The legal industry is renowned for being slow to adopt new technology, particularly those firms that operate with the “not broken, why fix” mindset. Unfortunately, as the legal tech around them advances, firms often incur many hidden costs by holding on to outdated solutions.
Faced with competing financial demands, astute business leaders always look for ways to conserve revenue and cut costs. Unfortunately, oftentimes this means putting off expenditures, such as new server upgrades or new practice management solutions, and instead holding on to outdated hardware or legacy software. However, what many firms may not realise is that working with outdated technology can lead to increased costs across multiple facets of the business in the long run.
Here are just a few examples of why holding on to outdated technology can cost your firm more than it saves.
- Maintenance and IT costs: Outdated software often has no support from the provider and this leads to pressure on IT resources to resolve issues with patchwork solutions and make-do fixes. This increases the IT support costs as these patches can be unstable and require constant monitoring and managing.
- Operational costs: Older systems have increased failure rates which can take days to resolve and lead to significant staff downtime. Not only does the firm’s productivity suffer, so do their customers when critical matter dates are missed due to system failure.
- Inefficiency costs: Outdated technology doesn’t have the automation capabilities of a modern solution. Manual operations and workarounds disrupt workflows forcing fee-earners to waste billable time on repetitive, manual processes.
- Security and data loss costs: If the technology is no longer supported by the developer, firms may no longer receive critical security updates and patches leaving the firm vulnerable to cyber attacks. Data back-up and disaster recovery also become a huge concern.
- Staff turnover costs: Outdated software is more susceptible to slow processing speeds and crashes. This affects the legal team’s inability to effectively do their job and can lead to growing frustration and decreased staff morale as a result of using outdated, slow and limiting technology.
- Client churn costs: Today’s tech-savvy clients have an expectation for efficient, transparent and cost-effective legal services. Outdated technologies can result in poor client experience leaving the firm at risk of losing its clients to competitors.
- Compatibility costs: If a law firm has built its infrastructure around solutions that are outdated and no longer supported by the vendor, they may not be able to integrate with more recently developed tools and applications that firms may need to efficiently run their business.
- Scalability and business growth costs: With increased scale and demand, older systems may lack the power and functionality to support the growing requirements of the firm.
Why are law firms reluctant to update their technology?
Although every firm is different, the reasons for not changing technology tend to be the same across the board, including:
- The unknown – unaware of the options available
Law firms don’t necessarily need to be at the forefront of all emerging technology by implementing all the latest toys as they’re released. They can simply review available options on a regular basis, assess their internal processes and have discussions with their staff about any pain points they might face throughout the day that prevents them from being client-focused. This ensures that when the time is right for the business to make a change, they enter this phase as an educated buyer.
- Cost – the outlay of the purchase
Replacing or upgrading core systems can require a significant initial outlay of cash. Typically, the lifetime of server hardware is three years and a lot of firms now work this into their budgeting. However, those firms that push the limits and simply wait until they absolutely must upgrade, can find themselves in a position of having to make a last-minute decision with unexpected costs occurring after the project begins.
- Resources – time is money
It can take significant time and resources to implement new systems and train staff. Productivity may be affected in the short term while ironing out glitches and small bugs that can occur during the implementation process. The balancing act of pulling fee-earning staff into a project journey can be a difficult decision however engaging the right staff in the implementation process can be key to the project success. Alternatively, outsourcing can be a benefit to those firms that don’t have sufficient inhouse skills or the time to train in new skills.
- Change Management – staff set in their ways and not open to change
Not all staff are open to change, particularly if it means a complete overhaul of the working processes they are used to. Unfortunately for some firms this causes the delay of change way past its due date and can be very damaging to the firm’s ongoing success. As change is inevitable, finding ways to manage the change for a positive outcome is essential – support from internal decision-makers, external product suppliers/IT Support and potentially outsourced change management experts will help immensely.
- Incompatibility – outdated legacy solutions that are not compatible with new technologies
Upgrading outdated systems can require a complete system overhaul which is a big commitment for a firm and has many challenges of its own. Having the right support and advice from the firm’s IT Support and tech providers, internally and externally is essential. Tech talk can often cause confusion and end up in the “too hard basket”. Firms should ask questions until it makes sense, ask for visual diagrams, ask for second opinions and get various quotes until they feel comfortable and confident in their decisions.
Adopting a forward-thinking approach
When firms consider the costs of maintaining older software, they may find that it makes economic sense to invest in technology upgrades. Few organisations can manage this all at once, so it’s important to perform a risk assessment and prioritise tech solutions that are critical to day-to-day operations. Firms should ask themselves these questions:
- If a piece of hardware or software were to fail, how would that impact the firm?
- What software is end-of-life, or will be within the next year?
- What systems are hampering productivity?
Once firms have a list of the most critical upgrades, they can create a plan and budget for bringing their IT environment up-to-date.
Law firms don’t necessarily need to be at the forefront of all emerging technology by implementing all the new toys as they’re released. They can simply review available options on a regular basis, assess their internal processes and have regular discussions with their staff about any roadblocks they might face throughout the day that prevents them from being client-focused. This ensures that when the time is right for the business to make a change, they enter this phase as an educated buyer.
The trick is not leaving decisions to the last minute as this can lead to a bad experience with the process and outcome. A change in technology, particularly something as business-critical to a law firm as a practice management system, can take a lot of time and effort. Through market research and forward-planning firms should be able to forecast and mitigate any potential risks and ultimately realise a positive return on investment that any good practice management solution should offer.
Regardless of the size of a law firm, change is inevitable as technology continues to drive the legal sector forward. Firms that adopt a proactive, forward-thinking approach by investing in technology solutions that are easily customisable, dynamic and scalable to accommodate business growth are better prepared to tackle change and evolve with the direction of the industry.
Download our Practice Management Due Diligence Checklist for an overview of 10 key areas for consideration when selecting legal practice management software for your firm.