Solo and Small Firm

ABA TECHREPORT 2017

Natalie Kelly is the Director of the State Bar of Georgia’s Law Practice Management Program. She is active in the American Bar Association’s Law Practice Division and chaired the 2014 ABA TECHSHOW Planning Board. She is a fellow in the College of Law Practice Management, and a member of the National Bar Association and the National Association of Bar Executives.

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What do you get when you ask 300 or so lawyers what they think and do about technology? You might imagine the range of answers will vary wildly, and you would be correct. However, most assuredly, lawyers in solo and small firms (those firms with 2-9 lawyers) are paying attention to the call to learn more and do more with technology. From responding to moving more systems to the cloud to managing data in a time of uncertainty surrounding online security, lawyers are facing their past fears and creating reasoned responses to the challenges related to learning more and keeping up with the latest in technology.

For solo and small firms, particularly for those surveyed by the American Bar Association’s Legal Technology Resource Center, technology is a vitally important tool—a tool that should be understood and mastered. Yet, it is apparent from the responses that many lawyers continue to struggle to fully understand and effectively use the tools available for the delivery of legal services.

This article will outline responses from solo and small law firm practitioners across a broad array of both basic technology services and very specific areas within law office technology. Shifts and changes in the responses received over the years are of note and will be explored. Attention will also be given to the areas where trends to watch are developing into 2018 and beyond.

Particularly, this article will focus on the solo and small firm numbers gleaned from the “2017 Technology Basics” and “Security and Law Office Technology” volumes, which are integral parts of the 2017 Legal Technology Survey Report. This article will review the solo and small firms’ responses in the areas of legal fees, IT staffing, technology budgeting and spending, software training, non-general office technology, security, laptop use, computer hardware, networks, practice/case management, contacts management, document management, document assembly, and technology policies.

Demographics and Trends

Twenty-eight percent of the lawyers responding to the 2017 Survey were from solo practice, and 27% were from firms with 2-9 lawyers. Since they make up just over half of the respondents, the information learned from this year’s survey is likely to represent a very comparable picture of what real-world solo and small firm practitioners are facing in their knowledge and use of technology. With heightened requirements for technology education for lawyers, knowing these numbers can assist with unveiling trends and helping determine needs in one of today’s most critical law firm business spaces.

Legal Fees

Because there is a lot of information—and in many cases, misinformation—available regarding solo and small firm lawyers and their rates, it is interesting  that when it comes to the billable hour,  solo and small firms are not as committed to the old ways as their larger business counterparts. In 2017, with the highest percentage of fixed fees among all of the responding lawyers, solos and small firms reported that they use this form of billing at the rate of 23% and 17% respectively. Next in line for fee types were contingent fees—solos at 11% and firms of 2-9 lawyers slightly higher at 18%. With hourly fees making up 71% of the method of billing employed by respondents, and fixed and contingent fees only covering 15% and 10% respectively, the billing flexibility of smaller firms may be telling when it comes to how this segment of the legal market has responded to the last U.S. recessional period. It is likely that the overall hourly fee billing percentage will continue to gradually decline, and there will be a steady climb in the number of fixed and contingent fee matters undertaken by solo and small firms as they look to remain nimble in a changed consumer-driven market space.

IT Staffing

Because 79% of solo and 55% of firms of 2-9 attorneys do not have any technical support staff at all of their offices combined, they are likely to be relying on outsourced IT staffing and outside vendors for their day-to-day technology servicing needs. This trend, though not surprising, may become more significant as more and more servicing is made available in remote and online formats. With the larger sect of solo and smaller firms possibly relying on external IT staff, the opportunities for advances in areas like virtual assistance and fully-outsourced IT service platforms begin to take shape as viable options. This modeling will certainly be amenable to the burgeoning number of cloud-based technology solutions that can be implemented without the need for a technical support staff person.

Technology Budgeting and Spending

Sixty percent of the firms reported that they budget for technology; this is in line with the gradual increase of previous years., It is a positive indication that firms are taking the job of technology planning seriously, versus making ad hoc decisions without considering the financial impact of legal technology purchasing decisions.. 39% of solos  and 48% of firms of 2-9 lawyers  reported they budgeted for technology.. Additionally, solos and small firms continue to be the major spenders at the sub-$3,000 level—as might be expected due to their smaller budgets.

Technology Support and Training

The critical point for moving legal technology to the forefront of a firm’s most valuable resources most likely lies in a firm’s commitment to leveraging support and ensuring the receipt of technology training by all firm members. With 60% of respondents indicating they are required to understand the benefits and risks of technology as part of their basic competency requirement under their jurisdiction’s enactment of revised rules of professional conduct, it is indicated that most firms use outside technical support and internal sources to manage issues arising with their technology. Solos were at 61% and firms of 2-9 lawyers at 77% when reporting they used outside tech support to resolve their computer-related problems. It does seem from the respondents, however, that they preferred to use the outside sources for help rather than go online for assistance from their technology vendors. Only 16% of solo respondents indicated they relied most often on web support by their product or service’s vendor or manufacturer. Firms with 2-9 lawyers were even less likely to choose such support,  reporting their reliance on web support by vendors or manufacturers at just 6%.

Solo respondents were the largest class of respondents who indicated they considered it not at all important to receive training on their firm’s technology, and 4% of lawyers from their firms of 2-9 lawyers were unfortunately trending in the same fashion. Perhaps the reassuring aspect of these indicators is that they reflect the profession realizing the need to be educated on technology. This could very well mean a rise in the numbers for legal technology training percentages among solos and small firms in the near future.

Lawyers responding to the 2017 Survey indicate that they mostly have policies for email and internet use at 56% and 51% respectively. Among the respondents with email policies, 20% were solo, and 44% were in firms of 2-9 lawyers. Having policies for internet use were at 17% for solos and at 39% for firms of 2-9 lawyers.

Security

Security is paramount to the foundational aspects of using technology in a law practice today. With the lawyer’s requirement to maintain confidential information in the information age, and to manage ever-growing amounts of data (whether client-related or not), it is not surprising to see the focus turn to securing this information on a lawyer’s network or across media for which the lawyer is responsible. 22% of all respondents indicated they had experienced a security breach. While this number gives pause,over 22% of all respondents said they did not know whether their firm had ever experienced a security breach.

Despite these growing numbers, those reporting a breach most often reported that no significant business disruption or loss had occurred. Yet, 38% of respondents reported that it resulted in downtime/loss of billable hours.

Solo and small firm lawyers have begun to increase their use of security tools; a logical step, as 32% of solos and 53% of attorneys in firms of  2-9 lawyers were infected with a virus, spyware, or malware. The numbers for security-related replies are as follows:

  • Using email encryption: 24.4% of solos and 31% of 2-9 attorney firms
  • Using virus scanning (desktop/laptop): 75.6% of solos and 70.5% of 2-9 attorney firms
  • Using mandatory passwords: 60.5% of solos and 64% of 2-9 attorney firms

Cyber liability insurance coverage is increasing slowly among solos and small firms, with 18.6% of solo respondents and 26.9% of the 2-9 attorney firms indicating they have cyber liability coverage responding.With the need to secure data via passwords, a password management tool is used by 21.4% of solo respondents and 20.9% of firms with 2-9 attorneys.  Over half of the solo respondents (56.9%) did not have policies or plans that govern technology. However, firms with 2-9 attorneys were much more likely to carry technology policies and plans—only 23.9% of those firms indicated they did not have such policies.

Web-Based Software and Services/Cloud Computing

Fifty-two percent of the survey respondents reported they use cloud computing technology for work. Among the solo respondents, 56% indicated they use cloud computing services for work; among the respondents in firms of 2-9 attorneys, 56% indicated they likewise use cloud-based services for work. These percentages have increased by over 10% for both groups since 2016, and are in line with the trend toward more software applications and service models moving to cloud formats. In fact, the online service Dropbox showed a 62% usage rate among respondents despite some of the previous online document storage concerns by attorneys. With the trend toward more cloud-based offerings, it is anticipated that the percentage of lawyers continuing to utilize services in web-based format will likewise continue its upward trend.

Case/Practice Management

For the first time, 50% of those surveyed reported they have access to case/practice management software in their firms. Even at this level of availability, solos were the least likely to have case/practice management software, with only 31% indicating it was available to them. This number is down from 34% in 2015.

When asked about usage of the software, however, Microsoft Outlook, TimeMatters, CaseMap, and Clio were the programs mentioned. Interestingly, the only software programs generally classified as legal case/practice management are TimeMatters and Clio. Additionally, only 10% of users indicated using TimeMatters and 8% indicated using Clio. These numbers show there is still an overarching misconception about exactly what case/practice management software is; this is further shown by the use of general business email tools like Microsoft Outlook, and litigation support tools like CaseMap for case/practice management. The use of the systems are lagging a bit behind where usage was indicated in 2016. 27% of solos indicated using practice/case management in 2017, and 45% of attorneys in firms of 2-9 attorneys were using it.

PDF Creation/Document Software

Well over 90% of the firms surveyed had PDF creation software available to them. Looking deeper at the use of document-based systems for tasks requiring redlining, document/records management, document assembly, and metadata removal, the majority of firms were again found to personally use PDF creation software. 92% of the solos respondents and 82% of firms of 2-9 attorneys were using PDF creation software. 54% of solo respondents and 67% of firms of 2-9 attorneys use redlining software; 29% of solo respondents and 37% of firms of 2-9 attorneys use document/records management software; 35% of solo respondents and 35% of firms of 2-9 attorneys use document assembly software, and 27% of solo respondents and 34% of firms of 2-9 attorneys use metadata removal software. All these rates were lower than 80%.

Conclusion

Solo and small firm practitioners are the largest demographic of lawyers, and their use of technology continues to ebb and flow as what is available to them expands. The technology use and impact in this segment of the profession varies widely. The technology areas reporting over 50% for respondents in either solo practices or firms of 2-9 attorneys were for hourly fee billing; use of outside tech support; not having tech support IT staff; having budgets for technology; being required to understand risks and benefits of technology as a competency standard; having email and internet usage policies; not having policies and plans for governing technology; using web-based and cloud computing services; using redlining software; using PDF software; being infected with a virus, spyware, or malware, and using mandatory passwords. Just as the use and impact of technology continues to shape the future of the profession, the individual lawyer and smaller firms will also be shaped into businesses further defined by their use and leveraging of technology.

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