A number of factors are converging to make this a time of review and change for the legal sector. Opportunities presented by the Legal Services Act, combined with an empowered client and affordable legal technology, means that those firms standing still risk extinction. What is more, strict compliance regulations and the public's awareness of recent data protection failings are throwing the spotlight on a law firm's ability in records management.

Like many sectors, law firms are looking at new ways to cut costs, improve service and find positions of strength in the turbulent market. The dual goal is to deliver improved customer service while increasing profits per partner.

Clearly, given the industry's heavy reliance on document-intensive processes, this is a key area for seeking efficiency and cost reduction through technology. The 2008 Pitney Bowes Legal Insight Report takes this as its central theme, focusing specifically on records management competency within the industry.

Fifty of the UK's leading law firms were asked to respond to questions around their own, and the industry's, records management procedures. The resulting data presents a clear view of the sector's current status and an insight into the future strategy of an industry no longer set apart.

The survey found that almost two-thirds of law firms have no strategic policy in place covering the migration of hard copy records to digital.

For a sector that is currently heavily reliant on paper-based processes this finding makes for remarkable reading. Not only are current practices antiquated, it would seem that the majority of firms have no plans to change.

But is this really the case? Pitney Bowes' discussions with law firms do not indicate that the sector is simply content to continue along the well-trodden paper records path. Rather, here is a sector with a genuine desire to improve and automate-but one that is simply overwhelmed by the task ahead.

The sheer volume of paper being retained, coupled with the fact that navigation of these existing records is manual and time-consuming, prevents many businesses from taking the important first step towards change. The consensus is that such migration would be too disruptive, too demanding of senior employee time and crucially, too expensive to consider.

The truth, however, is a distance removed from this perception. The important action is to draw a line in the sand-to create a start point from which future strategy can be implemented. Only once this line is drawn can law firms truly embrace digitisation and begin to think strategically.

One option is to agree a date from which all further incoming documentation is to be digitised. Once this procedure is implemented and running smoothly, the business can then focus on migrating the remaining archive from paper to digital-over a period of time and in a modular fashion.

Of course, the necessary IT infrastructure needs to be sourced, implemented and managed. Again, many businesses baulk at the decisions to be taken, having neither the time nor the knowledge to make informed choices. It is here that business process outsourcing partners can demonstrate real value. Expert third-party partners will know the market, will have access to a range of appropriate technology and will have the capacity to oversee the ongoing information management operation.

The survey also found that two-thirds of firms store their documents in their central offices. This statistic is damning. The cost burden of storing paper records centrally is vast.

Consider the location of top law firms and the percentage situated in London's square mile: now consider the cost per-square-metre of such office space. The average filing cabinet requires approximately one square metre of space to house the cabinet itself and allow sufficient space for its drawers to be opened and the contents accessed. Multiply this requirement several times over and the sums quickly add up to serious wastage.

Central records storage is not merely a financial burden. Today's law firms are asked to be flexible, to have the ability to set up team and office structures to meet client requirements and to adapt quickly to new ways of working. This approach demands a working environment that is spacious, open-planned and geared towards the client. Hard-copy archives certainly do not fit this mould.

Additionally, mergers and acquisitions continue to make the headlines. Companies might be asked to pool resources, to make office space available for additional staff or to swap team locations around. Again, paper files simply are not conducive to a lean, efficient and flexible operation.

There are alternatives to this scenario and several businesses, while not yet at the stage of digitisation, are at least storing records off-site, either at their own out-of-town premises or those run by third-party partners.

However, this strategy, unless managed efficiently, has its own inefficiencies and hidden costs. For example, many law firms are finding that the cost of couriering documents to and from premises is prohibitive, and that courier firms are proving unreliable.

The survey also found that almost a quarter (22%) of firms admit that the relatively simple process of document retrieval causes disruption – a serious cause for concern.

This disruption is solely caused by manual, paper-based systems. The immense volume of archived material becomes a maze of information – and even the most efficient and studiously indexed paper files are not immune from simple human error.

The technology exists to eradicate this disruption – safeguarding brand reputation, maintaining client relations and achieving full compliance. Certainly, law firms have extensive experience with other IT solutions-database management techniques, for example (possibly related to the fact that, without client details, bills can not be accurately despatched and will not be paid on time!). But, in the majority of cases, the next step-information management-has not been taken.

The advantages to be gained through a fully integrated records management solution cannot be ignored. Nominated personnel have instant access to information relating to a case, client, location and time-period, however the business chooses to categorise its data.

Information can be shared across the office or across different geographies, bringing expertise together and expediting decision making. Every type of record-a scribbled note, email, phone conversation, case file-can be captured, indexed and made available at the touch of a button. Reports, presentations, proposals-all can be produced, on demand, with the need for manual intervention reduced to a minimum.

This is not to say that law firms must become paperless environments. There is still a resistance, for example, to reading multi-page documents on a monitor screen. But an office environment with less paper is certainly achievable, and eliminating the disruption caused by document retrieval must impact positively on customer service.

Scrutiny of billing structures will only increase as new entrants bring a fresh approach to the marketplace. As a result, law firms can not rely on ever-rising fees and must introduce leaner, more efficient processes to achieve the desired profit margins.

Records management competency can save money, boost client service and enable firms to meet ever more stringent compliance demands.

There is a genuine desire for change. But only by drawing a line in the sand can the first step towards meaningful change be taken.

Richard Thompson is managing director at Pitney Bowes Management Services.