Strategic Legal Technology

I have proposed that law firms consider the possibility that lawyers be encouraged to work at home some days or at satellite offices. Today, the Wall Street Journal reports yet another reason to support this idea: workers get more done at home because there are fewer interruptions.  

In my article Going Virtual and subsequent blog postings (e.g., Working Virtually - Some Statistics, I set forth the case for doing work at home.

The somewhat light-hearted Journal article Cookies, Gossip, Cubes: It’s a Wonder Any Work Gets Done at the Office (4/28/04, p. B1) reports that interruptions at work are legion, especially for those working in cubicles. “In a sign of just how loopy the line between work and home has become, it sometimes seems as though the home is better suited to work, while work is better suited to, say wedding planning.” A researcher found that at “one large law firm,” people working in cubicles (granted this probably means staff and not lawyers) were interrupted more than 15 times per day. This leads to losing one hour to re-focus one’s effort.

The article acknowledges that homes create distractions as well but that it can actually be easier to close the door on family and pets than it is to prevent cubicle interruptions. I suspect that lawyers are somewhat insulated from this volume of distraction, both because they typically have private offices and because there is a culture of quiet in law firms (at least in my experience and relative to the corporate world).

Large law firms that face build-out and lease renewals should think carefully about the work culture of the future and how creative planning now can lower occupancy cost, convert wasted commute time to leisure or billable hours, and make their lawyers and staff happier and more productive. It goes without saying that appropriate technology is necessary to support such changes.

Ten days ago I bought a Treo 600 - a combined cell phone and Palm OS personal digital assistant. SprintPCS is my carrier. Though configuration and learning the device took some time, I am very happy so far.  

Some seemingly random factoids: This year I am traveling more. My cell phone was close to 3 years old and beginning to feel clunky. Even when I carry my notebook, I find that I cannot always find or connect to a WiFi spot. Sometimes I am at client and can connect to their network but am limited to web surfing - the firewall sometimes even blocks Yahoo or other web mail to prevent viruses.

So I broke down and bought a Treo 600, which has been widely reviewed and praised as one of the better combination cell phone and PDA devices. Configuring and loading it took some time and I was not particularly satisfied with Sprint’s support (for example, when I arrived in NYC from DC this week, the wireless web access did not work and I spent about an hour on the phone with Sprint resolving it).

But now that it works, it’s great. First, I have one device instead of two. Second, I don’t have to dial numbers of anyone in my contact list. Third, I can get all my e-mail (I use SnapperMail). And fourth, the device even acts as a modem for my PC, so if I can connect my notebook to the web to download e-mail or web surf. Though Snappermail is great, it’s still much easier to deal with e-mail using a full screen and full keyboard.

Wireless e-mail is perhaps the best feature because I can quickly see if I have any urgent issues without booting up a PC or finding a web connection.

The device is not cheap but Sprint’s wireless web service costs only $15/month above the voice plan. For those who operate on their own, I highly recommend the Treo 600. Of course, lawyers in large firms need to go through central IS departments because of the need to connect to enterprise mail servers. I’ve had a Blackberry in the past and am now reminded of why they are wildly popular - now even more so that these types of devices are also cell phones.

Ernie the Attorney also has some interesting comments on the Treo and Sprint at Sprint is my wireless provider — for now…

Recently I have learned of not one, but two law firms that have commercialized extranets, creating separate entities to market products and services.  

In my last posting on Extranets, I suggested that law firm Extranets are more touted than used. I do not have good data on actual usage, so my anecdotal impression may well be misplaced. And I do know a handful of firms whose Extranets are used regularly and extensively by clients.

Judging by their action to create separate entities to market extranets, at least two law firms perceive that a market exists for additional, legally-focused extranets. Tom Baldwin, formerly consultant to Foley & Lardner and now CKO of Sheppard Mullin, alerted me to Haynes & Boone’s hbconnect Extranet, which has created separate entity, ClientConnect to offer customizable Extranet services.

Separately, Sedgwick, Detert, Moran & Arnold LLP has created a subsidiary called Xerdict, which also offers customizable Extranets.

It will be interesting to see how these two offerings fare in the market. It seems to me a competitive space, with offerings by Hummingbird, Interwoven (owner of iManage), Documentum (owner of eRoom), and Intralinks, among others. The market does not seem to be crying out for additional choices. There is, of course, always the possibility of the proverbial “better mousetrap.”

If I were advising a law firm about selecting an Extranet product, I would focus first on functionality, including ease of use and administration. Another consideration is the company offering the product - its stability, focus, market position, and incentives. It can be hard enough to evaluate a software company that is purely free-standing; it would seem even harder to evaluate one affiliated with a law firm.

The widely reported merger of Wilmer, Cutler & Pickering and Hale & Dorr raises interesting questions about the role technology can play in helping to integrate two firms. 

To be sure, merging the tech infrastructure of two firms can be a major challenge. I will leave that topic to others. Even if the infrastructure consolidation proceeds flawlessly, there is still a big question: should a merger prompt adopting knowledge management practices and technology.

The answer is clearly yes, as was well-articulated by Cindy Thurston, Director of Knowledge Development at Shaw Pittman, in a February 2004 article, Knowledge Management and Mergers (PDF) in Capital Connection (a publication of the Capital Chapter of the ALA). Thurston points out that “a key to successful mergers is being able to find the right information or expert quickly.” For this, she suggests good KM and expertise systems are required, as is a serious customer relationship management system.

Of course, I am biased in the direction of firms “doing KM.” I have also for several years now asked (of partners, consultants, and others) why there is so much consolidation among large firms. I do not find the proffered answers convincing, so I was pleased to read a skeptical commentary in the Washington Post today. In Scaling the Myth Of Mergers’ Efficiencies , columnist Steven Pearlstein questions the rationale of mergers.

Synergy does not happen by itself. Cost savings must be carefully engineered. And revenue enhancements through cross-selling take a lot of work. If ever there were a time to demonstrate the return on investment in capturing and sharing documents, identifying and locating experts, and sharing relationship information, it seems that it would be in the two or so years following a major merger.

Added 4/22/04 at 945am: See Law Firm Merger Mania for the transcript of a follow-up discussion to the Pearstein column.

I noticed today on Legal Technology Insider that Interface Software, makers of Interaction customer relationship management (CRM) software, has acquired the assets of Scout Solutions, makers of Aptus.  

According the April 19th Interaface press release,

“Interface Software announced today that it has signed a definitive agreement by which it has acquired the assets of Scout Solutions. This acquisition cements Interface Software’s leadership in the CRM space and underscores the company’s long term strength and viability as the premier provider of CRM solutions to the professional services industry.”

It will be interesting to see if this acquisition has an impact on the role of CRM in large law firms. While many firms have purchased CRM, my sense is that few are really using it effectively.

As far as I know Scout and Interface are the two products most large law firms considered because both “grew up” in the legal marketplace. I hope that the combination does not diminish innovation in CRM for law firms. To be sure, there are many “generic” CRM systems, but at least anecdotally, I’m not aware of many firms that have looked beyond these two choices for CRM.

The March 29, 2004 issue of the National Law Journal features a cover story titled ‘Offshore’ Legal Work Makes Gains. It presents a detailed and, in my opinion, balanced view of the trend and issues.  

Unfortunately, I could not find the story online (I have never been clear how and why law.com selects some articles to upload to law.com and not others, but I digress). So, here are some highlights and comments.

The article starts by reporting on Lexadigm, an outsourced legal research company that relies on lawyers on India, is growing rapidly. The company web site indicates that lawyers in the US supervise the research of lawyers in India. So it’s not obvious to me how this differs from traditional legal research companies, at least with respect to legal and ethical issues.

It goes on to say that the potential for offshoring work is great, but that, so far, there has been no outcry against the practice (as there was when accounting firms threatened to take share from lawyers). Several lawyers quoted, however, express various ethical reservations about offshoring. As I’ve mentioned in prior posts, I am not clear what the legal reasoning behind these concerns are. I was therefore pleased that the article explored the ethics issue in more detail.

The article quotes Prof. Morgan of GW Law, who points out that US lawyers are still “on the hook” for the work performed in India, which should suffice to address ethics concerns. He does suggest, however, that as a relationship management issue, lawyers who offshore elements of the work disclose this fact to clients.

Another concern discussed is whether rules concerning the unauthorized practice of law might apply. The analysis concludes this should not be an issue, in part because defining law practice has proven difficult and in part because “much of the everyday work of attorneys can be performed by consultants, paralegals, law student or interns without violation of the restrictions on the unauthorized practice of law.” Also, two companies that provide offshore service make clear that they are not providing legal advice.

I was pleased to see a more in-depth article and, in my opinion, more balanced one on the ethical considerations. There may be reasons why offshoring does not grow (e.g., the cost of supervision may be too high or the politics too inflammatory), but at least the marketplace should be able to make that decision, unencumbered by alarmist and probably ill-founded ethical considerations.

If offshoring takes off, it could have strategic implications for technology in law firms. First, it would help support the concept of Working Virtually (one of my recent blog postings and article) by further reducing the link between physical location and work. Second, if any large firms do consider offshoring, it may push in the direction of work flow systems to better control the work (though e-mail and document management may suffice). And third, if the concept takes root, it’s possible that some large firms could use lawyers in India to assist with internal knowledge management activities.

My recent post (4/11/04) reviewed how hospitals are closely examining procedures to improve work flows and quality. This approach may be the best hope general counsels have to control outside counsel costs. In Staying Power in the April issues of both American Lawyer and Corporate Counsel magazines, reporter Krysten Crawford examines “Five Big Ideas” from the 1990s for controlling outside costs.” The verdict is mixed at best.  

The Five Big Ideas are “law firm ‘convergence,’ legal auditing, task-based billing, research outsourcing, and online auctions.” The article examines each in detail and finds that convergence works if properly managed, legal auditing disrupts relations so does not work, task based billing is hardly used and has had little impact, Fortune 500 general counsels have never embraced outsourced legal research, and auctions may work for high volume routine matters but not for high-stakes, one-off cases.

It’s not clear to me whether the returns on these five approaches are lower than initially expected because of inherent limitations or execution issues. I suspect that, with the possible exception of legal audits, the problem is in the execution, not the concept. If so, it’s not obvious that a “Toyota best practices” approach will work either. This would require law firms, of their own accord or at the behest of their general counsel clients, to carefully examine their processes and make significant changes.

One way or another, general counsels will have to become more demanding customers of law firm services. The options for managing outside counsel and reducing costs are narrowing. One possible next “Big Idea” is e-billing. But that’s not likely to significantly reduce costs unless accompanied by task based billing and a willingness of general counsel to apply careful analytics to bills across multiple matters and firms.

The path to lower cost is changing the way large law firms work. The Five Big Ideas are mainly about economic incentives or after-the-fact analysis that, in theory, will change how lawyers work. A “process” approach as described in my recen post on applying process analysis - while enormously difficult culturally - might actually find ways to lower cost by changing the way lawyers work. And that’s what’s ultimately needed in my opinion.

For a very interesting case study on using auctions, which in part questions the idea of convergence, see eLawForum Case Study by Professor Clay Christensen, Harvard Business School (PDF format) posted on the eLawForum website in February 2004.

I do not recall seeing many articles about knowledge management in the legal market outside of legal trade publications. So it seems noteworthy that Toronto’s Globe and Mail has a lengthy article today about legal KM. 

Knowledge management crucial tool for law firms (4/12/04, p. B12) notes that

“Facing an increasingly competitive market, a drive to specialization and a need to operate globally, major law firms must share knowledge more effectively than ever before. So they are turning to knowledge management – a combination of technology for organizing knowledge and techniques for using it better.”

The article then explains how most large law firms have some type of KM program in place and goes on to explore how several firms are approaching KM. Legal KM professionals probably will not learn anything new from this article but will perhaps be pleased to see that KM as a topic is now considered newsworthy. Even the general computer trade press has limited coverage in my experience; my post KM Update in Information Week of September 4, 2004 reflects the most recent significant coverage I have seen in the tech press.

Personally, I was pleased to see that my clients ii3, Inc. and Hummingbird are specifically mentioned.

In the “never rains, it pours” department, Federal Computer Week has not one, but three related articles on KM today: Plug-and-play expertise - Army help-desk portal taps knowledge management tools to solve staff problems, Pieces of the KM Puzzle, and Knowledge vs. content management.

In To Fix Health Care, Hospitals Take Tips From Factory Floor, the Wall Street Journal (4/9/04, p. 1) reports that hospitals are applying techniques pioneered by John Deming and used heavily by Japanese manufacturers to improve the quality of health care. Lawyers and law firms and departments can learn from this example.  

The article describes several systematic techniques that hospitals are adopting from manufacturing that improve quality and reduce costs:

“The Toyota system emphasizes the smoothest possible flow of work – accomplished by, say, mapping out work processes and eliminating unnecessary steps, and using teamwork to identify and fix problems as soon as they crop up. Hospitals are using the tactics to reduce patient waiting times, slash wheelchair inventories, prepare operating rooms faster and move patients through a hospital stay or doctor visit quickly, seamlessly and error free.”

At least one hospital sent a team of executives to Japan for 2 weeks to learn how manufacturers, especially Toyota, apply such techniques. One application of this approach is that any health care provider can perform the equivalent of hitting the stop button on a factory line to correct a problem. For example, a nurse in an ICU can now call the attending doctor directly to make sure a problem is addressed.

Another application is to map patient processes. One hospital “produced a 25-foot wall map charting a pneumonia patient’s typical office visit. With help from the consultants, they concluded that 17 steps are valuable and 51 aren’t. In the latter category, for instance, patients walk to a separate laboratory to get blood drawn.” Among other benefits, patient waiting time was cut from 30 minutes to 9.

Of course, making these changes is not easy; the article notes that “the conflict between the culture of efficiency and the culture of caring is never far from the surface.”

Medicine and law share some common characteristics: highly trained and fiercely independent professionals, complicated processes, and often difficult to measure outcomes. It is interesting to contemplate what would happen in a large law firm or department if the “Japanese” approach were applied. Would teams of process consultants that hospitals employed find significant savings and opportunities for quality improvements in law practice processes? I think the answer is undoubtedly yes.

In my next blog posting, I will discuss some recent general counsel initiatives to save money that have not worked as expected. Perhaps the time is coming to “think out of the box.” The types of process improvements described here could be a big money saver for general counsels.

Last summer, the large UK law firm Lovells announced that it is farming out certain routine work to “provincially-based solicitors.” Now, Freshfields is following suit. Details and other outsourcing updates follow. 

According to a Lovells press release dated July 2003, the firm has entered into an “IT-driven outsourcing arrangement whereby lower value or more routine work involved in managing a property portfolio is sub-contracted by Lovells to provincially-based solicitors, who work to quality standards set by the firm, whilst the higher value, more specialist work, is handled by Lovells as principal.”

Legal Week reports that Freshfields is following suit. A March 25th article reports that “Freshfields now regularly farms out due diligence work to firms with operations outside London that include national” and other law firms. Whereas Lovells takes responsibility for the work, Freshfields does not, according to the article.

It seems to me that this type of arrangement is similar to outsourcing legal work offshore. Once a firm or client crosses the threshold of outsourcing, the difference between a domestic and overseas provider does not seem that great. Either way, a client or firm faces management, quality control, and ethics considerations.

In other outsourcing news, Law Abroad, a UK company, is gearing up to outsource legal work to South African lawyers, using automated systems to manage the work. (I spotted this on Legal Technology Insider, Issue 159). Separately, Laying down the law, in the Star-Ledger of Newark (New Jersey), reports on the increasing trend of law firms to use lawyers in India.

It feels to me like the market is “tipping.” That is, soon, it may be common place to at least consider using, if not actually use, lawyers in countries where the hourly rate is considerably lower.

A decade ago I thought that the age of personal productivity growth using technology was over and that future gains would be in group productivity. I was wrong. 

Group productivity can be improved but that’s a discussion for another day and another post. Observing my own work, my clients, and my friends, I realize that there is plenty of room to improve personal productivity. The investment in time and effort required to learn new software or learn more about existing software generates ample rewards.

In my view, personal productivity should be a strategic issue for law firms and law departments. Ensuring that lawyers are productive affects professional development, client service, and lawyer retention. If nothing else, professionals should gain a sense of personal satisfaction if they are able to do their work more effectively and efficiently.

As for the economics, I reject the shibboleth that lawyers don’t want to be more productive because then they bill fewer hours. Inhouse lawyers are not compensated based on hours billed and so have an incentive to be more productive. Outside lawyers typically have enough work to fill the day and are eager to get more done. Moreover, I believe that there is a growing problem with write-offs, especially “self-imposed write-offs” by lawyers who realize they’ve been unproductive and do not bill all the time they spend on a client matter. Improving productivity should, on balance, reduce these write-offs, “hidden,” unbilled, and billed.

So, with this post, I am starting a new blog category, Personal Productivity. To start with the concrete, here’s an example of how learning new software can pay off….

During the holidays at the end of 2003 I downloaded and learned Microsoft OneNote. (See my prior post on OneNote.) Since then, I have integrated OneNote into my daily working. I use it regularly, both when working by myself and with clients. Working on my own, I use OneNote to track all types of information and to take notes during phone calls. I have also used it to draft an extensive outline for a white paper.

At meetings, it’s a great place to take notes: outlining features make it easy to enter and modify notes; the ability to add text blocks anywhere on the page helps keep track of thoughts off the main path; and the ability quickly to find content previously generated for the project helps me add to the discussion. For more information, see Mark Voorhees’ article, Worth Noting (in which I am quoted) in the March 2004 issue of AmLaw Tech.

Let me close this first post in a new category by saying that I know at least one person who makes a living helping lawyers be more productive. My friend and professional colleague, Jared Goralnick, is the founder and principal of SET Consulting.