Law Firm Cloud Migration: In the Next Five Years, Most Law Firms Will be Using Cloud for Critical Systems

In the next five years or so, we think the vast majority of firms will embrace the cloud, from reputable solution providers, without a second thought.
That’s a projection we’ve made in a Legal Business Report, titled The Next Five Years: Future of Legal Technology. The cloud is one of three key legal trends in the report that we forecast will have a considerable influence on the business of law in the near term.

At first glance, the data supports this viewpoint, and it doesn’t seem too audacious. Consider the following statistics:

• 78% of law firms currently store client data in the cloud; another 8% have plans to do so in the near future, according to a 2019 survey by Fish & Richardson and ILTA; the survey polled members of ILTA.
• 74% of law firms are at least “somewhat” or “slightly” cloud-based – and another 12% are “mostly” or “completely” cloud-based according to the 2019 Business of Law and Legal Technology Survey, an annual survey of allied legal professionals we facilitate;
• In 2018, law firm cloud usage grew to about 55%, according to the 2018 Legal Technology Survey Report by the ABA which polls lawyers; just 9% cited client concerns as a barrier to cloud adoption;
• The ABA survey also found that 31% of lawyers believe the cloud services can provide greater security than their respective firms; in addition, “lawyers are becoming more familiar with cloud technologies and are attracted by anytime, anywhere access, low cost of entry, predictable monthly expenses, and robust data backup”; and 69% of respondents indicated their firm would be more likely to adopt cloud solutions over the next 12 months – a six-point leap from the year prior, according to the 2018 Legal Technology Survey by ILTA.
• Lastly, in our 2019 Business of Law and Legal Technology Survey, we found that one of the top challenges facing law firms – cybersecurity – dropped 16 points, from 33% to 17% in just one year. The study suggests firms are more comfortable with the subject matter, as cybersecurity fell from second to seventh place in the 2019 rankings of top challenges facing law firms.

That all sounds quite convincing, but as it is with all things legal and technology, nuance matters. It’s one thing to say your firm will use more cloud services – everyone needs to share a file that’s too large for email sometimes – but a divergence emerges when asked about critical systems.

For example, in our survey – the 2019 Business of Law and Legal Technology Survey – we drilled down on that idea. When we asked respondents about moving critical systems to the cloud, the answers were fairly evenly split in a three-way tie among, yes, no, and probably never.

More specifically, we asked respondents if they thought their law firm practice management system, the crown jewels of a law firm, would move to the cloud, the answers were far less convincing.

Here’s how those stacked up:

• 34% said this system is already hosted in the cloud or headed that way within two years;
• 37% also said this would not happen in the foreseeable future;
• 1% said it would never happen; and
• 28% were unsure.

This, of course, seems much less certain, so will we stand by our prediction?
Indeed, we will, and we want to be clear that we don’t just mean law firms are going to be a little more cloud friendly. Instead, we believe in the next five years, most law firms will be hosting critical systems on servers that belong to, and are managed by, trusted partners.

In other words, the vast majority of firms will be predominately cloud-based.

5 Reasons Why Most Firms Will be Predominantly Cloud-based

There are just too many benefits of moving to the cloud for law firms to ignore it. Those benefits range from the conversion of hefty capital expenditures to predictable operating costs – to business continuity and disaster recovery – to the efficacy of access from anywhere and at any time.

These benefits, of course, are not new, and the question that remains is: Why will it be different this time?

1)  Most clients work for businesses that rely on the cloud.
Clients were a big part of the original barrier to law firm cloud adoption. Today most of them work for businesses that host sensitive data – customer, financial, and trade secret – in the cloud. The ABA report cited above also references credible third-party data suggesting that in 2018, a whopping 96% of businesses reported using cloud services.

Cybersecurity was among the top concerns for law firms in 2018, according to the 2019 Business of Law and Legal Technology Survey, but has since dropped drastically. Security is still an important issue, however for many firms it’s no longer a new issue and is something they’re able to tackle with the help of security expertise from  cloud providers like Amazon, Microsoft, or Google.

2) Clients want improved collaboration with their firms.
Clients have been pressuring their law firm partners for greater transparency and tighter collaboration for years – and this will only continue to increase. The level of collaboration that clients want can only be supported with cloud-based technology. This will be a dramatic turn of events, where clients once objected to law firm cloud adoption, to proactively asking for it.

3) Many law firms are already using the cloud.
Whether the lawyers realize it or not, many of their firms have already begun to use the cloud with hosted email and document management systems (DMS). These communications and collaboration tools are, in fact, critical systems – most law firms couldn’t operate without them. Some technologists suggest those two systems are a roadmap for the great law firm cloud migration. “Start with email, then the document management system (DMS) and finally practice management,” says Craig Bayer, a legal technology consultant with Optiable, LLC.

4) The cloud is catching up with on-prem features and functions.
Some law firms objected to the cloud because most on-premise software, with decades of development, had far more robust features and functions. This enabled firms to personalize, customize, and configure the software to their liking – and many cloud products couldn’t match this flexibility. Today, that’s no longer true. Many cloud products for law firms have closed, or are closing, the gap rapidly. Additionally, the cost of keeping up a server has proved cumbersome for many firms – and not just the server needs to be kept current. The operating systems, tools, and patch releases can become tedious. The attractiveness with cloud offerings is that all upkeep (server and operating system) is often included in the price.

5) Single tenancy: public versus private cloud.
Like some of the previous objections, some firms were concerned about co-locating data in a public cloud. This included the physical geographic location of the data and associated jurisdiction. However, as leading legal technology providers have poured research and development investment into cloud products, they created controls to address the fears of multi-tenancy.