The evolution of the U.S. legal industry has accelerated in recent years. Law firms and other legal service providers have adopted an array of new technologies that have impacted both the business and practice of law. Meanwhile, these new technologies are driving a variety of changes to legal workforce dynamics that are forcing employers to navigate internal culture shifts. These simultaneous forces of technology and workforce changes are challenging law firms to rethink the way they deliver value to internal and external clients.
A key operational area at the cross-section of these forces is the law firm IT function. Law firm IT has long played a mission-critical role in business infrastructure, but it is becoming an increasingly essential vehicle for supporting the delivery of client services, enabling practice development, and powering new client acquisition. As a result, law firms are rethinking the strategic ways that IT can impact competitive positioning and differentiation.
Law firms are now searching for better ways to achieve key strategic objectives, such as enhancing client value, aligning talent, strategically allocating investments, mitigate risk, and improve operations. And while this is an ambitious task, many firms have discovered there is a way to achieve all these goals with a single strategic decision.
In the last two years, we have seen a growing number of law firms move to the IT managed services model. This approach involves partnering with an expert managed services provider that assumes operational responsibility for some or all of the firm’s core IT infrastructure and daily operations. What makes the IT managed services model unique is that these services are run jointly, with close cooperation between the law firm staff and the managed services provider, so there is a single IT team that appears seamless to the attorneys and other professionals receiving IT support. These tasks typically include things like desktop support for the firm’s employees, management of the firm’s network, servers, databases and applications, and monitoring and resolving IT issues.
This innovative model enables a law firm to turn over responsibility for essential but non-differentiating operations to a service provider — a strategic partner who can often do it at a lower cost and with greater efficiency — and to redirect the time of firm resources toward higher value, more strategic functions that drive the firm’s business forward.
There are seven major reasons why leading-edge law firms are moving to the IT managed services model:
- Risk reduction. Partnering with an expert IT services provider allows a law firm to offload a number of meaningful risks onto the shoulders of another company that is in the business of delivering those services, freeing the firm to focus on its core business of practicing law. This includes easily measured financial and staffing risks, but also the harder to quantify risks related to information security, data privacy, and IT operations.
- Greater leverage. An individual law firm competes not only with peers, but also against the financial services and high-tech industries, for access to the best IT personnel with the technical skills needed to manage and secure data in the cloud-based world. In the world of enterprise purchasing, even large firms are classified as “small to medium businesses” and lack leverage to drive the best pricing on IT hardware, software, and services. By moving to the IT managed services model, a law firm suddenly benefits from the tremendous hiring leverage and buying power that comes from partnering with a company that focuses exclusively on providing these expert services to law firms.
- Improved control. There is a curious myth that persists in law firms that suggests they can better control operational functions by doing the work themselves. This idea has proven to be false in other areas of the business and is now being understood as a myth in the day-to-day IT operations as well. When a firm partners with an IT managed services provider, there are typically enforceable Quality of Service standards, and the firm can impose immediate consequences for a failure to meet those standards. In this sense, the firm actually improves the direct control it exercises over the way that IT services are delivered to its professionals.
- Redeployed investment dollars. Perhaps the most measurable driver behind the move to IT managed services is the significant increase in value that early-adopting law firms have experienced. Partnering with an expert IT managed services provider enables a firm to have greater predictability in costs — with transparent options for how it can spin up more IT services to support controlled growth — and often produces net reductions in day-to-day operating expenses. The realized cost savings can then be redeployed to fund innovation and new strategic initiatives. This translates into a better return on the firm’s IT investment.
- Lower management overhead. Senior IT executives are not easy for law firms to attract and perhaps even harder to retain. Moreover, the best people command very high salaries because of the competition for that specialized level of talent. Moving to the IT managed services model enables law firms to redirect their high-cost/high-value IT executives to projects of more strategic value to the firm, reducing the number of managers needed to oversee the day-to-day IT operations by transitioning that job to the managed services provider.
- Acceleration in project delivery. Many law firms have a number of innovative business projects that are languishing on vision boards and in strategic planning documents because they have been unable to deploy the IT resources needed to make them happen. This leads to time delays and management frustration over lost opportunities. By moving to the IT managed services approach, firms can free up the staff and resources they need to increase acceleration and predictability in the delivery of strategic projects of higher value to the firm.
- Enables shift in operational focus. Law firm IT started as an operations and facilities service necessary to troubleshoot hardware problems and make sure the network was running, so it is understandable that many firms still operate IT with a cost center philosophy. However, leading-edge law firms are discovering there is tremendous power in leveraging technology innovations and practice-specific tech platforms that can improve efficiency. Moving to the IT managed services model enables that critical shift, empowering firms to use IT as a vehicle for strengthening their client services, practice development and acquisition of new clients, while the managed services provider handles the non-differentiating underlying core functions.
In the competitive world of legal services, it is essential for law firm leaders to challenge old paradigms and contemplate the potential value of new operational models. Firms are discovering that IT managed services is a powerful new approach to leveling the playing field in a way that allows them to reduce business risks, increase operational efficiencies, self-fund innovation and maximize value from their internal IT functions.