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Legal management software can help firms become more efficient by automating critical processes, such as calendaring, organizing contact and case information and tracking billable hours. To uncover more about the benefits and challenges users experience, what functionality they use most often and their firms’ future investment plans, Software Advice conducted a survey of current legal practice management software users in the United States.

This report, which highlights our findings, can help prospective buyers learn what to look for—and look out for—when searching for new legal practice management tools.

Key Findings:

1. The most used software features reflect users’ desire to automate daily tasks: 68 percent use calendar/scheduling functions, 66 percent record billable time and 61 percent store phone and email correspondence details.
 
2. A combined majority say using legal management software has a positive impact on case-file organization (88 percent), improving workflow processes (85 percent) and increasing billable hours (79 percent).
 
3. Some users also experience difficulties with this type of software, citing at least a “moderate challenge” with integration (27 percent), customization (26 percent) and intuitiveness of the interface (22 percent).

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Introduction

It’s hard to ignore that the legal industry is changing. Perhaps the biggest change is the “rapid shift from a sellers’ to a buyers’ market,” as Georgetown University Law Center states in its 2015 State of the Legal Market report. This means clients now dictate the terms of how legal services are delivered. Due to an increasing emphasis on accountability for accurate time and cost projections of services, many firms are restructuring to meet changing client expectations.

Other growing market trends include:

• Social networking, in the form of marketing and branding via social media.
 
• Virtual law offices (VLOs), which operate entirely online, allowing legal professionals to collaborate and communicate using Web-based technology, secure server systems and encryption tools.
 
• Alternative billing models, which trade in the standard bill-by-hour model to fixed or capped fees, for example.
 
• Legal process outsourcing, which involves using external vendors to increase access to talent and help reduce costs and turnaround time.

Legal software can better enable firms to compete in this changing market. For implementation to succeed, however, firms must recognize that cost, time and training investments are required to align the system with established workflows. This report will help potential buyers evaluate legal practice management software in order to make more informed purchase decisions.

Majority Use Calendaring, Contact Management and Tracking Billable Hours

Most legal practice management systems have similar core functionality, which includes:

• Case management
• Contact management
• Document management
• Calendaring
• Time tracking

These systems often support other critical business functions, such as accounting (which the time-tracking application feeds into), project management, reporting and analytics, client portals and even marketing.

To better understand how users interact with their practice management systems, we asked how they most commonly use the software. Not surprisingly, many use tools that automate daily tasks:

• 68 percent use calendar/scheduling functionality to view tasks, deadlines and meetings;
• 66 percent record their billable time; and,
• 61 percent track and store details from phone calls and email correspondence.

Most Common Uses of Legal Management Software

According to Julie Feller, director of marketing for Abacus Data Systems, a provider of legal management solutions, these findings correspond with the two main reasons firms adopt a practice management system. She says that clients who contact her company seeking software often fall into one of two categories: those looking to solve a problem, or those looking to grow (or a combination of the two).

“Whether a firm has suffered a problem ... or is growing and needs technology and processes to support new employees, staff or practice areas, the challenges are quite similar: mobility, security, collaboration and automation,” Feller explains.

Legal practice management systems can alleviate these common challenges by:

• Providing access to the software via mobile devices;
• Helping firms safeguard sensitive client information;
• Offering a centralized database for case collaboration; and
• Automating daily tasks.

Pamela Woldow is partner and general counsel for Edge International, an international legal consulting firm. She advises firms on how to better serve clients through legal project management, which focuses on delivering efficiency, value and pricing predictability. She notes that while technology can assist and support, software itself is not the whole strategy.

“The software is really the tail on the dog,” Woldow says. “The dog is getting people to understand the importance of delivering services in a different way—That’s the biggest hurdle.”

While just 37 percent of respondents in our survey say they use reporting, Woldow says this tool is essential; enabling firms to establish a baseline from which they can increase efficiency, drive profitability and, ultimately, grow their business.

By analyzing the data captured by different applications, such as time and/or task tracking, firms gain an understanding of what their services and staff cost. This helps them staff similar cases accordingly, identify the most profitable practice areas and better understand what drives the most revenue (more on this later).

Software Positively Effects Organization, Workflow Processes, Billable Hours

Automating common tasks can boost individual productivity as well as a firm’s overall efficiency. The biggest benefits users experience when using legal software include:

• Improved case-file organization: 88 percent say this has been “somewhat” to “very positively” affected.
• Improved workflow processes: 85 percent report their workflows have been “somewhat” to “very positively” impacted.
• Increased billable hours: 79 percent of users note a “somewhat” to “very positive” influence on billable hours.

Impact of Using Legal Management Software on Common Tasks

Law firms deal with extremely large volumes of data. This means that being able to quickly access materials such as case and client data, documents and emails in real time—and in one, centralized database—helps improve organization, freeing up time for revenue-generating activities.

“Having paper files means that every time someone in the office needs to access information, they have to go to the file cabinet and look for the folder. But it’s not always there—it could be on someone’s desk, misfiled etc.,” says Feller of Abacus Data Systems.

“If a client emailed documents and information to the attorney, but the secretary is trying to help answer questions on the phone while the attorney is out of the office, they don’t have visibility into the information they need."

The example Feller provides is not only evidence of how software can help improve organization, but also how it can streamline workflow processes: Secretaries and paralegals often handle data entry and field questions, so giving them access to a legal management system also gives them easy access to important data.

Michael Barry, executive vice president of strategy and product for legal management software vendor Aderant, explains that one way for firms to maximize profitability is to grow revenue. However, if firms can’t raise rates and/or are working for a fixed fee, another way is to increase the efficiency of tasks being performed.

As noted in the previous section, Woldow says that legal project management and reporting tools can help firms increase efficiency. Barry builds on this, explaining that tracking and reporting on repeatable tasks and processes allows firms to streamline their workflows—for example, by outsourcing work to a third-party provider or having lower-level staff complete simpler tasks, such as data entry. In this way, firms can use software to optimize and improve their billable hours, as 79 percent of users in the chart above report doing.

Additionally, Barry explains that, by using data derived from reporting, firms are better equipped to enter into alternative fee arrangements (for example, collars or fixed fee) because they know how much tasks cost and can provide documentation justifying those costs and can set expectations accordingly. As the legal industry trends toward alternative billing models, buyers should consider systems with reporting functionality to help them stay competitive in the market.

Integration, Customizations and Ease of Use Are Top Challenges

We next asked respondents about the challenges they experience with their legal management system and to rank them as “major,” “moderate,” “minor” or “not a challenge.” The top three issues respondents say are “major” or “moderate” challenges are:

• Integration with other systems (27 percent);
• Lack of customizations (26 percent); and
• A non-intuitive user interface, or UI (cited by 22 percent).

Top Legal Management Software Challenges

According to Mark Horne, director and law firm technology consultant at Duff and Phelps (a consulting firm with legal management expertise), these challenges are not unique to legal software, but rather, are common to software design and development in general.

In order to find a system that is a good fit, Horne advises firms to consider their future needs in addition to current business objectives. Implementation alone can take from several months up to a few years.

As Feller points out, one of the main reasons firms adopt practice management solutions is to help them grow their business—so it’s important they choose a system that offers the flexibility and scalability to grow along with them. Since most vendors offer free trials, buyers are advised to test different solutions and find the best fit for their specific needs.

According to Barry, many firms are used to working with stand-alone systems, and thus, assume their legal software will need to integrate with other programs. But today, he says, it makes more sense for firms to purchase a comprehensive legal management suite that can perform all essential functions, replacing their existing software. This way, as firms grow and their needs change, they’ll only have to contact one vendor to add additional applications (for example, business intelligence or project management).

Tailoring solutions to a firm’s needs is one reason implementation takes so long. Barry says many vendors offer solutions that are pre-configured to fit certain common needs, such as practice area, number of books etc. Pre-configured solutions are recommended, as they don’t require the vendor to go in and make specific changes to the source code.

Buyers are advised to avoid more extensive customizations that require source-code modifications: This increases implementation time and is ultimately more expensive, since firms typically must pay for customizations to be maintained through additional upgrades.

Regarding the challenge of systems not being user-friendly or lacking an intuitive interface, Abacus Data Systems’ Feller says working closely with the vendor during implementation can help. The client and the vendor must both invest the time to make sure the system is set up correctly and that staff are properly trained in its use.

“Any new product requires users to take the time to learn the system and to set it up properly based on their needs,” she explains.

A Majority of Users Plan to Maintain or Increase Their Software Investment

Respondents report high overall satisfaction with their legal management system. In fact, when asked about their investment in these platforms in 2015 as compared to last year, 35 percent have increased their investment, while 55 percent are maintaining the same spend level.

Twenty-seven percent of users say they increased their software investment to improve accuracy and efficiency, which is consistent with the findings in this report. Other top motivations include a growing client base and/or case load (25 percent), and the need to add users to the system (22 percent). These findings suggest users see benefits from these solutions, and are successfully using the software to help grow their practice.

The American Bar Association (ABA) notes in its 2014 Practice Management TechReport that legal practice management systems are becoming increasingly popular—both in terms of availability and use—among small to midsize firms with 50 attorneys or fewer. These findings can be seen in the demographics of our survey respondents, the majority of whom are from small firms with less than 10 attorneys (see the “Demographics” section below).

Conclusions

As our data reflects, practice management systems can be extremely valuable to law firms of all sizes. This software can help firms expand their practice, increase their profitability and boost efficiency.

Based on these findings, legal practice management software buyers should look for platforms that:

• Offer tools that automate daily tasks, such as calendaring and time tracking, which help increase productivity and free up time for revenue-generating activities.
• Are flexible and scalable, so solutions can grow and be modified as the needs of the firm change.
• Are configured to reflect the unique needs of their practice, and are easy to use and navigate.

Additionally, vendors often allow prospective buyers to demo products through a free trial period before investing in the solution. Firms are encouraged to vet products before purchase to ensure the software aligns with, and helps them achieve, strategic goals.

Demographics

Over half of the survey respondents work for small law firms (determined by employee size, annual revenue and number of attorneys):

• 62 percent, combined, work for firms with between six and 50 employees;
• A combined 84 percent work for firms with an annual revenue of $50 million or less; and
• A combined 66 percent are from small firms with between two and 10 attorneys.

Additionally, we broke survey respondents down by job title and practice area and found:

• The largest group of respondents are paralegals (28 percent), followed by legal secretaries (27 percent);
• Attorneys make up 14 percent of our sample;
• 17 percent of respondents practice criminal law, followed by 13 percent in civil litigation and 10 percent focused on business/corporate law.

Methodology
To collect the data in this report, we conducted a nine-day online survey of 19 questions, and gathered 180 responses from random users of legal management software in the United States. We screened our sample to only include respondents who work within the legal industry and who currently use the software either daily or weekly. Software Advice performed and funded this research independently.

Results are representative of our survey sample, not necessarily the population as a whole. Sources attributed and products referenced in this article may or may not represent client vendors of Software Advice, but vendor status is never used as a basis for selection. Expert commentary solely represents the views of the individual. Chart values are rounded to the nearest whole number.

If you have comments or would like to obtain access to any of the charts above, please contact eileen@softwareadvice.com.

by Eileen O'Loughlin
Market Research Associate, Software Advice
August 26, 2015

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