Strategic Legal Technology

It’s year-end. Forget about predictions for 2005. What will the legal profession look like in 20 years??? 

In Law Practice Today, an ABA online magazine, John Tredennick organizes a forum, Looking to the Future: What Changes Do You See Coming in the Next Twenty Years?, in which several commentators answer six questions he posed. The article is worth reading for the many points of view on each of the questions. Here are my answers:

1. What will be most different about the practice of law twenty years from now? Why?
Following the trend in health care, the legal market will adopt “evidence based law.” General counsels will finally put bite behind the bark for lower cost and better service. They or their agents will systematically analyze how lawyers work (for example, by analyzing the data generated by e-billing) and develop best practices. Key among these best practices will be formal project management, which will be a requirement for any sizable matter. The imperative to reduce costs and improve outcomes will drive this.

2. Will the billable hour still be king in twenty years? If not, what will replace it?
Yes, billable hours will prevail, but vitiated by disciplined project management combined with budgets for each stage of the matter.

3. What will law firms look like in twenty years? Mega firms, virtual organizations, or what?
Best practices and project management will enable well-managed law firms to recognize efficiencies, from investing in automation to hiring and effectively deploying professional project managers. Among large firms, only those with more than 1000 lawyers will have the scale to deliver the systematized services that clients will demand. Boutiques offering highly refined and niche services will also survive.

4. Will computers replace most of what lawyers do in twenty years? If so, how and what will be left for lawyers?
Computers will replace a portion of routine work that large law firms do today. The tools already exist, for example, expert systems or document assembly. The challenge is not in the technology, but in the economics. Only as both clients and firms develop discipline about best practices and budgeting will the economics of automating become positive.

5. Will the trend toward internationalization of law firms increase over the next twenty years? Will it engulf even the small firms?
Law firms will follow clients in this regard. Assuming business continues to globalize, so too will the firms that service them.

6. What technology change (existing or coming) will most affect law practices? Why?
The adoption of web services and the semantic web will create the ability for firms to deliver “law embedded in software.” This software will offer preventive law, detection of potential problems, and automation of routine legal tasks. Large firms will sell this on a subscription basis as part of institutional relationships; the profit, however, will still be in high-end, highly leveraged traditional matters.

When it comes to selling, firms increasingly recognize that lawyers need coaching. We can only hope that when it comes to doing the work, law firms recognize the same is true. 

Video Trains Lawyers Not to Be Boors in the National Law Journal reports that Pillsbury Winthrop has created training videos that illustrate various mistakes - from horrendous to subtle - that lawyers can make in pitching a client. The horrendous include arriving late, dressing inappropriately, and using a BlackBerry during the meeting. The video addresses the concern that “lawyers are not putting their best foot forward in face-to-face meetings.” Several other large firms “have been among the many firms that have experimented with one-on-one sales coaching for partners.”

So, the myth has been punctured - lawyers really don’t know how to do everything perfectly. As a client, I would want my outside counsel to devote similar effort to training lawyers on how they do work. Lawyers may receive adequate substantive training, but there is scant evidence that they receive enough on how to practice.

Where is the video that shows the blunder of building a discovery “document database” in Word? The deal meister who tracks changes on a complex document instead of using specialized comparison software? The litigator who has never heard of CaseSoft or considered using it? The lawyer who fails to remove meta-data (including a different firm shown as author) from the document sent to a client? The firm that has no way to locate its own experts or prior work product?

In selecting outside counsel, perhaps general counsels should consider whether firms invest more in sales training than practice training. That training should include application of best practices and appropriate use of technology.

Newly developed software may prove promising to address the problems of duplicate and near-duplicate documents in discovery. 

Why are duplicates a problem? First, lawyers may inconsistently tag duplicates or near dups, meaning some versions are designated responsive and some non-responsive, some privileged and some not-privileged. This can lead to confusion, credibility issues, and possibly even sanctions, especially in portfolio litigation where multiple cases turn on the same set of documents. And second, numerous duplicates can significantly increase the time - and therefore cost - for reviewing documents.

Existing approaches to detecting duplicates have limitations. One approach is to use a “hash,” a mathematical technique. This approach determines only if documents are completely identical; a single difference in one character or the file path makes two documents different. Another approach is to use meta-data to detect possible duplicates.

Software start-up Equivio has software that, upon first evaluation, allows litigators to identify near duplicates and adjust what is meant by “near.” For example, drafts of the same document prepared by different authors on different days with different file names could be identified as potential duplicates. (Hashes and meta-data cannot do this.) Such differences may be relevant to the case, but often they are not. Clustering near duplicates and reviewing them simultaneously can be a great advantage in helping to insure consistent responsiveness and privilege designations and in saving review time.

This is yet another example of software that can help address the new challenges created by e-discovery. It seems increasingly clear that over the next few years, automation using highly sophisticated semantic techniques will ease the burdens of reviewing and managing digital discovery documents.

Continuing with the end-of-year theme of predictions, commentator Adam Smith, Esq. recently asked a panel of fellow bloggers about the future of large law firms. 

He posed the following question: “"Looking out five to ten years, what will the single most significant change be in terms of how sophisticated law firms (think AmLaw 200) are managed, on the ‘business side’?”

My answer:

“I started in the legal market in 1989 after three years as a Bain & Co strategy consultant. I observed glaring inefficiencies and convinced myself that the legal market would rapidly change in fundamental ways. I was wrong; change has been slow and evolutionary. Chastened, I no longer predict revolution. I think that the next 5 to 10 years will bring increasingly sophisticated financial analysis, particularly wide adoption of more detailed profitability and financial/competitive analysis. Firms will gain deeper insight into profits by practice, office, matter type, and perhaps even lawyer. Some firms may not act on their findings, but over time, the analysis will drive decisions from mergers to compensation to how matters are staffed. If true, this will not be as visible as other developments such as the advent of marketing departments, so observers will have to read the tea leaves closely to confirm this.”

Of course, enabling this profitability analysis will require some new technology, particularly business intelligence software.

For other interesting answers to the question, click here. Note that this is the first in a series of questions Adam Smith, Esq. will pose to his panel of “Savvy Bloggers.”

It’s that time of year for predictions. I have previously suggested that law firms with outsourcing practices have an opportunity to help their clients not just draft complex contracts, but also manage them once signed. In 2005, we will likely see more corporations adopt contract management systems. 

Many corporations already have deployed contract management software (for example, diCarta lists customers such as NBC, Kraft, and Walgreens; imany lists Honeywell, P&G, and Scripps; Nextances lists Genzyme and Fireman’s Fund; and Upside Software lists JCPenney and Boeing).

Cisco Systems’ law department, probably the leading law department in the use of technology, recently deployed contract management software according to the Corporate Legal Times magazine (Sept. 2004). Eliminating the Paper Trail reports that the law department created an automated system, “Click-Accept.” It “automatically generates, customizes and keeps track of distributor contracts - as well as 30 other types of high-volume contracts.” The system automates the contracting process from end-to-end, so that no lawyer work is necessary and signing occurs digitally. Cisco plans to expand use of the system over the next few years. To date, Click Accept has processed 500,000 contracts and saved an estimated $4 million. According to a news item on Cisco’s web site, Click Accept has freed up two full time workers (presumably lawyers?) for other work.

The challenges of contract management - as in many intersections of law and technology - are primarily ones of process and culture. But with savings like this, it seems safe to predict more companies will adopt contract management systems. That much seems inevitable; more interesting will be to observe whether any large law firm figures out a way to capitalize on the trend.

Harvard Law School is searching for a new CIO. Will a premier law school have an impact on legal technology? 

I think not; the academy seems disconnected from the real world in my experience. One of the qualifications listed in the job description: “Very strongly preferred: experience in higher education; knowledge of educational technologies; teaching experience.” If a law school were interested in teaching students about technology of value to practitioners, it would be prudent to include in this list knowledge of or willingness to learn about practice technology. If Harvard Law has any interest in the practical and practice aspects of legal technology, I do not see it reflected in the job description.

Interestingly, however, another qualification is a preference for “superior record of leadership with business partnership orientation.” It will be interesting to see if Harvard partners with businesses on the tech front. How about a partnership with a large law firm to make the education more relevant to the real world?

(At the risk of editorializing - and this is a blog after all…. I attended a “national” law school and am firmly of the belief that law schools can be more practical without impinging on what they view as their core mission. I actually believe law school only needs to be 2 years. If the academy insists on 3, at least let them do something practical.)

Spotted on Rick Klau’s blog, another major acquisition in the legal market. 

LexisNexis has announced it is acquiring Interface Software, Inc., makers of Interaction software, a client relationship management system (CRM) widely used by large law firms.

Over the last few years, both LexisNexis and Thomson Legal and Regulatory (parent company of West) have acquired several software concerns. It looks increasingly like both companies are bulking up. It’s not clear yet how this will play out in the future. Combining multiple products under one roof presumably offers benefits to the acquirors, particularly the potential to cross-sell and to reduce overhead. The benefits to law firm customers is not as clear. Is it a single point of contact for multiple products? Is it integration of products? Lower prices? System-spanning content or taxonomies?

It will be interesting to watch the legal software market evolve. If nothing else, perhaps such acquisitions will continue to inspire entrepreneurs and innovators because acquisitions like this provide an exit strategy.

I started my career in legal technology in 1989. For most practical purposes, this means I was in the legal market at the beginning of the PC revolution. And I had many colleagues who shared with me their technology experiences from the prior decades. For readers who may be frustrated at times with technology today, it’s helpful to think how far we’ve come. 

The current issue of the American Lawyer magazine has published my article, Back to the Future in the AmLaw Tech supplement. I had fun writing this - you may have fun reading it.

The online version did not include three “sidebars,” which are available here.

Also of note, this is the last quarterly issue of AmLaw Tech as a stand-alone magazine. Quoting editor Mark Voorhees in his Editor’s Letter: “It is time now to bid adieu to AmLaw Tech, the publication but not the concept.” The supplement will appear annually in June, with the annual tech survey. A new AmLaw Tech column will appear in the main magazine. Why? Voorhees explains: “After compensation and rent, [technology] is the largest expense at most firms. We want to recognize the central role that technology palys at firms by covering it in our flagship rather than relegating it to a supplement.”

DC-based Howrey Simon Arnold & White, LLP has chosen enterprise resource management software SAP to run key business processes. This may be a first for a US-based firm. 

According to an SAP press release, “[t]he first phase of Howrey’s implementation will include SAP® solutions for financial accounting; management accounting; client and order management; engagement management, including time and expense management and invoice management; and business analytics.” The system will run on hardware from Sun Microsystems.

Anecdotally, I do not know of any other US law firm that has installed SAP; I have heard that at least one firm in the UK has. It will be interesting to see if SAP for Professional Services will gain traction in the legal market. Presumably, it would do so at the expense of other financial management, time and billing, and HR systems. From the perspective of a large law firm’s CIO, it cannot hurt to have another player in this space.

I am intrigued by the press release reference to “first phase.” It will be interesting to observe what phase two brings and what other benefits this industrial-strength software can have for large law firms. SAP may unintentionally tip its hat a bit when it refers to “order management,” language that does not reflect legal market reality. Yet in my experience, there is a gap - both in software and mindset - in managing client matters that remains to be filled, so there is no lack of opportunity to put the software to good use. And bringing an industrial mindset to law firms is a good thing in my opinion.

Large law firms are hiring general counsels. Will this have an impact on knowledge management? 

Spurred by Insurers, General Counsel Posts Popping Up at Large Firms in Corporate Counsel magazine (December 2004) reports, citing an Altman Weil study, that “63 percent of the nation’s 200 largest firms had designated a general counsel and 10 percent planned to do so in the next year.” Malpractice claims and conflicts are among the factors driving this trend.

Corporations employ various quality control (QC) measures to avoid both defective design and manufacture. Legal advice can be defective in its “design” or “manufacture,” that is, the theory of the case or transaction can be wrong or the execution can be flawed. Presumably, one function of a law firm GC will be risk management and reduction - the moral equivalent of QC.

One way to control risk is with knowledge management. KM can help assure that lawyers have access to vetted documents, prior research, and the right experts within the firm. Other ways include training and systematically reviewing work product prior to delivery to clients. It will be interesting to see if any law firm GC become advocates for KM, arguing that the cost of KM is warranted by risk reduction.

Playing devil’s advocate to my own argument, a GC might argue against KM. A systematic program of KM, including vetted precedents and best practices, would demonstrate that a firm had determined the “best” or “right” way to deliver certain advice. If so, and if a lawyer failed to use the KM system, it might be easier for an aggrieved client to make a malpractice claim than in the absence of the system. This seems a weak argument to me though - to the extent it has any legs, the answer is to ensure consistent use.

I recently updated the list of online legal services that I maintain. There have been a few changes since the prior update in June.  

New to the List: UK firm Morgan Cole offers tools to manage corporate employee policies and an employment e-learning service. US firm Littler Mendelson Bacon & Dear PLLC offers web-based immigration case management.

Changes to the List: Allen & Overy has added several new online services and Linklaters has added a competition law e-learning service.