Blog: Best practices to determine, strategize and measure your law firm’s IT budget

As a rule of thumb, we advise our clients that they should be spending 3-6% of their firm’s annual revenue on technology, including IT staff salaries, benefits and training. This metric is based on client assessments and other industry research like ILTA’s 2016 Technology Purchasing Survey which found that 65% of law firms already spend between 2 – 6% of firm revenue on technology, excluding IT staff.  Even if you include IT staff salaries or the cost of hiring an outsourced managed IT service provider (MSP), you should still be able to run your firm efficiently and securely while keeping technology spend between 3-6% of your firm’s annual revenue.   

Most legal professionals know that technology is critical to running their business, supporting clients and surpassing competition – but deciding how and where to spend can be a challenge. I help law firms strategize, develop and implement their technology budgets. Below are three primary steps involved in legal IT budgeting and some advice on how to strategize your firm’s resources based on my experience.  

  1. Determine your IT purchasing strategy

Some of the big picture considerations attorneys and IT professionals need to ask prior to purchasing include:

Will your firm own or lease computer equipment?  Will you hire an outside company to manage your IT, or will you try to manage it internally?  Will you purchase on-premise perpetually licensed software, or will you opt for a cloud-based, per-user subscription model?  Do you want your attorneys and staff to be able to work remotely as easily as they can in the office? 

Ultimately, it will be the technology you decide upon that puts your lawyers in a position to apply his or her talents as quickly as possible and allow them to focus on doing their work.  Technology is an enabler.  Better technology leads to more efficient and effective attorneys, which allows firms to take on more work and better cases, leading to increased billed revenue.

When assessing which technologies to purchase, there are many factors to consider. We recommend taking a comprehensive look at the existing operational ability, scalability and service level, current cybersecurity and data management practices, and client requirements. 

2. Establish purchasing priorities

First, law firms need to purchase and budget for technology that allows them to perform the basic functions of legal services.  This will include items like computers, telephones, and time and billing software and also requires your firm to budget for the replacement of these items periodically.  Far too often we see firms fail to account for updating aging equipment in their budgets.  This temporary cost-saving measure will lead to old, unsupported, at-risk hardware and software.

The second priority behind the basics should be cybersecurity.  Law firms are targets, plain and simple, and it is an attorney’s duty, as well as the duty of firm leadership, to protect the information that is trusted to them. Although cybersecurity should be a top priority, we often find that it’s not properly accounted for in a law firm’s budget.

After law firms have purchased technology hardware and software and are able to use the devices securely, there are quite a few niceties that law firms can leverage to make their attorneys and staff more effective at their jobs.  These extras can include document comparison software, voicemail transcription, automatic time mining software, and collaboration tools and can increase efficiency and streamline work processes, making the workday easier and clients happier.  

3. Measure your budgeting success

There are a few ways to determine whether you’ve budgeted and strategized correctly. One key metric we monitor is hours of support per device per month.  This metric gives us an important look at the overall health of a client’s technology ecosystem.  If the appropriate proactive steps are taken and we are spending less time reactively supporting a firm’s technology, that means attorneys and staff are spending more time on their work and therefore assisting (and billing) more of their clients.  When technology is aligned with business goals, your firm will become more technologically efficient and effective.

The LOGICFORCE difference

LOGICFORCE offers a one-of-a-kind service called Synthesis E-IT Secure® (SEITS®), an assessment of your current technology system — the combination of IT, eDiscovery, cyber security and data management — and helps firms plan for the future using these powerful technologies. During the assessment we focus on how to make the best use of each firm’s budget. We help law firms understand the power of technology and how it can be used as the single biggest strategic enabler of growth.  Attorney’s receive a technology blueprint that clearly articulates their firm’s business goals and provides a practical strategy to unite their technology ecosystem with their goals all while staying in budget.

Gary Dempsey is the Business Development Manager at LOGICFORCE. He works to better understand client needs and coordinates with the LOGICFORCE team to maintain high levels of satisfaction for all current and future clients.

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