or email away and accessible 24/7. Even staid law firms have embraced this technology wonder—81 % of firms allow mobile devices to access their network.

While almost 100% of attorneys have embraced email (yes there are still a few that have support staff print messages and then type their hand-written replies), unfortunately the use of other practice management tools in not as universal. This is unfortunate because embracing technology in legal practice is more essential than ever for all attorneys and firms given the changing nature of legal services. But the profession’s adoption of practice management tools has slowed to a crawl. Is this slow-down a phenomenon that will persist into the future?Have we reached “peak legal technology,” or can an iPhone-like disruptor still change the landscape?

Usage and Adoption of Practice Management Tools

Perhaps most telling is the usage of the so-called “gold standard” of practice management tools known as matter or practice management software. Note that the ABA 2017 Legal Technology Survey Report definition of practice management software is broad, and includes Microsoft Outlook, which is the most used at 57%, followed by Time Matters (10%), CaseMap (9%), and Clio (8%). While Outlook is better than nothing, it offers a fraction of the functionality of many other practice management software tools. While it has email, calendaring, and contacts, it lacks the ability to keep track of time and documents, and do billing and accounting like the dedicated practice management tools. Its popularity may be attributed to the fact it is free with Microsoft Windows, but as practice management software, it falls short relative to the dedicated tools. Purists would argue it really isn’t practice management software at all.

While the use of practice management software increased in firms of all sizes in 2016—most glaringly to a whopping 62% in law firms of 10-49 attorneys—it fell back down to levels seen in prior years. The increases seen in the 2016 results are probably the result of random selection or a fairly small sample size.

Attorneys reporting they are “Very satisfied” with practice management software fell from 32% in 2016 to 25% in 2017, the same as the previous year, and those reporting “Somewhat satisfied” went up from 57% in 2016 to 66% in 2017—a 16% swing. It thus appears that the majority of the users of practice management software are reasonably happy with it. One would expect this, given the benefits of using practice management software.

At first glance, practice management software should be easy to love. The benefits have been well canvassed: it becomes the central nervous system of a law firm by keeping track of emails, documents, calendars, deadlines, time, contacts, billing, and accounting. Even better, it can complete these tasks electronically, which means all information on all files is available instantly to everyone in the office. Welcome to the paperless office, where there are no more lost files and documents. The time saved not looking around an office for a lost file can’t be understated.

Avoiding Malpractice Claims

There is a further bonus to practice management software—it can significantly lessen the risk of three of the most common causes of malpractice claims. The largest causes of claims in most areas of practice are attorney-client relationship and communication failures (e.g., poor communication, miscommunication, or no communication). As these claims often come down to a “he said, she said” scenario (e.g., the client says particular things about what was said and the attorney tells a different story), the information for the matter in a practice management tool (e.g., sent and received emails, dates in calendars, copies of documents, etc.) can serve to refresh and prove the attorney’s recollection of what happened. Failing to meet or react to deadlines is another large source of claims in many practice areas, and the number one source of claims in the personal injury and plaintiff litigation areas.[2] Using a calendar to track deadlines and tasks can easily and significantly reduce this claims risk. Conflicts of interest are another persistent cause of claims that can easily be prevented with a searchable database of current and past clients (see below for a discussion on avoiding conflicts claims).

Recognizing the Benefits and Dealing With the Challenge of Implementation

Prior to this year, a common refrain was that attorneys need only try practice management software and they would be hooked. One of the biggest identified barriers to adoption was that attorneys, being a stubborn group, would be reluctant to try new technology. Along similar lines, aging demographics are often cited as a barrier because, usually, older owners of law firms would not be open to considering and adopting technology. One would expect that these barriers are slowly being overcome as the demographics of the bar change and cloud-based tools are more widely adopted (see below more detailed discussion of the cloud).

Additionally, one can’t ignore the headaches of implementing new technology or a new application at a law firm. Getting people to work in new and different ways, and teaching them the features and functions of a new software program requires time and effort, including assisting people through the change and providing them with adequate training.

With practice management software, you leave behind separate applications that handle each of email, calendars, billing, accounting, and document management (the different available practice management tools offer some or all of these functionalities). But who hasn’t been frustrated at the stream of clicks necessary to move one document from one application into another? Click save, click okay, click the case file number, click the folder, label the document, click okay, rinse and repeat. This is a far cry from the user-friendly “One-Click Buy” that Amazon has famously popularized. The Holy Grail of practice management software—that is, the one-stop practice management app across all devices handling all aspects of practice—remains elusive, but is much closer.

With the growth and acceptance of cloud applications, including full-featured practice management tools, there should be wider uptake of this powerful tool. And with the vendor taking care of hosting, security, updates, and backups, you can get incredible functionality for a low monthly fee that is a fraction of what firms used to spend self-hosting similar tools. We are likely to see more user-friendly design and integration with all applications and mobile going forward, which will hopefully galvanize broader adoption.

The Importance of Training

2017 Survey respondents who have training available at their firm report that the most effective type of training is when a person shows up and guides a lawyer through the technology. Live classes by in-house staff were available at 28% of respondent firms, 18% of firms said live classes were available from vendors, and 6% of firms said they were available from outside organizations. Collectively, web-based training was considered to be the second most effective form of technology training.

Only 11% of respondent firms said they offer CD and DVD training. Come to think of it, my office has a drawer full of old Microsoft Office DVDs and VHS tapes gathering dust. While more widely used several years ago, this form of training seems to have been replaced by live and web-based training. I will note that the more advanced features of Word, Outlook and Excel featured on those old CDs and DVDs are the same ones that many attorneys and law firm staff need to learn.

It is good to see wider availability of live training and training from vendors and manufacturers. In our experience, firms often don’t spend the time or the money they should on training. We have seen firms spend tens and even hundreds of thousands of dollars on new technologies, only to give attorneys and other firm staff a few lunch-hour training sessions. While well-designed cloud-based tools are often easier to navigate as they work within a familiar browser window, training is essential to ensure that staff understand the basic features of any application, and critical for most staff to learn more advanced features.

One-Purpose Practice Management Tools

Full-feature practice management tools are great for many firms, but some need the more powerful or specialized features offered by dedicated customer relationship management software (“CRM”), document management, and conflicts products.

Managing Clients and Conflicts

Basic client management software maintains a database of names and contact information. Not surprisingly, the vast majority (83%) of respondents say they are using Outlook. This is followed by the far more powerful CRM InterAction (8%), and interestingly, Time Matters at 7%. Solo attorneys seem to be trending downward in their use of contact management software, while big law firms have hit a four-year high of 97%. This is really an apples and oranges comparison as the practice management tools (both full suite and single purpose) that solos and small firms use are different from those the medium and large firms use.

The ease of use and other advantages of an electronic system over paper are hard to dispute. Client management software makes it easy to contact previous clients to follow-up on new business, perform conflict checks, and, when updated properly, eliminate the possibility of sending letters to the wrong addresses and people. With law firms coming into contact with hundreds if not thousands of people over time, it is baffling that not all law firms maintain an electronic client database. We suspect that most do but the numbers reported for solo and small firms are low. Perhaps there is confusion over the definition, as even simple accounting packages have basic functionality that would let a firm track and search client names.

Specialized customer relationship software goes several steps further and keeps track of information such as how much business a client has accounted for, which clients know whom, how much money the law firm has spent on a vendor, and so on. Solos continue to make available such customer relationship software at the low rate of 23%, while big law firms have increased availability from 66% to 80%.

Since law firms earn business from referrals, it is puzzling that more sophisticated customer relationship software has not seen a larger uptake among solos and small law firms. Likely, the cost of these tools is prohibitive. But keeping data such as the percentage of the firm’s total billings a single client is responsible for is a useful metric. Similarly, keeping track of relationships between clients can help a law firm market better. As performance data becomes more important and easier to gather, expect either this to increase, or for other software like practice management software to continue to pick up the slack.

The availability of conflict checking software goes hand in hand with customer relationship software. Only 32% of solos have conflict checking software available, while 90% of big law firms do. Again, this is really an apples and oranges comparison. Solos and small firms can do a reasonable job of checking for conflicts by using Outlook or an accounting package, whereas larger firms, and in particular firms with multiple offices, need more powerful tools to identify conflicts and implement screens.

In LAWPRO’s experience conflicts of interest claims are the fifth most common cause of claims by count and cost. Conflicts claims are proportionally more costly to defend and indemnify as they tend to be complex and usually involve multiple parties (e.g., a current and past client).

There are two types of conflicts claims: The first arises when conflicts occur between multiple current or past clients represented by the same attorney or firm. The second is a conflict that arises when an attorney has a personal interest in the matter. As they regularly act for multiple clients and/or entities, real estate and corporate commercial attorneys experience more conflicts claims than other areas of law, while litigators have a relatively low rate of conflicts claims.

A good database with current and past clients will help a firm identify and avoid conflicts of interests. Make sure your firm has a procedure and system in place for checking conflicts at the earliest possible point in time. Ideally, it should include more than just client names. A system that identifies individuals and entities related to the client, including corporations and affiliates, officers and directors, partners, and trade names etc., will flag more real and potential conflicts.

Managing Your Time and Money

While clients, leveraged by organizations like the Corporate Legal Operations Consortium (CLOC), seem to have finally broken the back of the billable hour, the 2017 Survey indicates that hourly billing continues to account for the primary source of fees at 68%, which is up from 65% in 2016, but counter to the long term trend we expect to see. It’s still important to keep track of time to determine the profitability of a firm, practice areas, and even individual matters.

Well over 90% of respondents have a calendaring system, with 77% actually using it – very similar to previous years. The most available product is Microsoft Outlook at 78%, followed by Google Calendar at 6%, and Time Matters at 6%. It is interesting to see that many attorneys are using Google Calendar when only a few short years ago many attorneys wouldn’t use cloud-based tools.

LAWPRO’s claims files show that a suit to collect fees almost always leads to a counterclaim alleging malpractice. Clients who feel they are paying more than they should will look for any mistakes or shortcomings that will support an allegation of negligence, even if it is unfounded. To this end, keeping track of your time along with sending accurate and regular billings to the client is important to keep the client informed of the progress of the matter. Informed and happy clients are less likely to allege malpractice. Electronic billing software is superior to a manual process involving paper tracking sheets, which can result in simple arithmetic errors and missed entries. About 50% of solos and small firms make use of electronic billing software, while large firms stand at 89%. The general trend is upward, a positive development. The writers suspect actual usage is higher.

Rules-based docketing and calendaring software can be very helpful to eliminate missed deadlines and timelines, especially for litigation matters. Attorneys should embrace any tool that helps them complete tasks and track deadlines so matters keep moving. Unfortunately, software designed to keep track of some deadlines, namely those that are rules-based, is used sparingly, with solos at the low end (16%) and big law firms at the high end (66%). The writers are reasonably sure firms of all sizes have, but are not using, this functionality in the tools they possess.

Managing Your Documents

There are three kinds of document apps: creation and editing, assembly, and management. Virtually every law firm has at least two apps: word processing software (98%) and PDF creation software (97%). Stalwarts Microsoft Word (97 %) and Adobe (88%) rule the day, and alternatives Wordperfect (14%) and Nuance (12%) are holding their own.

Document assembly software, which automatically creates the most-used legal documents, such as precedent wills, contracts, and letters are available at 42% of solos, and rise to 63% for big law firms. Note that about a quarter to a third of respondents answered “Don’t know” to whether document assembly was available. Given that nearly every attorney uses a word processor, the 2017 Survey results may simply reflect that attorneys either do not understand the term “document assembly,”, or do not make use of the basic automation already available to them in word processors. If the latter is true, then more training on what attorneys already have at their disposal may be welcome. The leading names were HotDocs (3 %), AIA Contract Documents (10%), ProLaw (9%), and Microsoft Word (8%). One would think Microsoft Word would take the lead as it is available at 97% of law firms.

Finally, availability of document management software has not changed much in the last four years. The most common brand names are iManage (22%), Worldox (12%), Time Matters (12%), and NetDocuments (9%). Smaller firms may well be using a DIY approach, as documents can be stored in file folders on a shared server at less cost. As the number of files and documents grow, the value of document management software grows. It makes sense that larger firms take greater advantage of this.

The availability of document assembly and management apps appears flat. Small law firms are seemingly satisfied with the DIY or paper approach, while larger firms are more likely to opt in. Given the changing nature of legal services, these attorneys need to understand how automated documents can help them work better, faster, and cheaper. Those that fail to adopt this kind of technology will be far less competitive and profitable as we move forward. And it’s not as if this is new technology—document automation has been around since the dawn of specialized legal technology, and it is cheaper and easier to use than ever.

Conclusion

The adoption rates for dedicated software in the biggest areas of practice management—practice management software, document management software, and billing software—have apparently plateaued. The surge in 2016 of law firms taking up practice management software was met with a disappointing slide in 2017, associated with a level of training that may have been less than adequate. In considering whether to adopt new technology, law firms must dedicate time and money to adequately training attorneys and staff.

Those law firms that have invested well and stuck with the technology reap enormous benefits: savings in time and money, reducing the risk of malpractice claims, and keeping track of metrics that can drive business. While we can concede that law firm technology has not reached iPhone levels of user-friendliness and intuitiveness, what is available now can be mastered with the right training, and is capable of helping law firms do better.

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