Strategic Legal Technology

Legal technology can be a competitive weapon for large law firms. 

Foley & Lardner Leads the Way With Client Extranets (Legal Times, 11/30/06) reports on how Foley uses technology to serve clients.

The firm has created customized extranets to share documents with client; one client uses the system to track 200 matters. Foley also offers “templates to generate legal documents, such as nondisclosure agreements, based on specific business rules.” The author notes that

“Legal-technology tools, such as templates that can be easily used to create documents such as nondisclosures and other types of agreements, allow clients to perform many of their own tasks without external attorney assistance. The result is that clients are less dependent on outside counsel for agreements for each customer or vendor. Technology tools such as these drive down costs on lower-value legal work and allow law firms to focus their efforts on the clients’ most critical need: high-level legal counsel.”

I have written extensively about online legal services (articles and blog posts), so am pleased to see that the idea of delivering legal guidance interactively for lower value work still has legs.

The author notes that heavy reliance on client-facing technology is not risk-free. This can be managed, however, “by selectively marketing the systems to the most innovative attorneys and by hiring an internal technology consultant to ensure that the systems are properly demonstrated and supported.” Foley actively promotes its tech prowess, but more on that later.

Many businesses borrow best practices from other industries. Do law firms do so? 

Rarely in my experience, and that’s too bad. That point was hammered home reading A Hospital Races To Learn Lessons Of Ferrari Pit Stop (Wall Street Journal, 11/14/06, p. A1), which explains why surgeons adopted Ferrari race-car-team pit-stop techniques.

“Devastating mistakes” can occur in the thousands of daily handoffs from surgery to recovery. “The challenge of moving a patient to another unit, or to a new team during a shift change, is an old one.” One study found that 70% of preventable hospital mishaps stem from communication glitches during hand-offs.

Two British doctors “noticed striking similarities between patient handovers at their hospital and the interchange of tasks at a racing pit stop.” This insight led to working with Ferrari’s racing team to learn about pit-stop techniques such as a clear leader and contingency planning. After adopting such techniques, hospital hand-off mistakes dropped dramatically.

Law firms face their own “hand-offs.” For example, paralegals who keep working on a matter days after it settled because no one told them it settled, team members coming and going, or clients switching counsel.

Health care and law have similarities but two big differences separate them: (1) medical mistakes are more deadly; and (2) insurers and employers, as third-party payers, pressure providers to improve efficiency and outcomes.

BigLaw can learn from other businesses. But they won’t until the bill-payers – inhouse counsel – exercise their market power more effectively. It will take external pressure to drive BigLaw to seek inspiration outside of legal. And that would be good for BigLaw CIOs, who likely would find their know-how in higher demand.

Updated: For another comparison of law and medicine, see Does Your Firm Resemble a Hospital? (12/2/06) by Adam Smith, Esq. This post examines the relatively slow transition from coronary-artery bypass grafting (CABG) to angioplasty and the dynamics of doctors adopting new techniques.

Legal offshoring and outsourcing is a hot topic. How much is smoke, how much is fire? 

Joy London and I maintain a list of legal market outsourcing and offshoring. In connection with our October update of the list, we wrote an article, Developments in Legal Outsourcing and Offshoring, published in LLRX.com (11/12/06) (also here).

In it, we conclude that “our impression, based on reading and talking to onshore and offshore contacts, is that the volume of work moving offshore is not as large as the growth in our list might suggest.” Read the article for more details about the offshoring scene. Since we wrote this article, Integreon has posted a list of the top 10 legal market offshoring companies, which was researched by Brown-Wilson Group’s in its 2006 “Black Book of Outsourcing”.

In this roundup: new market research identifies top legal offshore companies, an Excel tip (for serious users), new legal tech new source from down under, and practical pointers on innovation. 

Outsourcing
New market research identifies the top global Legal Process Outsourcing (LPO) and Document Process Outsourcing (DPO) companies. One leader, Integreon, has posted the top 10 KPO and DPO list, which was researched by Brown-Wilson Group’s in its 2006 “Black Book of Outsourcing”.

Personal Productivity
Ok, so I am an Excel nut. From Setconsulting, an excellent Excel tip: If you have so many tabs that you can’t see all across the bottom, then right click on the arrows on the bottom left of the Excel window (just above the status bar) for a pop-up list of all tabs.

Legal Tech News Source
A new web site from down under: Australasian Legal Technology aims to provide information on technology relevant to law firms in the Asia Pacific region.” Some of the news is regional, but some is of interest in the US.

Innovation
David Maister has a good post on innovating in professional service firms. Innovations about Innovating (11/6/06) provides several practical pointers.

The new federal e-discovery rules take effect on December 1st. How will technology changes affect the application of these rules? 

A recent software demo caused me to ponder this question. The “reasonably accessible” standard of amended Rule 26(b)(2)(B) guides allocating the burden and cost of discovery. New technology may alter that burden and cost. For example, magnetic tapes, which contain enormous quantities of corporate data, are often considered relatively inaccessible. But what if the restore cost drops dramatically?

I saw a demo of Index Engines, which provides an appliance that reads multiple back-up tape formats and indexes them at “wire line” speed. The result is a full-text searchable, de-duplicated database that is 5% to 8% the size of the original materials. Lawyers can do searches to identify which specific tapes should be restored.

I am neither a backup tape nor FRCP expert. But it seems that the easily restoring tapes across formats, without requiring original systems, and compressing them significantly may well change what courts consider “reasonably accessible.” This product seems to lower the cost of figuring out what’s on back-up tapes.

I think the broader implication is that lawyers must keep current on technology options. Inaccessible media today may well be all too accessible tomorrow. Reading tech trade journals may be as important as reading legal publications.

We may see a “reasonability ratchet.” Acceptance by just a few courts of a new approach may spawn a standard other courts find hard to ignore. In a loose opposite of Gresham’s Law, good technology will drive out bad. Whether this is good probably depends on your perspective. The technology cost may go down but the lawyer review time and costs up.

[Note: Index Engines may well have direct competitors – I did not research this. I have no relationship with this company. When vendors offer possibly interesting demos, I sometimes accept and then sometimes blog about it. My analysis may be wrong but I don’t have a vendor- or technology-driven bias.]

Kroll Ontrack today acquired concept-search engine maker Engenium. 

From the press release (11/20/06): “Kroll Ontrack…. today announced the acquisition of Engenium… a leader and pioneer in intelligent search and search-related products. This acquisition signals Kroll Ontrack’s continued commitment to advancing technology that addresses the growing demand for cost-effective methods to locate relevant information from large volumes of data in support of investigations, litigation and regulatory compliance matters. Terms of the transaction were not disclosed.”

The EDD consolidation we are seeing means more competition. With competition comes price pressure and the need to differentiate offerings. So it does not surprise me that a top EDD vendor would buy a software product that allows it to differentiate. It will be interesting to see how current Engenium EDD customers react (and note that one listed customer is Fios, another large player).

I’m also glad to see a leading vendor emphasize the need to make document review more cost effective.

You don’t often read about legal market innovation in Business Week. 

Case Study: Access To Justice - Designing a better user experience of the legal system in the Inside Innovation supplement to Business Week (11/27/06) describes an innovative project at the Chicago-Kent College of Law. The project is being led long-time leading edge legal tech thinker Prof. Ron Staudt. Its goal is to make courts and legal proceedings more accessible to citizens.

Inspired by the latest corporate approaches to innovation, students went into the field to observe how citizens interact with courts and fill-in forms. They then worked with a team of design students to create a virtual guide (using an avatar) that guides citizens in completing forms and the system. They created easy-to-program and easy-to-use software that several states are now rolling out to provide better access to justice.

BigLaw can learn lessons; lessons that go beyond technology. After all, how many large law firms identify a problem, do field work to study it, and then work with designers to create a solution. This is an approach that law firms should consider adopting to create innovative new services.

Starting in the early 1990s, I noticed that secretarial work was changing as a result of widespread lawyer use of PCs. Yet I have seen few articles about this much less smart management reaction. 

Already in 1991, I thought secretarial roles needed re-thinking. By 2003, when the main reaction seemed to be tinkering with the ratio, I wrote The Future of Legal Secretaries (Legal Times, May 2003). It suggests testing the concept of secretarial teams.

That article emphasizes matching needs and resources more effectively. Today, law firms have a new option to do so and, at the same time, recast the role of the legal secretary. Earlier this year CBF, a secretarial and document processing outsourcing company, retained me to write a white paper. In it, I explain why outsourcing some secretarial and document processing tasks makes sense. The reasoning applies to many law firm operations.

It’s a mistake to assume that full-time secretaries (plus temps) is the best decision. Outsourcing may be wrong - but decide that consciously, not by inertia.

The issues here affect CIOs two ways. First, if firms do outsource as suggested, that will affect training and systems. And second, the underlying reasoning may drive you to outsource some tech functions.

The chart below illustrates how outsourcing could change secretarial roles. This change and forming teams are not mutually exclusive. In fact, outsourcing can support a team approach.

What can law schools do to help newly minted lawyers be technologically prepared? 

A LexisNexis-funded study underway at the Berkman Center of Harvard Law School seeks to recommend “how next-generation law school curricula can preserve the fundamentals of critical thinking and legal history, while at the same time equipping graduates with technology training and skills.” Gene Koo, the fellow leading the study, has a blog post at Law School Innovation seeking comments.

The LexisNexis press release states that “Young lawyers are highly motivated to embrace emerging technologies such as e-discovery and early case assessment.” Perhaps, but one older law student with a tech background told me that his classmates are not particularly comfortable or facile with technology.

Law students today are undoubtedly more tech savvy now than 20 years ago. But just how receptive to and interested in learning new technology are they? They probably rank low in that regard, at least relative to their peers studying other professions. Ultimately this is an empirical question but my experience in large law firms is that “if you build it, they will come” does not work, even with freshly minted, supposedly tech-savvy lawyers.

I’ve left a comment to this effect at Gene’s post. I encourage you to think about the question he raises and provide input. This is one small opportunity to help bridge the gulf between the academy and actual law practice.

Outsourcing comes in many shapes and sizes. A new legal outsourcing website with a fresh approach has just launched. 

Lawsourcing.com is a web-based service started by two technology lawyers. It’s a legal-specific reverse auction market: lawyers in need of help - substantive or business - post a project description. Suppliers then bid for the work. Only licensed lawyers may bid on legal work; anyone may bid on other work.

This is an intriguing idea. In Inside vs. Outside: When Does it Make Sense for Law Firms to Outsource? (Law Practice Today, April 2006) I noted:

The core business of law firms is a combination of solving legal problems and helping clients cope with difficult situations. An old adage says that lawyers are finders (business getters), minders (relationship managers), or grinders (ones who crank out legal work). Today, lawyers who are great at “client hand holding” typically rely on a partner or associate to do the legal work. Could the minder instead outsource this to a lawyer in another organization? The point is that even in what many would consider the core business of law firms lie potential outsourcing opportunities.

So conceptually, the idea of outsourcing legal work makes sense to me. For the BigLaw skeptics, just remember that you essentially outsource local representation all the time! And for law departments, remember that many of you use lawyers from Axiom Legal. Though Lawsourcing may seem new, it strikes me more as an extension of existing trends.

That said, it will face challenges. I was involved in the early days of an online service for lawyers, Counsel Connect. And I have observed several online legal marketplaces over the years. The challenge is always to develop a critical mass, customers and suppliers in this instance. Lawsourcing looks well conceived but faces this usual challenge. With staying power and the right marketing, will Lawsourcing become the eBay of law?

The title is not a typo. An Australian company is raising money in a public offering to buy law firms. Outside capital could drive innovative legal technology. 

In the UK, the Clementi reforms allow non-lawyers to own law firms. I’ve followed this because with outside capital, legal technology could become strategically more important. In Australia, legal reforms have led to a public offering by Integrated Legal Holdings Limited, which intends to buy several smaller law firms. My quick read of the prospectus is that this offering is about rolling up smaller law firms, not changing the legal business model with technology. Legally listed (LawyersWeekly, 20 Oct 06, Australia) offers the useful observation that for large law firms, raising capital is not typically a constraint, so selling shares is not attractive relative to the partnership model. But it will be interesting to see if ILH succeeds and, if so, invests more in technology than partnerships typically do.

Thanks to Simon Lewis of Sinch for alerting me to this news; his blog is here.

Legal Note from the Prospectus cover: “A copy of this Prospectus can be downloaded from the website of the Company at www.ilh.com.au. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.”

So what’s legal offshoring really like from the inside? Two Harvard 3Ls report on their journey through India. 

The source on outsourcing in the Harvard Law School Alumni Bulletin (Fall 2006) carries a report by two Harvard Law students who spent time in India researching legal offshoring operations. They “interviewed law students, attorneys at top corporate firms, venture capitalists and India’s second-ranking solicitor general. They also visited the cubicles where legal work is being done at a fraction of the going U.S. rate.”

Though several US corporations have set up their own offshore operations, the students found that the “independent firm started by an entrepreneur, often an Indian-American lawyer who supervises the work of Indian-trained attorneys” is more common. Offshore vendor claims notwithstanding, they found (1) few top Indian law school graduates work in these operations and (2) most offshore legal work, other than in patents, is not very complex. The article offers many other interesting anecdotal reports and suggests an optimistic future for legal offshoring.

And why does this matter to corporate law department tech managers and BigLaw CIOs? If your department or firm does offshore work - substantive or not - you can be sure there will be IT issues involved. And for law firms, any move to offshore legal work will cause - or should cause - law firm management to at least raise the question of outsourcing aspects of IT, if that is not already occurring.

Last week, Oracle acquired Stellent. BigLaw CIOs should keep their eye on this longer term. 

Stellent is a content management company, though in legal, it may be better known for its Outside In viewing technology, which is integrated into several e-discovery platforms. The merger (press release here) could have two distinct impacts. Oracle might go after the document management market, competing with OpenText (formerly Hummingbird) and Interwoven (formerly iManage). But DM is small potatoes relative to compliance.

EDD is exploding in more ways than one. Continued EDD vendor growth does not seem sustainable, at least from the corporate side, which pays the bills. The eventual solution is in the maturing of tools for corporations to manage their documents and content. With better enterprise content management (including retention, destruction, categorization, and search), many of today’s e-discovery challenges go away.

As noted EDD market observer Michael Clark of EDDix observed in an e-mail exchange:

“Not to minimize the complexity but, at the enterprise level, litigation support (including electronic discovery) is essentially a workflow problem that cuts across records policy, storage topology and content (document) management tools … as is compliance and reporting. Today, large organizations in highly litigious and highly regulated categories are beginning to look for holistic workflow solutions that can address both the prescriptive needs of compliance as well as the reactive needs of litigation.

I fully expect to see enterprise players like Oracle developing and marketing converged solutions … which will have a non-trivial impact on the EDD marketplace over the next several years. I think the large enterprise players will be strategic buyers of EDD vendors (to gain the legal domain knowledge, specific e-discovery tools and workflow patterns) and I see them as ultimately dominating the large organization marketplace. Although I don’t think that EDD was a major driver of the Oracle-Stellent deal, by virtue of the document viewing tools Oracle has acquired, Oracle is well-positioned to enter the market for converged solutions”

EDD companies currently sell at high multiples. With the dollars chasing deals and the entry of new players, competition may take a toll on pricing. If so, then I suspect that valuations will drop. That would would make it cheaper and easier for the Oracles of the world to acquire the legal domain know-how. And that could have a major impact on EDD.

Not long ago I wrote about using enterprise RSS to deliver the right information to lawyers. I’ve since learned of another good use for this technology. 

My former colleague Robyn Rebollo is a law librarian. She recently moved from the US to Australia, where she writes the Accidental Aussie blog, which covers resources for US and Australian researchers. In response to my post, Robyn wrote:

“I wanted to comment on your posting concerning RSS feeds. In my prior job, I purchased several copies of Feed Demon [a new aggregator] for both the library and marketing departments to use for business and competitive intelligence tracking purposes. The deployment was a big success and I was able to really get a grip on all my RSS monitoring. Glad that you mentioned the SEC will be offering RSS. There are many government sites out there already doing the same thing.

Let me share with you a good tip on monitoring other law firms and clients. You can track other firm or client press releases, new attorney listings, or product announcements. If a page with regularly updated information does not have a built-in RSS [really simple syndication] feed, you can use the web site Feed Yes to create an RSS feed for one or more pages. That turns out to be a great way to keep track of what firms and clients are doing, especially cases competing law firms were involved in.”

My guess is that in a few years, RSS will be ubiquitous as way to fetch, deliver, and consolidate information. It will be like electricity - something we use all the time but don’t talk about except when it goes out.

Update: (11/8/06) Bloggers Dennis Kennedy and Tom Mighell wrote a good article on RSS in Law Practice Today; it lists other tools similar to Feed Yes. More generally, it’s a good intro to RSS.

Telepresence seems like an interesting new technology with potential value for BigLaw. It’s video conferencing on steroids. 

I’ve seen several articles and ads recently. For example, Are You Ready For Your Close-Up? in Business Week (11/6/06) says of telepresence: “videoconference systems intended to make participants forget they’re in different places. The people captured onscreen are life-size – and lifelike: Lips move in perfect sync with the video. There’s eye contact. And no audio lag.”

Here’s how it works: you sit in a conference room and face a bank of large, high-definition flat panel video screens. Multiple cameras and a very high speed connection drives the system so that the - according to ads and articles - you feel as if the people on the screens are in the room with you. It sounds like a new generation of video - but at a high cost (both one-time hardware and on-going fees).

Over they years, I’ve seen the good, the bad, and the ugly of traditional video conferencing. I think there’s a case for telepresence, even at its much higher cost. If telepresence corrects the shortcomings of traditional video conferencing, at least for smaller groups, it could be a hit for inter-office meetings in BigLaw. After all, the cost to fly partners around is quite high, especially for internal meetings. And think of the opportunities to connect more closely with clients if the travel barrier is eliminated.

I make no prediction about its ultimate penetration. Cost seems a likely barrier for a while but I suspect that some big companies and BigLaw will adopt in 2007.

Several vendors supply telepresence systems; see, for example, Cisco or Polycom.