Strategic Legal Technology

I previously posted about an upcoming Legal Tech session that will examine whether clients should pay for aspects of KM. This topic led to an interesting e-mail exchange with Guy Borda, an Associate on the Defense Systems Team at Booz Allen Hamiltion who works on KM issues. 

I started the exchange by raising the idea of clients paying as an agenda item for a local KM meeting. Guy asked a question in turn, which led to several rounds of messages. Reproduced here, with editing limited to correcting typos, is our exchange:

Ron: If the [upcoming KM meeting group] will indulge me, I’d like to take a few minutes to discuss the idea that clients should pay for some portion of KM. At Legal Tech in NYC on Jan 31, I will moderate a session with Jeff Rovner (KM at Clifford Chance) and Christian Liipfert (senior lawyer, BP) on this topic. Would love to get feedback from group on some of the topics I plan to raise then.

Guy: Can you elaborate on what you mean by clients paying for the KM?

Ron: The best example is at the close of a matter, it would often make economic sense, I think, for lawyers to collect key documents and lessons learned and catalog them systematically, including providing meta-data descriptions and taxonomical categorization. That rarely happens now and it’s not even clear it would happen were it a billable activity. The client would benefit by having a set of high value documents, meta-data, and possibly “lessons learned” summary. The law firm would also get to re-use the material. The reason law firms are looking primarily at automated KM approaches (e.g., Recommind) is that there is no motivation to identify documents for re-use or to describe what a matter was about (independent of the underlying documents that were produced for it).

Guy: It does. And, I couldn’t agree with you more. Although, if I compare what you just wrote to the previous email… are you saying clients should pay for the lawyer’s inability to conduct KM?
In our space, IT and strategic consulting, we reuse as much as we can for our benefit (e.g., responding to RFPs, RFQs, RFIs, marketing, outreach, and more), and for the benefit of our clients (e.g., design, requirements, development, operations, analysis, and on and on). Reusability of our materials, documentation, methodologies, and software is key to our success.
Our big problem is that we don’t change our own culture, no amount of automation will resolve the underlying KM issues… people’s willingness to share data, catalog data, expand beyond their existing social/professional networks, use web-based KM methods are still barriers to entry.

Ron: I would not argue that “clients should pay for the lawyer’s inability to conduct KM”. My argument is more that the “inability” is really an economics issue, specifically that in a time-based billing world, lawyers have no incentive to spend time on KM when they could be billing other clients. If they could bill for their time at the close of a matter to assemble, catalog, and describe key elements of the work, then they would more likely do it. There are issues of course, as some of the benefit of that work accrues to the firm as well as to the client. But a lot of the work a lawyer does for one client ultimately accrues to the benefit of other clients, so it’s not obvious an after-matter KM task is all that different.
Of course, the real problem may not be economics. In corporate law departments - and for that matter, consulting firms - which do not typically operate on a purely hourly billing model, the economics ought to be cleaner. That is, if investing in KM really had a return, it should just happen. So that leaves several possibilities:
1. KM does not have a good economic return and individuals are making correct and rational decisions about how they spend their time
2. KM does have a good return, but individuals are simply irrational
3. KM does have a good return to the enterprise, but from an individual perspective, the returns are not adequate and institutions have not figured out how to deal with this externality problem
If, as you suggest, non-hourly organizations cannot figure out how to motivate individuals to engage in KM that benefits the institution, then I have little hope for hourly billing law firms. This is one of the points I want to make at Legal Tech - if law departments can’t do KM because of cultural barriers, why do they expect their outside counsel to do so?
PS - It would be interesting to see if clients in fact did allow lawyers to bill for some KM if those lawyers would actually do the KM work.

Guy: Interesting. I like points one and two. I think depending on the organization and business, either or both could apply. One of the ways we’ve kicked around trying to shake-up this lack of KM culture is by revamping our competency assessment process. Our current process is extremely detailed and we evaluate our consultants (yearly) based on a number of criteria related to their performance. However, we do not currently rate them with regards to their ability to share knowledge, conduct knowledge management, or even implement knowledge management measures or methods.
We have about six levels in our firm before someone becomes partner. And, for each of those levels we’ve discussed assigning KM metrics related to performance (e.g., someone posted 99% of their documentation into the firm’s enterprise KM portal, or someone assigned metadata to each document they develop over the last six months). This would be one way of slowly trying to change the culture. The extreme (which we are not yet pursuing) resembled an “up or out” model, except for KM it was going to be a “publish or perish” model… meaning get your content/documentation published to the KM portal if you want to be considered for advancement.

Ron: In general, I think it’s fair to say that people do what they are compensated for or what they find fun (and the latter is, by economists, considered psychic compensation). Unless KM is somehow “baked in” to other processes that workers must do and remains an extra step, we have to be concerned with motivating them to do it. I don’t see how to bake it in, so that leaves KM as an extra step. If we want it done, we must compensate/evaluate for it. My recollection is that McKinsey has a good KM system and seriously considers KM activities in performance evaluations. That, to me, is the answer.
As a consultant at Bain & Co I worked with one client that wanted to change the product mix sold to increase margins. We did lots of analysis and had grand plans for how the mix would change. They told sales people what the mix should be but were unwilling to change sales compensation. Not surprisingly, the mix did not change. Sales people sold what maximized their commissions, not company profit. The moral is you get what you compensate for.
The alternative to changing behaviors and compensation is to try to substitute technology for human action, which is the direction most large law firms are moving. That, or hiring a few people whose job is KM but who are not actual practitioners.

I have previously posted about General Electric’s experiments to use auctions to buy legal services. The experiment seems to be a success. 

In ”General Electric names 37 firms for UK panel launch,” LegalIT reported on January 19th that in the UK, GE selected 37 firms for £30m of work based on an online auction. “The review saw firms bid against each other in real time for mandates, primarily on price. A GE spokesman said: ‘[Using the new system] means we have appointed the best possible counsel at the best prices.’ ”

Apparently at least one lawyer is upset that some firms started their bids high and then matched subsequent lower bids. Oh horrors! Price competition in legal services! It could get worse; LegalIT reports that “the auction system is now being introduced to other parts of GE’s European business, with a national review currently underway in Spain.”

As I have argued previously, as competition and pricing pressure increases, forward-thinking law firms will look more to technology to lower costs and improve their ability to deliver service.

The legal market is consolidating yet again. Well-known consulting company Hildebrandt is now part of the Thomson organization. 

According the Hildebrandt press release, “Combined, Hildebrandt International and Thomson bring unrivaled industry insight, client knowledge and consulting expertise, providing exceptional management, organizational and technology advice and services to the legal profession.”

It will be very interesting to see what impact this merger has on legal technology coming from Thomson. Thomson already has excellent insight into the legal market, but now gains even deeper access, not only to IT and legal research, but also to top level law firm management.

I recently posted on the seeming paucity of large law firm blogs. Several readers and bloggers have provided examples but I interpret the relatively few leads received as confirmation that there are indeed few firm-branded blogs. 

Here then is the list - albeit a short one and not necessarily all-inclusive - of large law firms (NLJ 250) with firm-branded blogs:

• Telecom Law Blog by Davis Wright Tremaine
• Holland and Hart’s Rocky Mountain Health Care Blog by Holland & Hart
• The Environment by Lowenstein Sandler
• Electronic Discovery Law by Preston Gates Ellis

Though not an NLJ 250 firm, I also found almost-100-lawyer firm Stark & Stark publishes New Jersey Law Blog. Richard DeLuca, the firm’s Director of Business Development, reports that “"we created the New Jersey Law Blog in response to a lackluster reception/readership to an email newsletter which we had been using. The external response to our blog has been great and has helped us as a firm focus our e-marketing initiatives.”

Also, at least one more large law firm has blogging plans. Tom Baldwin of Sheppard Mullin reports that his firm will soon launch antitrust and labor blogs. Tom also has a good blog post comparing blogs to newsletters.

Since it’s still January, I feel entitled to make a prediction: there will be significantly more large-firm-branded blogs in 2005.

Update of 8/30/05: Spotted on Robert Ambrogi’s LawSites Bracewell & Giuliani’s Energy Law Blog

Update of 8/27/05: Spotted on Inter Alia, Davis Wright Tremaine’s Privacy and Security Law Blog

I have previously suggested the possibility that clients should pay for KM (here and here). I will moderate a discussion on this and related questions with two leading KM experts, one law firm and one law department, at Legal Tech in NYC later this month. 

The Legal Tech Conference takes place in NYC and KM at the Crossroads (on January 31) will be a discussion that I moderate between Christian Liipfert of BP America and Jeff Rovner of Clifford Chance. Here is the session description:

“The promise of greater efficiency, more billings and the ability to generate new clients has long driven law firm investments in the promise of knowledge management systems and technologies. Recovering those investments and justifying those expenditures, however, continues to be a challenge for many law firms. Clients have the right to expect - even demand - greater efficiencies, but should they also share in the investments required to deliver them? Does KM add value in the eyes of the client and are they willing to pay for that value? If so, should clients pay for KM before, during, or after a matter? Join us for this moderated discussion between knowledgeable practitioners on both sides of the aisle as we highlight the conflicts and agreements and help define a path that makes sense for both sides.”

This conference requires registration.

Law firms contribute to information overload with their regular updates. Meanwhile, in-house lawyers often struggle to stay current. A solution is possible. 

Imagine the general counsel arriving in the morning, opening Outlook, clicking on her updates folder, and seeing a few high-value items tailored to her needs. The folder does not contain just e-mail. Rather, it aggregates messages and other updates from multiple sources - law firms, legal publishers, web sites, and other third parties - and groups them together, consistently formatted.

All this happens automatically. Some updates are free, some require a subscription, and some are client-specific law firm work product. The GC clicks once to retain or forward an item and the system knows where to save or send it. The system suggests topics to add or delete.

The technology for this vision exists. RSS is one element: “Real Simple Syndication” allows software automatically to fetch updates from web sites; it is widely used in blogging (see my post re using an ”aggregator” to read multiple blogs). Tom Gelbman, in Information Flood Warning (Legal Tech Newsletter, Dec 2004) explains the benefits of RSS well.

Gelbman also hints at what I believe is the necessary next step: standards to tag content for automatic filtering and sorting. The way to tag content - XML or the extensible markup language - has been around for several years.

Creating classifications and tagging content takes time and money. It is happening, albeit in the financial world. The Research Information Exchange Markup Language is supported by RIXML.org, “a consortium of buy-side firms, sell-side firms and vendors that have joined together to define an open standard for categorizing, tagging and distributing global investment research.” This standard allows suppliers and consumers of financial research to buy, sell, aggregate, and use research more effectively. The legal market could follow this model.

A first step would be for large law firms to blog instead of to add web pages or send e-mail. (My prior post points to the paucity of large-firm-branded blogs; a follow-up post is coming soon.) Legal publishers have taken some steps. LexisNexis has an RSS feed for Mealey’s and Westlaw delivers IntraClips via RSS. There may well be more; these are merely ones I’ve found.

Innovation is hard, especially when you want to do something new. It may take a consortium of clients, as suggested by a Cisco lawyer early this month, to create the pressure and incentives to realize the vision.

How many large law firms have blogs? I would like to get a sense of how many AmLaw 200 firms have blogs and possibly create a list of those that do. I need your help. 

I have checked blawg.com, Internet Marketing Attorney (which reviews 250 law firm web sites) and other sources. I could not find list of large law firms that have blogs. If you know of a list or even a single large firm with a blog, please contact me. Depending on what I learn, I may create a companion list to my online legal services one. (NOTE: I am primarily interested in blogs branded with a firm’s identity, less so in ones by large firm lawyers that link to the firm but are not firm-branded.)

The only large firm blog I have identified is Electronic Discovery Law, which is published by Preston Gates Ellis LLP. Interestingly, I can only find one reference to the blog on the firm’s web site, on a practice group page. A search for the word blog on the firm’s web site yields no hits (surprising since I did find the word).

I ask because it seems that large firms are missing a great opportunity for marketing and distribution. Ten years ago, I suggested to a large firm that it consider e-mail alerts to clients. I reasoned that the firm was generating lots of interesting content and already sending paper updates. Why not just send occasional e-mail updates? A look of horror crossed several faces: the liability, the work to do this, clients would view it as a bother, it would not look professional, etc.

Today, many firms do send e-mail updates to clients. It seems to me the time has come to make these available as blogs with an RSS feed. This is clearly not about technology - it is about serving clients. Of course, this means lawyers have to grapple with a new concept, which, as I’ve previously discussed, is often a challenge and, if technology is involved, is often perceived as a tech issue rather than business decision.

Ringing in the new year is a great article by a Cisco law department member on how technology can change and dramatically improve the ways lawyers practice and the business relationship between lawyer and client. 

Laura Owen, a lawyer who is director, worldwide legal services, at Cisco Systems Inc, suggests in The Tech Evolution: Change or Die ((Law Technology News, 1/4/05) multiple ways that lawyers can work more effectively. Her advice is directed at both law departments and firms. Many of her suggestions relate to appropriate use of technology.

She enumerates nine specific measures, including commoditizing routine work by deploying document assembly, e-signatures, and contract management systems. (On contract management, see my recent prediction on this topic and how Cisco uses contract management.)

Evans also suggests consortia to share needed work and using technology to perform routine work. As an example of the latter, she cites McGuireWoods ContractBuilder. (I maintain a list of online legal services and will add this one soon.)

She concludes that “Just like the industrial revolution, technology has revolutionized the way businesses work. But it’s not enough to have BlackBerrys and knowledge management systems. We all need to embrace these advances to change the way legal services are delivered.” I could not agree more; in fact, much of this blog is directed at that very idea.