Cloud-based software has seen rapid growth over the past few years within the consumer market where there has been an uptick in the use of cloud-based software such as Gmail and Dropbox. However, the larger point of interest for our purposes is whether the growth has also been replicated within the Australian legal market. There is no doubting the existence of a emergent market for cloud-based software solutions for lawyers, and although there are a number of issues that exist within the growing sector, the signs are there that we may be at the beginning of a revolution in how lawyers conduct their business via the cloud, with start-ups and small firms leading the way.

Australian businesses and the cloud

In the 2013-14 Business Characteristics Survey conducted by the Australian Bureau of Statistics (ABS) (the ABS Survey), found that 19 percent of businesses with access to the internet used paid cloud computing services.

Of the 6640 businesses that responded to the ABS Survey, 47 percent of businesses cited the simplicity of cloud-based solutions as the most common benefit, with increased productivity followed closely behind at 46 percent.

Perhaps the most eye-opening result of the ABS Survey was that between 22 and 24 percent of businesses of all sizes cited that the reason behind the limited use of cloud computing services was due to insufficient knowledge of the services on offer, which may suggest a gap in the messaging of cloud-based software in all markets.

The issues

The concerns expressed by the ABS Survey respondents are also similar to the issues held by many law firms. Businesses surveyed cited risk of security breaches, uncertainty with the location of data, and legal, jurisdictional, or dispute resolution mechanisms as some of the anxieties related to using cloud-based software.

At 24 percent, risk of a security breach was the second most cited factor of why businesses were prevented from using cloud computing services in the ABS Survey.

It’s unsurprising that security is also often mentioned as an issue as well for solicitors as Coralie Kenny and Tahlia Gordon wrote in their article, “Cloud computing issues for legal practices” in the New South Wales Law Society Journal.

“The sources of potential security threats are twofold. First, there are external threats including third parties, such as hackers. Even data held by Google, one of the largest cloud-computing providers, for example, is not immune from hackers. Second, there are internal threats, for example, employees of the cloud computing provider accessing the data without authorisation.”

Smaller firms are leading the charge in the use of cloud-based software

There has been no comprehensive research of the use of cloud-based software in relation to Australia’s legal industry. However, if we look to the findings of the American Bar Association (ABA) survey conducted in 2013, that at an anecdotal level, we may be able to draw some parallels in Australia, especially in relation to the growth of cloud-based software use in the small law segment.

The ABA survey found that 40 percent of solo practitioners used cloud software, and that 36 percent of firms with two to nine attorneys had taken advantage of cloud-based solutions.

The ABA survey findings arguably follows a similar trajectory within the Australian market, and according to James Boocock, General Manager of Legal Solutions and Small Law at Thomson Reuters, not only are smaller firms increasingly making greater use of cloud-based software, but cloud-based solutions has the potential to change the landscape in the practice of law according to Mr Boocock.

“Cloud, is becoming the technology option of choice for many small law firms globally. The disruption to the legal market offered by a new trend in infrastructure and IT circles allows lawyers to manage their infrastructure needs more cost effectively, run their business more efficiently and to secure their data.”