Strategic Legal Technology

Can law firms rely on software rather than lawyers to review huge volumes of documents in discovery? In Concept Searching in Discovery I wrote that this is an empirical question. 

Now, a well-known litigator has gone on record saying the answer is yes. Fred Bartlit of Bartlit Beck Herman Palenchar & Scott

“says that his firm has run blind tests pitting document discovery software against a document review team of lawyers, and the software performed as well or better than its human counterpart. Bartlit concedes the system may not be perfect – but then neither are associates, and they cost a hell of a lot more.”

Yesterday I suggested that improving the process of assigning associates could improve partner profits. In fact, Bryan Cave, with its deep commitment to business intelligence, appears to have done so. 

I asked John Alber, the firm’s technology partner and author of several recent excellent articles on BI, to comment on my prior blog post. John wrote:

At Bryan Cave, we’ve developed an ‘availability’ application that helps lawyers who are staffing a new matter find available associates and counsel. Every Monday, an automated form goes out to associates and counsel, who use it to declare their availability as none, limited, or general. They can also add comments to qualify their declarations.

Lawyers who need to staff engagements use a Google-like advanced search feature to find available lawyers. They can sort results by various criteria and view individual comments about availability.

After more than a year of use, our leverage is up markedly. Certainly the business climate contributes to that, but our increase outstrips anything we’ve seen during prior upturns. I think the availability application and our new Financial Dashboard (which reveals the benefits of leverage to responsible lawyers) have contributed. We are now doing regression analyses [a statistical method for confirming relationships] to confirm this finding.

Is there an easy way to increase per partner profits by $27,000? 

I previously reported that IBM’s global consulting business built a system to match consultants with the right job. Business Week (11/21/05) reports that using it, IBM “with 36,000 consultants in its system… saved $500 million in the first year alone, cutting the time needed to assign the employee by as much as two weeks.” That works out to almost $14,000 per consultant.

Let’s play with some numbers: Assume in BigLaw a blended associate billing rate of $300/hour. If each associate billed 30 more hours per year, that would generate an additional $9,000 in profit (assuming no increase in costs). If leverage is 3 associates for each partner, that would increase per partner profit by $27,000.

Possible? Maybe. Clearly, associates are, on average working very long hours already. But not all meet billing targets. More importantly, opportunities may exist to convert some non-billable time to billable hours via more effective workforce utilization. This is no sure thing but IBM’s win should tempt law firms to think about more effective ways of assigning lawyers to matters.

US corporations invest a lot in process improvements. And now law firms show signs of doing the same. 

Two recent ILTA white paper excellent articles (Don’t Support the Practice of Law - Support the Business of Practicing Law and The Value Proposition of the Business Analyst Role) describe large law firm staff positions that focus on supporting law practice and business analysis.

Last year I completed a 15-firm benchmarking study for Hunton & Williams CIO Jamie Booth on the role we called “practice support consultants.” We wanted to learn firms’ views of practice improvement initiatives and compare how they staff and organize to support this goal.

In our hand-selected sample, most firms aspired to improve law practice and had at least some dedicated staff working on process improvement. Among the findings: (1) Though firms wanted staff in this role to initiate improvements, many pressures kept them more reactive; (2) The person in the role does not have to be a lawyer but must be familiar with law practice.; and (3) Organization and ownership of the role vary widely.

That law firm CIOs focus on business and practice process improvement might be surprising. Yet it’s not obvious who else in a firm would take on this mission. The Custodian Of Business Processes in the June issue of Optimize Magazine explains why CIOs in many companies own process improvement, even outside of IT.

Separately, a November LegalIT article, Taking charge of strategy, notes the new, strategic role of the CIO: “Responsibility for technology costs, support and development at the firm is no longer enough…. An understanding and adoption of the firm’s business culture and external market positioning is also essential.”

Jamie and I spoke after we both noticed the ILTA articles. We share the view that there are great opportunities to continue improving law practice. Jamie summed up his current thinking: “Our four practice support consultants keep working closely with our practices. They respond to demands and uncover hidden needs but as you found, there is tension between the two and also between operations and innovation. But as competition in the legal market heats up, I think more lawyers and firms will see the need for and value of this position and a focus on practice and process improvement.”

Merger activity continues in the US electronic evidence market. 

EPIQ Systems, “a national leader in the market for fiduciary management and claims administration systems and provides an advanced offering of integrated technology-based products and services,” has acquired nMatrix, a “a leading provider of case management and document management products and services for electronic discovery and litigation support” according to an EPIQ press release. The acquisition is for $125 million ($100m cash and $25m stock); nMatrix’s projected operating revenue for its fiscal year ending December 31, 2005 is approximately $20 million, more than double the revenue for its fiscal year ending December 31, 2004. Sounds like a pretty good multiple to me. (Spotted this news on Litigation support industry news and information.)

Many have and are predicting consolidation in the e-discovery market. I’ve been expecting a storage or information life cycle management company to acquire a pure-play e-discovery company. EPIQ and its business are new to me; it will be interesting to see what synergies emerge over time.

Are you an innovation proponent in a large law firm? Ever wonder why life is hard? 

Richard Susskind, a leading legal technology thinker and consultant, writes an excellent article in the Financial Times Online: Backroom boys lead ‘positive disruption’ (free registration required; spotted on DennisKennedy.blog).

Susskind writes that innovation is hard because it “is not easy to convince a group of millionaires within clear sight of retirement that their business model is wrong and that they should change direction and embrace new technologies.” This is a must read for anyone who’s proposed innovative ideas in a law firm, technology or otherwise.

David Snow, legal technology editor for law.com/tech, assembled a panel to discuss “Experts’ EDD Trend Watch and Product Picks.” The recorded conversation was excellent. (Easy registration required; sound takes about 30 seconds to start once controls display.) 

The action in e-discovery is unprecedented. The last big change in discovery occurred some 15 years ago when the market moved from paper files and coded databases to scanning, OCR, and full-text. That transition raised difficult issues but relatively few lawyers or firms paid much attention. Today, the e-discovery story is different. With billion dollar plus judgments stemming from discovery problems, pending rule changes, and the enormous cost of processing and reviewing electronic evidence, lawyers and law firms are very much engaged.

The attention e-discovery commands is reflected in the outstanding panel law.com assembled to discuss a range of timely topics. Participants were:
-Jerone English, Litigation partner and co-chair of e-discovery committee, Pillsbury Winthop Shaw Pittman
-Ron Friedmann, President, Prism Legal Consulting, Inc.
-Jonathon Hughes, Partner, director of litigation department, Howard Rice Nemerovski Canady Falk & Rabkin
-Jim McKenna, Litigation Technology Manager, Morrison Foerster
-Lori Ann Wagner, Partner, Redgrave Daley Ragan & Wagner

Highlights of our discussion include:
- Challenges of comparing vendor costs
- Proposed Federal Rule changes and Sedonna Principles and implications
- The value of early EDD planning
- The degree to which law firms should rely on vendors versus do EDD work in-house
- How firms are staffing to manage e-discovery
- Selecting vendors and products
- The role of concept searching in document review

Yesterday, I summarized several ALM articles on EDD published in connection with the webinar.

ALM’s law.com published today (on the web) a collection of stories on E-Discovery Trends of 2006. 

A recorded webinar, “Experts’ EDD Trend Watch and Product Picks,” will soon be available. I was one of five panelists for this interesting discussion. Once it’s live, I will post some thoughts about. In the mean, time four articles cover a range of EDD topics:

The Forecast for EDD ("Chief among developing trends, the EDD market is rife with confusion and ready for consolidation.")

Piecing Together EDD’s In-House vs. Outsource Puzzle ("Most law firms and corporate legal departments turn to outside companies to help them manage and process portions of the data. Doing this can save time, money and energy – but experts say it’s important to have established relationships with reliable vendors before taking on large cases.")

EDD Training: A Growth Industry ("Law firms and corporate counsel are dealing with EDD in different ways, but the fears are the same: sanctions such as those in the Morgan Stanley and Philip Morris cases… So let’s say you are a lawyer who is chosen to be the firm maven on EDD. Or let’s say your company wants to train a core group of lawyers. Where do you go?")

More Than OneNote: Will Microsoft Break Into EDD? ("Microsoft is not currently offering products specifically designed for e-discovery processes, but it’s just a matter of time before it does, says Laura DiDio, research fellow at industry analyst firm The Yankee Group.")

I sometimes despair that lawyers will ever “get it about technology.” But now I think we may be turning a corner. 

Lawyers don’t need to be techies, but they should make conscious decisions about how they practice and the tools they use. For too long, too many lawyers have ignored tools that would make them better lawyers. While still a problem, I see signs of improvements.

Early this month, I attended and presented at the Marcus Evans LawTech Forum. I was encouraged by the number of practicing lawyers, both from law firms and law departments, who are actively thinking about how to use technology to practice more effectively.

E-discovery, with its risks and huge data volumes, drives much smarter use of technology. I was impressed by several presentations, which described more systematic processes to manage discovery and more conscious choices and applications of what tools to use to review documents.

But forward-thinking lawyers apply technology throughout their practice, not just in discovery. DLA Piper partner Browning Marean’s presentation was music to my ears. He described several approaches he uses in his practice to deliver more efficient and effective service: matter budgets in Excel; decision analysis using TreeAge; case planning and analysis using CaseMap; work product retrieval using RealPractice; and extranets using eRooms.

Law departments, which often struggle with fewer IT resources than law firms, are moving forward. I joined a discussion of several experienced in-house lawyers. There is significant interest in doing more to manage contracts, from drafting to managing rights and obligations. And almost all reported using e-billing, where the focus, for the moment, is streamlining administration and reviewing bills for variances from agreed upon engagement terms. But there is active interest in going further to analyze data across matters to determine effectiveness and efficiency.

I have recently come across a few useful news items concerning offshoring or outsourcing legal services. 

Orrick continues to move forward with its outsourcing initiative. A recent press release reports that “Williams Lea, a leading Business Process Outsourcing provider specializing in Corporate Information Solutions, has entered into an agreement with international law firm, Orrick, Herrington & Sutcliffe LLP to deliver document and transactional processing services to the firm… The new Williams Lea Corporate Information Center will be a state-of-the-art facility with centralized operations for Orrick and other professional business services companies throughout the world.”

Fellow ALM Blogger, The Wired GC has had two recent posts on offshoring. One is a podcast with the Wired GC interviewing David Perla, co-CEO of legal offshoring company Panagea3. (You can also read my May 2005 interview with Mr. Perla.)

The Wired GC also reports on a new web site concerning legal offshoring:   offshore-legal-services.com. I’ve reviewed this web site and it has interesting information. I’m not yet exactly clear on what services are offered but it appears to be positioned to help law firms or departments select or manage lawyers working in India.

I’ve previously suggested that blogs could serve as radar for legal problems. A new, off-the-shelf tool from IBM should make that easier. 

IBM has released new software that Tracks Blogs, Web Content to Capture Buzz, Spot Trends Around Companies (spotted on beSpacific). It uses new full-text techniques IBM has developed that I’ve discussed in earlier posts.

How long before a law firm uses this product to identify legal problems it can solve for clients or in litigation or lobbying PR battles? Forward thinking CIOs and librarians should consider learning more about this software to see if it would be a helpful resource for lawyers. Or maybe the marketing chiefs will beat them to the punch.

Last week at the Marcus Evans Law Tech Forum in NYC, Phil Crowley, Assistant General Counsel of Johnson & Johnson and I presented on knowledge management in corporate law departments. 

We discussed the demand for KM and processes, technology, and staffing to support it. Though law departments do not face the billable hour barrier as do firms, KM is no cinch for them.

J&J is fortunate and unusual in having a dedicated KM person and, as a result, has done some interesting KM work. For example, the law department created a practice guideline on the corporate Intranet to guide business people through the process of divesting a business. I am partial to this because I think that documenting processes is an under-developed aspect of KM. Separately, the company has crystallized significant legal information in an e-learning and compliance system that reaches all employees.

Phil emphasized that KM is about process and culture, not solely technology. Since in-house lawyers are no more willing than law firm lawyers to “do extra work” for KM, law departments do not have any “magic bullets” that law firms do not. Both benefit from dedicating the efforts of “practice support lawyers” or equivalent in pushing the effort. Given the economic barriers to dedicated staffing, however, we also discussed some emerging automated paths for doing more KM.

One path is “baking it into the business,” meaning capturing additional information in established processes. We explored the potential for “baking in KM” to case/matter management. Phil confirmed what I have often heard, that law department matter management systems are a bit like manual KM systems. They rely on lawyers doing something extra (with nothing in it for them personally), so they are not uniformly used. We agreed though, that law departments with the collective discipline to use matter management probably have lurking KM opportunities.

Another automated path to better KM is deploying a specialized KM tool. For example, many law firms are evaluating or deploying RealPractice or West km. These products seem to have less traction among law departments. [Full disclosure: I work with Practice Technologies, Inc., the developer of RealPractice.]

In sum, I would say that law departments are fellow travelers with law firms on the KM road.

Is blogging here to stay? Lawyers seem to ask that more than most. I think the answer is clearly yes. 

Last week I presented at the Fall Educational Forum of the ALA Capital Chapter on whether blogging is here to stay. I explained blogging basics and lobbied the law firms present - large and small - to consider firm-branded blogs. I emphasized law firms are now repeating with blogs the debate of 10 years ago about web sites. Then as now, the answer seems obviously yes - blogging is here to stay and law firms should write blogs. My presentation is here.

Two of the older, more established vendors of advanced full-text search software are combining. 

The Financial Times reports today that Autonomy has purchased Verity for $500 million. Details are outlined in the Autonomy press release.

Though I’ve not seen industry data, my impression is that there are a lot companies with full-text solutions relative to the size of the market. On balance, my guess is that some industry consolidation will be good for law firms that are considering enterprise search solutions. I believe that a smaller number of larger players will ultimately offer law firms better products and services.