Are law firms investing in the wrong IT resources – if they are investing at all?

WRITTEN BY JOANNA GOODMAN | 01 JULY 2012

A new survey conducted by business technology services provider Avanade and The Lawyer magazine revealed a worrying disconnect between business and technology strategies in many UK law firms. The survey, which included half the UK’s top 50 firms, asked 74 law firm decision makers about their strategic IT investment priorities. While nearly two thirds of respondents cite client and resource management as their firm’s main business focus, and half mention finance and billing and business growth, a clear majority – 65% in total and 76% from top 25 firms – state that their next technology investment would involve outsourcing.

Yet 56% of respondents agree that client pressure on fees represents the greatest threat to their business with 45% citing client demand as their top reason for investing in new technology.

As Daryn Edgar, senior director at Avanade, explained at a round table debate on 29 June, the findings indicate that law firm technology investments are focused on cost cutting rather than addressing the issues that concern their clients. Are law firms investing in the wrong IT resources – if they are investing at all?

This is particularly relevant in the changing face of competition. “New market entrants, such as retail brands, are historically more focused on consumers. Client-focused firms are investing in new IT systems that are consumer-savvy and efficient”.

Although some law firms offer their clients online access to case information and knowledge resources, the majority fail to address clients’ need for business agility when it comes to fees and billing.

“It is vital that law firms concentrate on their critical, client-centric technologies to help deliver the best service and run a smooth cost-effective practice,” adds Edgar.

Corporate legal departments are increasingly buying into sophisticated e-billing technology (internal or third-party) and require their suppliers – including law firms – to submit bills in the requisite format. This often involves a more detailed breakdown than many firms are accustomed to providing. The information facilitates like-for-like comparisons between different firms.

Enterprise resource planning (ERP) systems give firms the business agility that their corporate clients expect. But only 15% of respondents are considering investing in ERP. Customer relationship management (CRM) systems fare better, with 37% considering investing.

Effective resource planning
Simmons & Simmons is implementing Avanade AX Legal, an ERP solution that brings together workflow, compliance and business intelligence to provide a single data set across all practice areas, departments and offices. Based on Microsoft Dynamics, it offers seamless integration with other Microsoft products.

Finance director David McLaughlin explains the rationale behind the decision to replace the firm’s entire practice management and HR systems. “Whereas most businesses are organised by geography, law firms tend to run a global common profit sharing model,” he says. “Professional services are about people and ERP provides a single software platform that brings together the information about all our people and all our clients across all our offices.” He adds that having fewer systems that need to interface with each other significantly reduces both complexity and cost of ownership.

Finance and HR have different priorities and concerns, and bringing together all the information in one place improves efficiency and productivity and facilitates innovative billing arrangements. For example, it can help identify the right people for a particular piece of work in terms of skills, experience, training and location. Clearly, this type of decision has financial and billing implications. Because the system is implemented globally across the business, there is less risk of lost revenue, under/over utilised resources and poor customer experience.

The roundtable discussion turned to confidentiality. Avanade AX Legal includes the ability to create different views for different users, by seniority, responsibility and geography. For example, practice heads can view both team and fee-earner information and senior management can access a helicopter view of the entire firm and then drill down to more specific information. Client accounts and billing can include – and share via a client portal – the appropriate amount of detail.

The secret is not just enterprise resource planning, says McLaughlin. It is effective resource planning. And the right technology can make an enormous difference.

 

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