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THE ADVANTAGES TO ATTORNEYS OF LEASING COMPUTER SYSTEMS

The modern law firm or corporate legal department is frequently faced with the need to obtain or upgrade computer systems. The decision as to how to finance enhanced automation support of the practice should be made with knowledge of equally modern and available financing tools. In particular, leasing has become a major, and often attractive, choice for such acquisitions.

Computer systems were originally leased as a matter of course; most early mainframe computers and software were not available for purchase. The rise of powerful, economical and widely available office management computer systems based on personal computers, and the adoption of these systems by attorneys, has reversed much of the perception of how computer systems are paid for. As a result, attorneys tend to think of powerful office management PC networks as items to be purchased. This may not, in many circumstances, be in the best interest of a law firm or legal department. This article will examine the reasons why law firms and corporate legal departments may not wish to purchase a computer system outright, and the advantages of leasing as a method of financing such purchases.

Under a typical agreement, the leasing company takes legal possession of the computer system, leasing it to the firm over an agreed upon period, usually between three and five years. While terms and conditions may vary between leasing companies, by obtaining and financing such systems as a whole (a so-called 'turnkey' system), the firm may be able to finance software, system setup and other services as part of the overall package. Such turnkey systems are, in most cases, specifically tailored to the practice by the vendor or vendors, enhancing their value and usefulness to the firm.

The advantages of leasing include:

• Tax deductibility. Lease payments may generally be deducted dollar for dollar as a standard operating expense. Consult your tax advisor for regulations applicable in your circumstances.
• Treatment of networks and software as an investment. Leasing permits the law firm to analyze the purchase of equipment from an investment standpoint. Investment in computer systems allows the firm to enhance support of its income generating activities, or allows the firm or legal department to provide additional or enhanced support, while expending the same or fewer resources. These enhanced efficiencies or extended support, in turn, justify the investment in the systems.
• Rationalizing upgrades. One of the most annoying aspects of purchasing or upgrading a computer systems is dealing with the nuts and bolts of establishing credit with entities from whom equipment, software, or other items are purchased. Once a leasing relationship is established, the leasing company can handle much, if not most, of the paperwork. This eases and rationalizes the process of enhancing systems, and obtaining additional functionality over time.
  
• Small initial investment. Lease arrangements require a relatively small initial investment, usually a two months payment.
  

The lease also maintains a number of advantages over bank financing. Among the least obvious, but most beneficial, is the familiarity of computer-knowledgeable leasing companies with the cycle of purchasing computer systems. Such companies understand the process of obtaining goods and services from hardware, software and consulting providers, and can answer questions and otherwise help smooth the way through what may be an unfamiliar acquisition process.

Leasing can provide a simple, straightforward method for a law firm or corporate legal department to obtain and enhance computer systems practice support on an as-needed basis. The systems lease has, for these reasons, become a common tool for managing the acquisition of computer systems and other office equipment for attorneys. Extending the lease to cover software and services on a turnkey basis creates further flexibility for the firm or department in taking advantage of computer technology in the practice.

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