Richard Blasdale is a Managing Consultant within the Information SystemsConsultancy at Grant Thornton. He has advised legal firms on IT related issuesfor more than ten years and during that time has also conducted numerous surveyson the use of IT within the legal sector. The Grant Thornton Legal IT InterfirmComparison Report was launched on 22 February 2000. Copies can be orderedthrough www.gtclic.com. The Web site alsooffers an interactive analysis facility.
In the last issue Laurence Eastham highlighted some of the headline findingsfrom the Grant Thorton Legal IT Interfirm Comparison – in particular, increasedusage of PCs by fee earners, the proven benefits of document management linkedwith advanced office systems and the worrying absence of IT policies in manyfirms. In this article, I will comment on some of the other detailed findings.
In the analyses, I will refer to large, medium and smallfirms. These are measured by numbers of partners in the firm (more than 25,11-25 and up to 10 partners respectively). In terms of the breakdown ofresponding firms, 55% were small firms, 29% medium and 16% large. The respondingfirms have a total of over 42,000 staff, including more than 21,000 partners andfee earners. We believe this makes it the largest such survey undertaken todate.
As might be expected, there are significant differences inthe usage and management of IT across these size categories, and consequently intheir IT development plans for this year. I have looked closely to identify anysimilarities in usage across all sizes of firms.
IT Investment
I have used the word investment rather than expenditure.Investment signifies that a return will be gained. Otherwise there is no pointimplementing IT. Having said that, there are few firms that could survivewithout basic IT facilities for operational support, practice management andcommunicating with clients.
We identified a number of indicators as to the level of ITinvestment. We have included both capital investment on infrastructure andapplications and revenue investment on IT staff and support contracts. First welooked at IT investment per partner. Size of firm has a bearing – large firmsinvest significantly more (£23.1k) than medium sized firms (£15.2k) and smallfirms (£13.7k). Secondly we looked at IT investment as a percentage of feeincome. Previous research has indicated average law firm investment to be in theregion of 3 to 3.5% of fee income. Our findings indicated an upward movement -no doubt influenced by upgrades and replacements for the Y2K. See Table 1.
Large firm IT spending averaged out at 5.5% of fee income,but there was considerable variation in spending as shown in the graph above.Amongst the medium firms there were similar levels of spending with an averageof 5.4% of fee income. However, when looking at the small firms, the averagespending was just 3.8% of fee income. My theory is that the small firms are morelikely to upgrade a proportion of their PCs each year rather than take the‘big bang’ upgrade approach often adopted by the larger firms. Thus they maynot have invested as much upgrading for Y2K – or maybe they were just lucky!
Our third indicator of IT investment relates the totalinvestment to the number of PCs installed in the firm. Our results showed thatthere was only a small variation in this indicator according to firm size, withlarge firms averaging £2.9k, medium firms £2.7k and small firms £3.1k. Wewould expect this result since hardware, software and IT support costs areinvariably linked to the number of system users.
What about the change in IT budgets for this year? Amongstthe large firms, the majority (45%) were planning to spend more than last year,against 30% who planned to spend less. However, 40% of medium firms planned tospend less than last year – against only 22% who were planning to spend more.Amongst the small firms there was an even split – with a one-third planning tospend more, one-third less and the remaining one-third the same as last year.
We would expect the larger firms to be increasing their ITinvestment to a level approaching that of their major clients. For example,within the financial services sector my experience is that it is not uncommonfor companies to invest 15 to 20% of their turnover on IT. Increasingly majororganisations will expect their legal advisors to have access to the sametechnological facilities that they have.
IT Staffing
When I first began consultancy work in the legal sector morethan ten years ago, it was only the large firms that had full-time specialist ITstaff. Amongst the smaller firms it was common to rely on an enthusiasticpartner who dabbled in IT or for a secretary to be handed the task of taking theback-ups and training/supporting the other users (mainly the secretaries). Howthings have changed!
Only a quarter of the small firms do not have full-time ITstaff. Amongst the larger firms, IT departments of more than 50 are notuncommon, supplemented by contractors, consultants and various external supportcontracts.
We calculated the average number of employees for each ITperson. The figure was almost identical in small firms and large firms atroughly 43 staff for every IT person. There was less support provided for themedium firms at 57 staff per IT person. Table2 shows the variation measured amongst the sample.
We looked to see if there were any differences in theseratios according to the IT infrastructure in place. For the small firms, wenoted a significant difference between those firms with a single operatingsystem (45 staff per IT person) and those firms supporting multiple operatingsystems (30 staff per IT person). There was less of a difference in the mediumfirm category (54 staff reduced to 42 staff) and minimal difference amongstlarge firms, who are more likely to choose the most appropriate operating systemfor the application and have a wider range of skills in their IT departments.
Operating Systems
So what about the IT infrastructure in place? Here are someof our main findings.
Server Operating Systems
Microsoft dominates (with more than two-thirds using NTServer v4) against Unix (used by 38%) and Novell (27% v4, 16% v3). Amongst thelarge firms 87% use NT Server and 55% Unix.
Overall a third of responding firms use NT Server exclusivelywithin their firm.
Workstation operating system
Windows 95 is much the most used operating system for PCs. Wenoted however that Windows NT workstation usage amongst the large firms (55%) ismuch higher than the overall average. See Table 3.
Table 3
We asked whether firms were planning to move to Windows 2000,when available. The majority (48%) were unsure, with only 11% saying that theywould move. However, amongst the very largest firms (more than 100 partners), asignificant majority (64%) were planning to migrate to Windows 2000 at theearliest opportunity.
Servers
Compaq dominates, with 60% usage, followed by Dell (26%) andHewlett Packard (17%). Responding firms averaged one file server for every 26staff. As the costs of servers continue to fall, firms have been able toincrease resilience and performance by giving each major application its ownserver.
Communications
We asked about the Wide Area Networks in place. The chart in Table4 shows the current position by number of firms using each service. We wouldexpect to see vastly different answers in a couple of years as the use ofswitched networks expands significantly to provide greater bandwidth and moreflexibility for changing network locations.
Applications
Office Applications and Facilities
As Laurence Eastham reported in the last issue, theinexorable rise of Microsoft Word has continued over the last year: 86% now useWord, whereas WordPerfect usage has dwindled to just 26%. This is a completereversal of the situation of just five years ago! Furthermore a further 4% arein the process of changing from WordPerfect to Word. Incidentally, it is wellworth comparing this situation to that in the USA where, according to theAmerican Bar Association survey, WordPerfect has 60% usage in legal firms.
We know of a few firms that are still avid supporters ofWordPerfect. They will have been encouraged by a very interesting statistic fromour survey that shows that the secretary to fee earner ratio of firms usingWordPerfect is 10% better than for those firms that use Word. Our view is thatthe firms that have changed over the last year from WordPerfect to Word arestill on a learning curve. As ever, training and supporting the users are bigissues for IT departments – they were the top two issues faced last year.
Calendar/Diary software usage is high, being used by everylarge firm, 91% of medium firms and almost three-quarters of small firms. MSOutlook is the most used product – it has treble the usage of Novell GroupWise.
E-mail usage is now almost universal – those firms that donot use e-mail are all small firms. E-mail was placed first as the applicationthat had provided the most benefit by both the large and medium firms and placedthird by the small firms. MS Outlook/Exchange is used by more than half thefirms. As a user of e-mail for more than 15 years, it is nice for me to see thateveryone has now caught up!
Our document management findings were reported in the lastissue, but in summary our data supports the view that significant economies canbe made in support staff if these systems are used effectively. More than halfof the large firms used document management, whereas only a third of mediumfirms and a quarter of small firms had document management in place. PCDOCS isthe dominant supplier.
The use of faxing from workstations has increasedconsiderably over the last couple of years; usage has reached 45% of all firms.From our data there does not seem to be a dominant market leader.
Voice-recognition systems continue to be piloted by firms and42% of firms claim to have such systems installed. These systems have so farfailed to match expectations – firms across all size categories placed thisapplication in the top three applications providing least benefit.
| Large (>25 Partners) |
| Elite (21%) |
| Axxia (19%) |
| AIM (11%) |
| Medium (11-25 Partners) |
| Axxia (17%) |
| AIM (13%) |
| Avenue (11%) |
| Small (up to 10 Partners) |
| Axxia (12 %) |
| AIM (11%) |
| TFB (11%) |
Practice Management Systems
The three most used PMS suppliers are shown below.
We asked whether firms used a marketing database and whetherthe PMS supplier supplied it. Amongst the large firms 85% used a marketingdatabase. Of these half were supplied by the PMS supplier, 40% were developedinternally and the remainder used a specialist marketing package. The usage ofmarketing databases was surprisingly low amongst the medium firms (73%) andsmall firms (51%). The PMS supplier supplied the majority of these databases.
Our report details the rating of the PMS suppliers and theirproducts in terms of service, value for money, product innovation, ease of use,functionality and reliability. From my recollection of past studies theseresults show that suppliers have improved their service over the last fiveyears. It is the large firms that are the most likely to criticise – with 30%rating the service received as poor or very poor. Only 15% of small firms and 4%of medium firms gave a similar adverse service rating.
In our separate supplier survey, we asked the PMS suppliershow law firms could best assist them during the implementation period. Theresults in Table5 confirm our long-held view that realistic and achievableimplementation plans need to be set and agreed by all parties and that theimplementation must be tightly project-managed against these plans.
Case Management Systems
| Small |
| Conveyancing (32%) |
| Debt Collection (20%) |
| Trust & Probate (20%) |
| Medium |
| Debt Collection (46%) |
| Conveyancing (37%) |
| Trust & Probate (31%) |
| Large |
| Tax/Fin. Services (45%) |
| Debt Collection (40%) |
| General Litigation (36%) |
The percentage of firms that have installed case managementsystems has increased slowly over the last few years. Our results show thatfirms holding a legal aid franchise have a higher usage than those that do nothave a franchise. The top three case management applications by size of firm areshown at the top of p18.
The speed of the development and implementation of casemanagement systems is undoubtedly one of the biggest disappointments for lawfirms who were willing to embrace this technology and consider changing the wayfee earners worked. Indeed case management was rated first as the applicationthat had provided the least benefit by both small and medium firms and rankedsecond (behind desktop fax) by the large firms. Our view is that firms, with fewexceptions, have not been willing to completely re-engineer their workingpractices to maximise the potential benefit of these systems.
Although case management systems have been slow to beimplemented, our experience would suggest that the suppliers have madesignificant improvements in the products being marketed. We also feel that, withall the technological developments taking place, lawyers are becoming more awareof the need to adapt – even if this does mean a major change in workingpractices. Therefore we would see the use of these systems expanding over thenext year. This is borne out by our question regarding the main developmentpriorities for 2000 with case management being placed highest by the mediumfirms, second by the small firms and third by the large firms.
The Internet and E-commerce
Despite Tony Blair’s recent plea for companies to‘‘grasp online opportunities’’ and the announcement of help to be givento small to medium-sized companies in the recent budget (through the 100% writeoff against tax in the year of purchase for investment in e-commerce and IT),legal firms as a whole have been slow to utilise the Internet to its fullpotential.
Our survey shows that Web sites are common amongst legalfirms with 59% of our responding firms having a Web site. However, hardly anylegal transactions are conducted via the Web, with the figures being 0% by thelarge firms responding to our survey, 16% by the medium firms and 22% of thesmall firms. Maybe it is easier for small firms to change their mindset?
Our survey suggest that there is not much sign of change inthe near future as the development of Web -based legal transactions was ratedonly 17th out of 20 development options for this year. Can legal firms reallyafford to delay their exploitation of the Internet?
Intranets are in place in a third of the firms and areforming the basis for the development of knowledge management systems.
The Web provides a great opportunity to allow easy clientaccess to relevant data in the law firm systems. Over the years UK legal firmshave been very slow to entertain the idea of letting clients see what they wantwhen they want. The capability exists – with new supplier software developmentsbeing focused on Web enablement.
Our findings regarding providing access to clients are veryinteresting. Table6showsthat it is the large firms that have recognised a demand for such access fromtheir clients rather than the smaller firms. Indeed Intranet/Extranetdevelopment was far and away the priority development area for the large firms.
When we carry out the next Legal IT Interfirm Comparison, wehope to report on success stories in the exploitation of the availablee-commerce opportunities.
