After paying lawyers and renting business premises, a law firm’s investment in information technology is typically its largest cost. This includes the cost of servers, networks, datacentres, security, and teams of people to manage that infrastructure. In fact our benchmarking figures show that typically firms spend between 4 and 5% of their turnover on IT, and often this equates the several thousand pounds per person per year.
As client and regulatory demands increase, and the rate of technology change continues, investment in technology infrastructure is a continuous process, often with large-scale re-investments every 3-5 years. This has two consequences that are significant for the efficient operation of the firm:
- Typically unless drastic action is taken the trend of operational IT costs only go one way – up.
- This cost of IT investment is fixed, and doesn’t flex as the firm changes shape.
With this large fixed investment, IT departments typically spend their time focusing on keeping the lights on. Indeed, we estimate that around 80% of spend and 85% of resources are concentrated in operational activities. This means that typically only 15% – 20% of the focus of an IT function is directed towards activities that will exploit technology to generate business value, the rest being directed towards making sure that current systems simply work.
However, we understand that law firms need their IT departments to do much more than keep the lights on – law firms across all segments of the market claim to be looking to:
- Use technology to make their lawyers more efficient and effective,
- Help lawyers be more mobile,
- Make more use of alternative sourcing methods to deliver legal advice, and;
- Reduce the cost of supporting the business.