TechReport 2022: Cloud Computing

The ABA TechReport combines data from the annual ABA Legal Technology Survey Report with expert analysis, observations, and predictions from leaders in the legal technology field. Every Wednesday, we’ll be posting a new report from one of our experts, so stay tuned!

The 2022 ABA Legal Technology Survey Report showed the surge in cloud usage we expected after March 2020 starting to take off, led by solo lawyers. In 2021, 70% of respondents reported that they used cloud computing, up from 60% in 2021. For solos, cloud users moved from 52% to 84% in just one year.

The legal profession still lags the business world in cloud usage, but we still expect the practice of law to be much more cloud-intensive in the near future than it is now, with courts and clients driving many of the changes. COVID has pushed us to online meetings, online court hearings, and other forms of online collaboration tools. Natural disasters (like Hurricane Ian) keep reminding us of the disaster recovery benefits of being in the cloud, cybersecurity risks highlight security benefits, and the uncertain economy emphasizes the benefits of cloud subscriptions over large capital spending on technology.

The Cloud: A Quick Refresher

We’ve reached a point where we wondered whether it made sense to define “cloud” and “cloud computing” this year, but we decided to give an abbreviated definition and explanation because there can still be some confusion among lawyers.

The 2022 Survey focused on cloud computing as a platform for a “web-based software service or solutions,” including Software as a Service (SaaS). In practical terms, you can understand cloud computing as software or services that can be accessed and used over the internet using a browser (or, commonly now, a mobile app), where the software itself is not installed locally on the computer being used by the lawyer accessing the service. Your data are also processed and stored on remote servers rather than on local computers and hard drives. Cloud applications are also called “web services” or “hosted services.”

Cloud services might be hosted by a third party (most commonly, Amazon Web Services or Microsoft Azure platforms) or, more commonly in the legal profession, by a provider running its services on Amazon, Microsoft, or another cloud platform. The cloud approach has become popular in the business world. Many people also use cloud applications daily in their personal lives, from Gmail to Dropbox to Netflix to Zoom to Facetime and Facebook. According to a report by Skyhigh Networks, the average number of cloud applications used by each employee in large business enterprises has been estimated at 36 apps each day.

In the legal profession, it’s still a much different story. Legal is a lagging industry in cloud use. However, it is still surprising that even in 2022 the reported use of cloud computing in law practice, despite a significant increase, stayed relatively low in comparison to the rest of the business world.

The 2022 Survey results again show lawyers still using the cloud much less than the rest of the business world, and probably much less than most individuals. The 2022 Survey reports that cloud usage increased significant overall, from 60% in 2021 to 70% in 2022. Those saying they use no cloud services dropped from 25% to 15%. The “don’t know” category stayed the same (15%). Solos led the way with a huge increase of usage – from 52% in 2021 to 84 % in 2022. Small and medium-sized firms reported the next highest use – roughly 75%.

Despite the increase and escalation of cybersecurity threats, including cyberwarfare and ransomware, and clear warnings that law firms are targets, the poor cybersecurity approaches of lawyers were again the key take-away from this annual survey. It’s difficult to reconcile the ethical duty of technology competence with the reported behaviors of lawyers in the 2022 Survey.

Perceived cloud computing benefits have remained constant over the years. Lawyers and law firms see the cloud as a fast and scalable way to use advanced legal technology tools without the need for a substantial upfront capital investment in hardware, software, and support services. Cloud services are generally provided as a “subscription,” with a periodic fee (typically monthly or annually) per user.

Despite a significant surge in 2022, cloud computing appears to be inching toward becoming a standard approach in legal technology, although not as quickly as many have expected. The 2022 survey results, however, suggest that the expected COVID push to the cloud is starting to happen, although perhaps a year or so later and with less urgency than expected.

SURVEY HIGHLIGHTS

  • Cybersecurity has passed the crisis point in lawyers’ use of cloud services in our world of cybersecurity risks, ransomware, cyberwarfare, and more. The 2022 survey results showed only modest gains in the lax compliance of lawyers with even the most basic cybersecurity practices. Although lawyers say that confidentiality, security, data control and ownership, ethics, vendor reputation and longevity, and other concerns weigh heavily on their minds, their employment of precautionary security measures is quite low. No more than 40% of respondents were taking any of the specific standard cautionary cybersecurity measures listed in the 2022 Survey question on this topic. A stunning 16% of respondents (down slightly from 18% in 202) reported taking none of the security precautions of the types listed. Only 41% of respondents report that the adoption of cloud computing resulted in changes to internal technology or security policies. These are shocking numbers. Do you feel safe?
  • Cloud usage increased significantly from 60% to 70%. Solos led the way (increasing from 52% to 84% in one year), followed by small and medium-sized law firms (roughly 75%, up from roughly 65%).
  • Lawyers continued to use popular business cloud services like Dropbox (66%), Microsoft 365 (59%), Microsoft Teams (51%), iCloud (21%), and Box (18%) at rates far higher than dedicated legal cloud services. Clio and NetDocuments continue to rank as the highest among the legal-specific cloud services. Note that Zoom did not make the rankings.
  • Lawyers are becoming more familiar with cloud technologies and are attracted by anytime, anywhere access, low cost of entry, predictable monthly expenses, and robust data backup. Only 36% indicate that cloud services provide the benefit of giving greater security than they can provide on their own. Compare this level of confidence to reported security practices and you will see why there are major concerns around law firm cybersecurity efforts.
  • Concerns about confidentiality/security (62%) and lack of control over data (40%) lead the “biggest concerns” list about cloud services by a wide margin. 97% of lawyers rate the reputation of the vendor as important (very, 72%, and somewhat, 25%) in their decision-making process.
  • The 2022 Survey results also suggest that client-focus is not a primary driving factor for lawyers using and considering the use of cloud computing. The consideration of client needs, expectations, and desires should be a key target area for innovative lawyers and firms.
  • For the first time, the 2002 Survey asked respondents about APIs (application programming interfaces). Only a small percentage report use of APIs (5%) and most respondents did not know whether their firms were using APIs.
  • Only 11% of respondents indicated that they expected to replace an existing software tool with a cloud tool in 2022. 29% have no plan to do so and 60% don’t know.
  • Over 40% of lawyers are at firms with extranets (e.g., client portals). Extranets are used primarily for firm lawyers (83%) and much less likely for clients (32%, down from 36%) or external collaboration (27%). A trend to watch is that 41% are accessing extranets hosted by their clients.

Cybersecurity: Past the Crisis Point?

Although lawyers report many concerns and wariness about cloud services, especially security, confidentiality, and control issues, their reported behavior about precautionary measures simply does not reflect what they express their level of concern to be. In fact, the results are shocking and reflect little positive movement in the past year or even in the past few years. The lack of effort on security is a major cause for concern in the profession. Given the growing incidence of ransomware, other cyberattacks, threats of cyberwarfare, and the common knowledge that law firms are being targeted as weak points for the data of their clients, we should expect to hear ever more stories of security incidents at law firms over the next year.

Of the thirteen standard precautionary security measures listed in the 2022 Survey, only 40% of the respondents employed the measure most used (using secure socket layers, a/k/a SSL). The next most widely-employed precaution was making local data backups (33%, up from 25% in 2021). Given the emphasis on data privacy in 2022, the modest increase to 27% from 24% in 2021 (was 27% in 2020) of respondents reviewing vendor privacy policies is less than comforting. Only 29% reviewed ethical rules and opinions on cloud computing and just 24% reported that they reviewed terms of service. Would lawyers recommend that their clients take these approaches?

The numbers only get worse from there.

Twenty-two percent sought advice from peers and only 27% evaluated vendor company history, despite the stated importance of vendor reputation (97%) in selecting vendors.

At the bottom of the results list are things that lawyers should be good at. A mere 8% (up from 6%) negotiated confidentiality agreements in connection with cloud services, and 6% negotiated service legal agreements (SLAs).

If security and confidentiality are lawyers’ biggest concerns about cloud computing, does this lax behavior make any sense in the world we now live in?

Usage Numbers

The percentage of the 2022 Survey participants answering “yes” to the basic question of whether they had used web-based software services or solutions increased significantly to 70% from 60% 2021. 15% said “no,” a big decrease from 25% in 2021. “Don’t know” responses made up the other 15%. Solos led the way, jumping from 52% to 84% in 2022. Small firms (2-9 and 10 – 49) increased their usage substantially, although not nearly as much as solos (from roughly 66% in 2021 to roughly 75% in 2022. Larger firms were the laggards in the 2022 results.

However, these overall results can be confusing given answers to other questions, suggesting the possibility that actual usage might be higher than the reported usage. For example, many mobile apps are also essentially front-ends for cloud services. Many lawyers who do not think that they are using the cloud may in fact be using it every day, especially through mobile apps. Other examples include the absence of Zoom and legal research services in the results.

Consumer Cloud Services Much More Popular Than Dedicated Legal Products

The 2022 Survey asked respondents what cloud services they had used. In 2022, Dropbox again topped the list at 66%. Microsoft 365 (formerly known as Office 365) was in second place at 59%, followed by Microsoft Teams at 51%, up from 41% in 2021. Other consumer or small business cloud services also remained popular (notably, iCloud at 21%, Box at 18%, and GSuite at 8%). Zoom did not appear among the highest-used services.

Legal-specific cloud services have not reached the same levels of popularity as consumer services. Clio continues to be the most popular legal cloud service named by respondents (17%), followed by NetDocuments (11%), and MyCase (3%). These numbers are roughly the same as in 2021. These results might reflect both the difficulties lawyers and others have with determining what is a cloud service and the increased number of legal cloud service providers, especially in the case management category, which might have split the votes among products. Note that services that many would consider “cloud”—WestLaw, LexisNexis, FastCase, to name a few—do not show up in the results.

Client Portals and Extranets

A primary example of an extranet would be a client portal like the patient portals that have become so common for health care providers. Extranets are probably the classic example of a secure cloud tool that can help clients and help lawyers collaborate on projects with external parties.

Here are a few numbers to consider: 43% of firms have extranets, 36% do not, and 21% don’t know. The results show that 83% of firms allow access to their lawyers and 62% to their staff. Both of those percentages are down slightly from 2021. Access to clients, who potentially benefit the most from extranets, was only provided by 32%, despite the wide popularity of patient portals in medicine and much commentary about the need for client portals in the legal industry. Collaboration for “friendly” outsiders was allowed by 18%. On the other hand, 41% of respondents report they have accessed extranets of their clients.

Firms primarily either use Microsoft SharePoint (51%) or a custom solution (35%).

Cloud Benefits

There was not a lot of change in perceptions of the benefits of cloud computing in the 2022 Survey. Anywhere, anytime access is reported as the biggest benefit of cloud computing for lawyers. The percentage of responses listing that benefit jumped to 75% (up from 63% in 2021), presumably associated with the work from home trend. Low cost of entry, 24 x 7 availability, robust data backup and recovery, and predictable monthly expenses are also highly rated benefits. Only 36% of lawyers see “better security than I can provide in-office” as a benefit of cloud computing—a striking number, especially to anyone familiar with data center security procedures as compared to standard security practices in law firms.

Biggest Lawyer Concerns

Lawyers continued to express reservations and concerns about the cloud. When current cloud users were asked to identify their biggest concerns, they cited “confidentiality/security concerns” (62%, up from 61% in 2021) and concerns about a lack of control over data (40%, down from 43%). Concerns about losing control over updates (28%) and vendor longevity (18%) were other significant concerns. Only 6% (down from 8% in 2021) reported that client concerns about lawyers using the cloud were an issue. Concern about a vendor turning data over to law enforcement rose from 8% in 2021 to 12% in 2022.

There were similar concerns among those lawyers who have yet to try the cloud. When asked about the concerns that had prevented them from adopting the cloud, 35% cited confidentiality/security concerns (a big decrease from 53% in 2021), 38% cited the loss of control over data, and 15% cited lack of control over software upgrades. “Unfamiliarity with the technology,” was listed by 32%, down from 40% in 2021.

Name and Reputation of Cloud Vendor

Ninety-seven percent of respondents using cloud services considered the name and reputation of the cloud vendor as either very important (72%) or somewhat important (25%) to their decision. However, only 21% of respondents reported that they evaluated the vendor’s history and only 22% sought peer advice/experiences in connection with the vendor. This area is definitely one in which lawyers can improve their due diligence efforts.

Replacing Existing Tools with Cloud Services

Even though interest in cloud services is high, the interest does not seem to translate into replacement of existing software tools. Only 11% of respondents indicated that they expected to replace an existing software tool with a cloud tool in 2022, even with what we’ve learned during the pandemic. Lawyers might be looking to the cloud only for new tools or to supplement existing tools. They also might not be thinking of mobile apps as cloud tools.

APIs and Third-Party Data Integrations

The 2022 introduced questions about application programming interfaces (APIs) and third-party data integrations. These are highly important in the cloud world and are used to move data between applications, create automations, analyze data, create dashboards, and much more.

Only 5% of respondents knew that they used APIs, while 65% did not know and 30% said they do not. These results will serve as a good baseline in future years.

Of the API users, 46% (of the 5%) use them for dockets. Twenty-three percent use them from public records, intellectual property tracking, compliance, and legal news.

Takeaways and Action Steps

The 2022 Legal Technology Survey shows that, for a steadily increasing majority of lawyers and firms, cloud services are now part of the IT equation. Overall, reported growth in cloud use moved significantly in the past year, even though it is below what we might have expected with a pandemic and many lawyers working from home. However, the continuing lack of attention to confidentiality, security, and due diligence issues remains a serious and disturbing concern, especially with the growth ransomware and other cyberattacks. Clients will continue to be concerned about whether their law firms making adequate efforts on cybersecurity.

As in every year, there is much that law firm IT departments and technology committees, legal technology vendors and consultants, corporate law departments, clients, and all legal professionals interested in the adoption of technology by lawyers can learn from these survey results. They give us much to think about and some indications where firms might want to move their technology strategies in the coming year and beyond. Cloud cybersecurity must be at the top of the list of questions for clients to ask their law firms and the list of answers lawyers must have for their clients.

About the Author

Dennis Kennedy (dmk@denniskennedy.com) is currently the Director of the Michigan State University Center for Law, Technology & Innovation and teaches courses at both Michigan State University College of Law and the University of Michigan Law School. Dennis retired as Vice President, Senior Counsel for Mastercard’s Digital Payments and Labs group in 2017, after a long legal career in information technology and innovation law. He is the President of Dennis Kennedy Advisory Services LLC. You can contact Dennis here.

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