Strategic Legal Technology

An article in Forbes (How to Be a Pack Rat) describes knowledge management research underway at Microsoft. As described in this article, I wonder if MS really understands KM. 

The article describes a research project called MyLifeBits, designed to store everything a user has ever created or viewed. Discussing the challenge of searching so much data, the article reports that

“The problem is twofold. First, you have to label it properly going in. Then you need to be able to search to find it at the other end–and quickly. Microsoft may have solved that problem with MyLifeBits software, still in development, which is letting users annotate their stored data with hyperlinks and voice notatations [sic], while automatically recording web pages, IM transcripts, radio and television. The software also makes it easier to sort and query the database. The key to archiving files is to tag and index files intelligently”

Anyone involved in KM understands the challenge of tagging and indexing files intelligently. UK law firms have invested substantial human resources in this process; US firms are focusing on automated solutions. It is clear that most users will not invest the time to tag and index documents. A random search of most any law firm’s document or file management system reveals numerous documents with cryptic titles, which shows that even when users MUST provide information, its value for finding and re-use may not be high.

A KM solution that presumes users will tag, index, or annotate items seems destined for failure. A couple of asides on this. First, the idea of voice notations seems counter-productive as there is no way to skim them quickly. And second, Apple’s new Tiger operating system, reported on extensively yesterday, received a rave review by Walter Mossberg of the Wall Street Journal for its operating system level full-text search capability.

Well-known law department consultant Rees Morrison has an interesting post about lawyers in law departments. 

He writes that in-house lawyers “barely scratch the surface of what accomplished users – not experts, just lawyers who have learned how to make the most out of a program such as Word, Excel, or Outlook – can perform. Powerful ways of working languish (think of macros, search and replace, and pivot tables)…”

This “chronic under-use” of the most pervasive business tool not only inhibits personal productivity, it also limits the ability of in-house lawyers as legal services consumers to judge the productivity of outside counsel. So the loss is a double whammy.

I only read Rees’ post after my prior Personal Productivity post about Google Maps. I concluded just about one year ago that personal productivity is still a worthy topic.

I am reminded by a laudatory post on inter alia about Google Maps. 

Until now, I have frequently found maps on the web a frustrating experience because I could not easily shift the view to see adjacent pieces of the map. (Somewhat along the lines of when using a book of maps, why does it seem that the route I need is always obscured by the binding of the book!)

With Google maps, it is very easy to move the view by clicking on the map and dragging. With amazing response time (based on Ajax), you can drag the map to see “beyond the edge,” just where you want to look.

I am impressed enough by this and other features that I rate this as an important personal productivity tool. Until Google maps, I often had to pull the atlas off my shelf or dig through drawers for a fold-out map. There are still times when printed maps are great, but Google Maps has made navigating both known and unknown parts much easier.

Would general counsel buy legal radar? Like regular radar, it would provide a picture of the nearby environment and early warning of upcoming hazards. This seemingly outlandish idea may not be so far out in fact.. 

The advent of blogs, the web, and advanced full text technology may provide the basis for it. Adam Smith, Esq. has commented about the current issue of Business Week coverage of blogs (paid subscription required). He notes, as have I (here), that lawyers need to consider writing blogs. But that’s not the point now.

Blogs also provide valuable intelligence about current and future trends. The article notes about the huge volume of blogs:

“The racket is deafening. But there’s loads of valuable information floating around this cafe. Technorati, PubSub, and others provide the tools to listen. While the traditional Web catalogs what we have learned, the blogs track what’s on our minds.
Why does this matter? Think of the implications for businesses of getting an up-to-the-minute read on what the world is thinking. Already, studios are using blogs to see which movies are generating buzz. Advertisers are tracking responses to their campaigns. ‘I’m amazed people don’t get it yet,” says Jeff Weiner, Yahoo’s senior vice-president who heads up search. “Never in the history of market research has there been a tool like this.’”

How does this work? One media executive with whom I recently spoke explained how his company used advanced full-text software to monitor blogs and web sites in a particular target audience. The company was able to predict how an upcoming media release would fare, which allowed favorable last-minute adjustments to advertising and promotion.

What does this have to do with law? Why not adapt these techniques to “monitor the horizon” for looming legal problems. Already many companies monitor the web for trademark infringement. Let’s go further, applying sophisticated textual analysis to try to get an early handle on the possible emergence of a new legal problem. Similarly, why not monitor “web buzz” for hints about the outcome of pending trials. I have previously written about creating derivatives for pending litigation. Advanced textual analysis might support better valuations of pending litigation.

Other than jury research, market research concerning substantive legal problems seems pretty limited. The tools may not yet be off-the-shelf, but the stream of blogs is waiting to be tapped. It may yet tell a story that can be very valuable to law departments to avoid and manage problems.

Corporate Counsel magazine has published its latest survey of in-house technology use. The bottom line: progress has been made. 

The article reports that in-house counsel are making better use of e-billing and matter management software to manage their outside counsel more effectively. Law departments are also using their market power to demand firms use technology, with 15% of respondents hiring a firm because of technology and 8% firing a firm because of lack thereof. Separately, 30% of law departments report having access to their outside counsel’s knowledge base, up from 21% last year.

Law department knowledge management, however, is still a challenge. Only one-third of respondents report having a KM system, the same percent as last year. The article has many other interesting points and is worth reading; details of the survey results are here.

The explosive growth of electronic discovery may be leading to a new position: large firm lawyers who are discovery specialists. 

Law Technology News reports in the April 2005 issue that Sullivan & Cromwell has recently hired an experienced lawyer, Thomas Barnett, as special counsel focusing exclusively on electronic data discovery: Barnett

“advises the firm’s attorneys on EDD issues, working in tandem with the firm’s litigation support staff. The firm will also offer his services to clients, both as a consultant and as an expert witness, he explains. He expects to bill at a partner rate, and reports to the executive committee. ”

I know one other AmLaw 100 firm has a partner who serves as the in-house EDD expert, though that is not his only role. That Barnett reports directly to the executive committee rather than the head of litigation suggests the position is “staff,” though he is listed as special counsel on the firm’s web site.

It will be interesting to see how this and similar positions evolve and whether other large firms will create functionally similar roles. In my view, this is a good trend. Firms would be well-served if the lawyers in these roles had not only EDD expertise, but also project management expertise. It’s not enough to know the rules of discovery and the technology - succeeding in large EDD matters also requires project management discipline.

As for reporting lines, that is a tough call. Litigation support can fall under IT, its own group, or occasionally the litigation practice. In-house lawyer-EDD experts will similarly have to cut across staff and lawyer lines, so it will take time to determine the optimal reporting relationship. But reporting to the executive committee certainly sends a strong positive signal that a firm is taking EDD and this role seriously.

I am often surprised that I have never found a web site with a comprehensive set of links to legal technology resources. I have taken a very small step in this direction. 

Over the weekend, I updated my ”Useful Links” page and organized into Publications, Conferences, Other Resources, and Surveys. It is by no means comprehensive; rather, it reflects those resources I think are particularly useful. One reason it is short is that I do not link to vendors from this page.

I’ve undoubtedly excluded resources others find valuable and am happy to receive suggestions using the comments link below or here privately.

According to LegalIT, knowledge management expert Matthew Parsons has joined Linklaters. 

The article also reports that Parons “will also be in charge of Linklaters’ high-profile online legal services unit, Blue Flag.” I have long believed that KM would fare better if it were client facing (see my presentation and article), so it will be interesting to the impact of putting both KM and online legal services under “one hat.”

Last week blogger Adam Smith, Esq. wrote that per partner profits at large UK firms are much lower than at large US law firms. It’s interesting to consider why and if technology plays a role. 

In a follow-up post, he offers explanations from several readers. The one I offered (and quoted in full at his post) is

“A possible explanation for the lower profits per partner in the UK is that clients in the UK are more sophisticated, demanding, less willing to pay high rates, and more insistent on budgets… If UK companies spend less proportionally on legal fees, there’s less money to go round. ”

My sense, based more on anecdote than hard evidence, is that the large UK firms are ahead of their American counterparts in the application of technology to law practice and that the difference does not stem from spending a lot more on technology. I believe the explanation for the difference in profits also explains why the UK firms do more with technology: competition. It seems to me that the UK market for legal services is more competitive, which not only drives down price, but drives the need to differentiate service offerings and hence leads to more interesting uses of technology.

Fellow blogger Joy London of excited utterances and I have assembled a list of outsourced legal services.  

Joy and I will jointly maintain the list, which is also available from the Resources pull-down menu on my main web site. We did this because we both have observed with interest a recent trend by US law firms and law departments to outsource some legal work overseas. As bloggers, we have informally tracked legal offshoring activity and wanted to consolidate our observations in a single list. We hope that readers will offer updates, corrections, and comments as appropriate.

Those interested in the offshore angle of outsourcing might also want to check out Andy Haven’s IndianLegalOutsourcing blog. Andy also blogs at legalmarketingblog.

A new survey by Bain & Company shows that knowledge management has gained ground over the last few years in corporate America. 

A Bain press release on April 11th reports on the management consultancy’s 2005 Management Tools & Trends survey. As a former Bain consultant, I know that Bain does excellent strategic thinking backed by outstanding surveys and market research, so I give more weight to these findings than I would many other surveys.

Among other findings, the survey shows that KM has “made substantial gains in use since the early ’90s.” Though small and large companies adopt KM at equal rates, small companies are more satisfied with their KM efforts than are large ones. On first thought, I would have expected the opposite result - that large companies, by virtue of being large and having expertise scattered, would find more value in KM. Upon further consideration, I think it is likely that the small companies have a more coherent culture and their employees, because of personal connections, may be more willing to share. That would explain higher satisfaction with KM efforts, though other explanations are possible.

KM traction in corporate America is good news for those law firms committed to KM. If clients “do KM,” then law firms should find doing KM easier, at least psychologically.

Last week I spoke at the ABA Tech Show on “Where Are We Going,” in which Toby Brown, Marc Lauritsen, and I talked about the future of legal technology. 

My key point was that while new technology often seems hard, the real difficulty typically revolves around change, not the technology itself. To illustrate this, I outlined a spectrum of new technologies ranked from easiest to hardest with respect to change (1 being easiest, 5 hardest):

(1) New software that requires learning only a simple, new interface, for example, the new generation of full-text search tools designed to simplify knowledge management and e-discovery.

(2) New communication tools such as blogs and webinars. These are easy and cheap but using them means some changes in thinking and behavior. Individual lawyers can act on their own, however, so the barrier is relatively low.

(3) New analytic approaches enabled by technology such as profitability analysis, business metrics, and workforce automation. Adoption is hard because it requires managerial action and change by many lawyers.

(4) New work patterns that technology supports such as working virtually, offshoring work, and adopting project management discipline. These are very hard because they require institutional action.

(5) New business models such as delivering interactive advice, managing contracts for clients, and developing preventive law systems. These are hardest because they require not just institutional change, but also market change.

The point is that in considering new technology, firms need to identify where the real challenge lies, from quick and easy training to difficult institutional and market changes. Firms should start with an analysis of their business need and opportunity, then realistically assess the individual and institutional appetite for change. Only then can they make an informed decision about a new technology and its potential payback.

Lawyers may be safe from offshoring, at least for a while longer. That’s my conclusion after talking to Alok Aggarwal, co-founder of Evalueserve (EVS), a company in India that helps US companies write patent applications. 

I had a very interesting conversation with Alok a few weeks ago (full report here). The bottom line is that setting up knowledge-intensive work in India is much harder than it might appear. EVS has about 550 professionals in India; 85 are engineers and scientists who work on US patents and patent analysis. But it’s taken up to two years of training and a process-intensive approach to handle writing 40 patent applications per month.

This is not to say that lawyers can rest on their laurels or that in-house lawyers should give up looking for lower cost alternatives. The question is what substantive legal work is most suitable to do offshore? Domestic outsourced legal research has not grown as much as I would have expected; lowering its cost further by doing the work in India may not increase demand nor suffice to shift where it is conducted.

My sense is that the initial sweet spot for higher volume offshoring is document review in litigation or antitrust second requests. After all, many large firms already use contract lawyers, sometimes not even in their main office building. So the leap to lawyers in India seems easier for this task. After that, I suspect the next target would be simple contract drafting and review.

Over time, EVS or other companies with operations in both US and India and the patience to invest will likely identify legal work that has enough volume at moderate complexity and so makes it profitable to send offshore. General counsels who face cost pressures - and that would include most - should remain open-minded to the potential of offshoring to reduce costs.

Fellow blogger Adam Smith, Esq. has assembled his second panel of “savvy bloggers” to address the question of the future of the billable hour. 

The assembled responses are an interesting read about the basic economic model of the legal profession. My response to his question was:

For the high-end, non-commodity work that large law firms do, the billable hour will prevail, at least for next decade or two and likely beyond. When I started in the legal market in 1989, I was sure alternative billing was just around the corner. It appears very little high-end work has moved away from the billable hour so I am now reluctant to predict radical change. I’ve spoken with lawyers eager to offer alternatives but clients decline. The billable hour will stay for the same reasons it has not yet gone away: risk aversion, lack of disciplined and business thinking by attorneys in firms and law departments, and a failure of imagination.

As a proponent of best practices and the application of technology to law practice, I wish it were otherwise. A move to fixed fees would create strong pressure for efficiency, which would favor adoption of demonstrated best practices and more technology to automate wherever possible. If e-billing spreads and if general counsels actually analyze the data rigorously (the latter being a BIG IF), then there might be a move toward tighter project management and budgets. This would at least vitiate some of the pernicious impact of the billable hour.