Survey: Technology Practices by UK Legal Firms

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Avanade’s research has found that UK law firms are jeopardising their own growth by failing to align technology purchasing decisions with key business priorities. In essence, do law firms have a connection between their business strategy and technology investments that is fit for the twenty-first century business world?

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Survey: Technology Practices by UK Legal Firms

  1. 1. LegallyboundWhy your IT strategy mustserve your business goals
  2. 2. A survey by Avanade and The Lawyer has revealed adangerous mismatch between the UK legal industry’sattitude to technology and its business goalsBy Daryn Edgar, Senior Director, Avanade UK‘Revolution’ is too strong a word, but there’s no doubtchange is afoot in the UK legal industry. In today’smarketplace, law firms are navigating major obstacles, In briefranging from increasingly tooled-up and sophisticated Avanade’s research has found that UK law firmscompetitors to squeezed client budgets and the arrival are jeopardising their own growth by failingof non-traditional law firms to the market. to align technology purchasing decisions with key business priorities. Nearly two-thirds (65With every law firm looking to see how it can be run per cent) of firms cite their main technologymore like a business and less like a traditional legal investment as cost cutting, but less than apractice, merely keeping up with the competition third focus on client-orientated and businessis no longer enough. Law firms need to be ahead of planning technologies. This apparent failurethe curve; but what might this look like? It could be to focus on client-centric technology is leavinga greater emphasis on marketing and promotion, a the door wide-open for consumer-friendlydifferent way of interacting with clients, or it might be companies from traditionally non-legalthe way money, time and effort are invested in IT and backgrounds to take market share.technology solutions. As an experienced business IT solutionsOne of the biggest challenges borne out of the and managed services provider, we here atcompetition between traditional and non-traditional Avanade have found another potential issue:law practices is that new market entrants, like retail the way in which law firms are investing inbrands, are historically much more focused on technology. In essence, do law firms have aconsumers. At a time when many law firms are cutting connection between their business strategycosts, these client-focused firms are investing in new IT and technology investments that is fit for thesystems that are both consumer-savvy and efficient — twenty-first century business world?already ensuring they’re a step ahead of the old school.
  3. 3. The results The survey by numbers ‘Client pressure on fees’ and ‘competition’ were cited as some of the biggest threats to respondents’ firms, 74 respondents with over 25 per cent selecting ‘pressure on fees’ as their main business risk. This response wasn’t unexpected, 50% from the UK top 50 law firms as the legal industry has seen some interesting new approaches from companies not associated with legal 40% IT/ops managers services, such as WH Smith’s tie-up with QualitySolicitors offering legal services in 100 of its high street stores, 60% lawyers while Eddie Stobart haulage launched its own legal service in May. “Changing buying patterns and theWith threats looming, law firms must begin the growth of in-house teams [is one of our biggest businessprecarious task of prioritising their investment agenda. threats],” confirmed one survey respondent.Do they concentrate on reducing costs so they can lowertheir own fees, or concentrate on more effective resource When asked which technologies they are investing inmanagement to better (and more efficiently) serve their to compete effectively, 66.7 per cent of respondentsclients? Should they consider outsourcing or said client and resource management, while anotheroffshoring, or look at moving to the cloud to enhance 50 per cent said finance management and businesstheir IT systems? development. Almost half said the reasons for investing in new technology was to keep up with a fast changingTo find out what the UK legal industry thinks, Avanade industry, while nearly 90 per cent said it was to remainteamed up with The Lawyer magazine to uncover how competitive. “Why act like lawyers? The business worldthe industry approaches its technology strategies always invests in IT,” one comment read.and investment levels. Senior IT operations staff andlawyers from the top 50 law firms in the UK and leading The survey proved that the majority of respondentsinternational legal practices contributed to the study. understand the significance of a long-term technologyThe survey featured a total of 74 respondents and was strategy, with 80 per cent saying that their firm’scarried out in May 2012. strategy is well-aligned with their own business goals. “It’s a no brainer,” wrote a respondent. “Not to invest means we will be dead in the water.” Another respondent injected a note of realism: “In the past, investment has been low, so causing some legacy problems now.” Last of the big spenders But how much are these firms really investing? The results show an interesting point of difference. While 32.8 per cent spend over £1m a year on technology (with half of this number spending in excess of £5m) this still leaves a substantial portion of leading firms counting their investment in thousands rather than millions. “We invest as much as we can afford to” echoed other sentiments in the comment box. Despite a number of respondents admitting that there can always be more to invest, over 60 per cent believe their firm invests enough in technology to compete effectively. These opinions appear in sharp contrast to the investments firms are actually considering. Two-thirds of firms told the researchers that the highest priority investment they’ll make this year will be in outsourcing. The technologies that will enable real
  4. 4. returns from outsourcing strategies, such as client- and These results show a clear misalignment between IT andbusiness-orientated systems, came much further down business. IT is integral to every law firm today, and asthe list. Less than a fifth (15%) say they were thinking such needs to be integrated into the business decisionof implementing enterprise resource planning (ERP), process from the outset to help deliver success in awhile just over a third (37%) say customer relationship competitive market place. Despite these figures, it is ITmanagement (CRM). staff who most think their firms needs to invest more in technology — 40 per cent feel their organisation doesLaw firms looking to create an IT strategy that help not invest enough, compared to just 30 per centthem concentrate on client service and billing would be of lawyers.advised to investigate ERP and CRM solutions, whetheroutsourced or in-house. After all, IT strategies must Maybe this is because 7 per cent of surveyed IT staffsupport business strategies. admitted that their last significant IT upgrade was more than five years old — a fact the firm’s lawyersDiffering points of view seem unaware of (not one lawyer thought their firm’sThere are also inconsistencies when the responses are IT systems were five years old or more). The resultsbroken down between IT staff suggest that, although half ofand lawyers. The majority of lawyers surveyed think theirlawyers (56.6 per cent) said “Why act like lawyers? firm’s IT infrastructure is ‘average’,their firm’s IT infrastructure was The business world average is therefore perceived‘average’ in supporting their core as just enough to give the firmbusiness needs, compared to always invests in IT,” a competitive advantage — anjust 39 per cent of IT staff, most opinion not wholly shared by theirof whom said their IT infrastructure was good (49 per colleagues in IT.cent), but not excellent. In the coming years technology is only going to growThis was compared to almost half the amount of in importance for the legal industry, and businesslawyers (26 per cent) rating their firm’s IT infrastructure leaders and IT managers will need serious buy-inas good at supporting their business needs, with over 13 from employees to push through new systems. At theper cent saying it was bad — an opinion, unsurprisingly, moment it would seem that lawyers are indifferentthat just 4.6 per cent of IT staff share. or only mildly positive about their IT infrastructure.
  5. 5. This lukewarm reaction is not a strong foundation for your law firm isn’t as diligent or even as ruthless withtackling the challenges ahead. The most prosperous its business data as it could be. Could improvementsfirms will be those who recognise the changes taking be made to how time is recorded? Does your existingplace in the legal marketplace, and then marry finance system let you report easily and in as muchsolid-but-forward-thinking IT solutions with wise detail as you’d like?business strategies. If the answer is yes, then deploying an enterpriseOk, so you’ve diagnosed the problem — resource planning system (ERP) is the answer. ERP’swhat’s the cure? ability to track and record a huge range of companyThe survey has uncovered how the door is now wide data makes them popular with businesses of all sizes,open for non-legal businesses to step in to the legal but they are especially well-suited for medium-to-largeservices market, so traditional law firms need to be sure organisations, where the sheer volume and complexitythey are running a water-tight business. What the survey of data makes it unwieldy to manage manually (usingalso illustrated was the lack of spreadsheets, for example).investment in client-focusedtechnologies like CRM and ERP; Avanade brings Adding an ERP system tothis is despite the recognition Accenture’s business your technology strategy willof the need to maintain and professionalise your operationsleverage client relationships for consultancy nous and and processes, from timestaying ahead of the competition. Microsoft’s software billing and finance to HR and project management.The first step to avoiding a and enterprisepotential mismatch betweentechnology plans and business technology acumen. Closely related but sometimes deployed separately are customergoals is to make an assessment relationship managementof your business’s advantages and disadvantages. When systems. These software tools help you track everycompared to a non-legal business, you might find that contact and action related to a particular case or client, acting as both a contact address book and calendar, but primarily as an advanced case management system. They have been helping non-legal organisations maintain a consistently high level of customer service for years. It might be time for the legal industry to catch-up. Avanade and Simmons & Simmons “Avanade’s Microsoft Dynamics The Avanade option: Tailored for the legal profession AX system coupled with the Avanade is certainly not just offering you a single Avanade AX Legal solution will out-of-the-box product. Working closely with your team, Avanade will analyse your existing processes and enable us to run the business technology to create a rounded assessment of your more efficiently and service requirements. How do you enter billed and non-billed time? How do you track cycle time? We’ll ask all the clients more effectively.” right questions to help us understand exactly how you David McLaughlin, operate and where improvements can be made. Finance Director at Simmons & Simmons. Providing a fully integrated view of its Our offer can be split into two areas: services and business and improved competitive advantage, solutions. Services is a consultancy phase — having Simmons & Simmons will see the creation of looked in-depth at your existing technology and a sustainable, easy-to-use enterprise resource business processes, Avanade will help you develop a planning (ERP) platform using Avanade technology roadmap that fully aligns to your business AX Legal. David McLaughlin continues, “AX goals. Avanade’s goal is to help you achieve success, integrates seamlessly with other Microsoft we’re not here to specify IT solutions just for its own sake. Office products, with a look and feel that is For now and for the future, Avanade’s services will help set familiar to users.” you on the right path.
  6. 6. Are UK law firms making the right decisions when it comes to investing in technology? Over half (56.7%) say client pressure on feesOver a third (34.2%) of law firms is the biggest threat tospend more than £1 million every their businessyear on technology Top technology priorities Why do law firms invest for law firms: in technology? 65.2% Client and resource management 50.7% Finance and billing 50.7% Growing business Keep pace 39.1% Reporting with client 45% 39.1% Compliance and risk managment To remain demands competitive 33.3% Mobile tech 31.9% HR & people services 91% Over a third (38%) haven’t made a significant IT upgrade in the past year. What will law firms invest in next?Outsourcing: 65% Shared Service CRM: 37% Partnering with ERP: 15.2% Offshoring: 8.7% Centres: 37% Subcontractors: 19.6%
  7. 7. Low cost, high quality: Microsoft judged Average in Gartner’s Magic Quadrant SAP Oracle Microsoft deployment Gartner is one of the world’s most trusted Duration 20.0 18.6 18.0 technology analyst firms, helping companies (months) across the world make intelligent, informed Total Cost ($M) 16.8 12.6 2.6 IT decisions. This is how Gartner has rated User 73% 60% 77% Microsoft’s ERP products against its competitors: SatisfactionOur solutions, which include AX Legal and Microsoft As we saw from the survey, control of core peopleDynamics CRM, have been tailored for the legal industry. and client data, organisational structure, conflictFounded in 2000 through a joint venture between management, project management, time managementAccenture and Microsoft, Avanade has a unique heritage and financial data, including client monies, projectthat gives us inside access to two industry leaders: budgeting, revision control and resource scheduling areAccenture’s business consultancy nous and Microsoft’s all important.software and enterprise technology acumen. We noticedthe changes taking place in the legal industry, but we Avanade AX Legal also provides enhanced managementdidn’t jump in head-first, we information so that lawyerswanted to get to know the Avanade has learnt what law and practice group leadersUK legal profession, talk to are better informed onthe right people and work firms are looking for, from a terms of both time andout what law firms need to shorter cycle time with fewer quality of information.achieve and how they prefer Avanade AX Legal isto go about it. breaks to helping increase based on best-practice matter margins and simplified businessThis was over two years processes, which means theago, and we began by talking to Simmons & Simmons support needed for lawyers is reduced but efficiencyand Linklaters, who are both now major Avanade clients. and effectiveness increase.Unlike other technology integrators, we make sure ourclients are closely involved with what we do and the Avanade’s technology solutionsdirection we take through our Client Advisory Board, Avanade can help you manage projects more profitably,which has already helped shape one of the best conflict integrate information for better decision makingand risk management solutions on the market. and help solve some of your most complex business challenges.We have three significant solutions tailored for the UKand European legal industry: AX Legal, which is based on ERP systems are often inflexible, complex solutionsMicrosoft’s enterprise resource management solution, designed to appeal to the widest possible targetDynamics AX; a customer relationship management market. Avanade’s AX Legal and CRM solutions aresolution based on Microsoft Dynamics CRM. different. They have been created for the legal industry.Keeping an eye on KPIs • rovide more accurate reporting of revenue, time and PThe single biggest operating expense for any law firm expenses across multiple projects.is people: lawyers or those supporting them. Avanade’s • Cut costs by deploying the amount of functionality services and solutions for the law firms have one aim: to appropriate to your business.help your IT strategies serve your business goals. Avanade • Help your people work more efficiently with a role- has learnt what law firms are looking for, from a shorter based user interface and role centres.cycle time with fewer breaks to helping increase matter • Deliver client-centric solutions that let you compete margins by letting your law firm take full advantage of with new market entrants and take service to theits resource pools and bill clients as soon as is realistic. next level.Additionally, pricing stabilisers can ensure your practice • Cloud or on-premise options for flexible, guards against the commoditisation of its resources cost-effective rollouts.and services.
  8. 8. Who we’ve worked withCall, email or tweet us 020 7025 1000 ukmarketing@avanade.com @AvanadeUK www.BetterERPsystems.com About Avanade North America Asia- Pacific Avanade provides business technology solutions and Seattle Singapore managed services that connect insight, innovation and Phone +1 206 239 5600 Phone +65 6592 2133 expertise in Microsoft® technologies to help customers America@avanade.com AsiaPac@avanade.com realize results. Our people have helped thousands of South America Europe organizations in all industries improve business agility, Sao Paulo London employee productivity and customer loyalty. Additional Phone +55 (11) 5188 3000 Phone +44 0 20 7025 1000 information can be found at www.avanade.com. latinamerica@avanade.com Europe@avanade.com Africa ©2012 Avanade Inc. All rights reserved. The Avanade Pretoria name and logo are registered trademarks in the US Phone +27 12 622 4400 and other countries. SouthAfrica@avanade.com

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