By Edward Poll
Posted: 3:40 pm Fri, August 24, 2012
Edward Poll
Law firms, like the players in any other economic sector, have a life cycle.
There are law-firm startups, as new lawyers hang out their shingles in a solo or small-firm practice.
There are firm buyouts, as lawyers reach retirement age or simply decide to head for greener pastures, and use the flexibility afforded by Model Rule of Professional Conduct 1.17 to sell their practices to another qualified attorney or firm.
And there are law firm mergers and acquisitions, typically driven by the idea that combining law firms to make them bigger will make them better through skill synergies and enhanced economies of scale.
However, what is still overlooked by attorneys as their firms progress through this cycle of life ? even as the digital revolution continues to affect every area of our lives ? is that technology is no longer just an add-on or afterthought to legal expertise.
It has become so integral to how law firms operate that taking the time to assess and integrate technological concerns is essential to a healthy and growing legal services organization.
The technology concerns at each stage of the life-cycle continuum are different, and addressing them is a must in order to establish the firm as an effective, continuing business organization.
In a startup, the problem is that lawyers are often beguiled by more technology than they can afford. Substantial spending on new computer hardware and software may simply not be possible, particularly because it may take up to five years for a new practice to be profitable.
But the answer is not to try to get by on 20th-century thinking. Rather, refurbished computers, open-source software, a free email management program, and online research utilizing the online library at the most convenient courthouse or law school are among the affordable options.
Ultimately, a real investment in new technology will be necessary, but the firm must tailor the financing decision ? cash, lease, loan ? to its financial and business realities.
In a buyout situation, technology can cut both ways. If a small-firm lawyer facing financial pressure resists buying or updating technology because of the high up-front expense, he may retain outdated software and hardware, may not be using vital case-management or document-assembly software, and/or may not be backing up and storing client electronic files properly.
Such lawyers who do not employ adequate technology only diminish the value of their firms in negotiations, as a savvy potential purchaser undoubtedly will see that a substantial IT investment soon will be necessary.
When mid-sized or large law firms merge, assessing the current state of technology used by the lawyers or firms, including the age of the hardware and software and their replacement cycle, should be (but rarely is) central to the merger due diligence.
If at least one of the parties to the combination uses up-to-date databases, hardware, and document processing and practice management software tools, it can serve as the foundation to make the combined practices more efficient.
But there must be adequate planning so that software for finance and accounting, client relationship management, knowledge management and case management is properly coordinated and integrated.
There is no one right way to approach these technology issues. But the wrong way is to ignore them and suffer the negative consequences.
Edward Poll is a speaker, author and board-approved coach to the legal profession. He can be contacted at edpoll@lawbiz.com. Also visit his interactive community for lawyers at www.LawBizForum.com. A version of this column originally appeared in Massachusetts Lawyers Weekly, sister publication to The Daily Record.
Source: http://nydailyrecord.com/blog/2012/08/24/commentary-technology-at-forefront-of-law-firm-life-cycle/
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