In a rare opportunity for the City’s top chief technology officers (CTOs) to sit at a roundtable breakfast and discuss cloud technology. The Lawyer was joined by leading UK Microsoft expert Cloud Direct on 26 March 2024 to host an industry-specific discussion that would address the gaps in knowledge and share challenges with the technological climate.

Common pain points in digital transformation include legacy on-premise software with most law firms hosting a mix of on premise and cloud technology deployment of solutions on the client side and, of course, generative artificial intelligence. The CTOs in attendance spoke with increasing urgency about the problems they face, although one participant revealed their concerns were particularly pressing as their firm needs to replace its entire case management system, before its next round of updates render it inoperable.

With that in mind, here are some key takeaways from the roundtable discussion.

Cloud vs on premise software

Law firms are increasingly recognising that technological innovation isn’t slowing down any time soon – in fact, it’s gaining pace. Microsoft has shown though its constant software updates that CTOs must not only keep up to speed with progressions in technology, but keep their boards involved and informed as changes take places.

The distinction between cloud and on-premise capabilities was depicted by one attendee through a ‘mind the gap’ graph, which demonstrated how on-premise capabilities will flatline over time while the cloud exponentially increases in functionality, capabilities, supportability, security and disaster recovery. Without embedding the cloud technologies within a law firm’s operations, this gap will never be bridged and they will simply fall further and further behind their competitors.

If there was one thing that the roundtable participants could agree on, it was cost. Half a decade ago, the industry sold cloud as a ‘switch on, switch off’ cost saving exercise. This narrative has dwindled, and the consensus was that ongoing security updates actually increase cloud costs year on year. This makes achieving buy-in for the cloud increasingly difficult as the expense of switching becomes more apparent, unless, as one CTO quoted: “you have armies of system architects and well-established infrastructure.

Some expressed that another inhibitor is that the industry hasn’t moved uniformly. While some tech providers are committed to the cloud, like Microsoft, some smaller companies are further behind in the transition and consequently, their on-premise plugins are incompatible. The CTOs in attendance were recommending that firms should acquire a software platform that does 80 per cent what you need, and then employ smaller services to do the remaining 20 per cent, which allows smaller peripheral services to still exist in the market.

Equally, cloud resourcing is proving a challenge for many firms, as they all rush to hire the best architects and engineers that have experience in managing the complexity of integration. To help close the talent gap, upskilling current technologists is also an imminent challenge.

Tackling the generative AI market

After a quick break, conversation turned to how the CTOs are tackling generative artificial intelligence – “the next argument to be won,” according to one attendee. The roundtable participants agreed that while tech is a fantastic area to work in, you can spend years pushing solutions that will never land as well as you like. Considering this, they continued that the last thing you want as a CTO is to have to do an exchange refresh. “Maintaining a long-term view of your tech trajectory is essential to ensure this doesn’t happen,” said one CTO.

Legal tech is booming and there are many, many start-ups operating in the space. The beauty of this is that these companies have all been born in the cloud, which makes it easier to try new software or flippantly ‘have a go,’ as one CTO put it. As a result, the cost of entry has never been lower, but attendees warned small start-ups that being in the cloud alone will not get you past the legal director.

The CTOs called out the naivety of smaller suppliers; their cavalier attitude meaning they often overlook the need for security governance. “They seem surprised when you send across anti-bribery, anti-slavery and privacy policies in contracts,” commented an attendee. AI-specific security reviews, what constitutes fine-tuned models, and what will manifest into hallucinations is what the CTOs want more clarity on from suppliers. The frustration with AI suppliers didn’t end there, as attendees also questioned the lack of detail in their pitches.

However, they look ahead to the benefits of AI in the long run, especially reducing the time and money that needs to be spent on trainees. Although with trainees billing less hours, thereby lacking incentive and motivation, this raises wider questions on the utility of the billable hour model. This might not be a bad thing though, according to one CTO: “This is a fundamental shift which has needed to change for up to 30 years.”

Sponsor’s comment from Cloud Direct

The industry finds itself at a key inflection point with technical thought leaders balancing the competing demands of security, governance and compliancy with the knowledge that remaining on-premises is not a viable medium to long term strategy for organisations looking to harness new innovations which are more naturally accessible to those working in with cloud services.

A key hurdle remains the software landscape for the industry, with a notable chasm between traditional software providers who are failing to move fast enough to support cloud innovations, and the more nascent cloud-first software vendors who are disrupting the market but lack credibility in meeting the strict demands around governance and security.

As this market matures and software becomes available that meets both innovation and control and more organisations make the switch to cloud then it is likely to precipitate a snowball of cloud migrations. All attendees acknowledge that cloud will be the natural destination for their systems and therefore it is a question of when, not if.