The end of the North-South divide?

The boundaries that divide Scottish and English legal software providers are eroding, writes Jim Cummings. Jim Cummings is chairman and CEO of Pilgrim Systems. Since the late 1970s, when software developers became aware of the market for computer systems in legal offices, there has been debate over the North-South IT divide.

The differences in requirements between Scottish and English systems is founded on the differences in the accounts rules between the two countries' respective law societies.

The notion that Scottish firms had very distinct practice management requirements has been extremely convenient for Scottish software suppliers, as it has helped to keep suppliers out of the Scottish market.

But things are now beginning to change as the distinctions between Scottish and English firms' accounting methods begin to blur.

In England, two balances are maintained – client and office – and there is a definite wall between them. The client balance controls client money and the firm can only use it for specific purposes, unless the client has been notified. The office balance controls payments made by the firm on the client's behalf, usually out of the firm's money. The client is then billed. This clean-cut separation makes it easier for firms to identify their cash exposure to a client. It is also easier for them to analyse and control work in progress, monitor profit potential and streamline billing procedures.

In Scotland, a single client balance is the norm. Everything goes through this one balance, including the client's payments and disbursements. The benefit of this is that the firm can offset disbursements and bills against client cash and therefore reduce the amount of money it is necessary to hold in the client's bank account. The drawback is that it is difficult to identify how much money the client genuinely owes the firm.

A number of Scottish firms have adopted the English system and many are now operating a hybrid version of the Scottish system, whereby everything still goes through client balance but it is possible to sub-analyse the balance to show client money, disbursements and bills. Scottish firms are also beginning to demand systems features which are standard in England, such as client interest calculation and cheque writing capabilities.

The provision of purchase ledgers also falls into this category, although this is probably more applicable to larger firms, who require purchase ledgers because of their high volume of transactions in relation to their own firm and client purchases.

Many of the differences between firms in Scotland and England have as much to do with style as substance.

In Scotland, lawyers adopt the "man of business" approach. Lawyers in most Scottish firms will seek to act for their client from the cradle to the grave (often literally), and aim to handle all their legal work on both private and business matters.

At the risk of generalising, larger firms in England tend to be much more departmentalised. This has fostered a more commercial, corporate, but perhaps less personal culture. As a result, commercial functions – time recording, billing and credit control – are more hard-nosed compared with Scotland.

Moves to adopt the English accounting system could make Scottish software suppliers a little anxious. Historically, Scottish systems have lagged behind their English competitors. There is also truth in the argument that Scottish developers were less sophisticated than their English counterparts.

In the past, we did not properly understand work in progress, write-offs, fee earner accountability, billing methodology and heavy-duty management information. We did not understand, because we were not required to by our clients, the Scottish law firms.

Despite this, Pilgrim Systems is a big fan of the English system. Although our old practice management system, Advocate, enjoyed a commanding position in the Scottish market, we have developed a new system called LawSoft.

The system is making headway in the English market where it has won £2m-worth of business in the past six months. It is also attracting international interest. Meanwhile English software companies are making their way into Scotland, while some international big hitters are making their way in the UK. Slowly, competition is becoming global. The North-South IT divide is beginning to disappear.