Strategic Legal Technology

Legal Tech is beginning. The Hilton in NYC is already buzzing with attendees on Sunday night. Even before the show, the elevators tell a story. 

For the last few years, a Legal Tech vendor has an ad running on continuous loop on the closed circuit TV in the elevators. (Otherwise it’s a news channel.) Three years ago, knowledge management was the topic; this year and last, it’s e-discovery. I don’t know if the “elevator index” is a reliable predictor (leading or lagging for that matter), but take it for what it’s worth.

Of course, the great thing about the elevator index is that it goes up and down. You just have to figure out which!

The annual Legal Tech trade show is next week in NYC, at the same time as ALM CIO/CTO Forum. With two education programs and many technology exhibitors, there is much to learn and see. 

If you visit the exhibits, here are my suggestions for what to see:

• Business Integrity (DealBuilder Product): online document automation for corporate intranets and law firm extranets
• Equivio: near-duplicate detection software for e-discovery - helps reduce the time and cost of document review
• Ixio (QShift Product): intelligent document assembly to help lawyers and/or clients achieve best practices
• MetaLINCS: packaged software for e-discovery evidence processing, analysis, review, and production
• Practice Technologies (RealPractice): automated work product retrieval software and other lawyer productivity tools

The above are companies/products I’ve seen or spoken to and think have cool and useful technology. (Practice Technologies has retained me on some projects.)

Earlier today I wrote that legal offshoring is no big threat according to a new report. But that does not mean the legal outsourcing market is standing still. An Indian company has just acquired electronic evidence processing assets from Bowne. 

Integron (already featured in my outsourced legal services list), yesterday announced in a press release “the acquisition of the electronic discovery services business from Bowne (NYSE: BNE) for undisclosed terms.” Integron will provide e-discovery consulting and processing from US offices and document coding from its facilities in India.

Offshoring legal services is a hot topic, covered by the New York Times and Wall Street Journal. Market researcher Forrester estimated (according to the Economist) that 12,000 legal jobs had moved to India by 2004. A new report, however, concludes that the trend is not so hot and the numbers not so big. 

Evalueserve, one of the bigger Indian companies that helps US companies with patent work, released a new study, Legal Process Outsourcing (LPO) – Hype Vs. Reality (and reported on in Economic Times - India). It does not specify its survey method but I interviewed co-founder Alok Aggarwal recently and found him very credible. I’ll quote the key findings:

“only 1,300 professionals are currently providing legal services to the US from India; however, this number is expected to grow to 5,200 by December 2010 and to 16,000 by December 2015…. despite the seemingly large growth in offshoring of legal services, in actuality, only 1.2% of the legal and paralegal jobs would be offshored to India by 2015 and constitute only 0.2% of the total revenue” [emphasis added]

Quite a difference from the Forrester estimate! And numbers this low seem hardly a threat.

Beyond the numbers, the report analyzes the types of work that have moved offshore and estimates the number employed for each type. It goes on to explain four business models for providing offshore legal services, the benefits of using offshore resources, and impediments to offshoring.

All in all, this is a must read for anyone interested in legal offshoring.

The Wall Street Journal has a good column today on knowledge management. It addresses the question of my prior post, is the KM cup half-full or half-empty, albeit from a different angle. 

Companies Struggle To Pass On Knowledge That Workers Acquire (WSJ, 1/23/06, B1, $) notes that “one of the modern workplace’s most vexing problems [is] the issue of knowledge management.” Though everyone is now a knowledge worker, few organizations have figured out how to share or preserve know-how, despite repeated attempts. The value of informal sharing is very high, but this has limited scope. “Employees rarely learn from colleagues they don’t already know… Hence the urge to collect tips in centralized computer databases. But it’s not easy to create the critical mass that makes these databases worthwhile.”

The bottom line: “Managers keep trying because the notion of sharing knowledge remains as captivating as it is elusive.” So, is the cup half-full or half-empty?

The 2005 ILTA staffing survey says the KM cup is half-full only. 

In 49% of 500+ lawyer firms, no one manages KM. Will the cup fill over time? We’ll know more if ILTA keeps asking this question. I’ll also have more to say soon about the evolving role of KM and what this result might mean.

The survey includes about 2/3 of all 500+ lawyers. 38 500+ lawyer firms responded; the 2004 AmLaw 100 lists 62 firms of that size. So I think the data are quite reliable.

Just how important are law blogs (blawgs)? Hard to say for sure, but just remember 10 years back when many lawyers questioned the need for e-mail or websites. 

Earlier this week, Law.com published my commentary Do Blawgs Burn as Brightly as Surveys Suggest?. It explains that blogs are a good way to get more mileage from material firms generate anyway, analyzes a couple of recent blawg surveys, and provides examples of firms that got new business from their firm-branded blogs.

The e-discovery market is booming. A boom does not, however, guarantee success. According to a press release, big player Daticon has declared bankruptcy and been acquired. 

In the release dated Jan 17, 2006, acquiror Xiotech writes that “today it has reached agreement with Daticon Incorporated to purchase the assets of that company. Daticon is a Norwich-based litigation support and document conversion services company that filed for Chapter 11 bankruptcy today. Xiotech is pledging to keep Daticon’s operations based in Norwich, Conn. protecting the company’s 170 local jobs.” (Press release spotted at Litigation support industry news and information blog.)

Xiotech is a storage solution company. The release quotes industry analyst, Michael Clark of EDDix: “To capitalize on growing opportunities around EDD, existing e-discovery companies will need more expertise in data storage and management. Combining a company like Daticon with Xiotech brings together a lot of the right capabilities.” I agree with Clark and suspect that we will see further consolidation.

A recent New York Times article suggests that law firms should worry about corporations outsourcing legal research. Is this right? 

Even Law Firms Join the Trend to Outsourcing (NYTimes, 1/13/06, $) by Jonathan D. Glater says of legal research outsourcing that the “development may be an ominous sign for the legal profession.” The Wall Street Journal Law Blog notes the Times article.

As a consultant (and former BigLaw employee), I focus on legal technology. But I follow outsourcing both for its overall legal business and technology implications.

I see no anecdotal data for Glater’s “development.” He describes LRN’s network of professors who do research. In 1995, at my invitation, LRN founder and CEO Dov Seidman explained to a group of lawyers I organized his research business model. That group found it threatening.

To my knowledge, the threat did not materialize – I see no evidence of significant BigLaw revenue loss. And observing LRN over the years, I’ve noticed an apparent shift from research to compliance, which may say something about outsourced legal research as a business.

I think the real development is offshore legal research. (See, for example, the list of outsourced legal services that I co-maintain with the excited utterances blog.)

Only time will tell if offshore legal research has a bigger impact than onshore. The Times did report on legal offshoring in March 2004 so it was surprising and disappointing to see domestic outsourced legal research positioned as newsworthy or a development.

Stretch your memory. Think back to the early days of e-mail. Did you resist? Fess up. Are we all at risk for resisting the next wave? 

Around 1995 I wrote an article arguing that lawyers should use e-mail. Seems quaint, but trust me, it was necessary. I noted that phone calls and meetings are synchronous, meaning everyone has to present simultaneously. In contrast, e-mail is asynchronous, meaning recipients can deal with messages when they want.

Most large law firms now can share documents with clients via extranets – an asynchronous collaboration tool. Large firms are less equipped with synchronous tools such as instant messaging or web conferencing. Is that because lawyers don’t need to collaborate in real-time? Or do they just resist new tools (as many did e-mail)?

New web tools (Web 2.0) allow virtually instant sharing of the same document or spreadsheet. Collaboration is also a big theme for Microsoft Office 12. The synchronous v. asynchronous question re-emerges.

A few months ago I wrote that collaboration is about coordination, communication, and co-creation of work product. All three C’s can have synchronous and asynchronous elements. It will be interesting to observe if lawyers adopt any of the emerging forms of synchronous collaboration.

Morrison & Foerster is one of the leading US law firms for creating and developing an innovative and highly effective approach to knowledge management. 

Last month, Law Technology News published IT @ Morrison & Foerster: Lessons Learned from Retail (free registration required or PDF version at MoFo web site). I co-wrote this and an earlier version with Oz Benamram, MoFo’s Practice Resources Attorney. For those who missed the LTN piece or who would like more details, the unabridged version is now available on this web site, here.

MoFo has ambitiously tackled two related problems simultaneously: enterprise search (using Recommind) and work product retrieval. Working with Oz, I learned a lot about enterprise search. At about the time I began writing with Oz, I started a partnership with Practice Technologies, developers of RealPractice, which is a work product retrieval solution. Seeing both search and work product retrieval up close has been illuminating.

Though differences abound, one common element in MoFo’s implementation is automatically profiling documents. As the article explains, relying on lawyers to profile documents does not work, so you have to look to software to do so automatically. For CIOs evaluating the two approaches, the important lessons are to define the requirements carefully, weigh the costs (out-of-pocket and soft), and make sure your choice addresses the most pressing needs.

Growth in offshoring legal work appears to continue, at least judging by the most recent update to the list of outsourced legal services that excited utterances and I maintain. 

The latest list of legal outsourcing and offshoring contains more than a dozen new entries since our August 2005 update. Growth in number of suppliers does not necessarily correlate perfectly with growth in employment or revenue, but it does suggest many offshore entrepreneurs, especially in India, see an opportunity. For a good analysis of the market, see New Offshoring Legal Services Report at excited utterances.

Reader reports of offshoring or new offshore vendors or other outsourcing experiences are welcome. Can anyone report on trying offshore document review (not just objective coding)? I continue to believe that any client that needs a team of 100+ US contract-lawyer reviewers should experiment with moving some of the work to a team in India.

Last November I suggested that in law firms, it was not obvious who should be responsible for practice and process improvement. A new answer may be emerging. 

Hildebrandt consultant Susan Raridon Lambreth wrote an excellent article, How Do Practice Leaders Get Their Jobs Done and Still Have a Practice? The Emerging Role of Practice Management Professionals, in the current issue of Law Practice Today. She describes the “growing use of professional managers who assist department chairs, practice group leaders, industry and client team leaders… [which] has now become commonplace in many large firms.”

These “practice management professionals” help run the business and serve as liaisons to marketing, finance, technology, and other firm staff functions. She writes that their function can include business planning, market analysis, supervising non-lawyers, and workload management.

In November, I suggested that CIOs were, somewhat by default, stepping into a void - that there were not other obvious proponents of practice and process improvement. Lambreth’s article describes a whole new class of BigLaw stake holders who could fill this role.

At minimum, CIOs and KM professionals should actively build bridges to practice management professionals. I suspect that the successful ones could be key allies - or serious roadblocks - to any initiative, from basic infrastructure upgrades to more strategic technology and KM decisions.

My 2006 technology prediction for BigLaw: Forget about technology per se. Instead, lawyers must adopt new ways of working. 

Changing how lawyers work is tough. On the tech side, even a roll out of easy-to-use new software requires cajoling and hand-holding. Vendors know this. They now deliver truly automated solutions that ask little of lawyers.

On the business side, firm consolidation and client demands create new market forces. Firms must change how they practice, manage, and serve clients. These changes are fundamental and much harder than learning new software. Bullets instead of long explanations:

Technology: Automation Dreams Come True
- Work product retrieval (e.g., RealPractice and West km)
- Relationship/lead discovery (e.g., Visible Path)
- Enterprise search (e.g., Recommind)
- Unified interfaces (e.g., document management in Outlook)
- Business intelligence (e.g., in-house system developed at Bryan Cave)
- E-discovery concept searching (winning products to be determined)

Business: The Looming Nightmare of New Requirements
- Better client relationship management (it’s not just sharing contacts)
- Strategic and marketing plans to achieve competitive differentiation
- Serious matter management - lawyers as project managers, not just domain experts
- Rationalizing work allocation and improving capacity utilization
- Process improvement (e.g., best practices for reviewing discovery documents and managing due diligence)
- Professional development gets real (e.g., affiliating with a major business school)
- Enabling real-time collaboration across offices and with clients and co-counsel
- Consolidating purchasing
- Re-thinking leverage models and partnership structures
- Records management policy
- Developing an outsourcing | offshoring strategy
- Acting on what business intelligence reports say

All this could be good news for BigLaw CIOs. They can enable many necessary changes and are instrumental to some. But lawyer resistance runs deep. Without strong leadership by partners, change management will fail and then a victim must be found. At that point, CIOs – take cover!