Case.One Evaluates the Cost of Practice Management Software

For nearly 30 years, software developers have been building practice management solutions to help legal professionals improve client communication, increase efficiency, and avoid missed deadlines. And yet after all this time, according to the American Bar Association’s 2016 Legal Technology Survey Report, less than 50% of law firms have adopted. Certainly, for many, the cost of licensing, maintenance, and infrastructure a practice management system is a real hindrance, preventing many firms from implementing the technology they need to practice efficiently.

For the sake of this discussion, we’ll use the following example: A law firm with five attorneys, 10 support staff, and 500 active cases. To be fair, we’ll estimate costs over a three-year period and we’ll use recent pricing data obtained from web searches.

From the earliest days of practice management, and continuing through today, most software has been priced based on the number of users accessing the software. So, let’s see how the different pricing models (and the related infrastructure) stack up:

On-Premise Legacy Software on an Internal Network

This model requires law firms to purchase and maintain hardware to run their practice management software.

  • Software License and 1st Year Maintenance: $19,069
  • Additional Software Maintenance Fees, 2 years: $5,326
  • Hardware, Backup, Licensing, and Setup Fees: ~$18,500
  • Ongoing Hardware Support and Maintenance: $42,300

Total 3-Year Investment: $85,195
Average Monthly Expense: $2,367

On-Premise Legacy Software in a Third-Party Hosted Environment

Similar to the first model, the software licensing and maintenance are the same; the difference with this model is the replacement of infrastructure costs with outsourced hosting. The big benefit is anytime, anywhere, and any device access.

  • Software License and 1st Year Maintenance: $19,069
  • Additional Software Maintenance Fees, 2 years: $5,326
  • Hosting Setup, On-boarding, and Data Migration: ~$3,500
  • Hosting 15 users at $149/month for three years: $80,460

Total 3-Year Investment: $108,355
Average Monthly Expense: $3,010

Web-Based (Cloud), Per User

Like the hosted model, these solutions provide access to your important data from anywhere, anytime. Web-based applications eliminate the infrastructure/hosting costs of the first two models. Per-user pricing varies from company to company; we used an average of several pricing plans for this comparison. And unlike legacy solutions, product updates and support are included in the per-user cost.

  • Software License (average of $59/mo/user): $31,860

Total 3-Year Investment: $31,860
Average Monthly Expense: $885

Web-Based (Cloud), Per Case

With this model, you pay only for active cases with no limit to the number of users. Eliminating the per-user model means your software cost is easily predictable and will only increase as your practice grows. Like the web-based model above, product enhancements and support are included.

  • Software License (average of 500 cases/month): $10,764

Total 3-Year Investment: $10,764
Average Monthly Expense $299

A Software Solution for Every Law Firm

Using our law firm scenario (five attorneys, 10 staff, 500 active matters), there is a practice management software model for every firm. Today’s technology has made web-based software extremely secure and it can legitimately be argued more secure than an in-house system. For those firms invested in legacy software a move to the cloud may be inevitable, either via hosting or transitioning to a web-based product. For firms not yet using a practice management system, you certainly have your options.

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