5 common mistakes mid-sized law firms make when choosing a practice management system

The legal business landscape is still changing at pace and thus the firms within it need to change to protect their client base, their staff, their brand and their margins. IT systems and platforms now sit at the heart of every firm and are key to supporting these important areas.

Within the IT estate, the practice management system is king and generally includes other important solutions, such as case management, document management and CRM. There’s certainly a renewed vigour in the legal sector around technology and the practice management system is the place where most firms are looking for an advantage.

There are however several common mistakes which all sizes firm continue to make time after time when it comes to choosing a practice management system.

1. Following the herd

The legal sector is notorious for having a herd mentality, particularly around IT. It’s common to see firms choosing the same practice management system based solely on another firm’s decision. And sometimes, before that firm has even implemented it!

It’s a dated strategy, basing decisions on what others are doing rather than being driven by specific strategic objectives. Whilst 10 or 20 years ago, in a smaller, less competitive market, there may have been some merit from being in the same boat. However, in an ever-increasing competitive market, this is no longer a sound strategy.

It’s important firms choose new business systems on their own strategic objectives and/or operational requirements. And to do this properly they must understand what’s available in the market and what’s possible; however, this needs to be a continual process, not just a something done once every 5 to 7 years.

To achieve a competitive advantage and increased margins, you must map the right technologies to specific and documented requirements, both operational and strategic. This doesn’t mean ticking off a features list – it’s about being in control of the sale and having a concrete understanding of the desired business outcomes before even looking at software products. If a firm just follows the herd, they aren’t generally in control of their firm’s direction and the move to a new practice management system is often unstrategic. This will significantly impact a firm in a rapidly changing landscape.

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2. Not defining the business outcomes first

Many firms choose new practice management systems for a variety of reasons:

1. Their old system is going end of life;
2. Other firms (the herd) are moving to a new system or
3. They’ve seen a shiny presentation that promises buckets of gold.

These are fundamentally the wrong reasons to be choosing new software and will often lead to failed projects – at least in terms of a return on investment or getting any sort of competitive advantage.

New software purchases should be driven by the business need, defined by the business strategically and led by the business board. Strategic objectives should drive the decision-making process and it’s important to define the objectives you wish to achieve post-implementation. It’s therefore essential to analyse and define the real business requirements upfront to ensure the right business outcomes are delivered.

Many firms also don’t know where they stand in terms of the maturity of their IT systems and capabilities, particularly how they use their systems.  It’s essential to do work upfront and baseline where they are now across areas of the business and defining the key project success factors on a departmental and firm-wide basis. It’s also critical not to simply focus on the fee-earning side of the firm. Marketing, business development and back-office functions are more critical than ever when looking at a practice management system.

3. Looking at one solution to fit all IT requirements

It’s common for firms to believe that using a single IT solution to deliver multiple functions is a sensible move. This (with the exception of the smallest of firms) is a significant mistake.

Practice management, case management, CRM and the like are important business functions and you will struggle to find a package which delivers great functionality in every area. Whilst one may deliver great case management and finance functions, you’ll often find other areas are mediocre. This leads to frustration in some departments and missing out on critical features that can deliver a significant business advantage.

Typically, firms should be looking at solutions to deliver for specific business needs. They need best-of-breed (balanced against budget and ROI) and shouldn’t be afraid to purchase new systems and integrate them the core line of business applications, i.e. their financial and case management systems.

There’s no harm in having in-built time recording or CRM but not using it and choosing a best of breed add-on solution if there’s a clear business case or return. Too many firms also end up changing their operations negatively to fit into a system, rather than choosing a solution that moulds to exactly what they require. This is quite possibly the worst thing you can do as it hampers growth, flexibility and innovation.

4. Viewing IT related projects as the IT team’s responsibility

Most IT projects these days are business improvement and change projects; practice management systems’ probably being the biggest business change project most firms undertake. Although a practice management system may be software-based and run on an IT platform, the outcomes are definitely business ones, be it generally operational or departmental. To push these projects to the IT team is therefore negligent at best.

IT or course plays their part, but often, particularly around Practice Management, they shouldn’t be leading the project. They have their responsibilities, but generally, they shouldn’t be solely accountable for the business results.

If a firm has a CIO, they’ll typically be the link that bridges the ‘business side’ of a firm and the ‘IT side’. Ultimately they’ll take overall accountability for successful project delivery. However, most mid-sized firms don’t have the luxury of a CIO.

With that in mind, it’s often sensible to build project teams and boards to own the delivery of a project, such as including key stakeholders, relative partners, departmental representatives along with IT. This way everyone has buy-in, rather than pointing fingers, shrugging shoulders and saying the change was forced upon them.

5. Not checking the contractual details and deliverables

Lawyers, of course, pay attention to the contractual details around the general terms of business when engaging with a software vendor. However, they often forget to ensure that the contract factors in successful project delivery, in terms of clearly defining the deliverables at various stages of the project life cycle.

It’s critical to define the stages and key milestones of the delivery, typically alongside staged payments. This certainly helps focus the mind of the vendor and ensures that expectations are managed on both sides.

Vendors will often link payments to key stages of project delivery. However, these staged payments are not typically in place for the firm’s benefit, but rather simply to ensure the vendor is paid. It’s, therefore, a good idea that a firm leads in defining project deliverables and what the measurements of success are prior to signing any deal.

These need to be documented clearly, agreed by both parties and then form part of the contractual terms. Too often are firms left with a solution that doesn’t provide any advantages over the one previously in place, because they did not define ‘success’ at the outset.

Firms need to understand that they are entering into a long-term partnership with the software vendor when they select a practice management system. Contracts are typically multi-year so pay attention to the vendor’s obligations, the service level agreements and where additional costs may come from. This is more critical now that many vendors are delivering their services via the cloud and thus firms are getting multiple services from traditional software vendors, not just software licensing and software support.

Looking ahead

I understand that firms do not change their practice management system very often but, when they do, see it as an exciting stage of transformation. It’s a big business change project and the risks are significant. However, the advantages are also significant if managed and implemented correctly.

I’d generally advise firms to seek some vendor-neutral, external assistance when considering a move, even if it’s just a half-day session to understand all the factors that need consideration and to show them what they don’t yet know.