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Practice Management: Should Law Firms Go Cloud or Premise?

Practice Management Should Law Firms Go Cloud or Premise

Cloud-based tools for practice management have gained substantial traction in 2014.  There has for example, been some $458 million invested in legal start-ups in the last year or so. That’s up from just $66 million year-over-year – and sizable portion of that is going toward cloud-based products and tools aimed at the legal industry.

There’s good reason too: Multiple market research studies indicate an increased enthusiasm for the cloud in the legal community. There is however, room for pause.  At the time of this writing, less than half of all state bar associations have issued ethics opinions, though there are clear signs of momentum.

Pros and Cons in Premise vs. the Cloud

Despite the momentum, the lingering questions leave seeds of doubt in the minds of attorneys and legal professionals who wonder:  Should I go with a cloud-based or premise-based solution for law firm practice management?

The reality is – it depends.

Since the LexisNexis software division offers solutions that support both approaches to law firm practice management software, we tend to break down the benefits and drawbacks in the following way.

Advantages of cloud-based practice management:

  •  Instant access.  The cloud delivers the software as a service (SaaS) which means it can be turned on and off instantly with a subscription or cancellation. This is akin to renting software, the same way a firm might rent or lease office space.
  • IT experience not required. Cloud practice management tools are web-based, so there is no need for an experienced IT professional to set up and install the software.
  • Scalability.  A key factor in choosing practice management tools, particularly for growing law firms, is to select a software product that will scale as the firm grows.  On a cloud platform, adding additional users is as easy as turning the software on initially.
  • Automatic upgrades.  Maintenance updates and product upgrades happen automatically; most cloud providers push these updates outside of working hours. Save for feature or usability enhancements, most users won’t even notice the update occurred, which avoids disruption.
  • Data protection.  Cloud tools generally back up data automatically but it’s usually advisable to check the terms and conditions.
  • Device agnostic. The cloud is accessed through a web browser, so it does not matter if you have a preference among operating systems or among a PC, a laptop or tablet.
  • Predictable cost.  Cloud tools are commonly sold on a monthly subscription model, which means law firms can forecast and budget costs with accuracy.  Some cloud tools offer discounts to law firms that choose to subscribe on an annual basis.

Disadvantages of cloud-based practice management: 

  • Less control. Cloud products tend to be configurable as opposed to customizable.Premise products, with 20 years of development behind them, often offer greater functionality and an ability to customize the software around established law firm processes.
  • Internet access a must. Generally it’s impossible to work “offline” on cloud tools.If the internet goes down, or a legal professional physically moves beyond an access point, the data and applications stored in the cloud are usually not accessible.
  • Limited integrations. While cloud tools are maturing, and more general business tools are becoming cloud-friendly, most cloud tools are challenged to integrate other software programs.
  • Service stops when payment stops.  Since cloud-based practice management tools are delivered as a service, access to use those tools ends if a law firm cancels the subscription.  Here again, it is important to check the terms and conditions of any provider chosen to see what conditions apply for retaining and moving data.

Advantages of premise-based practice management:

  •  Control.  A law firm owns the software, the data and can control the time and conditions of installation and upgrades.
  • Offline access. Depending on how the software is installed, typically as long as the access device – a PC or laptop – has power an individual user can still access the software. Internet access is not always required.
  • Accessibility. The data is stored locally which puts the law firm in control of the data – including the back up and retrieval.
  • Customization.  Many premise-based products are highly customizable and for larger firms with advanced installation, there are a range of support, training and assistance offered from certified independent consultants (CICs).  CICs often come with considerable experience and a wealth of ideas.
  • Ownership.  If a law firm stops paying the annual maintenance plan for a given premise-installed software product – it still has access to the software.  However, the law firm is not likely to receive technical support, product enhancements or security updates. In some cases, premise, or installed programs will work for month and even years after new versions are released.

Disadvantages of premise-based practice management:

  •  Infrastructure ownership.  With ownership comes responsibility for maintaining the IT infrastructure that supports the premise-based installation – including patches, upgrades, backup storage, and remote access services for mobility, among other common requirements.
  • Variable costs. Typically premise-based solutions have a set cost for the initial purchase and a smaller annual cost for maintenance. However, infrastructure costs can vary, for example IT best practice is to refresh or upgrade physical servers every 3-5 years.
  • Expert IT help.  Larger law firms almost assuredly need IT experts on staff. Even for smaller firms, an individual attorney might weight the value of their own time fiddling, not to mention the frustration, to fix an IT issue as opposed to the time and cost of expert help.

* * *

The Best Answer to Cloud vs. Premise

Will the cloud overtake premise solutions? Survey research shows divided opinions:

  • 15.4% said yes, in 3 years
  • 38.7% said yes, in 3 to 5 years
  • 34.1% said yes, in 5 or more years

Indeed, while as an organization we are very enthusiastic about the cloud, the reality is premise-based solutions have a long and viable lifespan.  Premise solutions are not going to vanish anytime soon.  To that end, the best answer might come in the form of legal parlance:  It depends on a law firms business needs.

Photo credit:  Flickr via Creative Commons; CC 2.0

If you enjoyed this post, you might also like:
3 Basics for Choosing Law Firm Practice Management Software 

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About Frank Strong

Frank Strong
Frank Strong is the communications director for the LexisNexis software division located on NC State’s Centennial Campus in Raleigh. In this capacity, he leads communications efforts in support of software products for law practice and law department management and also litigation tools – across large law, small law and corporate counsel segments. With more than 15 years of experience in the high-tech sector, Strong previously served as director of public relations for Vocus, which developed marketing, PR and media monitoring software. He has held multiple roles both in-house with corporations, ranging from startups to global organizations, and has also endured the rigors of billable hours, having completed gigs at PR firms including the top 10 global firm Hill & Knowlton. A veteran of two year-long deployments, Strong has concurrently served in uniform in reserve components of the military for more than 20 years, initially as an enlisted Marine and later as an infantry officer in the Army National Guard. Strong holds a BA in Film and TV production from Worcester State University, an M.A. in Public Communication from American University, and an M.B.A. from Marymount University. He is a PADI-certified Master Scuba Diver and holds a USPA "B" skydiving license.