TECHREPORT 2019: Practice Management

The Practice Management report is sponsored by MyCase.

Technology continues to expand across industries and the legal industry is no different. Various technological advancements and software are being developed continuously, however, our industry has been hesitant to adopt much, despite those who use said technology often reporting a high level of satisfaction. In addition to new developments, the technology that has already been adopted also undergoes continuous updates that impact the way attorneys practice law.

The American Bar Association’s Legal Technology Resource Center surveyed a sample size of 53,252 attorneys regarding the technology and software both available and utilized in their firms. This TECHREPORT analyzes both the responses of these attorneys on a variety of technological developments and changes occurring in the legal industry and the existing trepidation to adopt certain technologies.

New and developing software is often at the forefront of any discussion of technological developments in the legal field. Some of the most common forms of software are practice management tools, which, despite having a high level of satisfaction, still face obstacles in being implemented in a number of firms. Customer relationship management software is being regularly used as an alternative and is becoming more popular among attorneys. Metadata removal tools and technology, however, are also facing adoption obstacles and are decreasing in availability across law firms. In terms of how business is being operated, laptops are becoming more popular as the primary means by which attorneys conduct business, while tablets and desktops are fading in popularity. Also shifting the way business is done in the legal industry is the increasing popularity and acceptance of remote access. The fee structure of most attorneys has stayed relatively constant throughout the years, but technology is allowing electronic billing to become more available to firms.

As in any other industry, certain technology is being implemented that helps shift the way we practice law, while other technologies, however promising or sensible, face obstacles and downward trends in implementation.

Practice Management Tools: Usage, Satisfaction, and Concerns

The use of practice management tools continues to remain relatively constant across law firms of all sizes, with only a significant increase existing in firms with 2-9 attorneys. Attorneys at solo firms report usage of 28% in 2019, a slight decrease of 2% from last year. Overall, however, the usage at solo firms has only increased a total of 4% since 2016, showing consistency in usage at these sized firms.

While small firms with 2-9 attorneys have seen a more significant 8% increase in usage, up from 35% to 43% in this last year, the 35% usage rate from last year represents a small anomaly for firms of this size, with the 43% usage from this year representing a return to the more common usage rates reported in 2017 (45%) and 2016 (47%). These size firms have consistently been the largest users of practice management software over the last four years, and this was true again in 2019.

Firms with 10-49 attorneys have consistently represented the second-largest market for these software programs, and that held true again in 2019 with a reported usage of 33%, the same percentage as 2018 and only a 1% decrease from 2017. The reported 62% usage in these firms that was present in 2016 stands out as an anomaly, with usage by these firms more accurately falling in the 33-35% range.

Large firms with 100+ attorneys report the lowest rate of usage both this year and last year, at 22% for both 2018 and 2019. Despite a reported 51% usage for firms with 100+ attorneys in 2016, which seems to represent an anomaly, these large firms and firms with a solo attorney are the least likely to report using a practice management software package, as these solo firms reported the lowest usage in 2016 and 2017 and large firms with 100+ attorneys reported the lowest usage in 2018 and 2019.

The majority of attorneys utilizing these software programs are satisfied with their usage, however, there was a slight decrease in overall satisfaction compared to last year. While 33% of users reported being “very satisfied” with their software, a 1% increase from last year and an 8% increase over two years ago, the percentage of attorneys reporting being “somewhat satisfied” has decreased 4%, shifting from 61% in 2018 to 57% in 2019. This level of being “somewhat satisfied” is tied with 2016 as being the lowest level of being “somewhat satisfied” in the last four years.

This decrease in satisfaction is even more evident in the 3% increase in users reporting they are “not very satisfied” with their software, with 9% of users now reporting this. This is the highest percentage reporting this level of satisfaction over the last four years.

The amount of attorneys reporting being “not at all satisfied” has stayed constant in 2019, remaining at 1%. Satisfaction levels for these software programs remain high, with only 10% of users reporting not being satisfied. 2019, however, had a higher reporting of “not very satisfied” and a diminishing reporting of “somewhat satisfied” compared to 2018.

These software programs remain an efficient way to run one’s firm in a more technologically effective way. These programs allow for a more efficient way to build contracts, bill clients, and manage deadlines. They allow firms to operate primarily through technology, allowing firms to become paperless. The level of satisfaction decreasing slightly indicates, however, that these programs do have room to continue to improve as more firms look to these programs as a potential option. It is also important to note that user expectations increase with every passing year, and with the larger selection of practice management systems, each with their own set of (mostly overlapping features), users are growing accustomed to wanting more specialized features and automation, and as such need to pay more attention in selecting their practice management system, so as to make sure they select the ones with the optimal features for their practice types.

The lack of dramatic increase in the usage of these programs also signals potential concerns with these software programs and with user acceptance of the increasing presence of technology in law. Despite consistently high overall satisfaction levels, the percentage of firms utilizing these software programs has plateaued and, in some years, decreased. This, coupled with last year’s decreased satisfaction levels, represents a potential need to change the marketing and reputation of these programs. It is possible that firms are concerned with the costs associated with switching from paper to these programs and the time it would take to transition.

Switching to these programs also often requires a high amount of up-front effort and time that firms may not be able to afford. The fact that the usage percentages associated with these programs have remained constant suggest these programs offer value for their monetary cost, therefore the switching costs and hesitation from firms to provide the time and effort to switch seem to be prohibiting these programs from gaining more acceptance and usage. Meanwhile, firms are likely to overestimate the cost of conversion, especially to remotely managed cloud-based systems, and are failing to factor in many of the advantages of a practice management system, some of which are less than obvious—such as the savings in office space from removing the filing cabinets or the aggregate time savings of not having to retrieve and replace paper files.

The Need for Improvement and All-Inclusiveness

As previously mentioned, the lack of growth for these programs coupled with a slight decrease in satisfaction levels for these programs indicates that there is a need for improvement in the design, implementation, and marketing of these programs. One main problem of these programs is that there are still too many programs offering partial practice management, with no one program rising to the top as being able to do everything for these firms.

For example, while most practice management systems have a front-end billing and expensing system, they are usually not equipped with the ability to do payroll, income taxes, and firm expense categorization. This causes firms to have to buy a separate program for accounting such as an accounting suite like Xero or QuickBooks in addition to their practice management system. There are also two other areas where they may need extra software: a separate program for managing documents and a separate program to collaborate with other attorneys. Many practice management systems do have their own document storage systems built-in, but they often lack some of the more robust features of products like Dropbox or Google Drive. In addition, a shared workspace system in order to collaborate with other attorneys, like those built into Office Live and Google Docs/Sheets, does not exist in most practice management systems. For a firm looking to make a decision to spend the resources in switching to a practice management system, it is often a surprise that they will still need their Office Suite, Acrobat Suite, Cloud Storage Suite and Accounting Suite, rather than having everything built into the same system.

This is especially true with firms that face the highest potential damage from switching costs, which are solo firms and large firms of 100+ attorneys (the two groups that consistently had the lowest reported usage of these programs over the last four years). For solo firms, the resources and time needed to switch to various programs can delay the solo attorney from maintaining their practice by themselves. For larger firms with 100+ attorneys, the potential retraining that would result from switching all their attorneys to a new system may disincentivize them from switching. These concerns are exacerbated when these attorneys do not have to endure these switching costs just for one program, but for a variety of them since there is still no one program that fulfills all potential needs. Even if only switching to a practice management system, finding one that has all of the desired features and is fully compatible with the other software suites the firm may already be committed to (e.g. Adobe Creative Cloud, Dropbox, QuickBooks, etc.), and then learning how to use it all holistically, can be a terrifying thought.

The utilization of technology outside of law firms continues to develop and improve. Apps made for the public to understand and accomplish tasks without the need for an attorney are becoming more available and popular, and technology has made it far less appealing for the public to interact with lawyers in traditional ways. The public has shifted towards technology in almost all facets of life, and they will not tolerate those law firms that have not done the same. This continues to pressure attorneys to shift towards paperless, technology-based firms, and these software programs represent an efficient way to do so.

These software programs, however,  have to continuously develop ways to implement more robust features (reducing the need for the adoption of multiple programs), reduce the resources and time needed to switch to them (especially for solo and very large firms), and market themselves to firms in a way that reflects low switching costs and high potential value to the firms.

CRM Software Emerging as a Popular Alternative

Due to the lack of software that can effectively manage all desirable aspects of a firm’s business, customer relationship management (CRM) software remains an alternative solution. CRM software is more standardized and often only one program is needed to run a variety of different corporate tasks and functions. These tasks and functions, however, are generally not specific for the legal industry and lack customization for small and medium firms who cannot afford to reprogram the standard CRM.

While it is possible to customize most CRMs to a specific business’s needs, complex CRM software programs can take years to design and implement, and they still have the associated switching costs of time and retraining employees as other software programs. Firms, however, may prefer them as employees only need to be trained for one new program and the standardization of the software enables bugs and other issues to be found and solved quickly.

The availability of these programs at firms has increased 3% in 2019 to 44% and has increased 8% since 2016, indicating that without an all-inclusive practice management software program, firms may view CRM as a more convenient, less intimidating option. The danger to be aware of here, though, is that the CRM is less likely to add modern features over time;  while a practice management system has a tendency to introduce new features that are specific to law firms and which evolve over time, a customized CRM is a static product that would need to be further customized by the firm or an outside developer. As such, if a firm is looking to constantly get the newest features and functions, the cost of upkeep is much higher with a custom-configured CRM model.

Metadata Removal Tools: Decreasing and Constant Shifts

The availability of metadata removal tools at firms has decreased by 3% in 2019, shifting from 56% in 2018 to 53%. This percentage also marks a three-year low, and it represents the first decrease in metadata removal in the last four years. This is an interesting shift, as previously the increases in metadata removal tools have been attributed to the need for increased privacy and confidentiality as those issues have grown in prominence. The usage of these tools has remained constant across firms of all sizes, with the only differences being a 1% decrease in solo firms from 2018-2019 (28% to 27%) and a 5% increase in firms with 10-49 attorneys from 2018-2019 (44% to 49%). The consistency of the usage of these tools indicates that firms are not viewing the issues of privacy and confidentiality any less seriously in practice, however, the lack of availability of these tools at firms may indicate that firms are less willing to pay for programs to address these issues or that the consistency of these percentages may fall in the upcoming years.

It is also important to note that the vast majority of lawyers do not have a clear understanding of what metadata is, what it contains, or why they might want or need to remove it. Without better education for attorneys on the significance of metadata, wider acceptance will stall.

Shifts in the Use of Laptops, Computers, and Mobile Devices

Fifty-seven percent of attorneys report that a desktop computer serves as their primary work computer.  This percentage actually reflects a continual downward shift in the popularity of the desktop computer as the primary computer, though. The 57% figure is down 2% from last year, 3% from two years ago, and 7% from three years ago. This has led to a corresponding increase in the usage of laptops as the primary computer type, which has hit a high of 41% in 2019 (up 3% from a year ago).

Tablets and “other computer types” remain virtually unused as the primary computer type for attorneys, with tablets staying constant at 2% from last year and “other” remaining constant at .4%. The shift towards laptops can be seen more dramatically in larger firms, as firms with 100-499 attorneys have seen a 6% increase in laptops as their primary computer for work (from 51% in 2018 to 57% in 2019) and firms with 500+ attorneys have seen an increase of 14% in laptops as their primary computer for work (from 55% in 2018 to 69% in 2019). This contrasts against solo firms, which remained constant at 40%, firms with 2-9 attorneys, which saw a 1% increase (28% to 29%), and firms with 10-49 attorneys which also saw a 1% increase (34% to 35%). In these figures, it appears that larger firms not only have the highest percentage of employees who use laptops as their primary work computer, but they also have the highest growth rate as well.

These patterns are consistent with expectations, and it is understandable why a larger firm might want the flexibility of laptops with docking stations and the ability to move employees between cubicles and offices without the bulky mess of desktop machines—not to mention the benefits of each attorney being able to take their primary PC to depositions, meetings, and court. Solos, meanwhile, are more likely to have a permanent desk setup that they use as a “home base,” coupled with a laptop or tablet for portable work.

The availability of servers at firms had a drastic decline, shifting from 78% in 2018 (a four-year high) to 59% in 2019 (a four-year low)—a downward shift of 19% and the first downward shift for the availability of servers in four years. This is, of course, as expected, as more firms are opting for the benefits of the cloud and forsaking their old on-site servers.

Tablet availability has also seen a sharp decrease at firms. In 2018, tablets were reportedly available at 58% of firms, with this number shifting downwards to 46% in 2019—a 12% decrease. These numbers, however, are hard to gauge, with many modern laptops and tablets being somewhat interchangeable, with most having a physical keyboard available as a snap-on or wireless add-on, so it is unclear whether respondents classify the machine they are working on as a laptop or tablet (the Microsoft Surface, Surface Pro, and Surface Book, as well as the Apple iPad Pro are great examples of this grey-area category).

The usage of tablets while in the courtroom has also seen downward shifts, which could account for the shift away from firms having them available. The usage of tablets in the courtroom held constant for solo firms and firms with 2-9 attorneys, with usage only decreasing 1% for both groups. For firms with 10-49 attorneys, however, there was a 9% decrease and for firms with 100+ attorneys, there was a 10% decrease.

Smartphones as a substitute for tablets are not to blame for this, as they have faced an even more drastic decrease in courtroom use. The number of respondents who report using a smartphone in the courtroom was 84% in 2018 and 80% in 2016 and 2017. That number fell to 58% in 2019. Laptops also had a similar, albeit less drastic, decline, with 44% of users reporting using a laptop in the courtroom in 2019 compared to 50% in 2018, 57% in 2017, and 55% in 2016. The usage of specific tasks using mobile technology has experienced similar decreases, for example calendaring using laptops, tablets, and smartphones have all decreased from 2018 to 2019.

There does not seem to be one clear explanation for this. No one mobile device seems to be replacing others, as they are all facing declines. In all cases, the larger firms (and, therefore, the firms one would expect to have the most resources) are declining their usage of mobile devices in the courtroom the most. Are courts getting stricter on the use of technology in the courtroom as technology becomes more available? Is this evidence of an unwillingness to embrace technology and potential switching costs by firms who prefer to do it “the old-fashioned way,” a way that does not revolve around a dependency on technology? Or does the fact that many firms did embrace these devices, and subsequently rejected them, indicate that they were not efficient or useful for these firms in court? Perhaps attorneys spend less time in court now, as a result of electronic filing and other technological advances, with calendaring of future appearances being done from the court’s online system, rather than the attorney standing in the court part in front of the calendar clerk? A further survey focusing on technology use in the courtroom may be worth exploring.

The Continuing Increase of Remote Access

The availability of remote access technology is available at 84% of large firms, remaining constant from 2018. The usage of these technologies, however, has increased. 73% of attorneys reported using these remote access technologies in 2019, compared to 68% in 2018, 67% in 2017, and 70% in 2016.

Firms of all sizes have seen an increase in the percentage of attorneys who used remote access technology. Solo firms saw an increase of 9% (from 46% in 2018  to 55% in 2019), firms with 2-9 attorneys saw an increase of 5% (from 68% in 2018 to 73% in 2019), firms with 10-49 attorneys saw an increase of 2% (from 79% in 2018 to 81% in 2019), and firms with 100+attorneys saw an increase of 5% (from 88% in 2018 to 93% in 2019). Perhaps the most encouraging sign for the use of remote access is the increases for firms with 10-49 attorneys and firms with 100+ attorneys. Both of these firms saw decreases in the percentages who used remote access from 2017-2018, but both have rebounded with increases in 2019.

Larger firms have the highest reported usage of remote access software, with solo firms having the smallest (93% for larger firms with 100+ attorneys to 55% for solo firms), which could indicate that the stigma of having to do work in the office to network and move up in large firms is decreasing, or that larger firms are providing these remote access software opportunities to incentivize employees to work for them.

Either way, 2019 marks the first year that firms of all sizes reported personal usage of remote access software above 50%, a positive sign for those in favor of telecommuting and remote access working regardless of the size of the firm one wants to work at. It is also not clear how respondents viewed the concept of “remote access,” as one’s perception of what remote access is would highly influence the answer. For example, one could argue that having your email available on your phone or laptop is remote access, while another might consider remote access as being a function exclusive to an on-site server or remote desktop system while ignoring that he has a cloud-based practice management system with a smartphone app.

Consistency of Fee Structures and the Adoption of New Technology

The most popular method of fees has remained hourly fees at 69%, a 1% increase in commonality from last year. The next most common fees were fixed fees at 17%, a 2% increase in commonality from last year. Contingent fees are the third most popular at 9%, a 2% decrease from last year. Retainer fees have remained constant at 4% and “other” fee systems have increased 1% to represent 2% of fee management. Overall, this is virtually the same as in 2018.

Many discussions revolve around the potential need for firms to adopt new, imaginary pricing structures. The data, both this year and last year, however, indicates that few firms are making that shift. It would seem as though the waves of new pricing models and potential fee management changes has plateaued, with only relatively minor shifts being present in the ways the majority of firms bill their clients. It will remain a question as to whether fixed fees and “other” fees can continue to make small increases over the years. Unless there is evidence that they provide more of a return than hourly billing, it does not seem that any fee model will surpass hourly billing any time soon.

The percentage of firms with electronic billing available continues to increase, up 2% in 2019 to reach a record high of 74%. The availability of electronic billing decreased slightly with both solo firms and firms of 10-49 attorneys (decreasing 3% and 1% respectively). For firms with 2-9 attorneys, however, the percentage of firms using electronic billing increased 8%, to 82%, and large firms saw an increase of 4%, to 92%.

It is a little surprising to see the percentage of solo firms’ electronic billing availability fall, as from 2017-2018 there was a 6% increase for these firms and electronic billing does tend to make both the attorney and client happier with its convenience. It is likely that the decrease this year is a matter of a statistical margin of error. As such, it would be important to see where this number ends up in next year’s report. Smaller firms with 2-9 attorneys seem to value this the most, as not only did they have the highest growth last year, but over the last four years they have seen a four-year growth of 17% (starting at 65% in 2016 to 82% in 2019). Only large firms with 100+ attorneys reported a higher percentage of electronic billing software for use this year (92%), which is interesting as it seems as though smaller firms and larger firms are more willing to adopt these billing technologies compared to solo firms and medium-sized firms.

The availability of rules-based docketing has remained relatively constant in 2019 compared to the last two years at 36% (compared to 37% in 2018 and 36% in 2017). Solo firms have reported a 4% increase in the availability of this software at their firms, with all other sized firms reporting a decrease in their availability between 2-4%. Rules-based docketing software is useful in ensuring deadlines are met, which could be why solo firms with fewer resources and employees to manage deadlines are placing more of a value on these programs now.

The fact that the use of these programs is slightly declining in all other sized firms, however, may point to the presence of more resources that can manage these deadlines without the software’s help or with less of an emphasis on the use of technology for relatively simple actions, like managing deadlines, in firms with more than one attorney. Further, with the court rules and deadlines often changing, many attorneys lack confidence in these programs’ ability to accurately protect them from defaulting on obligations.

Conclusion

The world continues to shift towards a more technological focus, while the legal industry has not followed suit in many aspects. The use of practice management systems has not seen any real growth throughout the last four years despite high satisfaction ratings. There still remains a need for an all-inclusive practice management system that would not require firms to purchase a variety of different programs for specific tasks, and the switching costs of practice management systems remain a concern for many firms—particularly solo and large firms.

The use of CRM programs has increased this last year, indicating that firms may be viewing it as a suitable alternative to practice management systems as it generally is more standardized with less switching or retraining costs.

The availability of metadata removal tools has decreased slightly at firms, which is a bit surprising considering the focus on privacy and confidentiality existent today. The usage of these tools has remained constant, however, indicating that firms are not treating these issues less seriously, even if they are making the technology less available to attorneys.

Laptops are quickly replacing desktop computers as the most common primary work computer for attorneys, although they have not surpassed them quite yet. Meanwhile, for some reason, all types of mobile devices are becoming less used in the courtroom at dramatic rates.

The availability of remote access technology has remained relatively constant, although usage of the technology has increased in firms of all sizes as telecommuting and remote access have become increasingly popular—one of the few continuing trends towards technology in the legal industry.

The fee structure of the majority of firms has not changed greatly, although the use of electronic billing has increased slightly, especially for small firms with 2-9 employees, while the use of rules-based docketing has remained constant.

Overall, technology continues to be developed for the legal industry in abundance, however, in many sectors of the industry, various sized firms are hesitant to adopt these advancements, leading to steady or declining growth rates for much of these technologies. The size of the firm also has a large influence on the technologies a firm may adopt, and this makes it hard to predict what technologies may appeal to what firms.

Most law technology is still fairly new, and it has quite far to go before being developed enough to displace traditional ways of accomplishing tasks that many firms value now. There still exists a desire for more and newer technologies that will make this switch easier, and without the feasibility to switch to these software programs more efficiently and effectively, the legal industry will still wait to adapt to the evolving technological world around us.