Legal spending on IT predicted to spike in next two years

Clients may be the main catalyst pushing lawyers to adopt the use of technology, according to a new report that predicts big spending on information technology by law firms and corporate departments over the next two years.

The study from Robert Half Legal released last week, “Technology's transformation of the legal field,” looks at how emerging technologies are affecting management strategies at law firms and corporate legal departments and changing how legal services are delivered. The report is part of Robert Half Legal’s 12th annual Future Law Office project.

“Certainly, in the last two or three years, there’s been close to an explosion in terms of what firms and companies are doing. Whereas two or three years ago it might have been a pipe dream, it’s now being implemented,” says John Ohnjec, division director of Robert Half Legal.

As clients in large companies use enterprise hardware and software tools to better manage their own businesses, law firms are feeling the pressure to keep up and they’re seeing the economic benefit as they do so.

“There’s certainly a recognition of how this can be very cost-effective for a firm. Sometimes, the corporations firms are working with may be more advanced as a whole in their operations, and all of a sudden it has leached into the legal field and firms realize they have to keep up to date and service their technology-savvy corporations,” says Ohnjec.

For the report, Roberta Half Legal interviewed 175 lawyers from the largest law firms and corporations in the United States and Canada to assess how legal organizations might operate in the future. In total, 350 lawyers were interviewed for the report. For the questions that were only asked of corporate legal departments (175 in total), the Canadian sample was 75. For the questions that were asked of both law firms and corporate legal departments (350), 150 Canadians were interviewed.

The report also shows that while there will be an investment in information technology, it might result in a reduction in staff as firms and corporate departments will be able to minimize employee numbers through advances in technology. Law firm office size is already shrinking with mobile devices and wireless networks enabling lawyers to work remotely from any location.
Technology is also levelling the playing field. With firms of all sizes using similar services and tools, small firms and sole practitioners are able to establish a bigger presence online and, in some cases, better compete with larger firms.

“Technology has also allowed some smaller- and mid-size firms to catch up,” says Ohnjec. “Some smaller shops that are technologically advanced can take on work that in the past they may not have been able to due to volume. Not only is using an iPad or BlackBerry fun, but it’s far more reaching and can have results on the bottom line which obviously everyone is most concerned with.”

That doesn’t mean all lawyers are jumping on the bandwagon.

“There is certainly a prevailing attitude that if it’s not broke, don’t fix it,” says Ohnjec. “Those who have been practising for 20 or 30 years may be set in their ways and if those ways are productive they may be hesitant to try something new and it may be a bit intimidating for some.”

The report’s findings include:

• Nearly six in 10 (59 per cent) of lawyers interviewed said their law firms will increase spending on technology in the next two years. Law firms plan to purchase software (79 per cent), hardware (72 per cent), desktop PCs (62 per cent), laptops (49 per cent), tablet PCs or handheld computers (44 per cent), and smartphones (41 per cent).

• Web-based tools are improving client communication and the delivery of legal services. Lawyers surveyed said their law firms used electronic-filing systems (83 per cent), meeting or audio-conferencing tools (79 per cent), document storage sites (58 per cent), collaborative or information-sharing sites (51 per cent), and client portals or extranets (30 per cent).

• Corporate legal departments are using technology to manage higher workloads. Nearly one in three in-house counsel (30 per cent) interviewed said their legal department’s greatest challenge is reducing budgets and controlling costs. Software designed to monitor expenses and improve the work process is gaining in popularity among corporate legal departments.

As a result, they’re using technology to streamline communications with outside counsel and improve efficiencies. As the amount of electronic data grows exponentially, e-discovery remains a growth area and a challenge for law firms and their corporate clients.

A growing number of firms are also marketing their services using social media, the report found. However, law firms using these online networks, as well as cloud computing-based services to store data, must address new privacy concerns regarding the security of privileged information. This has prompted many firms to allocate additional resources toward protecting their systems and safeguarding confidential data.

Technology is also influencing the kind of work being assigned to outside counsel. While litigation and e-discovery projects are typically outsourced, if internal teams have access to the same software programs and systems as their law firms, general counsel might keep certain matters in-house to contain costs.

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