Cost Analysis of Cloud and Traditional Legal Practice Management Software Legal technology consumers have a lot of choices these days. But that wasn t always the case. Now, law firms can choose from an emerging group of online cloud providers for legal practice management (LPM) and time and billing applications. When evaluating new options, it s important to determine what s best for a firm s needs and to understand price and fee structures. With traditional client-server LPM systems, firms pay up-front costs and maintenance fees over the years. With the cloud model, firms pay little or no initial overhead; instead, firms are charged monthly fees. The goal of this white paper is to attempt to clarify what firms can expect to pay and what they can expect to get for their money. The bottom line: up-front costs and IT management time are considerably higher in the traditional LPM model than in the cloud. Also, ongoing maintenance fees required by older LPM vendors eliminate the spend money once advantage of installed software. About the Author Larry Port (larry@rocketmatter.com) is a Founding Partner and Chief Software Architect for Rocket Matter (www.rocketmatter.com), the leading cloud-based legal practice management and time and billing product. A speaker and writer at the crossroads of the legal profession and cutting edge technology, Larry frequently discusses efficiency and quality techniques in the software industry that can be leveraged by law practitioners. He has published extensively in legal publications, including Law Technology News, Law Practice Today, ILTA s Peer to Peer, FindLaw, Chicago Lawyer, and others. Larry also conducts free monthly webinars on emerging topics for attorneys and speaks at bar association CLEs around the country. Port is an active member in his community, speaking on technology issues. He holds an M.S. in Computer Science from New York University and a B.S. in Speech from Northwestern University. 2011 Rocket Matter, LLC www.rocketmatter.com
Traditional and Cloud LPM: An Apples-to-Oranges Comparison When comparing traditional and cloud LPM solutions remember that you re not comparing apples-to-apples. Each product offers a different feature set and comes with its own pros and cons. However, at their core, most LPM applications supply the following capabilities: Time Tracking Expense Tracking Task Tracking Calendaring Contact Management Client and Matter Management Invoicing Payment Tracking To make the comparison fair, we should factor in features and functionality cloud applications provide that would need to be replicated in a traditional LPM solution via additional technology: Since cloud LPM solutions run in a web-browser, they offer ubiquitous access from any Internet-connected computer. As long as a computer has a standards-compliant browser, a well-designed cloud solution can be used from that machine. Smartphones running full-browsers, such as Safari TM, Firefox Mobile TM, and Opera Mini TM can be used to access cloud applications. Data for a cloud LPM system resides on a database server. This server, if maintained by a responsible provider, is backed up at least daily and often continually throughout the workday. Communications with a cloud LPM are conducted over a secure channel of at least 128-bit encryption. Training and support are often built into the cloud cost structure. Servers hosting cloud applications are routinely monitored and updated with security patches. Legal cloud providers often supply data migration from market leading LPM solutions with the cost of service. 2011 Rocket Matter, LLC 2
Therefore, to get closer to an apples-to-apples price comparison, we will need to incorporate universal access, mobile access, backup solutions, training, encrypted communication, ongoing security maintenance, and data migration costs when examining traditional LPM solutions. Costs To License Traditional Practice Management Solutions To build a picture of total cost, this document will examine the costs involved for a five-person firm assembling a traditional LPM solution that approximates cloud functionality. We ll look at 3 market leading solutions: Amicus Attorney 2010 TM, Time Matters 10 TM, and PC Law 10 TM. Table 1 illustrates the license and support fees for these applications over a five-year period for a five-person firm. Table 1 Amicus Time Matters PC Law First Year Fees Initial Licenses $ 3,395.00 $ 3,005.00 $ 2,725.00 2-5 Year Fees (Per Year) Recurring Annual Support Fees $ 975.00 $ 950.00 $ 670.00 Five Year Cost $ 7,295.00 $ 6,805.00 $ 5,405.00 For a detailed description of the cost structures, refer to Appendix A. Likely Consulting Fees For Traditional LPM Solutions Once you purchase licenses, you are left with the task of installing the software. For a five-person firm, you have all of the issues involved with a multi-user environment: Machines need to communicate and data must be shared. Setups can be fairly complicated, and even the most tech-savvy attorney must weigh whether their billable time is worth spending on their LPM setup. Most often, a small law firm will not employ a dedicated Information Technology (IT) resource and will need to hire two separate consultants for their technology needs. The first is an IT consultant, who handles workstation setup, email needs, printer and scanner configuration, mobile devices, routers, and all other general computing needs. The second required consultant is a Value Added Reseller (VAR), also known as a Certified Partner or Certified Consultant of the LPM software. Once the basic computer setup is established, this more specialized expertise is needed. Some larger consulting firms will combine LPM consulting with IT support. 2011 Rocket Matter, LLC 3
Consultants, like attorneys, often bill hourly. Rates can vary broadly, depending on geographic region and skill level. However, to come up with a true cost estimate, we can use the following numbers: IT people average $75 per hour, and LPM specialists charge anywhere from $120-200 per hour. Currently practicing professionals in these fields provided these hourly rates as well as estimates of the work described below: In both cloud and traditional LPM solutions, an IT consultant will be needed for most basic computer and networking needs. However, with traditional LPM, additional setup is required for shared data. Beyond a simple network setup, a firm will need a dedicated machine, whether a simple file server or a more complex Microsoft SQL Server TM (SQL Server licensing and setup is beyond the scope of this document). A reasonable cost for a server machine is $1000. However, installation costs for these machines can vary widely. For instance, paying a network IT person to install a server, which can take 2-10 hours, can cost between $150 to $750. The IT person will need to continually apply security patches to the server. This works usually takes about three hours a year, which would cost at least $225. For the specialized LPM consultant, coming up with an estimate is more difficult because of the variety of factors involved. A good LPM consultant will make suggestions based on your current network setup and existing tools and practices, so their time estimates can vary greatly. For the sake of this analysis, let s analyze costs for an installation that goes smoothly. In this case, it will take typically 4 hours to install software on a server and approximately 30 minutes for each of the five workstations, for 6.5 hours worth of work. The total cost would be between $780 and $1300 based on the rates quoted above. Converting Data and Training After purchasing and installing the LPM software, the next steps in the technology conversion process are twofold: Ensuring adoption of the software by the office staff and importing existing data. Both are of vital importance to any successful technology rollout. The rest of the firm must embrace the new software to gain efficiencies and realize a return on investment(roi). A firm may also have years worth of data locked up in proprietary formats (either from home grown solutions or from other products) which must be brought into the new solution. LPM consultants help with both training and data conversion. Depending on the amount of information a firm maintains and their ability to import and export it, costs 2011 Rocket Matter, LLC 4
for custom migration work will vary. Data migration is a time-consuming and complex operation, and will likely range from 5 to 20 hours worth of work. Often data migration from market leading LPM solutions is often included as part of the monthly cost of legal cloud providers. Training is another service offered by LPM consultants a 4-hour course is common and costs between $480 and $800. It s also available directly from the software provider in the form of webinars. Cloud products are traditionally easier to learn and use than LPM products, and often include free training with their subscription fees. Approximating the Cloud Experience Cloud providers, by definition, provide software over the Internet, accessible by a standards compliant browser. This means that a cloud application is available via any Internet-connected computer on a variety of platforms, whether Macintosh TM, PC, or Unix-based. Also, Smartphones with standards compliant browsers such as Safari or Opera Mini can access a cloud application. Multi-platform access is not an arena in which traditional LPM solutions can compete. However, you can access your work PC remotely using products like GoToMyPC TM which operates over the web. The current pricing for 5 licenses for GoToMyPC would be an annually recurring fee of $676.20. (NOTE: Time Matters Browser EditionTM, which allows for web access, is no longer being sold. The sunset policy eliminates support for remaining installations in 2012. In any case, the initial costs of $5,000 proved daunting for most 5- person firms.) The other option for remote access to traditional LPM solutions is via Windows Remote Desktop TM (RDP). While RDP does not offer ubiquitous access, it provides access from a client machine with the proper software installed. Note that security must be a top priority for firms to protect privacy of their clients data. Encryption must be configured to match the cloud encryption levels of 128-bit SSL, so a consultant will be needed to configure RDP properly. A VPN router and its setup are also vital in this situation, costing approximately $700. The importance of data backups cannot be overstated and must be put in place for every firm. Cloud providers handle this concerns for firms, backing up data at least daily. Many offer intraday backups as well. For a locally installed tape backup solution, a firm might pay $1500.00. 2011 Rocket Matter, LLC 5
Mobile modules of traditional LPM software also exist: PC Law TE (Travel Edition) mobile integration costs $100 per user. Amicus Attorney offers Palm OS synchronization out of the box. But usage of other devices, such as Blackberry, requires Premium Edition ($999 for the first license, $599 for each additional license), an additional server license ($499), and licenses for each client devices ($149 per unit). Time Matters synchronizes with mobile devices via Outlook. A consultant will likely spend 2-3 hours on mobile configuration. Summing Up Now that we ve examined the pieces involved in an apples-to-apples comparison, we can calculate total cost of getting a firm setup with traditional and cloud LPM software. We assume that once initial setup is established, no problem or firm relocation occurs requiring the LPM or IT expert s help. These assumptions should be considered by firms in analyzing these numbers. Table 2 assumes that there is no subsequent consulting or training from an IT or LPM consultant during this period (aside from server patches) and that no upgrades are purchased. It averages the price points when research data indicates ranges. Table 2 - Total Estimates Amicus Time Matters PC Law Rocket Matter First Year Fees Initial Licenses $ 3,395.00 $ 3,005.00 $ 2,725.00 $ 3,119.40 Server Machine $ 1,000.00 $ 1,000.00 $ 1,000.00 included Server Setup $ 450.00 $ 450.00 $ 450.00 included LPM Consultant Installation $ 1,040.00 $ 1,040.00 $ 1,040.00 included Data Migration $ 1,000.00 $ 1,000.00 $ 1,000.00 included Consultant Training $ 640.00 $ 640.00 $ 640.00 included Remote Access (GoToMyPC) $ 676.20 $ 676.20 $ 676.20 included Mobile Access Licenses $ 895.00 $ 0.00 $ 500.00 included Mobile Configuration $ 480.00 $ 480.00 $ 480.00 included VPN Router and Setup $ 700.00 $ 700.00 $ 700.00 included Backup System $ 1,500.00 $ 1,500.00 $ 1,500.00 included Total Initial Setup $ 11,776.20 $ 10,491.20 $ 10,711.20 $ 3,119.40 Law firms should note that for the traditional LPM applications in our study, the average monthly cost of ownership rose 11.95% from 2009 to 2010. Time Matter s cost alone rose by 16.24%. 2011 Rocket Matter, LLC 6
Another factor to consider when purchasing traditional LPM systems: there are more moving parts which must be monitored and maintained by different vendors and consultants. Overall IT management is more complex and time consuming. In a cloud application, these pieces are collectively managed by the provider. Attempting an apples-to-apples comparison of the features and pricing of traditional LPM solutions with newer cloud solutions is a difficult endeavor. Each firm must come to its own conclusion based on business operations, structure of IT budgets, and price of consultants in its region. NOTE: All prices in this document are current as of the publication date of this article. Prices for software were obtained from the software vendors mentioned and from practicing information technology and legal practice management consultants. 2011 Rocket Matter, LLC 7
Appendix A. Explanation of traditional LPM licenses and fees To run Amicus Attorney 2010 in a multi-user, five-person environment, a firm will pay $999 for the first user and $599 for additional users. These are the fees for Premium Edition, the version of Amicus required for mobile access beyond Palm OS TM. There are annual support and maintenance fees of $395 for the 1st user, and $145 for each additional user. The total for a five-person firm for the software in a box is $3,395 for the initial licenses, plus a recurring annual fee of $975. To run Time Matters 10 in a multi-user, five-person environment, a firm will pay $905 for the first user and $525 for additional users. There are annual support and maintenance fees of $350 for the 1st user, and $150 for each additional user. The total for a five-person firm for the software in a box is $3,005 for the initial licenses, plus a recurring annual fee of $950. To run PC Law 10 in a multi-user, five-person environment, a firm will pay $905 for the first user and $455 for additional users. There are annual maintenance and support fees of $350 for the 1st user, and $80 for each additional user. The total for a five-person firm for the software in a box is $2,725 for the initial licenses, plus a recurring annual fee of $670. Training for Time Matters can be purchased from LexisNexis for $500 for a 4-class bundle per user. Amicus training can be procured directly from the manufacturer for $399 for a 5-class online training bundle. PC Law also offers a $500 per 3-class user bundle. 2011 Rocket Matter, LLC 8