Law firms using outdated technology, take note: Leaving to launch a new firm with better technology is easier than it once was.
For lawyers who spin off from an established firm to start a boutique of their own, the change can be a breath of fresh air, especially when it comes to the technology they use. While it may mean cutting ties with capital investments of the past, larger and older firms may benefit from imitating the upstart approach to legal technology.
Several leaders of new law firms in Pennsylvania touted the tech upgrades they made when spinning off, citing lower expenses, improved accessibility to clients and a more flexible work environment.
“Firms talk about being young. You’re only as young as your technology,” said Andy Benedict, one of the founding partners of Bardsley, Benedict + Cholden, a firm founded earlier this year with lawyers from three different midsize firms.
While any change takes time, larger firms are partly being held back by a version of the sunk cost fallacy: hesitancy to abandon hardware and systems that cost a lot of money years ago.
Heads in the Cloud
Firm founders said their priorities in choosing technology were being able to access firm data remotely and having up-to-date software that wouldn’t drain on efficiency. They said they achieved both by migrating firm data to the cloud, and finding subscription-based software that updates frequently.
“We wanted to make sure wherever we are, we’re going to be able to pull up a document, and wherever we are, our clients will be able to get a hold of us,” said John Martin of Harrisburg’s Pillar + Aught, which spun off from Rhoads & Sinon last year. Rhoads & Sinon has since dissolved.
Martin and his co-founders were no longer “burdened with all the legacy data” of an old firm, he said, so it seized on the opportunity to modernize.
Steven Bardsley, another founding partner at Bardsley Benedict, noted that subscription-based software is not only new when it’s first purchased, but it updates regularly to keep pace with technological advances.
At his former firm, the software “was so burdened down by years and years of cases, and it was so antiquated to begin with … it was really starting to lag,” he said. Now, “our software is updated every week.”
Mike Zettlemoyer, a partner at Brehm Nofer & McCarter in Conshohocken, said his firm has aimed to be “as mobile and paperless as possible,” since he and his partners this year left the firm Powell Trachtman Logan Carrle & Lombardo, which is now dissolved.
The firm’s new computers, software and storage “allow attorneys to be efficient and work from almost any location,” Zettlemoyer said. “It allows them to access files and documents on the fly, from almost anywhere.”
Those decisions also resulted in “overwhelmingly substantial” cost savings and smaller upfront investments, Zettlemoyer said.
“With some of the more in-house hard systems, the cost to maintain them is very expensive,” he said. And then, “You own the technology and it becomes outdated and you have to replace it.”
The associated real estate costs add up too—a server room, extra air conditioners and the space needed to store endless amounts of paper records.
Benedict also noted that the computers themselves are less expensive on a cloud-based system, since they don’t need to have a lot of storage or computing ability. “We pass that savings onto the client,” he said.
“It also allows us to scale up,” Bardsley added. “We could go from 15 to 20 to 25 [lawyers] seamlessly.”
Martin said as he understands it, his firm’s data is more secure now than it would be if the firm had physical servers on site. The task of maintaining the servers now falls on the vendor that provides cloud services, rather than on the law firm itself.
Recent firm founders had trouble coming up with disadvantages of converting to newer technologies, though they mentioned a few small challenges along the way.
Martin noted that he prefers to use Apple technology, which isn’t compatible with every tool his lawyers need. So while the firm’s computers are mostly Apple products, they have to keep a few Microsoft-compatible machines around.
Benedict said there were some speed bumps in transferring from three separate firms’ older systems to one new system, but that was a one-time hurdle. He also noted that one of the software services Bardsley Benedict chose to use is developed by a startup, which itself has had to grow along with its clients’ needs. But having direct contact with the decision-makers is a benefit that outweighs the potential hangups, Benedict said.
Zettlemoyer said he couldn’t think of a single disadvantage to the tech choices his firm has made. And other firms could make similar choices, even if they’re not starting from scratch.
“There’s nothing stopping them from doing it. You just need to cut the cord, so to speak, and embrace it,” Zettlemoyer said. But there’s a catch, of course: “A lot of people are set in their ways and don’t like change.”
The cloud is “the opportunity” for law firms at this moment, said Dan Safran, CEO of LegalShift. But it’s simply more complicated for large, established firms to make that transition.
“These new firms can move directly to the cloud. They don’t have the infrastructure investment” in older systems, he said.
And because these firms are starting small, they have fewer diverse practice group needs to consider. As law firms implement more practice-specific software, Safran said, it has multiplied the number of systems that would need to be converted. For that reason, he said, it can be more difficult for a law firm with many practice areas to make a wholesale change.
Adopting new systems can also feel daunting for a new firm, but Zettlemoyer said having no choice has its benefits.
“Those costs are substantial and it’s hard to throw that in the trash and start over. We had to, so it’s easy to make the decision,” he said.
Safran said more firms will move to cloud-based infrastructure over the next five to 10 years. A number of firms are appointing professionals to innovation roles in an attempt to modernize their systems, he noted, but getting good ideas to fruition takes time in a typical law firm structure.
“There is space for firms in their strategic planning process … to forget about what we have, and think if we were to start all over again what would it look like,” Safran said.
Martin, of Pillar + Aught, suggested older firms implement new technology through pilot programs with specific practice areas or certain portions of the law firm business.
“We were able to rip off the Band-Aid and say, ‘Let’s do this,’” Martin said. “That’s not the reality for a lot of larger firms.”
Then again, the reality may be changing.
Bardsley likened maintaining old servers and software to “fixing an old car.”
At some point, larger firms will have to say, “‘We’re going to migrate 40 years of documents to a new system,’” he said. “I don’t really see how they can keep that old car going that much longer.”