Charting technology's trends
6 June 1995
This is the sixth year that the Legal IT survey has been run and of the 326 firms which responded, 312 did so by the cut-off date for the analysis. The firms represent nearly 19,000 lawyers and
almost 20,000 support staff, and include some of the largest UK firms.
While we retained some key questions from previous surveys to monitor legal IT trends, this year we introduced a number of new questions about the strategic use of IT.
Five related topics indicated an upsurge in legal IT use over the last 12 months.
Fee earner usage of IT
In last year's survey we reported an estimated 33 per cent of fee earners (including partners) who had workstations. If UK growth was to follow trends in the US, we were expecting this year's estimate to be around 50 per cent.
As can be seen in the diagram below, significant growth has occurred in the last 12 months, and this is expected to continue throughout 1995. Currently, around 43 per cent of fee earners have workstations.
Firms responding to our survey expect the proportion to increase to 58 per cent over the next 12 months. It appears, therefore, that our predictions overestimated the increase by about six months.
While there has been minimal change in the percentage of firms where all partners have workstations (14 per cent) there has been a slight increase in the percentage of firms where all fee earners have workstations - from 10 to 13 per cent.
Fee earners have reported increased usage in almost every category. Of most interest to us has been the external communications links that firms have established, as for some years this has been an area of unrealised opportunity, particularly with regard to communication with clients and intermediaries.
External links have been established for email and document transfer and this year shows a considerable increase in firms establishing electronic links with clients. Thirty one per cent of firms now email to clients and 23 per cent transfer documents to clients.
Increases have also been noted in linking home workers to the office networks, and in electronic links to other solicitors, both within the same legal grouping or outside.
However, despite 26 per cent of firms reporting that major clients had requested access to their computer systems, only three per cent of firms in our survey currently allow clients to update information and only five per cent allow direct enquiries into their systems.
These increases have no doubt been heavily influenced by the availability of Link over the last 12 months - now used by over three quarters of the larger, 25-partners plus firms - and the media hype surrounding the Internet.
Twenty one per cent of firms now have access to the Internet, with a further 21 per cent planning access. Of the larger firms of over 50 partners, only seven per cent were not using or planning to use the Internet.
A high majority - 78 per cent - have found the Internet to be reliable, with the main access sources being through Compuserve (43 per cent) and Link (34 per cent).
After several years of reporting reductions in actual and planned IT expenditure, this year has seen a doubling of the average software spend. Over 70 per cent of firms reported spending on software in 1994 at an average level of £47,500.
There are of course significant variations according to size of practice ranging from an average £6,500 for the one to five-partner firm to more than £250,000 for the 50-plus partner firms.
Hardware spending has also seen a considerable increase with an average spend of £61,400 across all firms (£35,000 last year) - considerably more than the £49,000 per firm estimated last year.
The biggest increase in hardware spending has occurred among the 26 to 50-partner firms, where average hardware spend per partner has increased from £2,191 to £4,667, an increase of 113 per cent.
A new question this year was to ask firms what proportion of annual fee income was to be spent on IT-related expenditure in 1994, including IT staff salaries, training and maintenance support, and what were their plans for 1995.
The results were lower than expected, with an overall average of 2.5 per cent in 1994. There was little variation in the percentages by size of practice. The overall average estimated IT spend for 1995 was three per cent of annual fee income, with medium sized firms (11 to 25 partners) planning to spend the most (4.1 per cent).
Firms were asked to rank the external factors driving further investment in IT.
The strongest factor mentioned by a considerable degree was client demands for quality and speed of service. The next most important factor was providing a value for money
service to clients, with competition from other legal firms
being ranked third.
There was little variation by size of firm, although for medium sized firms the demands of professional staff for improved IT facilities was ranked higher than competition from other firms.
Among the major IT issues mentioned, there was a noticeable difference between the larger firms (25-plus partners) and smaller firms.
More than half the larger firms were using or planning to use 'workflow' systems to restructure the way legal work was done whereas, among the smaller firms, less than a quarter had considered restructuring legal work.
Integration of software
More than three quarters of the larger firms considered full integration of all IT services and facilities to be very important whereas less than half the smaller firms rated this as very important.
Graphical User Interface
The availability of a graphical user interface (GUI) for the applications software was rated as very important by 55 per cent of the larger firms as opposed to 16 per cent of the smaller firms.
Applications in use
Despite plans (as they were reported last year) for firms to invest in applications to support fee earners, the majority of replacements of upgraded systems have been in the traditional areas of accounting, time recording and word processing. There has been very little change in the overall percentage of firms using each application.
Among suppliers of accounting and time recording software that were identified by respondents, there were some differences according to practice size.
These differences will be reported in more detail in our final report, which will also identify the principal suppliers for other applications.
However, the six main suppliers for this core legal application were: AIM 13.5 per cent; Axxia 13.1 per cent; TFB 11.5 per cent; Miles 33 7.8 per cent; Avenue 6.6 per cent; Norwel 5.3 per cent.
Among the word processing packages, early results suggest that use of Microsoft Word has doubled to around 20 per cent of firms, with use of WordPerfect at a similar level to last year (about 80 per cent ).
Many firms appear to be in a transitional stage, with multiple word processing packages currently in use.
Satisfaction with the products and services provided by the legal IT suppliers appears to have deteriorated since last year. Cost is again a major issue, with almost two thirds of firms rating the software costs as high or excessive.
With regard to the quality of service provided by software suppliers, less than 20 per cent of firms rated it as good or excellent, although a further 10 per cent of firms agreed that the quality was improving.
These figures must be worrying for many of the legal suppliers which, like lawyers, are increasingly having to compete in the legal marketplace in terms of quality of service, technical excellence and value for money.
With an ever increasing number of legal firms becoming more reliant on IT to deliver a quality service to their clients, current attitudes clearly need to change in order for the law firms and their chosen
suppliers to work more in partnership, with the responsibilities of each side being fully understood.
The 1995 Survey Report will be issued free to all participating practices. For non-participants, copies are available from Robson Rhodes at a price of £150 which is wholly donated to The Solicitors Benevolent Association.
Please contact Richard Blasdale on 0171 865-2197 for further details.
Richard Blasdale is a senior IT consultant at Robson Rhodes Management Consultancy.