Legal Technology Journal

The heads of IT of a number of major City firms are forecasting that “innovation” will be their first priority for 2009 as they attempt to extract the most value out of existing technology and put new projects on hold in light of the downturn.

The revelation comes as part of a Legal Technology Journal poll of senior figures in the industry, which also shows suppliers carefully positioning themselves for 2009 in an attempt to capture work in a shrinking market.

Top City firms including Allen & Overy (A&O), Ashurst, Berwin Leighton Paisner (BLP) and Lewis Silkin have all said that next year will see them closely examining their existing systems, either to maximise productivity or to simplify them.

Ashurst director of information technology, Chris White, told LTJ: “The real push will be on innovation, on getting more for less and saying: ‘what have we got and how can we sweat more out of it’.”

At A&O, meanwhile, the firm is looking to simplifying its existing environment and systems in a bid to reduce costs. Measures will include reducing the number of standard hardware platforms used, retiring some old applications, refining the template management solution and standardising service and solution design components.

Crucially for suppliers, not all IT heads have decided against spending money in the coming year, although all of them are negotiating hard and scrutinising the business cases for new projects very closely. A&O’s director of IT Jason Haines said: “We are really making sure that when we commit funds to new IT investments, we know how we will get a return.”

However top 100 firm Lewis Silkin, which recently invested in Microsoft’s Sharepoint, Elite 3E and global tracking system TimeKM, is not expected to invest in new projects at all.

Lewis Silkin’s IT director Jan Durant said: “I don’t think we’re going to be buying anything but will be making the most of what we’ve already got.”

Meanwhile, as law firms look to boost practices such as litigation and restructuring - traditionally busy in a downturn - suppliers are angling themselves to capture business from these growth areas.

LexisNexis managing director Josh Bottomley told LTJ that the biggest challenge faced by the company over the next year would be to understand which of its products and services best address the specific needs of customers as they respond to the new economic climate.

Bottomley said: “Some firms are responding by moving into more specialised areas that require more insightful information whereas others are emphasising standardisation as a way of reducing cost.”

At document management group Interwoven, the biggest growth opportunity identified for next year is capitalising on the shift to bankruptcy and litigation and translating that into opportunities for both its eDiscovery and eDisclosure solutions.

However the company is still targeting practices in decline, and Ashurst’s White warned that suppliers should not focus too heavily on booming departments.

“We don’t focus on areas that are doing well and forget everyone else; the areas that are not doing well may be the areas that need our attention”, he said.

As law firms seek to cut costs, a number of suppliers are predicting that they will look to different licensing models that give customers a greater degree of flexibility, such as software as a service (SaaS).

Email management company Mimecast’s chief executive officer Peter Bauer said: “Given that cost management is a major benefit of SaaS the downturn may help to accelerate the inevitable transition to services based email.” Mimecast is forecasting growth in 2009 turnover on the back of this expected surge in business.

According to LTJ’s poll, however, many suppliers remain optimistic that their staffing requirements will remain constant in 2009 and that revenue will not be dramatically affected by the downturn. Both  Aderant and Elite are confident that sales will not dip, with Elite’s chief executive Steve Buege forecasting that delivering on currently active projects and achieving even a modest level of new sales should yield another strong year in 2009.

Aderant’s general manager of Europe the Middle East and Asia, David Thorpe, said: “Assuming that there are still some firms coming to market then it’s by no means inevitable that profits will take a dive.

“In addition, during economic downturns there’s a tendency for firms to try and make better use of what they have so those firms that are not replacing systems will probably be investing in additional modules and/or services to better leverage existing investments.”

According to White, suppliers will need to be smart to get new business. “Suppliers can do more of what they should be doing – getting to know clients intimately and telling them how their products can make our lives easier rather than providing a product and disappearing”, he said.