The cost of purchasing, utilizing and continually updating the software required to run the daily operations of a law firm has become a significant portion of the firm’s overall expenses — and one that is increasingly difficult to pass on to clients, even when specialized software must be utilized to meet those clients’ needs.
This is the second part of the Legal Executive Institute’s discussion with Judi Flournoy, Chief Information Officer for Kelley Drye & Warren, about how law firms should be aware of their software spend and how the trend towards standardization of software across the legal industry could bring benefits. (You can read the first part of this conversation here.)
Legal Executive Institute: After the realization that you had to get a handle on your software costs, what were the initial steps your firm took toward that?
Judi Flournoy: The first step was taking a more holistic view of the entire amount of money we were spending on software maintenance. When I came back to this firm in September 2012, one of the first things I did was a critical analysis of everything we were spending money on and why.
At the end of 2015 I charged our new Director of Information Services, Henry Stone, with continuing to analyze our spend. We have done that now on the operational side, looking at licensing for VMware [virtual servers] and SQL [programming language for data management] and Microsoft Windows and all of other components that are embedded inside of the Microsoft Enterprise Agreement. We also looked at Cisco SMARTnet. All of those things are on the operational side, so it was necessary to take a very critical look to see what we were spending money on.
Henry worked with his team in identifying where we could reduce our footprint and as a result the firm will realize significant savings both in VMware licensing, Windows/SQL licensing and the number of racks that we require in our co-located data center facilities.
Legal Executive Institute: So the review is the first step, but is it a continuing process? And what have you seen as results?
Judi Flournoy: First, it is ongoing — we review every year now. I’m still looking at software we bought two years ago. Who is using it, how and why are they using it? If they’re not really using it, maybe it’s time to let it go.
In the last couple of years, we’ve probably saved a half-million dollars. That comes from aggressively revising what we had, what we were using, and asking why it was being used or not being used.
Here’s the corollary: How well any software program being used is part and parcel of a good educational program for attorneys, staff and other professionals. That means really working with those folks to help them understand the value of what’s available to them in the toolkit, and then getting them the proper learning opportunities to help them leverage those tools.
“I’m still looking at software we bought two years ago. Who is using it, how and why are they using it? If they’re not really using it, maybe it’s time to let it go.”
For example, every law firm of any significant size has a document authoring template program that helps lawyers make their documents look a certain way. However, if you were to talk to most lawyers and even some of the staff, you’d find some of them don’t use those tools particularly well. They’ve never had the time to dedicate to learning how to use them effectively. We want to make sure that our lawyers actually understand how to use the tools and use them well. To that end our Human Resources, Training and Professional Development teams are working on new learning opportunities and ways to provide just-in-time learning using tools, such as the Traveling Coaches LegalMind learning portal.
Legal Executive Institute: The legal industry has moved slowly toward standardizing their software across the board. Where do you see that going?
Judi Flournoy: Outside our firm, I don’t know how many of my colleagues are doing what I’ve described, but I’d suggest a percentage of them are because we are all facing the same challenges. Clients are saying, we are not going to pay you what we were paying you, therefore, the business has to find ways to reduce its costs.
During the economic downturn, the first thing a lot of firms did was reduce headcount — that was the quickest way to eliminate expense. But in the last couple of years, we’ve said, let’s turn our attention to other areas where we spend a lot of money, like legal research, software maintenance and professional services.
For us, every time we start to add a new project, we look at those three components, try to identify real value, and negotiate with the vendor. Maybe if you think you are going to get 20% yearly maintenance, maybe you should think 18% instead.
That puts the onus on the software vendors. They need to look at how they are reinvesting in their own companies, in terms of innovation and making their products actually useful. It has to go beyond where they’ve been.
In fact, that’s the danger that a lot of software vendors face — assuming, without understanding, the value of their product within the institutional environments that they sell to.