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Sharpening the Focus on Legal Technology: 2009
A surprisingly large number of legal technology decisions are based on a slim amount of anecdotal information. Someone on the technology committee hears that two other firms bought a certain software. Someone in the IT department reports that other firms are having difficulty with an upgrade, delaying certain types of projects or finding “bugs” or compatibility issues with a new version.
In part, this approach stems from natural human ways of dealing with new issues. Stories are persuasive, especially when hard data can be difficult to find, as it often is in discovering what lawyers are doing with technology.
For the past nine years, the InsideLegal.com/ILTA Member Technology Purchasing Survey has been a breath of fresh air for lawyers, law firms and law departments looking to base technology decisions on solid data rather than on anecdotes. 2009 is no exception, and the survey comes at a unique time of economic difficulty where solid data about what is happening in the market is especially elusive and valuable.
This year's survey results were released at the International Legal Technology Association's (“ITLA”) 2009 conference in August. The legal market research firm, InsideLegal, worked with ILTA to produce this in-depth survey of actual purchasing decisions in a variety of technology areas, with a set of questions devoted to issues raised by these tough economic times. Respondents, 100% of whom indicated they were actual decision-makers and influencers, answered roughly 40 questions. Because many of the same questions have been asked consistently over the years, the surveys provide a great source for monitoring trends.
The survey focused on the medium and large law firm markets ' from firms of 50 lawyers up to more than 3,000 lawyers. Out of roughly 730 possibles, 115 firms completed the surveys, mostly in the United States, but also a few from Canada and the United Kingdom. That's a solid response, but you'll still want to use the results as indicators of trends rather than as precise measurements of the market as a whole.
Economic Effect
There's no question that the greatest interest of almost everyone reading the survey will be to see what kind of effect the economy is having on technology decisions. The data will not be a great surprise in a time where law firms are laying off lawyers and staff, but they do reflect a significant retrenchment in technology spending among law firms. Fifty-eight percent of firms indicated actual budget cuts, and per lawyer spending also dropped in many firms. Firms with budget increases primarily traced the increases to specific, planned technology projects.
One of the most useful benchmarks the survey has provided over the years is the percentage of revenue firms spend on technology. What change did we see this year? In 2008, 28% of responding firms spent 5% or more of revenue on technology. In 2009, that number was essentially halved to 15% of responding firms. This information will be especially useful to firms looking to benchmark their total spend and looking at special projects. Firms over the 5% threshold will want to take a hard look at business justification of projects. Firms in the 2%-4% range will find themselves comfortably with the majority.
The survey also reported that 75% of technology projects, primarily big “enterprise” ones, were deferred or otherwise postponed. What projects got done? It was the bread-and-butter jobs ' necessary network and server upgrades, desktop and laptop PCs, virtualization, printers, and, somewhat surprisingly, a large number (up 60% from 2008) of Office 2007 upgrades. Law firms' approaches to standard desktop technology remains interesting, to say the least, as we see this flurry of Office 2007 upgrades happening on the eve of Microsoft's release of Office 2010. It's also no surprise that there were no signs of widespread upgrades to Windows Vista. Among actual users in firms, smartphone upgrades were popular.
Attorney Role Increasing
I've written before that we are in the “second generation” of legal technology, where choices are largely driven by IT departments, with some movement toward the “third generation” where attorney-driven choices become the norm. The survey bears this out, with IT departments named as the primary source for technology requests by a significant margin. However, lawyers are the second-largest source of requests, showing a 9% increase from 2008 and 24% from 2007, perhaps suggesting some movement toward the third generation. Law firm administrators also are a growing source of technology requests. Client-driven technology, which I've dubbed the “fourth generation” of legal technology, remains relatively small and not yet growing, although both clients and corporate counsel show up in the survey as sources of technology requests.
Technology Uses
The survey also takes a look at the resources participants use to learn about products and get information about legal technology. The survey indicates a reliance on traditional print media and despite a wealth of excellent technology and legal technology blogs, few make the list.
Social media is a hot topic and the survey gives us some data on that. LinkedIn runs away with this category, with 84% of respondents being users. Twitter captures second place at 25%, with Facebook third at 23%.
Interestingly, the survey indicates that technology decisions are largely made as internal decisions. It is rare where outside consultants are used to help with decisions or set strategy. Among the responding firms, outside consultants are used primarily for implementation.
What is the biggest technology issue facing firms? By a wide margin, it's e-mail management, which was named by 36% of the respondents. In comparison, security was only listed by 5%. Following up e-mail management were “non-technology-specific” issues ' staffing, keeping up with growth and change, budgetary issues, and the economy in general.
What's Next
Where are we headed in the future? It looks like we are heading into the cloud. There looks to be a consensus that virtualization, cloud computing and Software as a Service (“SaaS”) will play a big role in the future of legal technology. However, despite this consensus, 56% of firms do not have the cloud on their current roadmap, and only 9% indicated that they were currently taking steps in that direction.
The other cloud in the survey is the economy. Asking specific economic questions revealed useful data, but also shows the shadow the economy casts over technology in firms. Firms who have not already done so will appreciate learning that 62% of firms have already been able to negotiate price concessions from vendors.
In spite of that, the survey ends on an optimistic note. Fifteen percent of respondents think that the economy has already begun to rebound, and 47% see a turnaround in a year or less. We'll see if the 2010 survey bears out that optimism.
Conclusion
Any firm or other legal organization, even those smaller than 50 lawyers, will want to study this survey to get a good sense for where the market is, identify trends, and base decisions on hard data rather than on anecdotes. The InsideLegal/ILTA Member Technology Purchasing Survey has become an essential tool for anyone working with legal technology, providing great data each year and solid information on historical trends.
The complete survey can be downloaded at www.InsideLegal.com.
Dennis Kennedy is a legal technology author and lawyer. He is a co-host of The Kennedy-Mighell Report podcast on the Legal Talk Network. His blog can be found at www.denniskennedy.com/blog.
A surprisingly large number of legal technology decisions are based on a slim amount of anecdotal information. Someone on the technology committee hears that two other firms bought a certain software. Someone in the IT department reports that other firms are having difficulty with an upgrade, delaying certain types of projects or finding “bugs” or compatibility issues with a new version.
In part, this approach stems from natural human ways of dealing with new issues. Stories are persuasive, especially when hard data can be difficult to find, as it often is in discovering what lawyers are doing with technology.
For the past nine years, the InsideLegal.com/ILTA Member Technology Purchasing Survey has been a breath of fresh air for lawyers, law firms and law departments looking to base technology decisions on solid data rather than on anecdotes. 2009 is no exception, and the survey comes at a unique time of economic difficulty where solid data about what is happening in the market is especially elusive and valuable.
This year's survey results were released at the International Legal Technology Association's (“ITLA”) 2009 conference in August. The legal market research firm, InsideLegal, worked with ILTA to produce this in-depth survey of actual purchasing decisions in a variety of technology areas, with a set of questions devoted to issues raised by these tough economic times. Respondents, 100% of whom indicated they were actual decision-makers and influencers, answered roughly 40 questions. Because many of the same questions have been asked consistently over the years, the surveys provide a great source for monitoring trends.
The survey focused on the medium and large law firm markets ' from firms of 50 lawyers up to more than 3,000 lawyers. Out of roughly 730 possibles, 115 firms completed the surveys, mostly in the United States, but also a few from Canada and the United Kingdom. That's a solid response, but you'll still want to use the results as indicators of trends rather than as precise measurements of the market as a whole.
Economic Effect
There's no question that the greatest interest of almost everyone reading the survey will be to see what kind of effect the economy is having on technology decisions. The data will not be a great surprise in a time where law firms are laying off lawyers and staff, but they do reflect a significant retrenchment in technology spending among law firms. Fifty-eight percent of firms indicated actual budget cuts, and per lawyer spending also dropped in many firms. Firms with budget increases primarily traced the increases to specific, planned technology projects.
One of the most useful benchmarks the survey has provided over the years is the percentage of revenue firms spend on technology. What change did we see this year? In 2008, 28% of responding firms spent 5% or more of revenue on technology. In 2009, that number was essentially halved to 15% of responding firms. This information will be especially useful to firms looking to benchmark their total spend and looking at special projects. Firms over the 5% threshold will want to take a hard look at business justification of projects. Firms in the 2%-4% range will find themselves comfortably with the majority.
The survey also reported that 75% of technology projects, primarily big “enterprise” ones, were deferred or otherwise postponed. What projects got done? It was the bread-and-butter jobs ' necessary network and server upgrades, desktop and laptop PCs, virtualization, printers, and, somewhat surprisingly, a large number (up 60% from 2008) of Office 2007 upgrades. Law firms' approaches to standard desktop technology remains interesting, to say the least, as we see this flurry of Office 2007 upgrades happening on the eve of
Attorney Role Increasing
I've written before that we are in the “second generation” of legal technology, where choices are largely driven by IT departments, with some movement toward the “third generation” where attorney-driven choices become the norm. The survey bears this out, with IT departments named as the primary source for technology requests by a significant margin. However, lawyers are the second-largest source of requests, showing a 9% increase from 2008 and 24% from 2007, perhaps suggesting some movement toward the third generation. Law firm administrators also are a growing source of technology requests. Client-driven technology, which I've dubbed the “fourth generation” of legal technology, remains relatively small and not yet growing, although both clients and corporate counsel show up in the survey as sources of technology requests.
Technology Uses
The survey also takes a look at the resources participants use to learn about products and get information about legal technology. The survey indicates a reliance on traditional print media and despite a wealth of excellent technology and legal technology blogs, few make the list.
Social media is a hot topic and the survey gives us some data on that.
Interestingly, the survey indicates that technology decisions are largely made as internal decisions. It is rare where outside consultants are used to help with decisions or set strategy. Among the responding firms, outside consultants are used primarily for implementation.
What is the biggest technology issue facing firms? By a wide margin, it's e-mail management, which was named by 36% of the respondents. In comparison, security was only listed by 5%. Following up e-mail management were “non-technology-specific” issues ' staffing, keeping up with growth and change, budgetary issues, and the economy in general.
What's Next
Where are we headed in the future? It looks like we are heading into the cloud. There looks to be a consensus that virtualization, cloud computing and Software as a Service (“SaaS”) will play a big role in the future of legal technology. However, despite this consensus, 56% of firms do not have the cloud on their current roadmap, and only 9% indicated that they were currently taking steps in that direction.
The other cloud in the survey is the economy. Asking specific economic questions revealed useful data, but also shows the shadow the economy casts over technology in firms. Firms who have not already done so will appreciate learning that 62% of firms have already been able to negotiate price concessions from vendors.
In spite of that, the survey ends on an optimistic note. Fifteen percent of respondents think that the economy has already begun to rebound, and 47% see a turnaround in a year or less. We'll see if the 2010 survey bears out that optimism.
Conclusion
Any firm or other legal organization, even those smaller than 50 lawyers, will want to study this survey to get a good sense for where the market is, identify trends, and base decisions on hard data rather than on anecdotes. The InsideLegal/ILTA Member Technology Purchasing Survey has become an essential tool for anyone working with legal technology, providing great data each year and solid information on historical trends.
The complete survey can be downloaded at www.InsideLegal.com.
Dennis Kennedy is a legal technology author and lawyer. He is a co-host of The Kennedy-Mighell Report podcast on the Legal Talk Network. His blog can be found at www.denniskennedy.com/blog.
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