At the annual International Legal Technology Association (ILTA) conference (ILTACON), underway this week, no discussion of information and insight about the strategy and operations of modern legal organizations would be complete without a discussion of money and how it’s being spent.

In cooperation with ILTA, InsideLegal produces an annual survey of legal technology purchasing practices. The 2016 ILTA/InsideLegal Technology Purchasing Survey is a good snapshot of the state of the legal industry, from the perspective of the people who keep the lights on and the servers running at member law firms.

A few quick highlights from this year’s edition:

Budgets are Up

More than half of all firms (53%) report larger tech budgets in 2016 than in 2015, as compared to just 9% who report smaller budgets. When asked what accounts for the change, those that increased their budgets mentioned a new focus on cybersecurity, information governance, business continuity or disaster recovery concerns and security compliance requirements as well as lots of cyclical hardware refresh scenarios. This is an interesting finding; for all the talk of technology transforming the practice of law that you hear in the educational sessions and the corridors around ILTACON, legal tech spend is actually driven by more mundane (albeit critical) concerns such as security and routine technology updates.

Technology spending levels are fairly concentrated, with 60% of responding firms saying they spend between 1% and 3.99% of revenues on tech.

Top Concerns

Consistent with the spending patterns noted above, security was once again very high on the list of legal IT professionals’ concerns. “Security management” topped the list, with more than 67% citing it as a top concern. Other areas hovering around the 40% mark are email management, information governance, risk management and compliance, and low adoption rates and lack of training in the user base.

Here again, the results show a concern with items that any IT department should normally worry about: keeping operations running smoothly and avoiding risks and security breaches. It’s partly a function of the way the question was asked and the list of possible answers, but there’s little evidence here of the concern for the business of the law firm itself. Should we read that to mean that legal tech leaders are less concerned about the way technology is or is not being used in the core business of the firm: the delivery of legal services? The talk on the floor at ILTACON suggests this is top of mind for many legal tech practitioners, but the survey is more focused on tech as organizational infrastructure than tech as practice tool.

A Revealing Look at AI

The survey does cover one area that gets closer to the use of technology in the actual delivery of legal services: attitudes about artificial intelligence (AI). In an open-ended question about the most exciting new technologies, various flavors of artificial intelligence were the most-cited response: “Artificial Intelligence (AI): Machine learning; augmented realities; robot lawyers; self-driving vehicles; automated attorney workflows; voice automation; processing and recognition; IBM Watson; ROSS.”

When it comes to putting their money where their mouths are, however, firms are not yet fully embracing AI. A full 87% of respondents say their firms are currently not evaluating or utilizing artificial intelligence technologies, systems, or related strategies. And 50% of the firms that are evaluating or using these technologies are large firms.

eDiscovery remains the area of legal practice where AI is expected to have the most impact — 71% of respondents think it will have an impact there. Other perceived areas for AI application are document automation, legal research and contract analysis and automation.

eDiscovery Continues to Anchor a Lot of Legal Tech

In addition to being a center for AI-based activity, eDiscovery in general is still going strong. In 2015, just 6% of respondents planned eDiscovery spending; in 2016, the actual number of firms making eDiscovery software purchases came in at 19% of firms surveyed.

The Legal Tech Professional Gap

The survey results seemed to show an emphasis on technologies that simply keep a law firm running smoothly, and they don’t say much about technologies that will change the way legal professionals actually do their work and deliver it to clients. That is actually a symptom of a major rift in the industry today. Lawyers don’t spend enough time thinking about how they do their work and how it could be done differently and better in service to clients with the help of technology. And technologists seem to be spending most of their energies and money on the infrastructure and not enough around helping the lawyers make those changes.

At an event like ILTACON, you see a lot of that cross-pollination between the disciplines of law and technology, because this is a self-selected group that shares an interest in cutting-edge ideas. But this survey raises the question: In the day-to-day running of a law firm, is there enough multidisciplinary engagement between the various professions who are running today’s law firms? Is there a focus on delivering the service in new ways to better serve clients, or is the focus instead on the smooth running of existing practices and business models?

This post was written by David Curle, with Thomson Reuters and was originally published on the Legal Executive Institute blog.

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