Strategic Legal Technology

Here’s a great illustration of the difference between human and technology failure. 

A friend sent me the following e-mail auto-reply text from a lawyer:

“Please note that due to the high volume of e-mails received, delays caused by internet service providers and other problems one encounters with e-mails, I may never see your e-mail and your e-mail may never come to my attention. Therefore, if your e-mail is important and you want to ensure that I know about it and that I read it, please send it to me by fax or by regular mail or call my office to inform me that you are sending an important e-mail. ”

Were I this lawyer’s client, I would be stunned. Are clients that much less busy or overwhelmed than lawyers? Are they less subject to “delays.. and problems?” This message screams “I’m really busy and important and you’re not… therefore, please go through extra efforts to get in touch with me, even though you’re paying me a lot.”

Systems may fail at times, but when humans fail, the results can be truly spectacular!

Several large law firms and EDD vendors have announced new or enhanced e-discovery consulting services. So law firms and EDD vendors may compete for e-discovery consulting business. Who should clients choose and what limitations do each face? 

Clients should consider carefully who offers the better set of skills and experiences. BigLaw brands may offer comfort, but some vendors have hired experienced lawyers and may offer the better bundle of skills and experiences.

EDD vendors risk competing against large law firm customers. Were I on the BigLaw buy side, I would not give my EDD business to vendors competing for the same consulting dollars.

BigLaw may suffer from the self-imposed caste system. They typically seeem not to list non-lawyer tech and other experts on EDD practice pages on public web sites. This lacuna could hurt marketing: as a client, I’d want to know about who is on my team. Furthermore, the caste system takes more than just a psychic toll; it can reduce effectiveness by hampering teamwork. Inhouse counsel often buy into the caste mentality but that is balanced by greater awareness of the importance of team work.

I can’t predict who will win the battle for EDD consulting dollars, but it will be interesting to watch the emerging competition.

(Disclosure: no sour bones from me and my NYU JD and two state bar (inactive) memberships.)

The legal market is not known - yet - for embracing innovation. And the life of a law practice management innovator can be lonely. That can and will change…  

The College of Law Practice Management (of which I am a trustee) sponsors the InnovAction Award, which is designed to identify and honor innovation in law practice management.

If you are in a law firm, inhouse department, or other law practice (no vendors please) that has done something innovative - whether with technology or otherwise - please take a moment to review the InnovAction web site and consider submitting an application.

Many articles lately cover the new e-discovery rules but don’t answer some nitty-gritty issues. 

For example, enterprise databases (e.g., SAP or Oracle) are decades old yet preserving or harvesting data from them can still be a struggle. Separately, I previously wrote about the potential EDD challenges of dealing with software as a service.

Now consider the rise of Web 2.0 tools that enable intra- and inter-enterprise collaboration via the web. Culture of Sharing Is Possible in eWeek (12/18/06) concludes that that “in 2007, more applications will allow simultaneous editing of content with good mechanisms for apprising participants of changes to that content.”

So, what happens when work moves from traditional applications (e.g., MS Word) to web-based systems (e.g., Google DOCs)? How often are data on third-party servers backed up? How long are those back-ups kept? These are the easy questions.

Preserving and harvesting issues grow potentially more complex with truly dynamic systems where multiple users simultaneously edit text or data. How often do such systems take snapshots? How many individual users take snapshots and then how do these compare to what others may save or what’s saved centrally? What happens when the system sends e-mail to alert users of updates, especially if the message contains content that is subsequently altered? Who “owns” or “controls” the data on these systems, especially if two separate companies have agreed to use the same third party tool? What if you need to discover data from a dynamic system such as Second Life?

Whoever addresses these questions on first impression may have a tough job. Likewise the corporate managers who have to establish and enforce record keeping policies concerning these systems. Legal Tech NYC next week is a good place to seek answers.

Morrison & Foerster is a big law firm that knows how to have its cake and eat it too. They developed an award-winning knowledge management system and use it as competitive differentiator. 

A MoFo team led by Oz Benamram, Director of Knowledge Management, developed “AnswerBase,” which won the Fourth Annual Law Technology News “Most Innovative Use of Technology by a Law Firm” award. AnswerBase is “an intelligent knowledge management system that allows users to find answers about documents, people, and matters from across a rich array of MoFo data sources” reports the 1/28/06 ALM press release. (For background on AnswerBase and its development, see Lawyers As Shoppers – It’s All About Finding Information, an article I helped Oz write.)

The firm also differentiates itself with AnswerBase. AnswerBase has its own page on MoFo’s web site, including a narrated demo (link on left nav bar). Furthermore, the firm retained law firm consultant Bruce MacEwan of Adam Smith, Esq. to write a report explaining the system and its value.

AnswerBase is a legal tech grand slam: a great system, promoted effectively, and appealing to to three key audiences: clients (for enhancing efficiency and effectiveness), potential new associates (for making work easier), and laterals (for enabling cross-selling).

The knowledge management peer group of the International Legal Technology Association is hosting a reception at Legal Tech on January 30, 2007 in New York City. 

The 2007 Legal Tech trade show takes place Jan 29-31 in NYC. On that Tuesday, the KM Peer Group of ILTA hosts a Happy Hour Reception sponsored by Practice Technologies, Inc., developers of RealPractice. The reception is from 5:15 to 6:30pm at Bridges Bar at the The New York Hilton (the show venue). To attend, register here.

Tyco International takes convergence (consolidating the number of law firms used) to the limit, paring back from 250 to 1, Eversheds in the UK. 

The Eversheds press release provides little insight on the economics of this deal. We do learn, however, that legal technology will be deployed to support the arrangement. The deal includes “Contract automation, business process redesign, and a legal extranet integrated into Tyco’s business by Eversheds (to facilitate online reporting and invoicing).” My guess is that an arrangement like this requires quite a bit of legal tech support to integrate the two organizations tightly.

On the business of law side, what’s the difference between “convergence to one firm” and just plain, old-fashioned outsourcing the corporate law department? Also, what does this mean for the “full-time, dedicated Eversheds lawyers?” If a lawyer is going to work exclusively for one client, why not jump inhouse?

Many law firms now use business intelligence methods to improve profitability. Do general counsels have opportunities to use BI to improve their operations? 

I think the answer is yes. Two years ago my post E-billing Ignores the Elephant in the Room argued that GCs need to go beyond using e-billing to check for ministerial problems. They also need to analyze how lawyers work and then change the way they work. A recent article in the Legal Times (12/19/06), After the Case, Analyze the Results also argues that GC miss the big e-billing opportunity. They

“don’t take the time to analyze the outcome, including settlements, awards and other amounts paid or received. And yet those numbers often turn out to be much larger than legal fees. Some law departments have found that they can significantly reduce spending by focusing on their results.”

The author emphasizes that looking at e-billing data is not enough - data must be analyzed in the context of results achieved. Assessing results involves a mix of subjective an objective measures that require extra effort to collect. But that effort is worthwhile.

Whereas I emphasized looking at how lawyers work, this article suggests looking at outcomes. An outcomes focus is ultimately more effective because it avoids the need to analyze mechanics of how lawyers do their work. The outcomes approach is particularly useful “in a series of similar legal projects.” For high-stakes one-off legal matters, however, GCs who want to control the legal spend may still need to assess how lawyers work and select firms that achieve good outcomes and work effectively.

With law firm mergers booming, national and global law firms are becoming the norm. What defines success for the new behemoths? 

For White & Case, Global Expansion Was the Easy Part (New York Law Journal, 1/12/07) describes the challenges one firm faces in creating a truly global firm as opposed to a collection of offices. Some say that even a single office is no more than a collection of solo practitioners.

Measured by profits-per-partner, many large national and international firms are successful. Profits, however, don’t indicate how effective the firms are at cross-selling and cross-staffing among offices. One measure of integration is the percent of hours worked in an office on matters not originated in that office.

The biggest integration challenge is establishing the right culture and incentives. With the “soft side” in place, firms need the right tools to communicate, share, and manage across offices. The supporting technology includes business intelligence reporting, experience location systems, knowledge management resources, and lawyer allocation tools.

You can have all the right tools and still be a series of offices. But you can’t be truly integrated without the right supporting technology.

All litigators should read the front page of the New York Times today. There’s a public pronouncement of an e-discovery challenge. 

Firms Fret as Office E-Mail Jumps Security Walls discusses the challenges of managing corporate e-mail when so many employees use personal accounts on services such as Google, AOL, Yahoo, and Hotmail. Beyond concerns about trade secrets leaking

“companies could run afoul of federal laws that require them to archive corporate mail and turn it over during litigation… Lawyers in particular wring their hands over employees using outside e-mail services. They encourage companies to keep messages for as long as necessary and then erase them to keep them out of the reach of legal foes. Companies have no control over the life span of e-mail messages in employees’ Web accounts.”

This issue should not be news to litigators; it’s certainly not to electronic discovery or legal technology consultants. In the past, lawyers seem successfully to have pleaded ignorance on issues like this. With the issue landing on the front page of the Times, the “dog ate my homework” types of excuses will no longer work.

Law firms face many knowledge management hurdles. KM success might be easier by focusing on high value activities. Empirical data can help establish where that is.  

For transactional work, identifying where KM can have maximum impact is not hard. The non-profit International Association for Contract & Commercial Management recently released its survey of most commonly negotiated contract terms in 2006. Top terms include limitation of liability, indemnification, and liquidated damages.

KM professionals could work mainly on clauses that appear most frequently. An “80-20″ approach - meaning focus most effort on the limited set of clauses used most often - might make KM more manageable and valuable. This survey could be a good starting point for deciding the best focus.

Firms can also review the most commonly negotiated clauses to see how their own lawyers draft them. But finding representative clauses can be hard because top terms appear across many agreement types. Some firms, however, already have tools to simplify this. For example, RealPractice by Practice Technologies makes it easy to find like clauses across contracts. (The related Public Access product allows searching other law firm’s clauses, via access to SEC filings.)

In litigation, one could apply similar logic, analyzing the most common substantive issues and jurisdictions. This would help guide what research and which model documents have the highest value.

Disclosure: I have a consulting relationship with Practice Technologies.

Joy London (of excited utterances) and I have updated our outsourced and offshore legal service list. This update (the last one was in October) includes 10 new vendors and 1 dropped one. We have also noticed a couple of other trends. 

One is that more Indian companies now list a US presence. Based on our own experience working in the US legal market, that is clearly a good strategy. Law firms are definitely more comfortable if there is a domestic presence.

The other trend is that the services provided by vendors seem to change regularly. Since we rely only on public sources (websites or articles), we don’t know if this reflects actual changes in service offering or just changes in what vendors actively promote.

We have not quantified these two trends, but based on checking web sites for each update and editing our table, the trend is clear.

In other recent outsourcing, news, several UK law firms are actively considering their outsourcing options. An article in Legal Week (11/2/06, UK) reports: CMS Cameron McKenna is exploring moving back-office functions to India; SJ Berwin is considering outsourcing; and Linklaters has inked a deal with Perot Systems. Perot will do some work for Linklaters onsite and some offshore. “Perot will initially work on developing the firm’s know-how systems.” It will be interesting to see how this deal affects knowledge management. On the one hand, from a KM professional’s perspective, this could be good news if more resources will be available to support the IT aspects of KM. On the other hand, who knows!

I’ve suggested that knowledge management and electronic discovery tools might converge, given that search underlies both. My June 29, 2005 a post mentioned “the possibility that e-discovery semantic analysis tools will be re-purposed for KM.” I got it backwards. 

Recommind, known to many law firms as a sophisticated federated and enterprise search tool to support KM, announced (1/3/06) its “new eDiscovery functionality that enables enterprises to quickly and easily locate electronically stored information (ESI) that must be preserved for ongoing or anticipated litigation.”

There is more money in the EDD market than the legal KM market, so it makes more sense for KM tools to go after EDD than vice versa. In my opinion and speaking from general business principles, Recommind’s move can cut two ways for KM professionals. On the one hand, extending its reach to EDD could give the company both experience and higher revenues that support developing more sophisticated KM features. On the other hand, its focus could shift to the much bigger EDD market and over time, mean less emphasis on KM-specific features. It will be interesting to observe what happens.

Disclosure (just in case readers believe this could influence my view here): I have a consulting relationship with Practice Technologies, developer of RealPractice, which serves the legal KM and work product retrieval market.

The Thomson empire (which includes West, Elite, and Hildebrandt) now includes Baker Robbins (BRCO), one of the leading legal technology consulting firms. 

A BRCO press release states that the acquisition “provides a powerful complement to the Thomson portfolio of legal consulting services, and will be aligned with the company’s Consulting Services group…. co-founders, Chairman David Baker and President and CEO Brad Robbins, will continue to provide leadership for the firm…. David Baker said the hallmarks of objectivity and accountability remain the essence of the firm.”

From what I have see, Hildebrandt has indeed remained independent, so I suspect BRCO will as well. But the interesting question is how Thomson will create synergies with strategy and legal technology consultants under the same roof as a range of software and information services. (Hildebrandt, by the way, has had a strategic partnership with BRCO for several years.) I imagine it’s fine line between allowing the independence of consulting units and gaining synergies.

Until not long ago, it has seemed that suppliers to the legal market were highly fragmented. With Reed Elsevier (Lexis-Nexis) and Thomson acquisitions, we have seen significant consolidation. It will be interesting to see how this continues and how the competition between L-N and Thomson will play out.

Last post I suggested ways law firms could better serve clients. General counsels can also take steps to get better service from their outside counsel. 

If I were a GC, here are questions I’d ask my law firms:

• Do you actively manage and budget matters? Just drafting a plan or budget causes lawyers to consider the flow of work, the possible scenarios, the resources required, and the likely time frames. The plan also serves as a valuable communications tool between the firm and law department. Spreadsheets are an easy-to-use tool for this. I have to do a budget for my boss, I want you to do one for me.
• What’s your approach to managing discovery? I don’t an army of associates or contract attorneys manually reviewing gigabytes of documents? Make sure your firm uses the appropriate approach to search and identify relevant documents. Increasingly, this means concept searching or other sophisticated software that reduces the number of documents lawyers must review.
• Transactions are expensive – how do you keep costs down? I’m coming to you for high stakes deals. I expect you to have the routine aspects of my transaction down pat. Do you have document assembly, master forms, checklists, interactive tools, or other systems that make you efficient for for the routine elements of my deal?
• Do you regularly perform early case assessments? Before diving into a new matter, it makes business sense to assess the stakes, the public relations value, the potential to settle, and the possibility of ADR. A formal process might include the use of formal risk analysis tools (decision trees) to quantify the value and consulting jury verdict databases to help assess potential damages.
• Do you systematically assign lawyers to new matters? I want experts on my matters and if you use my matter for training, I don’t want to pay the full rate. Do you have an experience tracking system so that I can be sure you are staffing my matters appropriately?
• How do you capture and re-use your know-how? Don’t charge me for work I’ve already paid for or that you’ve done for another client. Do you have form files or templates for routine court filings and routine transactions? How about an automated work product retrieval system?
• How do you collaborate internally and externally? Can a new lawyer on the case find past e-mail exchanges? Do you have systematic ways of discussing my matter and collaborating on documents? If you do a lot of work for me, will you put all final documents in a secure extranet that I can access? I’ve heard a lot about wikis - do you think that tool would help us work together?
• What are you doing to help me reduce my future legal exposure? You do a lot of work for me, so I want you to help identify root causes of my legal problems and whether there are preventive law programs I should sponsor or operational changes my company can make. You should also offer my department and my business managers timely legal updates that will help us manage our risk more effectively.
• What self-service options do you offer? I have many capable lawyers who work for me. I trust a lot of business managers jugment. They can do a lot on their own given the right tools - what do you offer?
• What do I get as part of our relationship? I use BigLaw for depth of resources. What are you doing to keep me smart about legal developments?

And by the way, it’s not just asking that’s important. The GC needs to be willing to select firms based on the answers.

New Year’s predictions, like resolutions, are easy to make but hard to keep. So instead, a look at what could be in legal technology. 

In keeping with strategic legal technology theme, the list below outlines ways that large law firms can use technology to enhance client service. Some ideas rely on established technology, some on emerging software; some are in wide use, others are not.

• Substantive legal updates
• “Push” via Webinar, e-mail, podcast, video, or instant messaging
• “Pull” via blog, RSS, extranet, or automated IM
• Work product repository, organized by taxonomy (topics)
  • Client-specific repository
  • Collection of prior legal updates
• Collaborative tools
  • Wikis for discussion groups or joint drafting
  • Deal rooms
  • Instant messaging
• Matter management and tracking via extranets
  • Client access to billing
  • Shared project plans
  • Case budgets driven by templates (plus analyses of variances)
  • Deadline tracking (esp. for patents)
• Interactive systems
  • To advise on “commoditized” work (or triage for custom advice)
  • For compliance with specific statutes or rules
  • To draft documents (document assembly and/or clause libraries)
  • For preventive law or risk assessments
  • Checklists and workflows for common legal tasks
  • E-learning and e-compliance
• Contract and deal management system
• Networking for business opportunities with other firm clients

I will hazard one prediction: only if clients aggressively demand more from their outside counsel will firms begin to adopt these ideas more widely.