Will Legal ASPs Rewrite the Rules?
By Andrew Z. Adkins III
TODAY'S LAW firm must run lean and mean in order to be competitive. The trend toward efficient lawyering has led the industry to use e-mail instead of couriers; the Internet and CD-ROM instead of books; and Web sites in addition to conventional marketing. The battle of the word processors continues: Microsoft's Word versus Corel's WordPerfect, along with the various application suites.
Yet while the question of "total cost of ownership" for the legal profession has been discussed, it has not been fully addressed. Most law firms have been through at least two generations of upgrades and transitions and understand the associated costs. The bottom line: software drives the hardware decisions, and law firms are continually fighting a budget battle to stay competitive in the legal services industry.
During the last six months, a new concept has been percolating to the top of the ever-changing legal technology marketplace. A new model of software delivery -- "Application Service Providers" (ASPs). Instead of buying proprietary software and services, law firms are being told that they can rent software and services. While still in its infancy, legal ASPs are emerging that offer a variety of payment plans -- from site licenses based on per user/per month fees, to single-use charges. From full-service programs such as ELF's Serengeti and the newly announced WestWorks, to pay-per-use services such as BlumbergExcelsior's "Blankrupter Singles" bankruptcy forms, legal ASPs are quickly populating the legal technology terrain.
What does this mean for companies that provide software applications to law firms and to the hardware and networking services industries? Opportunity, and plenty of it. The ASP Consortium, a relatively new group that was formed in May 1999 with 25 companies, has grown to more than 300 members in a mere seven months. There are predictions the ASP market will grow from between $1.9 billion and $3.9 billion in 1999 to between $17 billion and $23 billion in 2003.
Software developers, vendors, and consultants view this innovative arena as a new channel for delivery of their products and services. However, the business model changes dramatically, since the client investment is long-term and not high front-end costs. But, the cost is spread out over many clients. The most frequently quoted "outsourcing" model for human resources in the legal profession is the ADP payroll system, which has proven very successful. ASPs look at this model as a potential business building venture.
To explore how this new ASP model may fit within the mix of forces that affect the legal market, The Legal Technology Institute, (University of Florida's Fredric G. Levin College of Law), is preparing a survey of legal professionals, with funding from iManage Inc., ELF, Elite.com, Gavel & Gown Inc., Microsoft Corp., Niku for Legal, RealLegal.com, Union Squre Technology Group LLC, and West Group.
By combining direct mail and online sampling techniques, we expect to establish baseline figures and trend data for the potential ASP market in the legal profession. The ASP Survey will include specific data on law firm demographics including title or position, firm size, private or public firm, age and gender.
This study concentrates on mainland United States legal industry users, as opposed to all legal industry users worldwide. Legal industry users include lawyers, managing partners, executive directors, legal administrators and judges.
Here are some of the issues we plan to explore:
- How do users get information about the services and products they need to purchase.
- What are the core applications used within a law firm and the "cost of ownership" for those applications.
- What barriers and myths are there to the ASP model? What are the ASP expectations of IT versus lawyers?
- What are the purchase decision drivers?
- What is the current technology environment in the law firm? ASPs require specific technology; what type of computing environment is currently in use in the law firm?
- What are the "core" software applications used by the legal profession? ASPs offer various applications; can law firms utilize more than one ASP for different services?
- How are firms accessing the Internet; What is the current technology environment; what do firms consider to be core applications; what are key security and cost concerns; how do firms assess future technology plans; and what are decision "drivers."
- Are government or corporate law departments more likely to move to the ASP model than private law firms? Is there a different "vision" for corporate and government law departments than for private law firms?
- What is the current attitude of the legal profession toward outsourcing the IT department? Outsourcing various services is a hot topic in all business industries. What size law firms are reviewing alternatives to having internal IT departments?
- How do lawyers access the Internet? Is access available on lawyers' desktops, on the road with a laptop, from home? How many firms are using an ISDN, DSL, or T-1 connection versus dial-up? Are commercial providers like America OnLine favored over national Internet Service Providers?
How many lawyers access the Internet? What are the demographics of online lawyers.
What size firms use the Internet more than others?
Who plans to move online in the next 12 months? How does cost affect firms' use of online technologies?
How much do firms plan to spend in the next 12 months on Internet access and bandwidth? How does online use affect billable hours?
* How many and what size law firms have implemented Intranets and Extranets? Intranets and Extranets provide a method for efficiency and standardization. Are law firms with Intranets and Extranets more likely to outsource applications?
* What Internet Web browser is preferred by the legal profession? The Internet browser war continues: Netscape versus Internet Explorer. Each has its own intricacies and extensions. Which browser is used and preferred by legal professionals?
Results of the study are expected to be available in Sept., 2000.
Andrew Z. Adkins III is director of The Legal Technology Institute, at the University of Florida's Fredric Levin College of Law. He is chair of the ABA's TECHSHOW2000.