As I have discussed before, the legal profession, especially the law firm end of it, can’t be thought of as a monolithic marketplace. Instead, today’s legal marketplace is composed of various segments. These segments have business models and goals that are so different that they might be thought of as distinct businesses entirely. Marketers and vendors need to understand that different the sizes and types of law firms are have fundamentally different motivations and concerns. They also need to know where all law firms are similar. And various surveys can help in this understanding.
Toward the end of this year’s ILTA conference, for example, ILTA released an Executive Summary of its annual technology survey. This tech survey, along with those done by the ABA and ALM, forms the basis of much of our law firm knowledge when it comes to tech. The ILTA survey respondents tend to be from larger firms and are people who work in the legal tech field as opposed to practicing lawyers.
This year’s Summary is particularly interesting. It focuses the important. similarities and differences between small firms, mid-size firms, and large firms when it comes to tech
This year’s Summary is particularly interesting. It focuses the important. similarities and differences between small firms, mid-size firms, and large firms when it comes to tech. I don’t recall ILTA focusing on differences by firm size before. But it’s a good idea.
Some General Observations
ILTA notes at the outset that the pandemic has significantly impacted firms of all sizes. While many tech tools used by law firms are the same as pre-pandemic, there are radical differences in how those tools are now being deployed and used. And the use continues to evolve at a rapid pace. The differences in that deployment and use based on firm size is clearly shown by the Executive Summary.
It’s a lot easier to spread the cost of an expensive tech investment across 500 partners than 5.
According to the Survey, smaller firms have to focus more on tools to help manage their businesses—”keeping the lights on,” as ILTA describes it. Of course, it goes almost without saying that the larger the firm, the more tech staff and options and the greater the tech budget. The simple rule of economies of scale ensures this advantage. It’s a lot easier to spread the cost of an expensive tech investment across 500 partners than 5.
Smaller firms also struggled with moving to and facilitating remote work—they had no experience with it nor did they have the tools. Larger firms were more accustomed to geographically diverse lawyers and collaborating at distances.
In general, smaller firms still must make hard business choices and determine what is really necessary when it comes to tech. ILTA thinks this “simplicity” keeps smaller firms more nimble, and it may be right.
But I have seen other surveys that demonstrate that the logistical and cost hurdles with tech place smaller firms at a disadvantage. This disadvantage is particularly acute when it comes to the substantive practice of law. Plus, smaller firms often rely on lawyers to make tech decisions since they don’t have the IT staff that larger firms do. Due to time constraints, smaller firm leaders often don’t see the advantages particularly that nonbusiness management tech offers.
So what’s distinctive about large firms that perhaps marketers and vendors should know? According to the Summary:
- Large firms have more collaboration tools at their disposal. They tend to embrace Microsoft Teams more than smaller firms.
- Larger firms select laptops based more on weight and battery life, not necessarily cost.
- Larger firms focus more on information governance. This results in more rules for the use of information by firm members and employees.
- Larger firms are more concerned with security and data breaches. They better be: their clients are demanding more and more assurances that their information will be secure.
- Larger firms are investing more heavily in legal project management tools.
- Larger firms have more robust IT departments. Why? They survey users to see how satisfied they are with the IT staff.
So large firms have more money, care less about costs, and have more complex tech. No surprise. But what about the proverbial mid-size firms (ILTA defines mid-size as those with 350-699 lawyers):
- Mid-size firms are not rushing to Microsoft 365 and are more apt to stick with Office 2016.
- Mid-size firms really like Zoom. More than large firms and more than small firms. The Summary does not speculate why but it may be Zoom is simple to use, and mid-size lawyers may just use the Microsoft features a little less in general.
- Mid-size firms’ biggest security concern is user behavior. The Survey speculates that this may be because larger firms have more resources to catch phishing attacks before they happen. The biggest security challenge for mid-size firms is client demands. This challenge is not surprising. Mid-size firms have fewer resources to meet client demands than larger firms. And they face greater security demands than smaller firms.
And last but not least, what about smaller firms?
- For smaller firms, it’s all about cost, cost, cost. Cost is the most significant security concern. Cost is the biggest challenge to general information governance. Smaller firms are not prone to spend money on individual lawyers’ expenses like cell phone use. Cost and time pressures also prevent small firm lawyers and legal professionals from keeping up with legal tech. And this inability worries them.
- Smaller firms generally don’t formally assess their IT personnel, if any they have. They don’t have the resources to do so. Instead, firm leadership relies on general impressions. So it may be more important for iT to appear competent for these firms than to be competent.
- While, as set out below, firms of all sizes are moving to the cloud, small firms still are the most likely to still use on prem services.
- Small firms have less formal knowledge management systems, again relying on word of mouth.
The Survey concludes that “the smaller the firm, the more likely they are to simplify their platform, keeping users practice law, and ensuring reduced complexity and cost.” This may be a nice way of saying it, but smaller firms’ cost problems often place them at a substantial disadvantage.
What All Agree Upon
What do all sized firms agree on? The cloud is here to stay. 40% of all firms identify cloud-based systems as the most helpful technology while working from home. (up from 3% pre-pandemic). The Survey points out that while this doesn’t mean all firms are embracing the cloud, there is a greater awareness of the use of the cloud and SaaS systems. But the advantages of cloud-based technologies and the growing confidence in them likely means on-prem is in serious decline across the board.
Another similarity across firms of all sizes: little confidence in AI and machine learning solutions
Another similarity across firms of all sizes: little confidence in AI and machine learning solutions. The number of firms even researching these solutions is falling. Ironically, legal was far behind on cloud adoption for years until a pandemic forced it to use the cloud. Followed by the enthusiast embracing the cloud once its advantages were clear. Perhaps we may someday see the same with AI adoption. Although it hopefully won’t take another pandemic.
The Summary points out the fundamental differences based on size in tech attitudes and sophistication. It clearly demonstrates that there are at least three different law firm tech approaches. And that has lots of implications for marketers, vendors and consultants.