The Impact of IT On Small Legal Practices in Scotland

Peter Duncan

Department of Business Administration
Glasgow Caledonian University
pbdu@gcal.ac.uk

Contents

Abstract

1. Introduction

1.1 Overview

1.2 Contribution of the work

2. The Professional Firm and IT

2.1 The nature of the small professional firm

2.2 The role of IT

2.3 Introduction of IT into smaller firms

3 Innovation and the adoption of IT

3.1 Innovation-diffusion models

3.2 Limitations of innovation models

4. Methodology

4.1 Key research questions

4.2 The unit of analysis

4.3 Research model

4.4 Research design

4.5 Selection of sites

4.6 Data collection

5. Endpiece

6. References

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Abstract

Information technology (IT) is a powerful tool which can manipulate information and knowledge, the stocks-in-trade of the legal profession. This article presents an overview of the author's doctoral research regarding the impact of information technology on small legal practices in Scotland. Key concerns of the research are the usage of IT in small practices; the nature of any benefits gained; and the process by which firms may choose to adopt or reject IT. Using a case study design the work will extend previous research in the areas of information systems, innovation-diffusion, and small firms.

Keywords:

Computer-based information systems; information technology; innovation; innovation-diffusion; small legal firms; case study

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This is a Work in Progress article.

Date of Publication: 28 February 1997

Citation: Duncan P, 'The Impact of IT on Small Legal Practices in Scotland', Work in Progress, 1997 (1) The Journal of Information, Law and Technology (JILT). <http://elj.warwick.ac.uk/jilt/wip/97_1dunc/>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/jilt/1997_1/duncan/>

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1.Introduction

1.1 Overview

This article presents an overview of doctoral research currently being carried out by the author. The host department is the Department of Business Administration, Glasgow Caledonian University.

We live and work in a new era where the acquisition and use of knowledge have become the prime means of wealth creation (Drucker, 1969; Handy, 1989; Scarborough, 1996). A key to the acquisition and application of knowledge are systems for the conversion, storage, processing and transmission of information (Davis and Olson, 1984; Yates and Benjamin, 1991). Such information systems (IS) always existed in organisations (Galliers and Baker, 1994; Land, 1992; Ward, 1995). However in recent years IS have been transformed by the integrated circuit and allied technologies, collectively known as Information Technology (IT) (Scott Morton, 1995). Opportunities to benefit from this new technology are available to firms of all sizes (Delone, 1988; Venkatraman, 1994).

The increasing importance of relationships between information, knowledge and IT have encouraged an interest in how professional service firms operate (Pinnington and Morris, 1996) yet they are relatively under-researched (Greenwood et al, 1990). Professional service firms such as accountants, management consultants and law firms are information-intensive with a high information content of both the product/service itself and the value chain of the industry (after Porter and Millar, 1985). They are also knowledge-intensive, the work requiring application of considerable knowledge and expertise (Starbuck, 1992; Quinn et al, 1996). Some authors argue the characteristics of professional work, such as individual autonomy and working in project teams, make professional firms a role model for all organisations (Handy, 1989, 1995; Peters, 1993).

Combining the twin themes of the opportunity provided by IT to both large and small firms and the growing interest in the professional firm, this research focuses on:

The impact of information technology of small legal practices in Scotland.

A number of research questions arise:

• What IT, if any, do small legal practices use?
• What benefits do they achieve from the use of IT?
• Do small firms use IT to enhance their knowledge/intellectual bases?
• Do small legal practices who make greater use of IT (particularly uses which directly relate augment their legal knowledge) outperform other small firms?
• What are the organisational characteristics exhibited by successful users of IS?
• What factors promote or inhibit the use of IT amongst small firms?
• From the viewpoint of the small firm, will new technology transform the practice of law?

1.2 Contribution of the work

The work will make the following contributions:

Firstly, the research will to extend previous work on computer-based information systems (CBIS), innovation-diffusion and small firms into a different business sector and geographical location. Previous work regarding small firms and CBIS (for example Delone, 1988; Montazemi, 1988; Raymond, 1985; Yap et al, 1992) is largely North American and focused predominantly on the manufacturing sector. Apart from MacMorrow and Doswell (1985) comparatively little prior work has been published regarding the IS experiences of legal practices in Scotland. Regarding innovation, King and Anderson (1995, p119) note

'More research is needed in differing organizational settings to test the applicability of existing innovation process models, and if necessary to derive new ones grounded in observation of real-world innovations.'

Secondly, there is a current interest in information- and knowledge-rich professional firms as potential role models for all firms (Handy, 1989, 1995; Peters, 1993; Pinnington and Morris, 1996). Small legal practices could be a particularly appropriate setting for the study of such phenomena. Weick (1974, p487) argues that in small organisations 'relevant phenomena are more visible and available for hypothesis generation than in [large] complex organisations.'

Thirdly, IT can manipulate information and knowledge, the stocks-in-trade of the legal profession, and is available to firms of all sizes. If these views are valid, as the following literature review suggests, then it would be reasonable to expect increasing numbers of small legal firms to be making considerable use of IT. However pilot work by the author found small legal firms do not tend to venture beyond a core group of IT applications used primarily for administrative (back-office) rather than operational (front office) purposes (using Widdison's (1993) terms). The work will examine factors which may promote or hinder the uptake of IT among small law firms in Scotland.

A fourth contribution of the research will be to examine reasons for firms adopting and rejecting aspects of IT. Comparing the adoption and rejection of innovations would generate valuable insights not possible with the adoption-only perspective typically used by researchers.

Wider issues addressed by the research will include organisational culture and resistance to change, the de-skilling of professional work, and the role of IT in altering industry structures and competition.

2. The Professional Firm and IT

2.1 The nature of the small professional firm

Using Mintzberg's terms (1989), the organisational structure found in professional firms features a highly trained and skilled operating core, which operates as individuals under the supervision of professional regulatory bodies (Mintzberg, 1989; Starbuck, 1992). Middle-hierarchy and technostructure are minimal, but a large support staff exists to support the professionals' work. Individuals are granted considerable autonomy and are organised into project orientated work groups (Handy, 1995). There is a reliance on face-to-face interaction with the client; and customisation of the service provided (Maister, 1993).

Strategy-making is highly informal, with a tension between the self-interest of the individual, and the common good of the firm (Mintzberg, 1989). Reputation and the ability to build and sustain relationships with clients are distinctive capabilities (Kay, 1993) by which small legal firms differentiate themselves from competitors (Love et al, 1995).

Small legal firms share characteristics with small firms in other business sectors as they are also resource poor, with limited financial reserves and human expertise (Welsh and White, 1981). Access to key external data is often limited (Martin, 1989). Small firms frequently provide a 'niche' product or service, distinguishing it from the standardised products offered by larger firms. The client base may be limited. If able to cope with these constraints, small firms may be more innovative than larger firms (Storey, 1994).

The nature of professional partnership means the importance of the CEO may not be quite as marked as in other small firms, as power rests with a partnership group rather than the stereo-typical omnipotent owner-manager. There may however be a Senior Partner who is 'first amongst equals'. However the quality of top management is still crucial to the firm's chances of success (Martin, 1989; Merz and Sauber, 1995) and the partners' personalities can have a significant impact on the strategy and decision-making style pursued (Miller and Toulouse, 1986).

Legal firms are under increasing pressure from the growing burden of professional and statutory regulation, changing fee structures, increased scrutiny over ethics, and increasing competition for services (Fitzgerald, 1994; Gibson, 1995; Mill et al, 1992). To meet these challenges firms are turning to strategic thinking (Bevan, 1991) and a view of the firm as a business rather that a practice (Cooper et al, 1996; Francis, 1993; Mill et al, 1992). There is growing awareness that success is often related to how firms are organised, and that efficiency goes to the heart of servicing client needs (Fisher, 1994)

2.2 The role of IT

Every activity of an organisation creates and uses information (Porter, 1985), so benefits from applying IT may be found in many different areas and have an organisation-wide impact (Earl, 1989; Flynn and Goleniewska, 1993). In the particular context of legal firms, information systems can be used in two ways. Using Widdison's terminology (1993) administrative uses involve the application of IS to tasks essentially concerned with the internal management of the firm (for example time recording, client billing and word processing) whereas operational uses such as an expert system directly satisfy client requirements (see Figure 2.1). A more colloquial description of the two terms could be 'back-office' and 'front-office'.

Figure 2.1 The role of IT in a legal practice

In his recent book Richard Susskind (1996) outlines a Legal Information Continuum (Figure 2.2). On the one hand, enabling techniques provide IT-based legal expertise ranging from text retrieval systems (refinements of a standard word processing search and replace function) through to knowledge-based systems allowing the acknowledged expert(s) on a topic to be 'sitting on the desk of every lawyer in the land' (Susskind, 1996, p200). On the other hand, sources of legal guidance range from the primary sources of statute and case law, to human legal specialists.

Figure 2.2 The legal information continuum

ENABLING TECHNIQUES
Basic text retrieval systems	Enhanced text retrieval systems	Hypertext systems	Intelligent checklists	Diagnostic expert systems
Printed legislation and case law	Printed books and commentaries	Information services	Human general legal practitioners	Human legal specialists
SOURCES OF LEGAL GUIDANCE

Source: Susskind, 1996, p86

Firms can mix and match the enabling techniques with the sources of legal guidance. Providing for example a skill-led mixture of human legal specialists with the minimum of technology; or perhaps an IT-led combination of relatively unskilled staff with a state-of-the-art expert system; and a myriad of other possibilities.

2.3 Introduction of IT into smaller firms

Falling costs and user-friendly software allow IS/IT to be introduced by firms of all sizes and business sectors (Delone, 1988; Venkatraman, 1994) including the legal profession (Chalton, 1989; Johnston, 1994). Personal computer networks have become reliable, cheap and are easily installed by local suppliers (Susskind, 1996). Graphical User Interfaces (GUIs), comprehensive reference manuals, and on-line self-teaching tutorials flatten the learning curve required for new software (Naylor and Williams, 1994).

Susskind (1996) argues that small legal firms have an advantage over larger firms when introducing IT. Introducing new systems into large practices requires an expensive, complex and time consuming process. On the other hand although the various selection and implementation activities should still be considered (see for example Archbold, 1996), small firms with comparatively little previous IT installed can quickly introduce systems powerful enough for their needs. This Susskind argues will enable all sizes of firm to compete for business. For example groups of small firms with differing specialities may form a 'virtual legal practice' using the internet/World-Wide-Web.

Studies of the introduction of computer-based information systems (CBIS) by small firms (predominantly from the manufacturing sector) have identified factors which are positively associated with the success of such projects: user participation in the development process (Montazemi, 1988; Yap et al, 1992), the number of administrative applications in the firm (Raymond, 1985), and presence of a systems analyst (Montazemi, 1988). The influence of the personality, commitment and participation of top management is crucial (Delone, 1988; Thong and Yap, 1995; Yap et al, 1992). The duration of previous experience with CBIS was not a key factor (Delone, 1988; Montazemi, 1988; Raymond, 1985), though Yap et al (1992) did find a positive relationship. This perhaps lends support to Susskind's argument that small firms with less historic use of IT may be well-placed to benefit from future developments.

The systematic approach required for IS development (for example Archbold, 1996; Flynn and Goleniewska, 1993) may clash with the typically informal management style of small businesses (Raymond, 1989). Despite falling prices IT still requires considerable investment in both time and money (Cragg and King, 1993). The absence of internal specialists and pressure on management time results in firms placing considerable reliance on the knowledge and expertise of IT suppliers and IT consultants (Chau, 1994; Rackley et al, 1996; Raymond, 1989; Yap et al, 1992).

Naylor and Williams (1994) observe that user satisfaction with IS is linked to prior expectations as well as actual benefits achieved. More advanced hardware/software and an integrated system may benefit business performance (Raymond et al, 1995). However it is difficult to isolate the effect of IT from other factors which influence performance (Naylor and Williams, 1994).

3. Innovation and the adoption of IT

3.1 Innovation-diffusion models

The introduction of new information technology (IT) into an organisation can be considered to be an innovation (Cooper and Zmud, 1990; Heikkilä, 1995; Kaplan, 1991; Thong and Yap, 1995). The innovation literature has been used to consider the adoption of information systems by a particular organisation (eg Heikkilä, 1995), and the diffusion of an innovation across the organisations in a particular sector (eg Robertson et al, 1996). It has also been used to integrate different strands of the IS implementation literature (Cooper and Zmud, 1990).

The work of Everett Rogers (1976; 1995) is regarded as seminal in the innovation-diffusion literature (Clark and Staunton, 1989; Heilkkkä, 1995; Kaplan, 1991; Van de Ven, 1993). Based on his own research and a synthesis of innovation studies Rogers' work forms a 'common diffusion paradigm' (Frambach, 1993, p23).

According to Rogers (1995, p11) an innovation is 'an idea, practice, or object that is perceived as new by an individual or other unit of adoption'. Newness is a key characteristic on two counts. Firstly, it is the key difference between an innovation and other forms of organisational change as although something new will some require change to accommodate it, not all changes require something new (Rogers and Agarwala-Rogers, 1976, p153). Secondly, the innovation need only be perceived as new for the unit of adoption, it may already be in use elsewhere (Slappendel, 1996; Swan and Newell, 1995).

The diffusion of an innovation concerns:
'the process by which an innovation is communicated through certain channels over time among the members of a social system' (Rogers, 1995, p10).

There are four key elements: the innovation itself; the communication channels by which knowledge of the innovation is transmitted; a temporal dimension tracking the adoption of the innovation over time; and the social system in which the individual adopters exist.

In general, innovations are more readily adopted when they provide a relative advantage compared to old ideas; they are compatible with the existing value system of the adopter; the innovation is readily understood by the adopters (less complexity); the innovation may be experienced on a limited basis (more trialability); and the results of the innovation are more easily noticed by other potential adopters (observability) (Rogers, 1995).

Communications channels transmit information regarding a potential innovation to potential adopters. A social system defines the boundary within which diffusion is studied and may be a village, the consumers in a country, or a professional group. The system's structure and norms can influence the rate of diffusion. Opinion leaders who have recognised competence and conform to group norms may be particularly influential (Rogers, 1995). This leadership is distinct from any formal authority the person or firm may have within the system.

Communication of ideas is most likely to take place within the system, however new ideas regarding potential innovations from outside the system may be crucial in affecting the behaviour of potential adopters (Rogers, 1995; Robertson et al, 1996). These non-standard links to knowledge and information beyond group norms are known as 'weak ties', and the strength of weak ties is seen as an important factor in the diffusion of innovations (Robertson et al, 1996).

The innovation process in an organisation can be divided into two main parts - initiation and implementation. The split between the two parts being the point at which the organisation decides whether or not to adopt. These two main elements are sub-divided into five further stages, see Figure 3.1.

Figure 3.1 The innovation process in an organisation

Source: Rogers, 1995, p392

In the Initiation phase, problems and opportunities come to the attention of management (agenda setting) against which potential innovations are matched. This phase includes information gathering and planning, resulting in a decision whether or not to adopt the innovation. If the innovation is adopted then a second Implementation phase will follow. During redefining/restructuring there is a small window of opportunity when the innovation may be re-invented (Van de Ven, 1993) to achieve a closer fit with the needs and expectations of the organisation. After this period the innovation rapidly becomes part of the routine of the organisation, eventually losing its novelty and innovative character.

Other models describe the innovation process in a similar way. For example Kwon and Zmud's IS implementation model (1987) moves from initiation providing scanning of organisational problems and opportunities where IT could provide a possible solution, through to incorporation of the innovation. Cooper and Zmud (1990) outline five contextual factors which influence the innovation decision:

• characteristics of the user community - the culture of the social system in which the innovation takes place;
• characteristics of the organisation (eg size, centralisation);
• characteristics of the technology being implemented;
• characteristics of the task to which the technology is to be applied;
• characteristics of the environment - particularly key groups such as customers, suppliers, competitors and government bodies;

and also the interaction between the elements.

Innovations may not occur in isolation but be 'bundled' together with related innovations (Van de Ven, 1993). The adoption or rejection of contingent innovations (Rogers, 1995) can only be made following a prior decision. For example introducing e-mail also requires contingent decisions regarding hardware, software, and communications technology.

3.2 Limitations of innovation models

The innovation literature frequently exhibits a 'pro-innovation' bias (Clark and Staunton, 1989; Kaplan, 1991; Rogers, 1995; Van de Ven, 1993) leading to a focus on those who adopt a particular innovation, ignoring those who do not. Adoption is implicitly assumed to be the best course of action.

It is argued that the innovation process is much more complex than the models suggest, and in reality innovation rarely follows a linear pattern (King and Anderson, 1995; Van de Ven, 1993). Research has frequently focused on the process leading up to the adoption decision, the point at which the innovation crosses the organisational boundary, rather than what happens once the innovation is inside the organisation (Clark and Staunton, 1989; Cooper and Zmud, 1990; King and Anderson, 1995).

Frambach (1993) argues innovation-diffusion literature has focused on the adopter selecting the innovation and has, in general, ignored the influence of the supplier in the innovation-adoption process. The attitudes of the supplier in consulting potential buyers in the development of new products and how it segments markets and products will influence the decisions of potential adopter firms (Frambach, 1993). The lack of effective communication between IT users and suppliers may be a major reason UK small business do not make more extensive use of IT (Fuller, 1996). Similarly the services and marketing of IT consultants who provide expert advice to small businesses could have an important influence on the IT adoption-rejection decision.

4. Methodology

4.1 Key research questions

The literature review and some pilot work carried out by the author suggest that although the use of IT for administrative purposes (using Widdison's (1993) terms) is increasing, small legal practices in Scotland are not using IT to its full potential. In particular, the use of IT does not seem to have penetrated the operational part of the firm's work. The research will consider two key questions:

• Why do small legal practices decide to adopt or reject aspects of information technology?
• How is information technology used by small legal practices, and with what results?

4.2 The unit of analysis

One key methodological decision concerns identifying the unit of analysis (Zikmund, 1991). For this research, the unit of analysis is the small legal firm in Scotland.

There is no definition of 'small firm' which is appropriate in every case, and different definitions may be required according to the sector being studied (D'Amboise and Muldowney, 1988; Storey, 1994). Mayer-Schoenberger (1995) outlines three organisational modes for legal practice: the mega-firm providing trans-national legal services, the legal equivalent of accountancy's 'Big Six'; the small firm with 2-10 practitioners; and the sole practitioner. Using these distinctions as a rule of thumb, 94 per cent of the 1167 law firms in Scotland could be classed as small (Table 4.1). With less than 100 employees, the vast majority of Scotland's legal practices would also be considered small according to European Union definitions of firm-size.

Table 4.1 Number of Partners in Scottish Law Firms

	Number of Firms
Sole Practitioner	461 ( 39%)
2-5 partners	485 ( 42%)
6-10 partners	154 ( 13%)
Over 10 partners	67 ( 6%)
Total	1167 (100%)

Source: Law Society of Scotland, 1995

For this study, small legal firms are defined as having nine partners or less.

4.3 Research model

From the review of literature in Section 3 a model is proposed of the external influences on a firm's decision to adopt or reject a particular aspect of IT, see Figure 4.1.

Figure 4.1 External influences on decision to adopt or reject IT

Regarding the firm itself, Roger's innovation-diffusion model (Figure 3.1) will be used to analyse the decision to adopt or reject possible information technology. Firm specific factors will also be considered such as the size of the firm; decision-making within the firm; strategy; prior experience with IT; and attitude of the senior partner towards IT.

4.4 Research design

Several research designs were possible. Galliers (1992) suggests a taxonomy of IS research designs where selection of a particular approach will depend on the focus and context of the research to be conducted. Similarly there are various methods of data collection which may be applied to more than one research design.

Each research design and data collection method has its own strengths and weaknesses. Multiple methods can be used, enabling the strengths of one design or method to counteract the weaknesses of another (Bryman, 1989; Easterby-Smith et al, 1991). This process, called triangulation, is akin to a mountaineer taking several compass bearings to obtain a 'fix' on a particular mountain.

As there may be several possible areas to look for explanation of the research questions (see figure 4.1), the case study may be a particularly suitable research design as it can 'balance adaptiveness with rigor' (Yin, 1994, p87). Data collection and analysis can proceed in tandem (Eisenhardt, 1989; Yin, 1994), and the research focuses on How? and Why? questions which Yin (1994) argues are suitable for case study work.

Using case studies, the selection of cases (or sites) is based on theoretical rather than statistical sampling. Cases representing polar extremes of the phenomenon being considered are particularly suitable (Eisenhardt, 1989). This fits well with the consideration the research's aim of studying both the adoption and rejection of IT. The case study has been used for research in both information systems (Walsham, 1993) and small business (Romano, 1989) research.

Single- versus multiple-case studies has been a source of debate (Dwyer and Gibb, 1991; Eisenhardt, 1989, 1991). However as the present work will compare firms who may be more or less favourably predisposed towards IT, more than one site must be selected.

For the above reasons, the research will use a multiple-case method (after Yin, 1994).

4.5 Selection of sites

The number of firms chosen is eight. This sits between the four and ten site limits set by Eisenhardt (1989). Selection of the eight firms will where possible compare firms of similar size and primary service provided (eg domestic conveyancing). Firms will be 'paired' to allow comparison between:

• Geographical location - one proposed advantage of IT is benefits are equally available to firms remote from traditional economic centres. Firms outwith the Scotland's central conurbation (the Glasgow-Edinburgh corridor) will form part of the study.
• IT usage - more innovative users of IT will be compared with more typical users.

In this case the term 'innovative' is not being to describe new uses for IT which a firm may adopt or reject (eg a new word processing package). But rather as a proxy for describing the firm's whole IS/IT system. An 'innovative' user would perhaps be fully networked, with PCs on every partner's desk, and CD-ROM retrieval of case law and communication via e-mail are the norm. In contrast more 'typical' users (the majority) may have little use for IT beyond perhaps cash accounting and word processing.

4.6 Data collection

The primary method of data collection will be structured interviews. The advantage of this method is that typically the interviewer can gain more data than is possible than by questionnaire (Bryman, 1989). Data collection within the firm would typically consist of:

1. An initial semi-structured interview with the person responsible for IS/IT, usually a partner or office manager. The focus is on strategy and competitive environment of the firm; the historic development of IS/IT, including decision-making; and future plans for IT within the firm. This person will usually be the gate-keeper, providing the researcher access to the firm It is important to foster a relationship which will make the interviewee positive about allowing further work to be carried out, for example by giving reassurances regarding confidentiality. They may be able to suggest particular individuals to interview.
2. A short questionnaire to all users of IT concerning the technology used; training; perceived benefits or drawbacks. Respondents will be invited to participate in a follow-up interview.
3. Further interviews with other partners, fee-earners and support staff. The precise number and roles of interviewees will depend on the size of the firm; the willingness to participate; and any special insight which may be gained. For example a staff member using voice recognition software, or a partner sceptical of the benefits of IT would be prime candidates.

Interviews will also be conducted with the other stakeholders in the model outlined in Figure 4.1 such as IT vendors selling to legal practices and representatives of professional bodies.

5. Endpiece

Some early results of the research will be presented at the BILETA97 Conference, The Future of Legal Education and Practice, Durham 24-25 March 1997.

Please contact the author if you have any comments regarding the research, and especially if you or your firm would be willing to participate.

The author gratefully acknowledges the advice and encouragement of his research supervisors:
Professor Andrew Doswell, Mr Stephen Barr (both of Department of Business Administration, Glasgow Caledonian University) and Professor Joe Hogan (Business School, University of Central England).

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