Chris Pearson has been Chairman of the O2Smart Group of Companies for the past three years. Before that he was with Korbitec for 21 years. The O2Smart Group consists of a number of brands, including AJS accounting, XpressDox document assembly, C3 Call Centre Management, Galaxy Distribution, Avid Workflow and Avid Firefly.
We spoke to Chris about where the company is headed, and asked him to talk about the future of legal accounting in South Africa.
Tech4Law (T4L): So how are things going in the AJS camp?
Chris Pearson (CP): Good. We’ve had three years of good growth despite the recession. Three years ago the profession wobbled a bit, and even some of the larger law firms were battling to stay alive. That made business challenging, but despite that we managed to win a number of new clients. Today the company employs over sixty people, and most of them are legal accounting professionals with many years of experience.
T4L: I heard recently that there is a new Lite version of AJS. What’s up with that?
CP: We started out thinking it would be a Lite version, but it has grown to be a real giant-killer. That’s all credit to Nick Orpen, who joined us a year ago. Before joining us, Nick was responsible for the development of the LegalSuite accounting system. He has done a great job of designing the new system, and for the first time law firms can have an accounting system that works the way bookkeepers and auditors need it to. Another reason it is doing so well is because it is just so easy and logical to learn and use. So today we can comfortably cater for firms with up to 50 users on AJS “SME”, or “Swift” as it was known during development.
T4L: But you now have two AJS accounting products in the camp. Doesn’t that confuse your clients?
CP: Not really, because they both target different sized law firms. AJS Accounting caters for large firms that need complete flexibility. As you may know, our largest client has in the region of 1,000 users. We also recommend the “full” AJS for large Collections practices, who benefit from the process workflow system. AJS SME Accounting – which was previously known as Swift – caters for firms of up to 50 users. We’ve heard some really amusing stories where one of our competitors tells prospective clients that AJS-SME is a Lite version, and not powerful at all. We don’t know whether to correct them or not!
T4L: There has also been some debate about AJS running on the Universe database?
CP: The thing about Universe is that it is incredibly solid. Unlike some of our competitors we don’t have regular database corruptions. None of the other databases give us the same level of confidence for large installations. We can also scale Universe to thousands of users – and it handles the load just fine. Did you know that Outsurance also runs on Universe?
T4L: But then why is AJS “SME” Accounting on SQL Server?
CP: While Universe gives us huge power, stability, and flexibility, it is not an inexpensive database system. For small to medium-sized firms, we find that price is often the deciding factor, so by using SQL Server Express we can keep the price right down.
T4L: You guys have also got a Call Centre Management system, don’t you?
CP: We do. We code named it C3 during its first two years of life, but it will now be known as AJS Call Centre Manager. It is remarkably powerful, and it really does increase the Collectors’ throughput substantially. It also offers a host of other management controls which make it easier to manage a large team of Agents. Incidentally, one of the major reasons why it has the competitors beat is because it is completely integrated with AJS Accounting. So problems associated with integration to other systems don’t affect us – and believe it or not, making two systems talk to each other is hell for most of the competitors out there.
T4L: You’re also into document assembly, and I understand this came about when you needed a document generation tool for AJS – and it grew from there?
CP: Yep. That’s how it started. And today XpressDox is one of the top 5 document assembly systems in the world. Peter Tuffin – who was previously the development head for GhostConvey at Korbitec, has done a remarkable job of creating a really powerful but yet easy-to-use assembly system. Most of our customers are from overseas, and we have signed up over a thousand law firms of different sizes around the world.
T4L: I see in your marketing you talk about a Cloud version?
CP: That’s one of the things that sets us apart from competitors. It’s not simply that we have a web version, but that we can run the same templates in Word, or via any browser – even on an Apple iPad. And we can host templates in the Cloud, or customers can have their own web-server on-premise. So we offer clients huge flexibility – and all of the power in the Word version is available in the web-browser version too. By the way, although Peter Tuffin heads the XpressDox project, the web-server version was headed by Nick Prince – previously the developer behind SearchWorks, and before that he was with Korbitec as a Windeed developer.
T4L: What about Avid?
CP: We have just finalised the deal to acquire Avid Software, which is managed by Barry Swart. When we saw what Barry was doing with web-based workflow we were blown away. It is simply one of the simplest and cleanest process building systems we have ever seen. Put simply, it allows us to create custom workflows for any type of process, and to automatically populate documents using XpressDox as the document assembly engine. It will also shortly integrate to our accounting systems, which will increase its benefits still further. Incidentally, you’ll be amazed at how many law firms are already using Avid Flow to manage legal processes in various departments.
T4L: Then there’s one last product, isn’t there?
CP: Yes. That would be Avid Firefly, which has been around for some time now. It is a Conveyancing Costs Calculator which runs on a Smartphone. Law firms often licence the Estate Agents they work with to help them to calculate costs more accurately and to give better service to their mutual clients.
T4L: So it seems you have a great bunch of products. Is that what you believe differentiates you from your competitors?
CP: Not just that, although we do have some awesome products. I got to thinking the other day that I don’t know of any one of our competitors who is as passionate and committed to their clients as we are at O2Smart. If one of our customers has a problem, we put all of our effort into solving their problem. This sometimes means we work late into the night – but our customers come first. In recent years we have established a helpdesk that logs all calls to make sure nothing slips through the cracks, but we still allow our customers to call their support consultants directly if they want to do that.
T4L: So you’re happy that your service levels are 100%?
CP: I think our service is the best in the game, but there is always room for improvement!
T4L: OK, so let’s switch to the future of the legal technology industry in South Africa. What do you see happening next?
CP: That’s a tough question. There are a number of facets to the South African legal - tech market. In the legal accounting sector there is great competition, with around 10 vendors, all of which have relatively stable products. More recently, there has been a bit of aggressive competition between a few of the vendors in this sector, and this is great for the Profession because it fuels innovation and improves service levels.
T4L: So what innovations can we expect in the accounting field?
CP: Strangely enough, legal accounting software has never really worked like traditional accounting software, so bookkeepers had to change the way in which they worked to accommodate the system. I think we’ll see that change as some of the new software becomes more established. We’re also seeing a slow move to the Internet, with some packages already running in the Cloud.
T4L: Legal Accounting over the Internet? Is that wise right now?
CP: Personally, I don’t think we’re ready for that yet, because the Internet just isn’t stable enough or dependable enough in South Africa, and according to the experts, it won’t improve for the next 2-3 years.
T4L: Why is that?
CP: Well, for one thing the networks are congested. I know of a number of people who do their Internet work early while the Internet is still fast enough. On a business application like legal accounting you can’t function if the screens take ages to load. For some reason, ADSL also keeps dropping connectivity, which is hell for an accounting system. You see, running an accounting system on the Internet is actually more beneficial for the vendor than it is for the user. The vendor doesn’t have to install a whole lot of software on the customer’s premises, and updates are easy to issue. (And to re-issue again and again as often happens with certain software.) For the user, sure, they don’t need any expensive hardware to run the system, but that all comes at a cost in speed. One thing is for sure though – we will get there eventually as bandwidth speeds improve, and as the networks stabilise.
T4L: As far as I know there is a regulation where law firms cannot store client information offsite without approval from the Law Society?
CP: Yes, there is that aspect to it. I think that in time the Law Society will change its position as the world moves to the Cloud. But I also think the Law Society would almost certainly approve this if asked for permission. Having said that, my guess is that the handful of firms who are running their accounting in the Cloud didn’t bother asking for permission. Did you know that this regulation isn’t unique to South Africa? There are similar rules throughout the world.
T4L: What about backups if their information is in the Cloud?
CP: Backups are always the responsibility of the Client. In a hosted environment, backups are sometimes done by the hosting company depending on the plan the vendor has chosen from them. My advice is that firms need to ensure that their backups are secure themselves, although this isn’t that easy in a hosted environment since the entire data file needs to be streamed to the backup device over the Internet.
T4L: What about tablet computers? Will lawyers use them to capture fees in the future?
CP: Some will. Every year the profession becomes less technology averse as the tech-generation moves into Partner positions. An attorney in Port Elizabeth told me recently that he was a lawyer, not a data-capturer, and so he went back to having his PA capture his fees. The whole tablet debate is closely linked to the browser debate though, since nearly all tablets run a browser.
T4L: What’s the next big thing in legal accounting in South Africa?
CP: My partners would fire me if I leaked that kind of information!
T4L: OK then. What about the conveyancing software market?
CP: Well, whereas the legal accounting market is well traded with around 10 vendors, the conveyancing software market is really a one-horse show. Korbitec dominates that space, controlling an effective 90% of the market if one includes their stake in one of the other vendors. So while innovation is alive and well in the legal accounting space, it is my opinion that there isn’t as much innovation in the conveyancing software space.
T4L: There are about 5 vendors though, aren’t there? Why aren’t they succeeding in winning some market share?
CP: It is tough to attack an incumbent with a 90% share of the market, which also has relationships with the banks and links to some of the local authorities. Although there seems to be some unhappiness with what some firms see as a monopolistic situation at present, lawyers just don’t seem to want to go to the trouble of changing systems, since GhostConvey does the job.
T4L: Will there ever be a successful challenger?
CP: Sure. That’s the cycle of business. It is inevitable, but I think it will only be brought about by some significant change in the way property transfer and mortgage registrations are done in South Africa.
T4L: Like electronic registration?
CP: That type of thing, yes. In South Africa, we have always prided ourselves on the way our Deeds Registration system provides security of Title. But it is a complex process, and not closed to fraud, as we have seen recently. It is also a particularly expensive process given all the associated costs that the buyer of a home needs to bear.
T4L: Will law firms continue to be the only parties that do conveyancing?
CP: I think it depends on a few things. Government will have a lot of say in this as they try to reduce the hold that the profession has over this type of work. Their argument is that lawyers are making a fortune out of conveyancing, so right before election time, expect them to push for the correction of this unfair situation. Of course, few politicians seem to understand that the bulk of the conveyancing fee goes to the Government for Transfer Duty, The second thing that has to happen is for the economy to improve. In the heyday of property sales, every large estate agent and mortgage originator wanted to do their own conveyancing. Right now it just isn’t worth it. Having said all of this, in his book “The End of Lawyers?”, Richard Susskind speaks of the inexorable march to commoditisation. And my guess is that conveyancing is right at the front of that march.
T4L: Won’t banks do their own conveyancing?
CP: I think that would be a crazy decision. Right now they can whip their panel attorneys for performance – far more than they could whip their own staff. Also, it would be a mammoth task for banks to establish conveyancing departments. My thinking here is that they will try to improve and to automate the control they have over panel attorneys, which will be a lower-cost option for them.
T4L: Now there are two main players in the bank mortgage instructions space, Korbitec and L@W. Who will win that battle?
CP: It is a humdinger of a battle, isn’t it? It seems to change every couple of years, where one party gets the upper hand for a while.
T4L: But shouldn’t there be just one vendor, to make life simpler for the profession?
CP: I get asked that a lot. Personally, I think it is great that there are two strong competitors keeping each other on their toes. As I said earlier, it fuels innovation, and forces decent service levels. If there was only one player, we’d have a monopoly there too, and prices would climb fast, service levels would drop, innovation would all but die, and the profession – and the banks - would be far worse off.
T4L: All right then – let’s talk about Debt Collections.
CP: That’s another market that is well traded, with at least 15 vendors that offer Collections software. There are two main camps – those that play in the pre-legal Collections space, and those who play in “post” legal arena, and a handful who play in both. Competition in all of these markets is healthy though, so innovation is good.
T4L: A lot of law firms have started doing collections in this economy, haven’t they?
CP: They have. But with the economy improving, my guess is that the opportunity is almost closed to new entrants now. We have also always told clients that they shouldn’t dabble in Collections because they won’t make any money like that. Either do it properly, or don’t do it at all. Some firms have done very well out of that advice!
T4L: What about tech-spend in the profession? Is that increasing?
CP: It is. Lawyers are starting to understand business better, so they now know that buying a new computer to replace an old one makes good business sense. They are also realising that they should use software to increase productivity, which we have been trying to tell them for ages. Generally the economy is improving slowly though, and it looks like some of the property developers have become tired of waiting for the new day and have started some large new developments which will be good for conveyancing.
T4L: Before we close off, what about software piracy in the profession?
CP: It is still rife in the profession, although a number of vendors are introducing stronger licensing models to prevent it. I don’t think there is much piracy on the locally developed software though, it is mainly on Microsoft Office.
T4L: Thank you Chris. One last question before we wrap it up. Is AJS going into to enter the legal property software market?
CP: Who knows what the future holds? At this stage we are focusing on our existing products, but things might change at some point in time.
If anybody would like more information on AJS, XpressDox, or Avid Software, please visit their websites www.ajs.co.za, www.xpressdox.com and www.amn.co.za. Or you can contact their sales office on 0861 265 376.