Law firms face an increasingly daunting task in purchasing, utilizing and continually updating the software required not just to run the daily operations of the firm, but for the increasingly complex and specialized software needed to better serve their clients.
Judi Flournoy, Chief Information Officer for Kelley Drye & Warren, spoke to Legal Executive Institute about how law firms can make sure they’re purchasing only the software they need (and will use!) as well as how standardization of software across the firm and even across the legal industry could bring a multitude of benefits.
Legal Executive Institute: When lawyers discuss the legal industry’s software commitment, the talk often turns to standardization. Is this mostly a cost issue?
Judi Flournoy: I think it’s more related to having a good sense of the tools necessary for the work that needs to be done on behalf of a client. The more software is standardized, the easier it becomes to work with. That might be one reason why standardization is so important.
I think the other piece is cost — for example, if you have four or five different programs in your firm that essentially do the same thing, you have to ask yourself why. So, from a leadership perspective — whether in a CIO or a CFO role — you’re looking for different ways of reducing the cost of doing business. And there are big expenses in a law firm directly related to software licensing and maintenance.
Legal Executive Institute: I think most people outside the CIO and CFO’s offices would be surprised at how much of law firm expenses are tied up in software maintenance and upgrades.
Judi Flournoy: That’s a very true statement, and I think clients would be stunned. There’s so much pushback in recent years from clients to reduce billing fees, and there are things that clients won’t even pay for anymore, that push back has created tremendous pressure on firms.
“There’s so much push-back in recent years from clients to reduce billing fees, and there are things that clients won’t even pay for anymore, that push-back has created tremendous pressure on firms.”
Certainly our environments are far more complex than they were before, and on top of that we have had to layer new technologies to address the security concerns of our clients. Those technologies take up a large portion of the overall software licensing and maintenance costs now associated with running the business of a law firm.
In the situation here at Kelley Drye, we’ve looked at all areas of our software purchasing and maintenance, and created a much more aggressive negotiation process on that front. We’ve negotiated with software vendors over maintenance fees and negotiated our master service agreement with Microsoft very aggressively. Microsoft costs are pretty fixed, so we had to look at what we were really using. We discovered things which they had built into their platforms that we don’t need and that required different licensing agreements. Of course, Microsoft wanted us to license them all, in case we might use it. We said, well, we don’t think we are going to, so why would we pay you for it now?
Every time we buy a new piece of software, replace software, or put in a new system, we look at three related costs: i) the cost of the original software; ii) any professional services required to put it in place; and iii) the ongoing maintenance. We try to find ways to keep those costs down. The vendors on the other side of it are getting tremendous pressure to reduce those costs.
LEI: Does that make it harder for you to look at a new program that might provide a benefit?
Flournoy: Yes, and no — there’s a definite process now when we’re buying something, and we ask ourselves why we’re buying it, what the use-case scenario, etc. Yet we are still actively seeking to provide effective tools for our attorneys and other professionals to do the work they need to do on behalf of the firm’s clients. As my managing partner Lew Rose likes to say, make sure that what’s well-intended is well-utilized. When we buy something, if it’s not utilized, we pull the plug on it. A year or two later we’ll re-evaluate and say: No one’s using this, and we are not going to pay for it anymore. Before, if you had one or two people using something, you’d hold onto it, because you’d think, well, I’ll be optimistic, and maybe additional people will actually use this at some point.
But now, that’s less so. We jettison it. We don’t keep it longer, in the way we used to — we are less tolerant of that. We can’t afford to spend money on something people aren’t using.
(In the second part of this interview, Judi Flournoy will discuss the metrics Kelley Drye uses to measure software utilization and what the legal industry needs to do to address software costs issues.)