Issue link: https://epubs.iltanet.org/i/83718
Law Firm Technology Spending: More than a Numbers Game critical is "broken" and a solution can be found, the support fees are questioned less and less. Cloud(y) Benchmarks Another technology trend to keep an eye on is the impact cloud-based deployments and Software-as-a-Service (SaaS) models will have on ongoing maintenance contracts and costs. Due to the nature of delivery and reduced resources involved in such models, the overall support costs are bound to go down versus traditional client/server applications. Of course, acquisition and maintenance cost savings are cloud upsides, while security and compliance risks are well-documented barriers for many firms investigating the cloud. According to the 2012 ILTA/InsideLegal Technology Purchasing Survey, 32 percent of surveyed firms indicated they are currently implementing or using some sort of a cloud solution, a 23 percent increase over when the cloud question was first posed in 2009. Speaking of the cloud, the Aderant survey delved into average cloud/per-attorney costs, the first time we have seen such a distinct breakout, and, interestingly enough, the per-attorney spending decreased as the size of the firm increased. For example, responding firms with fewer than 10 attorneys spend an average of $1,092 per attorney on cloud solutions while firms with 101+ attorneys spend $741. The decrease is most likely attributed to the scalability of cloud-based software and the reduced licensing fees for firms with large user populations. Making Sense of Spending Stats In the Aderant legal technology spending survey, small firms spend the second highest in this category ($1,771 per attorney) next to the largest firms. The higher cost-per- lawyer for smaller firms may mean there is a minimum standard of software needed to manage a practice. It could also be a commitment to leveraging technology to achieve higher profitability, taking advantage of the many tools available to streamline a practice. For the larger firms, the higher cost could simply be having more resources available to try new software products. Also, it would be logical to assume operating an international firm would drive up software acquisition costs. While different departments within the firm will gravitate to different metrics and benchmark data when budgeting and determining technology spending, the two metrics all players (vendors as well as the various internal firm decision makers) can agree on in terms of value are comparative per-attorney statistics and percentage of total revenue numbers. and KPIs While comparative spending data sets are helpful, applying some common business sense and logic can also help firm decision makers optimize their technology budgets and better understand spending benchmarks. Take for example the per-attorney cost of new software acquisition. Since pricing for new software is often based on the number of attorneys, there is usually a correlation between the overall cost of the software and the per-attorney numbers. While using metrics to evaluate technology purchases is necessary and data provided by ILTA and select technology vendor surveys are very useful and conducive to benchmarking, the value of weighing purchases based on their fit within the context of the firm's overall technology plan is equally compelling. While the firm can look to its CFO and finance group for numbers and budget estimates based on metrics, functioning within an environment that encourages cross-departmental collaboration and even including the recommendations and feedback provided by technology vendor partners will yield the most thorough and comprehensive long-term technology strategy. Instead of defending their respective views and technology recommendations to one another, technology influencers in and outside the firm should band together to formulate the best possible strategy. Of course, having the numbers to back up the strategy doesn't hurt one bit. ILTA White Paper 27 During the production of this article, the 2012 ILTA/InsideLegal Technology Purchasing Survey results were announced. Click here to view the results.