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By Scott McFetters, President of CoreTech Leasing
The top 3 concerns of Chief Legal Officers, according to the Association of Corporate Counsel, relate to firms’ cybersecurity abilities and governance over their data. Technology adoption, not surprisingly, has become a central strategy firms are leveraging to meet client demands—but few of us were likely to forecast just how large the legal tech market would become in such a short period of time.
Legal tech investment reached $1 billion in 2018, as reported by AI legal tech startup, LawGeex.
But let’s admit it—technology adoption hasn’t been a bed of roses, let alone a cure-all. In this, legal is no different than any other vertical: Selecting and owning a technology are very different from its successful implementation and adoption to improve operations. That’s why we see ILTA’s 2018 Technology Survey listed cybersecurity and technology updates as the second and third most recurrent concerns for firms.
As technology continues to become an imperative function for firms, security concerns increase and data protection is essential. In the past three years, data breaches have become commonplace, and firms have had to up their games to protect client data. We have seen major global players like DLA Piper become a victim of a cyberattack that led to a complete shutdown of its digital operations. Firms are making drastic changes to ensure they are secure; this requires an operational transformation as well as a financial plan. For many firms the move to the cloud allows for increased security and reduced liability; according to the 2018 Enterprise Cloud Trends Report, organizations, including law firms are investing more in the cloud, with nearly every organization planning to increase enterprise spend in the areas of cloud and SaaS over the short and long term.
The changing landscape demands maximum flexibility and requires applying your resources in a smart and efficient manner. New tools, products and solutions are developed every day, creating a marketplace cluttered with options that cater to every business need. This is true as well for staple technology needs with which law firms need to equip their attorneys: laptops, desktops and tablets, etc. The obsolescence cycle for these key pieces of technology have shrunk well-below the rate of depreciation, while attorney demand has skyrocketed with the rise of mobile lawyering. Firms need to navigate technology, operations, security and finance astutely.
Leasing delivers that agility. Equipment leasing and financing is a strategic solution law firms can take advantage of in order to face the intricate challenges and embrace the countless opportunities and security benefits that technology offers.
Let’s delve deeper into some of these opportunities:
1. Investment in top-of-line hardware – The purchase of technology such as desktops, laptops, tablets, printers, and servers is a massive commitment. As law firms look for operational efficiency, funds locked in depreciating assets do not appear favorably on the books. With an equipment lessor, firms only have to identify their needs and find the right options.
Equipment leasing, unlike purchase is not a capital expenditure and does not affect a firm’s debt covenant. Even in the updated 2019 lease accounting tax law, leases will be categorized as non-debt, making this a rational option for law firms.
2. Flexibility – 2018 was the year of law firm mergers and acquisitions, with numbers exceeding historical averages with a total of 72 mergers; a 10% increase over 2017 as reported by The American Lawyer. In such uncertain times, instead of securing equipment for teams that may not be with the firm 6 months from the date of purchase, firms can choose to lease equipment per their evolving needs. Leasing agreements can be drawn for the short as well as the long-term and are a great way to bring agility to a law firms’ operations.
3. Security – In the era of enhanced cyber warfare, firms are expected to offer the highest level of security for all the confidential data they hold. When new upgrades are released, a firm will need to protect itself and its clients with the most up-to-date versions of security technology available, and therefore, firms may not want to purchase the technology or software outright. In this case, financing is an intelligent option, both financially and for security reasons.
So, from basic updated anti-virus software on your computers to sophisticated multi-factor login and anti-phishing enablement, the right leasing partner can fortify your firm to ensure the highest level of security. Furthermore, a good equipment lessor should be able to
Offer the highest level of security to all the hardware offered by them
Keep clients abreast of the latest updates
Ensure no data loss while replacing or changing an older piece of equipment
Properly dispose of obsolete hardware
4. Cloud Migration – Law firms have become more dynamic in the way they serve clients. It makes sense that they are increasingly leveraging the flexibility of cloud solutions for various aspects of their operations including document management (DMS), deal rooms, extranets, eDiscovery, litigation support, etc., and of course the rampant adoption of Microsoft Office 365. Moving to the cloud is a 2-3-year decision. During that time, it does not make sense to purchase your firm’s hardware. Rather your firm should consider leasing to match the IT hardware expense to the asset’s useful life.
5. Easy maintenance – Once you sign a lease for your equipment, maintenance becomes the responsibility of the lessor. So instead of paying an in-house tech support team and bearing the cost of salaries and benefits, firms can ask for round-the-clock support from the lessor.
6. Customized offering – Hardware-software combinations that best suit different roles have led organizations to reject the notion of ‘one-size-fits-all’ in their technology choices. While Original Equipment Manufacturers (OEMs) these days offer corporate deals for firms with sizeable orders, a lessor can truly understand your firm’s requirements and build a custom package that offers variety and matches each roles’ unique needs.
7. End of lease options – At the end of lease period, leasing contracts offer firms a variety of options – from disposal to refinance along with system upgrades to outright purchases at a discounted price.
8. 100% financing options – A zero down-payment structure with custom payment schedules can make a world of difference in a law firm’s accounting. Equipment lessors function on a vast pan-industry scale and can offer favorable deals to firms, that banks or corporations might not be able to.
9. Inflation protection – Equipment leases follow fixed monthly payments (in dollar amounts or in percentages) shielding law firms from currency fluctuations as well as market inflation.
In conclusion, the days when firms could succeed through traditional relationships and ever-growing demand are over. Instead, firms need to provide their lawyers with top-of-the-line equipment, along with the mobility, speed and flexibility of cloud. They need to manage their cash flow and spending carefully, as well as have the flexibility to change their strategic direction on a dime. Leasing can help them do that.
About Scott McFetters
Scott McFetters is founder and President of CoreTech Leasing, an independent technology and equipment lessor servicing over 100 of the nation’s most distinguished law firms. Scott speaks widely on best practices in technology and equipment finance; his articles have been published in Legal Management, Legal IT Professionals, Forefront and Law Journal Newsletters’ Accounting & Financial Planning for Law Firms. CoreTech proudly provides year over year sponsorships of key industry events such as ILTA, ALA Annual Conference, Thomson Reuter’s Elite, Aderant, the COO CFO Annual Forum in New York City.