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Law Firms Find New Opportunities in the Cloud

Jack Newton, CEO, Clio

The role of technology in law firms has shifted from on-premise servers to cloud-based solutions. Rather than work behind closed (and often locked) doors, information professionals now have access to new collaborative opportunities for delivering real, client-facing value.

For the last 20 to 30 years, lawyers have been using practice management software to organize and track their work. These are comprehensive solutions that help manage projects, track time, and coordinate billing.

What's changed in the last five to ten years, however, is that legal technologies have shifted from a focus on productivity to improving firm growth and creating effortless client experiences. The development of cloud-based software in particular has enabled new models for technical innovation while also providing the secure infrastructure needed to protect sensitive client data.

More than keeping the lights on

For CIOs and technology consultants working with law firms, their role is shifting from solving internal infrastructure problems to more outward-facing business solutions. CIOs and legal technology consultants used to be focused more on implementing and supporting on-premise systems; larger firms often required an entire floor of servers with a department of IT staff on hand for support.

  ​Law offices that are better equipped will have a competitive advantage over those that are not   

Now, technology specialists work towards more strategic initiatives. They don't need to spend as much time and resources on work dedicated to keeping the lights on, so to speak. Developing infrastructure and maintaining operations—the hands-on mechanics of keeping a system up and running—are tasks being outsourced to the cloud, which means CIOs can focus more on strategic business opportunities.

New creative opportunities for firm growth

When working from the cloud, firms have access to whole new structural models to help them thrive. Brick-and-mortar law offices of the past prioritized central, high-value locations to draw clients. These offices were also a central headquarters for all staff and resources, including their internal IT infrastructure.

The cloud, however, enables law offices to be more distributed. For a firm looking to expand its operations into new service areas, and potentially new jurisdictions, new attorneys can be integrated into the firm's operating network within minutes—the cloud makes building a highly distributed and specialized team feasible for firms of almost any size.

Expanding a network to other jurisdictions also opens up clear arbitrage opportunities, where innovative firms working in high-demand markets can charge premium fees and then farm out work to lawyers in other markets with lower billing rates.

Even having lawyers work from home can save firms from having to provide office amenities that may no-longer be the standard.

In terms of client experience, new technologies offer more opportunities to interact and provide service. The notion of a face-to-face conversation is no longer limited by proximity. There are a number of clients who would rather collaborate with their lawyer over secure video conference, which allows for more flexible scheduling and eliminates travel time. An attorney could be anywhere in the world, and the client could have a real-time, high-definition, and secure conversation with their lawyer. As an example, at our recent legal technology conference in Chicago, we had a lawyer lead a session on how he works with his American clients while backpacking through India.

Everyday consumer hardware makes these innovations possible, and modern management solutions ensure lawyers have everything they need to work a case from wherever they are while providing the most informed counsel possible. Platform integrations are also becoming the norm in legal tech, where software providers can integrate their products with other core services. Firms can essentially customize the services they need from a broader ecosystem of compatible products.

Working with vendors to gain key data insights

As more services are outsourced to the cloud, we're seeing more collaboration between CIOs and software vendors. As vendors specialize in their services to accommodate niche industries, they are taking on more consultancy roles for emerging businesses. At Clio, we get asked questions every day about what a lawyer's billing rate should be, or which practice areas are most lucrative. As a practice management software provider, these questions seemed beyond what we had set out to provide for firms. What we’ve found over time, however, is that we can actually answer many of these questions for our users.

In our recent Legal Trends Report, we used aggregate and anonymized data to look at a number of legal industry trends, including average billing rates across the U.S. as a whole, as well as within individual states and practice areas. With this information, lawyers can benchmark their performance against their peers and set their fee structure accordingly.

One of the most significant findings of the report was the low number of hours billed per day among lawyers. We broke this insight into three categories: utilization rate (the number of billable hours worked in a day), realization rate (the number of hours actually billed), and collection rate (the number of billed hours paid to the lawyer). Previously, the prevailing consensus said that lawyers spend somewhere between 60–90 percent of their time working billable hours. Our data suggests that this number, based on an eight-hour workday, is actually 28 percent, of which only 81 percent gets billed to clients. And, of all hours billed, only 86 percent (about 1.5 hours) gets collected upon.

Law offices that are better equipped will have a competitive advantage over those that are not—and we've based our mission at Clio on improving these key metrics for law firms, allowing them to collect more earnings for each given workday. For technology consultants, their mission will be the same: finding ways to help their clients deliver better service, more efficiently.

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