Is your legal software ready to remain compliant in 2019?
The legal software market is amidst a period of change and consolidation. Previously, most Law Technology suppliers tended to be owner-managed businesses. However, today’s landscape is very different, with a good number being bought up by larger Venture Capitalist-backed businesses looking to consolidate the market and drive product development with greater access to new technology. This focus on a dramatically reduced number of ‘go-forward’ products has created inevitable threats to existing solutions in use across many firms.
While older products may be supported by suppliers in the short term, many won’t receive the active development needed to keep pace with industry changes and could be ‘end-of-lifed’ in the future. Users therefore risk either not being totally compliant or will have to employ work-arounds to make them both function and comply.
Making Tax Digital
More change is fast-approaching and increasing the pressure on firms to digitise to meet regulations. For example, HMRC’s Making Tax Digital (MTD) initiative launches on 1st April 2019 and is set to make fundamental changes to the tax system.
MTD will require firms to record and report their VAT transactions digitally. Firms must therefore have suitable software in place that can record all VAT transactions and submit the data to HMRC via a new Application Programming Interface.
With paper only records no longer acceptable, solutions must be both capable of recording all transactions digitally and communicating directly with HMRC’s systems. Firms should therefore check the status of their systems, ensuring they have the controls to maintain an efficient and compliant operation.
The investment from software suppliers in ‘go-forward’ products could result in the products already in use by firms no longer being supported and in many cases, ‘end of lifed’ or ‘sunsetted’. Those that don’t ask questions of their providers therefore risk breaching legislation or incurring higher fees.
For example, a firm’s existing supplier could request that they change to an alternative system, which could come at a large expense to the business. Alternatively, keeping the existing system could mean that they simply won’t be compliant from the moment any new legislation takes effect, or are forced into buying expensive “add on” products which have a limited life span and are cumbersome to implement and use.
The process of implementing and migrating data to another software system could also be overlooked. Data migration takes considerable time and resources to make sure it’s done right. Leaving this close to regulatory deadlines or incomplete before systems cease could force firms to accept high renewal or migration fees, or even a lengthy agreement on a solution they aren’t fully satisfied with.
Taking active precautions, such as asking suppliers about the state of existing software or seeking advice from legal IT experts will help firm managers to make early decisions about the best course of action when faced with potentially outdated or non-compliant products. Taking these steps now could help firms to reap the benefits of providers which offer fast migration with full support and expertise, giving their practice maximum compliance and longevity and allowing them to thrive in an increasingly digital sector.