Strategic Legal Technology

My client ii3 is hosting a Webinar on how McCarthy Tétrault, the largest law firm in Canada, has successfully deployed a KM solution. 

The Webinar features Joshua Fireman, the KM Director of McCarthys . He will talk about how his firm created a successful knowledge sharing solution using ii3’s software, AdvanceKnowledge. The focus of the Webinar is on the business context for KM and deployment practices.

The Webinar takes place on Wednesday, February 11 at noon eastern. Click here if you would like to register.

In my prior post, Working Virtually, I referenced an article I recently wrote for Law Practice suggesting law firms consider facilitating lawyers working from home. A recent Wall Street Journal article, “It’s 10 A.M. - Do You know Where Your Workers Are?” (1/12/04), has some interesting statistics about alternate working arrangements, including a 15% productivity gain. 

The WSJ article reports that about 25% of the “US work force works from home at least some of the time, while another quarter is mobile or works from customer locations.” The move to at-home work is being driven by employers seeking to reduce costs and employees seeking more flexibility. The article goes on to report that at least some companies find at-home workers more productive: one study of 2000 workers at 15 companies found a 15% productivity boost from working at home. The gain is attributed to fewer distractions such as “water cooler gatherings and unnecessary meetings.”

These data support my contention that law firms should consider testing ways that lawyers could work away from expensive downtown offices, either in their home or at low over-head, suburban satellite offices.

The January/February issue of Law Practice magazine includes an article that I wrote called The Future Law Office: Going Virtual. It explores how law firms should consider letting lawyers spend more time working at home or in satellite offices and, in return, rent less space in expensive downtown centers. A good example of this idea in action appeared recently in the The New York Times.  

In the December 31, 2003 edition, the Times ran an article called Reverse Commute: Bringing the Office to the Employee that explains how Skidmore, Owings & Merrill, a large architecture firm, opened a satellite office on Long Island. An 8-person technical team works out of low overhead space in Hauppauge. The article cites several advantages of opening this office:

Various technologies allow the 8 remote employees to interact easily with their colleagues in Manhattan, though they do occasionally travel to the city for in-person meetings. The functional requirements of an architectural firm are, if anything, probably more demanding than that of a law firm. I was pleased to see a real-life of example of the ideas I explore working for a professional services organization.

On a related note, I also came across a good article by systems integrator Kraft, Kennedy & Lesser that describes Voice Over Internet Telphony, one of the enabling technologies I discuss in my article.

My article, and others on legal technology, is available on this web site.

If you read several blogs and do not already use an aggregation service, you should consider doing so. Over the holidays (yes, they do seem like a long time ago), I tried a couple (for example, FeedDemon). I decided to use Bloglines.com, a web-based service instead of client software locally. 

My decision to use Bloglines was based on a couple of factors. First, I found that FeedDemon and other local software had more features than I needed or wanted. Second, I already run so many applications and have so many icons in my task tray that I was not thrilled about yet one more (and yes, I do have 512 meg of RAM). And third, I liked the idea of a web-based service since it means I’d have access to my list of blogs from any PC, not just my own.

I have been very happy with Bloglines. The interface to set up “subscriptions” and folder them is not quite as crisp as it might be, but once I figured that out, it was easy sailing. Now I find it very easy to keep up with multiple blogs from a single, easy-to-use interface. Though I have yet to use it, Bloglines has another interesting feature: you can create an e-mail address for use in subscribing to listservs or e-mail newsletters. I imagine this is helpful for content and spam management. Next time I find a new service to which I want to subscribe, I will use Bloglines. Eventually, I may try to move over other regular e-mail alerts to it.

My only reservation is that I don’t understand the business model of the company. It’s free and there are no ads. After the dot-com boom, that makes me very suspicious. I would not be happy if the company started running ads, but I’d most likely be willing to pay a modest monthly charge to use the service.

PS - shortly after posting the above, a friend just let me know that he could not automatically subscribe to my blog using the auto-detect feature. The work around for this is to copy the RSS 2.0 link (right click on link and select “Copy Shortcut") and paste the URL into the subscription box on bloglines.

This week I attended a meeting of legal knowledge management professionals. The discussion turned to Customer Relationship Management (CRM) systems, focusing on using a CRM to find colleagues who have useful contacts. Managing relationships was not an apparent concern. 

I am not a CRM expert, but my recollection is that this class of software emerged to meet the needs of sales people. The idea was to track all “points of contact.” Eventually the concept expanded to encompass a 360-degree view of the customer, meaning that a single system would monitor the entire relationship. That system would also provide tools to manage and, in some instances, analyze relationships.

Law firms started looking at CRM some years back. My sense is that they wanted to use these systems to manage client relationships more effectively. I was therefore surprised at this meeting when our CRM discussion centered on identifying who within an organization knows someone else. For example, such a system would help lawyer who needs to identify someone in a government agency or a lawyer in a corporation.

While identifying the contacts of colleague’s has much value, so too does managing client relationships. I am not sure if I can generalize from my experience, but perhaps in the legal market, the “R” for relationship is slipping out of the CRM.

The Chicago Tribune reports today in Law firms slow to outsource (registration required) that law firms have been slow to outsource work. The article describes how Mindcrest, Inc., a legal outsourcing company, does most of its work for corporations, not for firms. 

According the article, most of the work Mindcrest does is “complex but repetitive legal administrative work [such as] processes qualified domestic relations orders.” Mindcrest was founded by a former large law firm partner. Its web site lists the types of projects on which it has worked.

Though the article’s take-away is that law firms have been slow to outsource, I have a different gloss. First, it is interesting that there is already at least one company, founded by big firm lawyers, already in the business of legal outsourcing. And second, the fact that a newspaper deems it noteworthy to even report that law firms are slow to outsource suggests that the pressures in this area mounting.

The article suggests, in quoting a large law firm partner, that confidentiality is an issue in outsourcing. I do not know all the ethics rules and perhaps there are special issues for work done off-shore. I see only one big difference between a firm outsourcing copying, litigation support, and even document review to contract lawyers in the USA and outsourcing legal work to India. That difference is the legal process available to deal with a breach of confidentiality. In the USA, injunctions might be available to stem a leak and civil or criminal actions available against the leaker. The same may not be true in India, but, in a similar vein as I suggested in my posting yesterday, this is as much an empirical as theoretical question. [I would welcome comments or e-mail from a lawyer who has researched the confidentiality issues.]

Separately, those interested in outsourcing might also want to read the Wall Street Journal today, which reports on internal IBM documents concerning outsourcing. The article reports that IBM expects to save over $150 million by outsourcing. It goes on to report that the documents also advise managers how to explain and position these decisions to employees.

I spotted on bespacific a reference to a very interesting article in the Star Tribune (Jan. 16, 2004) reporting that West is running a small test of using lawyers in India for some of its publishing operations. 

According to the Star Tribune, “a few months into the quiet Indian pilot-office experience, the half-dozen or so Indian lawyers have been doing online interpretation and legal-classification of “unpublished decisions” of U.S. state and lower courts that are not considered big deals – or “precedential” in legal parlance.” It goes on to say the work has been good and has highly-compensated West editors concerned about their jobs.

As I have argued in prior blog postings, I do not see any fundamental barrier to outsourcing legal work to countries where people speak English and are trained in British common law. It’s not obvious to me that quality concerns are a unique issue in outsourcing. All legal work is subject to judgment and to errors and requires quality checking (recall that, at least at one time, some large firms had a “2 partner rule” for any documents leaving the firm). Whether lawyer-editors in India can do as good a job as lawyer-editors in Eagan (home of West) is, ultimately, an empirical question. And I suspect that West, with its century-plus experience in publishing, has the know-how to make the empirical call. Of course, beyond cost and quality, West, like any large employer, will also have to consider intangible factors in making the decision to go offshore.

This week I had the opportunity to see a demonstration of an AmLaw 100 firm’s client-facing Extranet. Extranets have been much discussed but the evidence suggests little used. One reason I suspect usage has been low is that many Extranets don’t do that much. The one I saw this week, however, was impressive in its design and functionality. 

This firm has done a good job thinking through the business and design issues of Extranets. The firm acknowledges that ideally an Extranet would be hosted by the client and visited by multiple outside counsel. But they rightly point out that the reality is that most law departments don’t have the resources to build and host their own Extranets. So this firm set out to build an Extranet that its clients would find useful - and succeeded.

The Extranet includes numerous features such as share documents, matter management (e.g., docketing), contacts, tasks, and reporting tools. The interface and functionality varies, depending on the matter type. For example, both the navigation links and content are quite different for transaction versus litigation. In some areas of the Extranet, the firm has also included value-added features such as annotated form documents and “best practice” checklists.

This firm has gone beyond merely providing Extranets as we usually think of them. It also reports that its Extranets are, in some instances, instantiated as corporate law department Intranets. That is, employees in some companies use a corporate law department legal Intranet. Some or all of the Intranet is actually hosted and administered by the law firm.

The firm reports that they do monitor usage and use the tracking data to improve the site and to go back to the client if usage is lower than expected to understand why. Based on the URLs I saw, it appears the firm has built the entire system using Cold Fusion.

All in all, I was quite impressed with what I saw. While I have no information about client reaction, if I put myself in clients’ shoes and saw a similar demonstration, I would be impressed.

In Get the Picture yesterday, the Wall Street Journal explored the application of visualization software to gaining a better and deeper understanding of business problems. I wonder if law firms could use the type of visualization software the article describes to manage both their business and their knowledge. 

The article explains that a range of businesses - examples include a mobile phone vendor, pharmaceuticals maker, and corporate bond trader - use visualization software from vendors such as Fractal Edge, Antartica Systems, Panopticon Systems, and Inxight Software to visualize business data. By taking large quantities of data and displaying them visually, business managers are better able to spot trends, analyze workloads, and identify exceptions.

While it would take some experimentation, it strikes me that law firms could use visualization software. On the management side, firms face large quantities of data, both about their clients and their timekeepers. Perhaps visualization software would help quickly identify clients with payment problems or associates with too much or too little work. It might also help identify trends in the business by practice area. On the substantive side, many firms have created taxonomies to help manage knowledge. Applying visualization software to the number of documents by taxonomy node (perhaps including data about authors) would help identify areas “to mine and manage” for knowledge management purposes.

Visualization techniques are already in use to analyze the large volumes of data generated in electronic discovery. For example, vendors Attenex and Cataphora both provide interesting visualization tools to help understand, manage, and sift through e-data.

I would be curious to hear from readers if they know of any examples of visualization software used to manage firm business or knowledge.

The Fall 2003 issue of Chief Legal Executive magazine has an interesting article by the managing partner of Arnold & Porter, The Inside Story on the Outside Firm. James J. Sandman discusses five key questions clients should ask their firms. One of the five is what KM system the firm uses. 

Mr. Sandman begins the article by noting that law departments ask many questions in RFPs and law firm interviews but frequently do not inquire about important ways the firm operates. The five questions the GC should ask are about compensation, KM, diversity, associate attrition, and training. I’ll focus on Mr. Sandman’s comments about KM.

He notes that “firms vary greatly in their ability to identify and use their own most pertinent precedents.” This ability depends on whether lawyers submit their work product, QA systems to identify and catalog best practices, search tools, and how lawyers use the system. He makes the very interesting point that the client should ask to test the firms KM resources “so that he or she can make a personal assessment of their utility.” He also notes - quite correctly - that good KM covers more than just work product. Though he does not use the term tacit, he writes that a KM system should also include tacit knowledge such as what the firm knows about the client and the client’s industry and competitors. Inability to share this information means wasted time and lost value.

It is rare to see a managing partner focus on KM and write so clearly about the importance of KM. And it verges on revolutionary for a large law firm lawyer to suggest to the client to test a firm’s KM system. I agree with Mr. Sandman and hope that GC will follow his sage advice.

A prior blog entry discussed imperfections in the market for legal services. An editorial in Corporate Legal Times, Law Firms are Often Blind to Clients’ Needs adds fuel to this fire. 

In essence, my prior posting suggested that the customer, that is, general counsel, is not demanding enough (though there are some good reasons for this). It is thus with interest that I read publisher Nat Slavin’s piece in the January issue. He explains that he regularly meets with law firm leaders. One question he asks is “what they think is on their clients’ minds.” Law firm leaders think that clients
- View law firms as “irreplaceable.”
- Cannot solve legal problems on their own
- Think their firm is only one who can handle a particular matter.

His analysis of this situation is insightful. Both sides contribute to “perpetuating these myths.” One problem is that the firm lawyers who do client work are often not the ones managing expectations. Another is that “there are too few lawyers in legal departments willing to develop an environment that addresses or challenges these beliefs.” Inhouse counsel are too busy to do so; moreover, they are cut of the same cloth as their outside counsel and also believe the myths.

Salvation is in sight though. Mr. Slavin suggests that an increasing number of GCs are ready to change how they deal with outside counsel, in part by exercising their market power. Ultimately, he suggests that if law firm cannot adapt to changing requirements, the GC must change firms.

If, as this editorial suggests, the market is becoming more demanding, law firms will have to adapt, including considering a range of technologies that can allow them to deliver more cost effective service and to communicate more clearly with their clients.

Alerted by Joy London’s posting on her Excited Utterance’s blog, I’ve read a new blog, lawyer’s dont’ get it by attorney Charles Uniman. Mr. Uniman discusses contracts as code, an interesting idea. One can take his idea even further by getting a bit techie, namely considering the role of XML. 

It would be handy if contract clauses were “marked up” by XML codes. XML stands for Extensible Markup Language and is to content what HTML is to lay-out. That is, XML allows embedding descriptive tags within content so that, for example, one can label the author, abstract, section headings, and body text as distinct chunks of text.

XML could be used to tag clause types so that software could always identify common clause types, for example, indemnification or choice of law. Moreover, XML could also be used to tag the business data in a contract. This could have very high value for clients as it would potentially allow them automatically to integrate rights and obligations embedded in contracts directly into operational systems. For example, in a lease, all dollar amounts and dates could be XML-tagged. Software could then automatically track rent payments due and when renewal or escalation notices need to go out.

Between Mr. Uniman’s idea of “contract as re-usable code” and tagging data elements, there is tremendous potential to reduce the costs of drafting, interpreting, and administering contracts.

Here are my views of trends to watch in 2004. I choose the word “trend” intentionally because, as Yogi Berra said, making predictions is hard, especially about the future. Regular readers of my blog know that I focus on the strategic use of technology and not technology per se.  

I therefore start with what strikes me as important legal market trends, phrased as questions:

On the technology front, I start with the premise that most firms now have decent infrastructures and keep them reasonably current. Though there are a host of infrastructure questions such as storage strategies and disaster recovery, I’ll focus on what I consider the more interesting strategic questions:

Note that the trends I focus on are about how law firms and departments use existing technology. We should also keep an eye on new technologies that will continue to be important. The top three I’m watching are Wi-Fi, Voice Over Internet, and Web Services.