Managing your practice to a brighter future

Used well, technology makes our everyday lives easier, and allows us more time to spend on the things that truly matter. Craig Sisterson takes a look at how practice management tools do the same for your legal practice

As the economic downturn continues to bite, businesses everywhere are looking to become more efficient at what they do. And whether they are willing to face it or not, New Zealand’s law firms cannot afford to be an exception. Although lawyers spend years at university, and then many more on the job, honing their skills in order to provide the very best legal advice to their clients, there is a lot more to a well-run legal practice than just providing great advice.

How efficient a law firm is in terms of the amount of time its staff spends on legal matters, and then how successfully and how quickly it recovers payment for such time from its clients, will have a massive effect on whether the firm succeeds or struggles. While it is the provision of legal advice that brings income into a law firm, there are many other administrative matters surrounding the provision of that advice that play a big part in the strength and flow of that income stream.

As Ashley Balls and Ron Pol noted in The Business of Law 2009 (Thomson Reuters, April 2009), the most successful law firms of the future will be those that best embrace technology. Technology such as practice management systems that help law firms streamline the administrative matters surrounding the provision of legal advice, enabling them to spend more time doing the things that actually generate more income.

What is practice management?
Practice management is all about the systems law firms have in place to produce their work and interact with their clients. “I would see practice management as being the process or the act of being able to provide your client with excellent service, and the tools to continually improve that service, and to respond to your clients’ needs and wishes better, faster, and more cost-effectively for you and for them,” says Mike Holloway of AS Legal Systems, provider of the ActionStep practice management system.

For Graeme Ramsay, managing director of jPartner Systems – the creator of juniorPartner, practice management brings to mind the famous Benjamin Franklin quote “Remember that time is money”. Good practice management is all about becoming more and more efficient at converting lawyers’ time into money, he says. “This can be achieved by: decreasing non-fee earning time; increasing the ratio of fee earners to support staff; maximising the conversion of authors’ time to fees; and by leveraging the fee earners’ and the firm’s knowledge. Good practice management software should focus on these four efficiencies.”

Practice management tools have come a long way since the early days when they were almost solely focused on accounting functions. “The original ones were really all about trust accounting, with a few bits and pieces on them,” says Roger Richardson of Fujitsu, which produces the Infinity practice management system. “These days, that’s a given, and the really big thing is leveraging the time of the fee earners… [A] lot of lawyers are busy, busy people, but they often record disappointing amounts of time for all that effort. It’s trying to capture the time there, but also taking pressure off people by using good tools for storing documents and finding things. It’s the productivity thing we’re after.”

But it’s not just about good tools; it’s about using those tools to improve law firm performance. Good practice management involves well-trained lawyers who know how to use the tools to give their clients competent, prompt, and practical legal advice,” adds Holloway. “Efficiency and responsiveness are a key part of that. Practice management needs to take account of the ways in which your firm, as a whole, deals with your clients.”

Honing your practice
The current economic climate and business trends put increasing pressure on law firms, and bring with them new and varied challenges, says Jamie Kruger of LexisNexis, provider of the LAWbase, Affinity, and Practice Advantage systems. “The challenge is how to continue to service your clients in an increasingly competitive environment whilst still maintaining your margins – this is where technology can help.”

Such technology can provide major benefits to your law firm. As Ball noted in The Business of Law, law firms need to better embrace such technologies; used well, they provide benefits far in excess of their costs. Ramsay notes that juniorPartner has been particularly popular with barristers and legal aid lawyers. “[It] saves so much time preparing legal aid bills that the cost is recovered within weeks, sometimes days. This is the sort of efficiency good systems can bring to a firm.”

Richardson notes that it’s now no longer affordable for law firms to have large numbers of support staff. “That’s sort of forcing the need for lawyers to look after things themselves, rather than sending someone away to do it for them.” With a decreasing ratio of support staff to fee earners, it’s important for lawyers to be able to perform quickly any administrative tasks they need to do themselves (so they need to be more technology-savvy, and the tools easier to use), and/or the tasks to be made far easier with the use of such tools so that the remaining support staff can still perform them efficiently.

“The challenges all involve speed and creation/delivery of legal information; turning hours into dollars and using the best technology to achieve that,” says Ramsay. “Systems which make it easy to capture important information about the firm’s performance and have that information available for analysis are vital. Good systems make that work best at the file level. Personal productivity is the other major limb, and systems which enhance this put money in the bank.”

“You only need to get an extra hour a week of time over 44 weeks a year at $200 an hour across say half the people in your firm, and it makes a huge impact on your bottom line,” says Richardson. “Which is easy to save with the systems like we sell.”

With good document-generation systems linked to accurate client information databases, notes Holloway, law firms can streamline the process of creating documents. The key is that lawyers spend their time wisely, honing and revising such standard documents for the specific clients – it’s not at all about having a one-size-fits-all print and post system. “It’s designed to avoid an enormous, costly amount of unproductive time put into [creating the bulk of the document].”

Riding out the recession
All of the practice management experts I spoke with cautioned that the economic downturn was a reason for law firms to embrace technology, rather than to become over-cautious and shy away from it. “By nature, if not then by training, lawyers can be perennially cautious and watchful over costs,” says Ramsay.  

As Kruger notes, the law firms that had not invested in technology and had relied more on manual processes found themselves struggling to maintain both service and profit levels when the recession hit. “It is at these times that clients realise the importance and the economic necessity of having a good IT infrastructure to allow them to be innovative in the way they deliver their services without incurring additional operating costs,” he says. “In the downturn, in my experience, there’s a lot more thinking about law as a business,” adds Richardson.

In some ways, the relatively ‘slower’ times allow law firms a perfect opportunity to take stock and set themselves up well for ongoing future success. “Firms that don’t have practice management software (and there are still several hundred firms who don’t have any systems at all) will find this time is the ideal opportunity to introduce new systems,” says Ramsay. “Several clients are indeed using this slower time to examine their existing procedures and staffing levels with a view to making efficiencies on those fronts.”

And if law firms do take the opportunity to look actively at improving the systems helping run their practice, it is important they realise that it’s very much a partnership between lawyers and systems, says Holloway. “You can’t systematise the practice of a lawyer who can’t be bothered, and they can’t systematise their practice without a system that works the way they want to.”

Technological leaps
As Richardson said, practice management tools have come a long way since their earliest incarnations as trust accounting with a little more. “Trends in practice management tend to be influenced by trends in parallel industries. What we have seen over the past few years though is an increase in the demand from firms for information management (document, records, content) and customer relationship management systems,” says Kruger. “This trend is one of the biggest we have seen over the past few years – integrated workflow systems. What we are doing here at LexisNexis is taking this a step further and not only integrating information and customer relationship management systems into our core practice management systems but also integrating our global legal research platforms to enable our clients to efficiently conduct their daily tasks from one system.”

Richardson agrees that document management, workflow issues, and customer relationship systems have been the biggest trends in the improvement of practice management systems over the past several years. “With workflow you try and plan the matter from the start – what all the tasks are going to be, but also allocating the tasks to the least expensive resources, so you say we only need a partner to do those things, we only need a lawyer to do those things, and support staff can do all these other things. And while people do it naturally, and always have done, this is systemising it so you set things up, like conveyancing or company formations, and all the cheapest people do most of the work automatically, and it’s all directed towards them.”

Holloway has noticed another couple of recent trends: growing acceptance of unified client databases, and growing acceptance of ‘software as a service’ – where systems can be stored on the Internet rather than on a law firm’s own server. “Three years ago, when I explained to people that we were running a programme on the Internet, I had people absolutely recoil in horror. Now I find people going, well what about the Internet? You don’t have to worry about storage space, it’s triple backed-up, it’s constantly available, there’s fail-over processes for everything, and it’s far more comprehensive than anything you could ever afford to do in your own office.”

A bright future
Holloway sees an increasing use of the Internet and ‘virtual offices’ as the way of the future for legal practice. “In the UK now, there are 20 virtual law offices – that means that they do not have a central place where they all work; they work out of their own locations everywhere, they might have hot-desking which they can swap in and out – but essentially they all work remotely, and wherever they feel like working.” Holloway has also helped an Australian firm utilise ActionStep as part of their virtual office and hot-desking set-up.

This is where the advantages of software as a service, also known as ‘cloud computing’, really come into play. “Software as a service means where you can load some software down [from the Internet] that stays there while you’re using it, and when you close your browser down it disappears,” says Richardson. This means there is no need to permanently store software on your law firm’s system – “you only have it while you’re using it, and when you connect next time, it loads down again”.

Kruger and Richardson also see IT systems moving more and more towards allowing lawyers to work from anywhere, accessing their firm’s systems, records, and client data, along with other legal resources, from wherever they are in the world. “Our vision is for our clients to be able to conduct their business from anywhere in the world using just one integrated system,” says Kruger.

The big step for Richardson would be the idea of lawyers being able to access their firm’s systems from anywhere in the world, using handheld devices. “You know, you’re talking to a client out on the apple farm or whatever, and being able to say ‘just hang on, I’ll check when your lease expires’, and all that sort of thing, without having to run back to the office, or go home [to a PC],” he says.

Whatever the exact details of any future evolutions in practice management, there is no doubt that the law firms who will succeed in the future will be those who embrace technology, and harness its features to best benefit their legal practice, their staff, and most importantly of all, their clients.

NZLawyer, issue 119, 21 August 2009