Law firms can reduce the cost of communication by embracing Voice over Internet Protocol (VoIP) technology as part of their IT Strategy.
The legal market is facing unprecedented change. A recent survey of the Top 100 law firms in the UK by Legal IT and PA Consulting Group found that 87% of firms expected an increase in competition from other professional services sectors, whereas only 20% were planning to branch out of the legal profession. Therefore, law firms can expect increased competition for business from clients who want easier and lower cost ways of doing business.
Traditionally, the majority of costs incurred on behalf of clients have been charged back to the client. However, with increasing levels of competition, some law firms are already performing fixed or discounted fee work.
Telecommunications costs often form part of the costs incurred in the pursuit of client work. A recent survey by Eurobell highlighted the legal sector as being one of the highest users of international telephony and this can be expected to rise with the globalisation of legal work and the resulting need for geographic mobility of staff.
However, a new opportunity to reduce communication costs has arisen with the ability to convey international telephone calls across the Internet using VoIP. A survey by Rhetorik of European IT Directors found that 22% of companies are using this technology.
E-mail has revolutionized the postal industry. Over a period of 10 years it has become the most heavily utilised form of written communication. Voice and video based communications are now set to join e-mail on the highly versatile Internet highway.
Video and voice communication have different user requirements to e-mail. Writing an e-mail typically takes a couple of minutes, so a few minutes’ delay in delivery across a network is acceptable. However, no delay is acceptable for voice and video. Without the ability to relay immediate responses it becomes unacceptable as a communication medium. Therefore, specialist protocols and technologies are required to achieve the required performance level. VoIP is a commercially available solution.
The adoption of VoIP is being driven by the efficiency savings of having to maintain only one communications infrastructure.
A simple analogy can be drawn from the use of road transport. A road is used for a variety of vehicles e.g. cars, lorries and buses. A bus user requires a greater level of punctuality than either a car of lorry user. There are two ways of increasing the punctuality of buses: either create a separate road for buses or give priority to buses on an existing road by means of a bus-lane. The first solution requires the upkeep of two separate infrastructures. It is unlikely that a ’bus-only road‘ will ever be used to full capacity, therefore the road system as a whole is under-utilised and inefficient.
The flexible bus-lane approach, however, can vary the enforcement of the bus-only rule as a function of the flow of traffic. If the volume of traffic is low, then all road users can use all the lanes and the arrival time of the bus is still guaranteed. However, if the volume of traffic is very high, then the bus-lane can be enforced and the bus can still arrive on time, albeit with a slight delay to other traffic that is less time sensitive. The ability to prioritise the traffic on a single road leads to greater efficiency and, therefore, reduced cost compared to the dual road solution.
This transport analogy can be applied to the transfer of various media over the Internet. If it is possible to transfer video conferencing data, voice data and documents down one infrastructure with prioritisation, then efficiency savings can be realised over the use of separate dedicated telephone and Internet infrastructures. This efficiency saving is driving the market towards the use of the Internet.
The business case for VoIP is best suited to enable the use of unutilised bandwidth on a wide area network (WAN).
The two forms of telephony (circuit switched and VoIP) have different pricing structures. Circuit switched telephony has a complex charging system based on the type, length and distance of the call. The suppliers provide a bewildering range of packages that do not always clearly indicate the true costs of calls (and thereby complicate comparison). One thing is common to all the pricing plans - if an international call is not made then there is no charge.
The purchase of WAN services typically provides capacity (bandwidth) for a fixed period of time. The price is generally not dependent on the usage of that bandwidth. If a firm does not use the bandwidth fully then it may, in effect, be wasting money. VoIP implementation costs aside, the calls across a VoIP enabled WAN or LAN are free. Therefore, it may be economically viable to increase the bandwidth of a network to allow a greater proportion of calls to be routed via the Internet.
The Legal IT/PA survey found that 15% of law firms had implemented VoIP for video conferencing and 35% were considering implementation. Video conferencing is an ideal candidate for VoIP because it involves heavy communication for long periods between offices that are (often) located in different countries. Video conferencing equipment can have built-in VoIP technology to connect directly into a network. The cost of implementation can, therefore, be very low because it uses existing bandwidth to communicate without any international telephone calling costs.
Factors that affect implementation
There are several key factors to consider for VoIP:
- The existence of a high performance WAN. Without a dedicated WAN with agreed service levels, it is unlikely that the performance of voice and data transfer will be sufficient to ensure an acceptable quality of service. If users perceive a significant reduction in quality compared to existing international telephony then users will be unlikely to accept VoIP.
- High volumes of international telephony between countries. For VoIP, an organisation may need to invest in new equipment at either end of the communication channel. It is, therefore, beneficial to implement VoIP between two countries where there is known to be a high volume of calls, e.g. between regional offices.
- Experienced personnel. VoIP is a relatively new technology and significant expertise within organisations may be limited. A business case would need to factor training of existing personnel (or hiring of new) or potentially outsourcing the skills required.
- VoIP technology. There is a bewildering array of technology available running on a variety of VoIP standards. As the market matures, it is likely that specific standards will dominate. Expert knowledge is, therefore, essential to ensure that the best equipment is chosen for the requirements of the organisation.
- Secure communication. VoIP can be highly secure if strong encryption standards, such as Triple DES, are used. Security is very important within the legal sector especially given the need to discuss privileged and confidential matters.
- Local VoIP solutions. In addition to international telephony, it is also possible to implement a VoIP solution whereby all phones, faxes and video conferencing units can be connected to the LAN. The implementation of such a solution at a site means that there may well be limited need to maintain private exchanges (just an interface to the public network).
VoIP can deliver cost savings on communication and, therefore, help provide competitive advantage. Given that VoIP technology is expected to drive the complete convergence of voice and Internet communications over the coming decades, it is important that law firms should consider it as one of the core components of their IT Strategy.
