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Will Big Law Increase Cloud-Adoption in 2016?

In 2016, as law firms look to store not only traditional documents and emails, but also voicemails, instant messages and various other formats, the cloud is an increasingly cheap, and secure option. Yet many law firms have lagged in adopting cloud solutions.

At Ogletree, Deakins, Nash, Smoak & Stewart, P.C., many clients specifically ask that their data not be put in the cloud so it ends up on the firm’s servers, according to Gary Berger, the firm’s director of technology. That’s despite the fact that some of those clients use cloud-based services in their own business.

The perception remains that data is more secure on a law firm’s servers than in the cloud, Berger said.

“There’s a general impression that we will be more respectful of our clients’ data, more accountable and just [offer] better stewardship,” he said. “We have an ethical responsibility.”

As more people use the cloud, perceptions could start to change, Berger said. The tipping point will be when discussion shifts from security to cost. “Over time, margins will start looking more favorable to the cloud,” he said. “When the costs [of storing data in house] start impacting cost to clients, that’s when you’re going to start seeing things change,” he said.

Those changes are already beginning.

In a survey of 420 law firms conducted in June 2015 by 2015 International Legal Technology Association, 51 percent of law firms planned to increase their adoption of cloud-based solutions in the upcoming year. That’s just slightly above the 48 percent that do not expect cloud usage to change.

Only one percent of law firms plan to decrease their use of cloud-based solutions, the survey found, among other interesting conclusions:

  • The biggest law firms expressed the most enthusiasm about moving to the cloud: 72 percent of firms with 700 or more attorneys plan to increase their cloud use in the coming year.
  • Forty one percent of firms with under 50 attorneys said they planned to move more to the cloud.
  • Security, cost and reliability were the top three concerns among law firms when it came to shifting to cloud-based solutions.

Dan Carmel, chief marketing officer for iManage, a Chicago-company cloud solutions company with 1,800 law firm clients, said that functions such as time-keeping and billing or customer relationship-management are moving to the cloud most rapidly.

“But when you get to the actual client work-product, there’s a whole different level of scrutiny that comes into play,” he said.

The vast majority — more than 70 percent according to Carmel — of the data that law firms store with iManage is not in a traditional file format, such as a word document, but an email, photo, voicemail or some other format.

An informal poll that iManage took of 35 Chief Information Officers of law firms earlier this year found not a single one expected their firm to move 100 percent of their client information to the cloud.

“They all said no,” Carmel said. “There’s always going to be information that’s too sensitive, or for that matter a client that says, ‘no way.’”

Marshall Dennehey Warner Coleman & Goggin, a law firm of more than 500 attorneys and 1,150 employees with offices stretching from Florida to New York, doesn’t keep any of its work or client data in the cloud.

“We’ve been intentionally conservative,” Roger L. Bonine, the firm’s director of information technology, told Big Law Business.

The firm uses cloud-based applications only for a few functions like payroll, project management, and scheduling of conference rooms, he said. The rest is kept in-house on the firm’s own servers.

Data protection comes up regularly in security audits from clients, he said. The firm does a lot of work for insurance companies, much of which involves medical records. “We are bound to protect the confidentiality of our clients’ data,” Bonine said. “We have to be respectful of their regulatory requirements as well.”

Looking ahead, however, Bonine said he knows his firm will have to move to the cloud eventually.

“At some point, we’re going to be forced to make that decision,” he said. “Some of our key vendors are going to make it very hard for us not to go to the cloud.”

Bonine said he is “watching” the developments of cloud-based offerings and is encouraged by some of them. For example, Microsoft Azure, an enterprise-grade cloud computing platform, would allow the firm to use its own encryption keys.

Dave Robinson, a senior directory with Mozy, a Seattle-based cloud backup service that is part of EMC Corporation, said: “The number one question we get is about encryption.”

Carmel pointed out that the questions from law firms have become more sophisticated in recent years in one sign that attitudes and understanding of the cloud is maturing. Now clients ask what kind of information is being stored? How is it managed? How is it secured or encrypted? How fast can it be retrieved? And what happens to it during a system upgrade or when the electricity goes down?

“The cloud is happening,” he said “We’re done talking about cloud, no cloud.”

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