On 11 March, DWF Group under the leadership of CEO Andrew Leaitherland and Chairman Sir Nigel Knowles became the first law firm to IPO on the London Stock Exchange's main market at market cap of £366 million. The 300 page prospectus1 makes useful reading about the intersection of technology with the market for legal services in the UK.
The information in the prospectus on the size and shape of the market is about as accurate as you can get at the moment: it says that the global legal services is growing at 4% per year, and was worth £653bn in 2017, with the USA (£218bn or 33% of the whole) and the UK (£33.3bn or 5%) holding the top two spots, and France and Germany next up at £20bn or 3%). From The Lawyer UK 200 20182, we know that the top 200 UK law firms generated total revenues of £25.68bn in 2017, so when DWF, as the no. 23 firm with revenues of £235 million, say they'll be investing up to £10 million from the IPO in new IT systems, you realise how powerful these technology drivers in law are becoming. As the DWF prospectus notes (at page 8):
"The legal services sector is becoming increasingly complex as traditional law firms, alternative legal service providers and technology firms increasingly compete and collaborate. Technology is increasingly viewed as a strategic enabler to proactively offer client-centric solutions. This ongoing evolution is a response to client-led demand and the increasing disaggregation of service delivery."
With all today's excitement around LawTech, it's easy to overlook the pivotal role across the top 200 UK law firms played by core IT practice (PMS), case (CMS) and document (DMS) management systems, and it is into these systems that much of the law firm investment in technology is going right now. In many ways the beating IT heart of the practice, these systems are undergoing rapid change as familiar products reach end of life, firms migrate their IT to the cloud and user requirements become more demanding
So when you're procuring or implementing a system like this what are the key things to look out for?
Providers generally divide the contract into three pieces – the software piece (covering the platform), the services piece (covering the implementation) and the more statement of work (covering the nitty gritty detail). Providers' standard form agreements tend to be long on customer duties and provider rights, and short on customer rights and provider duties. The provider will have any number of contracts in the field, so will see each as probability theory and a risk reduction tool. The customer however sees the world through the other end of the telescope: it will only have one of these systems, on which it will be dependent, and so will be looking for granular, specific, measurable commitments about what the provider will do during implementation and how the system will work after go-live.
The contracts and SOW are where these two different views of the world are mediated, risk assessed and balanced. In the tables below, we've tried to capture our '3 x top 10 points' for the software agreement, the services agreement and the SOW as key, project-specific areas where the customer can seek more meaningful contractual commitments than the provider may initially offer. (We should add that we haven't focused here on technical 'legals' like confidentiality, intellectual property, warranty, indemnity, liability and termination, although it goes without saying that these will need to be appropriately addressed).
1. The Software Agreement
No | Issue | What the Customer Needs: |
Where the software is provided on premises, 'as a licence' | ||
A.1 | definition of 'seat' |
|
A.2 | payment start date |
|
A.3 | licence scope |
|
A.4 | support and maintenance:
|
typically in the range
of 18-22% per year, the customer should seek commitments:
|
A.5 | escrow, DR/BC | consider from the
security perspective
|
Where the software is provided in cloud, 'as a service' ('SaaS') | ||
A.6 | price and payment |
|
A.7 | service levels |
|
A.8 | GDPR |
|
A.9 | return of data |
|
A.10 | cloud migration in lifecycle |
|
2. The Services Agreement
No | Issue | What the Customer Needs: |
B.11 | warrant RFP responses |
|
B.12 | governance | the agreement has
workable processes and procedures around:
|
B.13 |
acceptance |
|
B.14 | customer responsibilities |
|
B.15 | modifications |
|
B.16 | compliance with laws |
|
B.17 | conversion |
|
B.18 | completeness |
|
B.19 | compatibility |
|
B.20 | new versions | clarity around:
|
3. The Statement of Work
No | Issue | What the Customer Needs: |
C.21 | project management |
|
C.22 | security assessment |
|
C.23 | continuity |
|
C.24 | resource levels |
|
C.25 | resource swap out, etc |
|
C.26 | price/payment
|
|
C.27 | timesheets |
|
C.28 | implementation process |
|
C.29 | project plan |
|
C.30 | project documentation |
|
LawTech is developing quickly, procurement and implementations are on firms' radars, and systems on offer are becoming more complex. The DWF IPO confirms that law firms are looking to build up war chests for technology acquisition in what they regard as a key area of strategic and competitive advantage. Attentiveness to the detail of the software and services agreements and the statement of work, and reducing gaps between the provider's standard documentation and where the law firm customer can hope to get to can play a large role in successful implementation.
Footnotes
[1] DWF Group Prospectus, 11 March 2019 – https://uk.dwf.law/Other/Corporate-Information/IPO
[2] 'The Lawyer's top 200 UK law firms revealed', 15 October 2019 – https://www.thelawyer.com/top-200-uk-law-firms/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.