Cloud Computing Impact: The Dark Side of Cloud Computing

(Note: this article was originally published in 2013)

As law firms continue to grapple with the challenges of managing large volumes of data and sensitive client information, the question of whether cloud computing is a suitable solution for bookkeeping and matter management has become increasingly relevant.

While I was at a practice management software conference in San Antonio, Texas, last month, the term “in the cloud” was noticeably interspersed throughout several key panels. Cloud computing is on a growth spurt, they said, companies large and small are adopting this new way of doing business. According to one presenter, Larry Foote, a Microsoft Territory Manager, even large corporations such as Home Depot and McDonald’s have integrated Microsoft’s cloud-based solutions in to their businesses – its use in the corporate environment is on a steady rise. Industry experts believe this trend will continue to grow over the next few years as averseness to working in the cloud continues to decline and the technology in this area continues to advance, industry experts believe that the trajectory of cloud computing impact will continue to grow. But when it comes to the business of law firms’ bookkeeping and matter management, does the same trajectory apply?

What is Cloud Computing?

Most people don’t realize, but whether or not you understand the term “in the cloud”, chances are you've already experienced it some way. For instance, if you’ve used the well-known email platforms Gmail or Hotmail, then you've experienced a form of cloud computing. Simply put, “in the cloud” means the software and data you are operating is not on your computer – it's on a network of servers located in another location where they are monitored and maintained. As a user, you merely access the software and the data via the Internet.

Firm Management in the Cloud

Cloud computing for legal practice management was popularized with the introduction of the Clio and Rocket Matter brands five years ago. In February 2008, Rocket Matter went beta and less than two weeks later, Clio followed with its own beta launch. Though Rocket Matter was first with a beta release, Clio led with its full version on October 1, 2008. Rocket Matter followed suit nearly one year later on January 6, 2009 with Rocket Matter 1.0. These two Software as a Service (SaaS) products continue to hold the lion’s share in this niche area; however, there are several other competitors who are also in the marketplace.

Once such entrant, Firm Manager from LexisNexis (the developers of PCLaw), is currently in beta but seeks to present a more promising option to the legal community when it’s fully launched in January 2014. Because of the LexisNexis industry recognition and with several key differential advantages that Firm Manager promises, they stand a good chance at becoming a formidable competitor to both Rocket Matter and Clio. But even with these current and future platforms in place, many lawyers are still concerned with managing their practice offsite, online, in the cloud.

The Dark Side of the Cloud

Since working in the cloud is dependent on the Internet, a reliable online connection is always required. But even the best Internet service provider can go down at the most inopportune time – and when it goes down, you go down; out of the cloud. Likewise, cloud service providers can also have unforeseen failure. Either of these scenarios could prove to be very problematical if working on an important file at the time.

As lawyers, there is also the professional and ethical responsibility of safeguarding clients’ confidential data to be considered. Managing your data in the cloud means you will be surrendering protection to a third-party with online portals for safekeeping. In an era of hacking, identity theft, malwares, spywares and the like, it’s no wonder why concern exists; nothing on the Internet is entirely secure, so your company can be exposed to online threats.

The Silver Lining

But not all things are bad in the cloud. Two of the most evident pros of utilizing practice management software in the cloud are what I call “geo-convenience” and the “big network benefit”.

Geo-convenience is the sexy part of maintaining your books in the cloud. The luxury of having access to all your files from any geographic location at any given time – to not be tied down to a desk or to your computer, is an unparalleled freedom for most lawyers. This benefit is generally the initial draw when contemplating going to the cloud.

The big network benefit refers to your files being hosted on mega-computers that are monitored by tech geniuses 24/7. This benefit commonly comes with an abundance of storage and infinite potential for growth. Also, the big network advantage includes the ability to back-up and restore much easier than doing so on a traditional drive. Cloud service technicians keep a high standard of maintenance and are usually extremely competent, more than the average IT consultant, particularly in handling recovery issues. And they can typically offer levels of security for protecting their servers that an average small firm cannot afford to protect their own.

Up in the Air

Having said all that, cloud-based computing for practice management, at present, is not a robust and comprehensive solution suitable for growing and large firms. As it stands, it can mostly satisfy the selective needs of the micro firm. But even in this capacity it must be kept in mind that any cloud-based firm and matter management software will also require the use of an accounting program such as QuickBooks (which Firm Manager is designed to use) or Xero, Clio’s affiliated SaaS accounting based program; no viable stand-alone option currently exists and accounting based software is essential for satisfying Law Society of Upper Canada compliance mandates.

In conclusion, with the increasing amounts of data and sensitive information that law firms have to manage, cloud computing is becoming a more relevant solution for bookkeeping and matter management. While there may be concerns about security, cloud providers have implemented measures to ensure the safety and protection of data. Ultimately, the decision to use cloud computing for these purposes will depend on the specific needs and requirements of each individual law firm.

As for the full potential of this technology in the bookkeeping and management of small and large sized firms, only time will tell; for now, its prospective benefit along with its likely functional usability in the future is still “up in the air”.

©2013, Keith Hill Jr. All rights reserved. Reproduction with credit is permitted.