TECHREPORT 2019: Budgeting & Planning

Each year, the American Bar Association’s Legal Technology Resource Center conducts its Legal Technology Survey Report of ABA members to find out how lawyers are using technology in the practice nationwide. The 2019 Survey is published in five volumes: “Online Research,” “Technology Basics & Security,” “Law Office Technology,” “Marketing & Communication Technology,” and “Life & Practice.” The published results represent one of the most comprehensive technology surveys of lawyers available. It is particularly adept at capturing responses from the solo and small firm demographic—the largest segment of the legal marketplace. In the “Technology Basics & Security” volume, which covers technology planning and budgeting, 31% of the respondents are in solo practice and 27% are in firms with 2-9 attorneys. In this overview of the results from law firm budgeting and planning, we will see where the solo and small firms differ from the average and where they don’t.

Is Your Firm Failing to Plan?

Respondents to the 2019 Survey were asked if their firms budget for technology. Overall, the numbers look good, with 60% responding in the affirmative. Looking at responses from small firms, however, shows that this is an area that needs to be addressed and improved. In 2019, 60% of solos responded that they did not budget for technology (down 6% from 2018) and 44% of firms with 2-9 attorneys did not budget for technology (up from 38% in 2018).

Why budget for technology? Windows 7 will no longer be supported as of January 2020. Firms will need to upgrade all computers running this operating system to Windows 10 before the end of the year. Data from the 2019 Survey shows that 13% of solos and 14% of firms with 2-9 attorneys are still using Windows 7. Also, as of October 2020, MS Office 2010 will no longer be supported. And don’t forget the servers! Windows Server 2008 (SP2) and Exchange 2010 (SP3) will no longer be supported after January 2020. 88% of firms in the 2019 Survey acknowledged using Adobe Acrobat. But which version? Adobe Acrobat X Reader/Standard/Pro is no longer supported as of November 2015. Adobe Acrobat XI and Reader XI support ended October 15, 2017. Mac users are not immune, as OS X 10.6 (Snow Leopard), 10.7 (Lion), 10.8 (Mountain Lion), and older versions of their Safari browser are no longer receiving security updates from Apple. While upgrades to the MacOS are free, the older hardware may no longer be able to support the requirements for the newest operating systems. Not updating your technology may provide short term savings but will be very costly in the long run. Running old, unpatched, and out of date software increases the firm’s exposure to ransomware and viruses. Additionally, last minute system upgrades and updates can be extra costly if they necessitate new hardware and other software updates, precipitate the need for training, or cause disruptions such as downtime. Not anticipating and budgeting for these costs can mean hard decisions and possibly cash flow issues.

Cloud products including the “as a service” products from security to infrastructure, managed IT resources, and even installed software are charging a per user per month price. Budgeting for technology should be easier to accomplish than ever. A technology budget will help ensure a commitment to keeping hardware and software updated and maintained which is essential not only for uninterrupted technology availability but also is a major component of best practices for security. Do not be tempted to have a single line in the firm budget for software and another for hardware/equipment. Break out the cost in line items for specific hardware and software/applications. You want to be able to measure the ROI (return on investment) and first, you need to see what you are considering spending, what you are actually spending, and then re-adjust as necessary.

Spending Habits

Respondents were asked to identify a monetary range of how much the firm spends annually on software to manage the practice (e.g., practice management, document management, time and billing, etc.). In 2019, solos most likely either spent less than $500 (27%) or $1,000-$2,999 (28%). Firms with 2-9 attorneys were most likely to spend $1000-$2,999 (24%), which indicates an increase of 7% from 2018(although in both years about 20% chose “don’t know”). This increased spending may be indicative of firms that pay by the month for SaaS-based products, thus having a higher annual spend.

Respondents were asked to identify a range of annual expenditures for hardware (computers, tablets, printers, etc.). In 2018, solo practitioners (30%) were most likely to spend less than $500 on hardware. In 2019, however, solo respondents were most likely (39%) to spend $1,000-$2,999. Firms with 2-9 attorneys spent anywhere from $1,000-$9,999 annually (21% spent $1,000-$2,999; 20% spent $3,000-$4,999, and 19% spent $5,000-$9,999).

To Train or Not to Train

While the 2019 Survey doesn’t explore what is specifically included in a technology budget, other indicators in the survey should guide firms on expanding their tech budget to include an investment in training on technology, not just budgeting for technology purchases. Over 64% of respondents indicated that they are required to stay abreast of the benefits and risks of technology under their rules of professional conduct, though 17% responded they were not required and 18% did not know. 35 of 50 states have adopted the amendments to the ABA Model Rule 1.1 Comment 8: “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology”.

Consistent with 2018, 71% of solo respondents in 2019 maintained that there was no technology training available at their firm and 49% (from 43% in 2018) of firms with 2-9 respondents indicated no technology training available. Perhaps the lack of training availability is indicative that lawyers don’t think they need technology training? Roughly 62% of solos and firms with 2-9 attorneys responded that they were “very comfortable” using their firm’s available technology (up from 56% of both solos and firms with 2-9 attorneys in 2018). Also, solo and small firm respondents indicated they seldom had technology-related problems that negatively impacted their productivity (58% and 50%).

In contrast with a comfort level with technology and low impact on productivity, 72% of solos and 81% of firms with 2-9 attorneys assert it is very/somewhat important to receive training on their firm’s technology. Regarding emerging technology, however, 60% of solos and 60% of lawyers in firms with 2-9 attorneys report it is very/somewhat important to receive training and education on emerging technology like blockchain and artificial intelligence, which is down in perceived importance from 2018 (69% of solos and 72% of firms with 2-9 attorneys).

When asked, “Where do you first turn when you have a problem with your firm’s technology?” solos seek help from Google or other search engines (37%) more than other methods, consistent with firms with 2-9 attorneys.

The basic technology tools—operating systems, browsers, office suite, and PDF manipulation software—are constantly being updated, upgraded, and enhanced. Lawyers and their teams should budget for and engage in training to make the most out of the technology they use every day. Training can reveal easier and more effective ways to use technology efficiently. Here are some resources:

General Tech Training

• GCF Learn Free
• LinkedIn Learning (f/k/a Lynda.com)
• Microsoft Office 365 Training Center

(A few) Legal Tips, Tricks, and Training

• Affinity Consulting
• Legal Office Guru
• Attorney at Work
• Lawyerist
• Suffolk Law
• Chicago Bar Association LPMT
• MassLOMAP
• NC CPM From the Center
• ABA Law Practice Division (several periodicals, blogs, and free webinars)
• Your state and local bar associations

Conferences

• ABA TECHSHOW

Purchasing Decisions

In solo practices, unsurprisingly, the sole practitioner generally approves technology purchasing decisions, at 98%. In firms with 2-9 attorneys, “all partners” are most likely to approve purchasing decisions (47%, a big increase from 39% in 2018), and 21% of the respondents asserted that the “managing partner” approved purchasing decisions, down from 33% in 2018. These decision-makers carried through for most firm sizes, though firms with 100-499 attorneys also had technology committees (16%) and C-level executives (17%) in on the approval process. Firms with 500+ attorneys charged an executive committee (38%) or C-level Executives (33%) with purchasing decisions.

The question may not be who makes the decision to approve a technology purchase, but rather how that decision is arrived upon. In firms from small to large new technology is purchased but the process often does not engender usage by the firm. There are steps to take to help ensure that firms make smart choices and bring in new technology in a way that sees maximum potential use. The need to study and implement best practices in change management will drive user compliance and adoption.

Under the Influence

There is little difference among firm sizes for what influences technology purchasing decisions. Like their larger firm counterparts, solos and firms with 2-9 attorneys chose the following resources as “very influential” to their purchasing decisions: Consultants (34% and 44%), peers (34% and 35%), staff feedback (32% and 36%), expert reviews (32% and 20%), and free trials (25% and 20%). A note that while CLE/educational conferences (25% and 14%) ranked a close sixth as one of the most influential factors on technology purchasing decisions, “trade shows” were “not at all influential” for solos and firms with 2-9 attorneys (27% and 30%), followed by print ads (37% and 33%), and online ads (38% and 38%).

Conclusion

According to the budgeting and planning results from the “Technology Basics and Security” volume of the 2019 ABA Legal Technology Survey Report, firms that are budging for technology are slightly increasing spending. While solos are more likely to maintain the same budget as the previous year (55%), 50% of firms with 2-9 attorneys were planning to increase their budget for technology. Firms should consider budgeting for technology training as an investment in the firm, it’s people, and client service. Budgeting for technology will help them know where to spend their money wisely, if they can also measure usage and track what is working—and what isn’t—over time. Plan well, spend wisely, and prioritize accordingly; technology is and will remain an essential part of running a law firm.