Gulf between little and large
6 April 1996
This is the seventh year that the management consultancy division of Robson Rhodes has run a legal IT survey. Overall 312 firms, employing over 19,000 lawyers and nearly 20,000 support staff responded to the mailshot.
The survey included 58 questions and this summary concentrates on some of the most important results, including an increasing technological gap between large and small firms.
Fee earner usage of IT
Over the last few years the use of computer systems by fee-earning staff has increased. This year's results also provide evidence of a polarisation between firms which are profitable and can afford to invest in systems (often to support fee-earning work directly) and so further improve profitability and service, and firms which cannot afford the investment and will struggle to maintain their existing client base.
The percentage of firms which provide all fee earners with workstations has doubled over the last year - it is now 27 per cent. But among firms with 10 partners or less, more than a third do not provide any fee earners with workstations.
The primary use of IT among fee earners is accessing practice management information and internal email.
The figures show that there are over 33,500 terminals and PCs installed to support the work of just under 38,500 fee earners and support staff, with the largest law firms now well on the way to achieving one-per-desk. PCs are being installed rather than terminals and there has been a 27 per cent increase in the average number (now 71) of networked PCs per firm this year.
The increasing requirement to communicate with clients electronically, and the ease with which Windows-based applications such as email can be used have helped the introduction of PCs onto fee earners' desks. Over 43 per cent of firms now use email for internal communications and just under a third for external communications. Two years ago, under 15 per cent of firms communicated electronically with their clients.
Last year's planned implementation of replacement or upgraded back office systems was much less than expected. Over a third of firms are not planning further spending on such systems in 1996.
There is also further evidence that small firms are falling behind in the utilisation of new technology. Among the majority of small firms spending on hardware and networks was half that of last year. However, large firms continue to invest heavily in hardware upgrades.
Software spending in 1995 was low for the majority of small firms, with three-quarters spending less than £10,000 on software. Two-thirds of small firms are also planning to spend less than £10,000 next year.
Many large firms have completed upgrades to their systems infrastructure and back office systems, and are now beginning to invest in software and facilities to support fee earners. However, it appears that many small firms do not have the resources to replace ageing back office systems, a move which is often a pre-requisite for integration with the newer fee earner-based systems available.
Marketing is, as ever, a key to enabling firms to maximise the potential of their client base and assist fee earners in bringing in work. Use of the Internet has been seized on by many firms, with two thirds of those with more than 100 partners using it for marketing purposes.
Marketing databases are the most popular application planned for upgrade or replacement in 1996 with 39 per cent of firms planning to update.
There has been a rapid increase of firms using the Internet, with 15 per cent having a Web page and 28 per cent planning to set one up in 1996.
State of the IT market
Axxia and Aim (excluding the Ushers software now owned by Aim) are now neck and neck as the most used back office system suppliers at 13.5 per cent.
Other suppliers used by more than 5 per cent of the sample include TFB (10 per cent), Avenue (9 per cent), Miles 33 and Ushers (6 per cent) and Norwel (5 per cent). Equitrac appears in the survey for the first time with its cost capture systems being used by 9 per cent of firms.
With regard to case management systems (which are used by just under two-thirds of firms), 20 per cent have introduced bespoke systems rather than a package from leading suppliers. Only 10 suppliers of case management systems had packages used by more than five of our responding firms, with Aim and DPS being the most used suppliers.
Wordperfect use is down for the first time since the surveys began, but it is still the most popular wordprocessing package (71 per cent). Character-based versions of Wordperfect are used by the majority (56 per cent) of firms in our sample.
Word has increased its share to 23 per cent, although it is much higher (41 per cent) among firms with more than 50 partners
Link is the most common email system (25 per cent), although 20 per cent of firms use Wordperfect Office and Novell GroupWise, and 20 per cent use the Internet for email.
More than two-thirds of firms use Windows or Windows '95 on their PCs. Unix is used by 58 per cent of firms. The use of Windows NT has shown no increase from that reported last year (6 per cent).
Satisfaction with software suppliers
Last year the main finding of the survey was the deteriorating confidence in the quality of service provided by IT suppliers.
Since then a number of initiatives have taken place to address the problem. The Law Society, suppliers and the formation of the Legal Software Suppliers Association (LSSA) have all helped. LSSA is a self-regulating body which imposes a code of practice on its members and has been joined by most of the long standing legal IT suppliers.
This year's questionnaire has enabled the separation of practice management system suppliers from case management system suppliers, although some supply both.
Once again, firms were asked to comment on software in terms of functionality, quality and cost plus the quality of service provided by the supplier.
There has been an improvement in the rating of service quality, with 42 per cent of firms now rating back office system suppliers as good or excellent (20 per cent last year). For case management system suppliers, the figure for good or excellent ratings is 39 per cent.
And 60 per cent of firms rate functionality and reliability of software as good or excellent. There has been a significant reduction in firms that rated software as poor (from 21 per cent last year to 6 per cent).
The cost of legal software remains an issue for small firms, particularly for case management software.
LSSA has the aim of promoting an understanding of the legal IT market among users. It will be interesting to see if next year's survey reveals that firms' perception of the value for money they receive from legal software suppliers is greater if those suppliers are members of LSSA.
Firms were asked to rank in order of importance a number of pressures that were driving investment in IT, and a total of 18 answers were listed on the questionnaire.
The two most important issues are internal. Since the beginning of the surveys, the key factor in investment has been that firms provide too little management information too infrequently. In the past, firms have blamed the poor reporting functions of their practice management systems.
However, it would appear that this year, given general satisfaction with the functionality of practice management software, additional financial management skills are needed to define and configure the reporting systems and interpret and act upon the results.
Nearly half the firms surveyed stated that they were committed to changing the way legal work was carried out and that they had implemented continual improvement. Only 2 per cent of firms were unconvinced of the need to change working practices.
Only 54 per cent of firms have a documented IT strategy, and one third of these have not updated it within the last 12 months. However, 80 per cent of firms that do not have an IT strategy claim to have commenced or completed major changes in working practices.
It is interesting to note that despite the increasing use of IT, full-time IT staff are employed by only 36 per cent of firms. For firms with 10 or less partners, the figure drops to less than 15 per cent .
In addition, the level of IT training provided for fee earners in small firms is minimal (the average is less than half a day per partner per year), and in over two thirds of these firms no partner or fee earner IT training was given last year. Even in the large firms, it is rare for more than two days' annual IT training to be provided for partners and fee earners.
Questions of training and support are inevitable as reliance on computers increases, and they must be addressed by small firms in particular if they are to maximise the benefit from their IT investments.
The 1996 report is issued free of charge to participating practices. For further information contact Richard Blasdale on 0171-865-2197.