Strategic Legal Technology

Legal publishers play an important role in the legal market. They have moved from print, to digital content, to assembling an array of services. How will changing technology affect the publishers? 

A large legal publisher recently asked me to address this question. This was not a research project; rather, it was based on my own market observations (plus a few conversations with friends in large law firms). Here are some comments on my Legal Publishers in 2007 and Beyond presentation…

Business Context: The market for primary and secondary legal content is big but well penetrated. To maintain growth, large publishers now offer a wider range of content, software, and services (often by acquisition). This strategy lets them address a bigger portion of the legal value chain, gaining a greater share of law firm wallet.

Content Delivery: New technology alters information delivery; in particular, portals, taxonomies, search, RSS, and mobile devices drive personalized delivery. In the past, lawyers visited multiple sources. Today, information comes to them on a custom basis. As systems incorporate more business logic, the chances increase that the right lawyers see the right information at the right time. Changes in information create some market tensions: (1) Pricing and licensing are open (if not contentious) issues. (2) Law firms want delivery via multiple channels, on flexible license terms, from multiple sources, via the platform of their choice but publishers sometimes want to control delivery.

Content Creation: Blogs, podcasts, wikis, XML, and other new (web 2.0) technologies will affect content creation more than delivery. Law firms have always generated a lot of content. Now, via blogs and RSS, they can distribute it more widely at low cost (see, e.g., the list of large firm blogs and RSS feeds). Government content is increasingly available over the web, with some agencies adding value over time (e.g., the SEC will add XBRML tags to EDGAR). Separately, low cost hardware and software platforms let niche content providers thrive. The growth of law firms, the government, and niche players as content providers could threaten publishers.

Opportunities: Publishers can take advantage of new technologies to expand their delivery channels and customer base. With multiple new sources, customers may want a single, aggregated, vetted, and tagged source. And publishers also have deep expertise (human editors) that can continue to add value in new ways.

Summary: Technology is a two-edged sword for publishers. The likely outcome is that new technology propels publisher growth, albeit with some bumps along the way.

Microsoft SharePoint has captured significant legal mind- and market-share. It may be moving one step closer to replacing document management software ("DMS"). 

The consensus among large US firms is that someday it may replace traditional DMS. That day has arrived for one 250-user, UK law firm. Legal Technology Insider (Issue 196, Mar 07) reports that UK firm Lewis Silken (ranked #129) “has decided the days of the dedicated DMS are over. The IT team… has been given the green light to replace its old Hummingbird software with a new” DMS built around SharePoint. “Insider sources suggest several other top 250 firms are planning similar moves.”

Separately, Tom Baldwin, CKO of Sheppard Mullin, an early SharePoint 2007 adopter, has a blog post about faceted search in SharePoint 2007.

India is a big outsourcing destination. It may also become one for recruiting lawyers. 

Indian lawyers next target for international firms in Lawyers Weekly (Australia, 9 Mar 07) reports that legal recruiters and some large law firms now look for lawyers in India work in outside India (e.g., in London or the Middle East).

Overseas recruiting is not new. Young Australian lawyers are being lured to NYC say my contacts down under. Lawyers Weekly, which I’ve been reading in print for several months now, is filled with ads from UK firms seeking Australian lawyers. Milbank has the March 9th centerfold ad to announce it is recruiting for NYC in Sydney.

Given these trends, perhaps it’s no surprise that the article reports “International law firms, in particular the big UK firms, have also begun to visit Indian law schools to do recruitment drives of their own – a strategy that will help them in setting up an Indian office should foreign law firms be permitted to practise in India. Firms such as Clifford Chance and Linklaters are looking to start large-scale recruitment.”

I recently commented in A New Weapon in the Talent Arms Race that law firms could use blogs in their recruiting efforts. Lawyers could write a lot of blog posts in the time it takes to fly to India.

Last week I attended a great e-discovery forum: “And Justice for All: How the Electronic Information Explosion is Transforming the American Legal System.” H5 Technologies assembled an outstanding panel (listed below), moderated by Prof. Arthur Miller. 

The 2-hour long panel discussion explored the impact of the explosion in electronic data on litigation, government record keeping, and privacy. I will focus on a few highlights from the litigation portion.

A big theme was the ability of lawyers to find relevant documents. One panelist thought that business should organize information anyway, so it shouldn’t be that hard to find documents if they just did this. Another replied “no,” if organizing data had value, then business would do so (a view I share).

Professor Miller suggested that perhaps lawyers have always been bad at finding documents and now still are, so what? A classic Socratic question but I was surprised to hear one panelist agree, saying what documents are found matters not since only a tiny percent are used at trial: we only need the important items, collections have much duplication, and litigators have always had nagging doubts about missing something critical. I can’t square that view with mounting the best case possible and fulfilling production requirements.

That challenge of finding documents led Justice Breyer to express concern about the cost of EDD. If reviewing documents is so expensive, then we limit access to justice to those who can afford EDD, namely just big companies. An audience member shared this concern, saying that his small business clients can no longer litigate ordinary employment matters because of EDD costs. (See also Rising Costs of E-Discovery Requirements Impacting Litigants, Fulton County Daily Reporter, 3/20/07.) A possible solution is more cooperation in the meet and confer process. Others took issue with this suggesting it is utopian; one panelist noted that the “gotcha” is no longer about the case, it’s about the discovery.

Expecting a panel to resolve these issues is not realistic. I think it’s a good sign that a diverse group of prominent lawyers came together to discuss everything from the nitty-gritty of search technology to the loftier issues of equal access. Many such discussions will be required to reach a new and better equilibrium.

Panelists:
Professor Arthur R. Miller (Moderator), Harvard Law School
Jason R. Baron, Director of Litigation, National Archives and Records Administration
Ron Brachman, VP of Worldwide Research Operations, Yahoo! Research
Richard Brachman, Executive Director, The Sedona Conference
Hon. Stephen G. Breyer, Associate Justice, United States Supreme Court
Julia Brickell, Associate General Counsel, Altria Corporate Services
Nicolas Economou, CEO, H5
Hon. John Facciola, Magistrate Judge, U.S. District Court for the District of Columbia
Anne Kershaw, Founder, A. Kershaw PC // Attorneys and Consultants
Patrick Oot, Director of Electronic Discovery, Verizon Communications
Marc Rotenberg, Executive Director, Electronic Privacy Information Center
Hugo Teufel III, Chief Privacy Officer, U.S. Department of Homeland Security
David C. Vladeck, Associate Professor of Law, Georgetown University Law Center

I continue to be intrigued by Google’s custom search engines. These little tools have potential value for law practice and law business. 

I recently blogged about a top US law firm search I created. After that, Mark Gould, Head of Knowledge Management, Addleshaw Goddard LLP contacted me and was kind enough to provide access to one he created for the Top 50 UK firms. Both now appear on a new resource page at prismlegal.com, Legal Market Custom Searches.

Assessing the impact of custom search engines (CSE) will take time. I can imagine many CSE covering specific niches. Web search engines do a good job of bringing back relevant results from the entire web. But searchers often get back are more than they want or can digest. Limiting the search to narrowly defined sets of web sites (URLs) can help make search results more meaningful.

One concern is validation. By this I mean that the user has to trust the engine creator that appropriate sites are included. I’ve not found a way to see a full list of the sites included in an engine someone else created. Of course, if a firm’s law library creates a CSE, validation is not an issue.

I will consider including other engines on the new resource page; if anyone would like to contribute, contact me at searches at prismlegal dot com.

Two recent e-discovery webinars suggest that the legal profession has yet to settle on the best approach to e-discovery document review.  

E-Discovery: Search Engines & The Lawyer’s Role in Review (law.com, 2/28/07) addressed using key words versus concept searching to speed document review. Implicit in the discussion was that it’s not a matter of if but when most litigants will rely on software assisted review. I share that assumption.

The panelists had a spirited discussion about simple Boolean search versus concept searching and what directions the courts would take. Some panelists took what I consider the only sustainable position: determining the best approach is an empirical question. They also pointed out that we will need a series of published opinions to settle the question.

Information Risk Management and E-Discovery: Alternative Approaches to Document Review (H5 Technologies, 3/1/07) included a presentation describing just such an empirical test: about 50,000 documents reviewed by both humans and an advanced concept search tool. The software performed better than the reviewers. Someone in the audience asked about the risk of the software missing a document. The panelist rightly answered that the question was backwards given that her data showed the software did better than the humans.

Here’s my take after listening to both. Many lawyers appears honestly to believe that human review is accurate, the “gold standard” for document review. “Honestly held” and “right” can diverge. I, for one, have never seen data to support the commonly accepted “gold standard.” I suspect that the proponents of it are the same ones who postponed dealing with e-data as long as they could.

Absent a well-controlled study with widely accepted findings, we seem doomed to years of costly litigation and a trickle of published decisions to establish a new standard. If I seem jaded, well, I am. Boolean search has been available as early as 1980. A seminal scholarly article (Blair and Moran, 1985) showed that Boolean search alone found less than 20% of the relevant documents. In 1989, I used a concept search engine (PLS) that generally found more documents than Boolean searching alone. In 1992, there was good anecdotal evidence that machines did better than humans in objective coding.

At least there is a debate today and at least some EDD thinkers are at least talking about an empirical approach.

In this Roundup: a report on the Large Law Firm Leaders Forum (with coda on demise of Goodman and Carr); comments on new New York State advertising ethics rules; and a SharePoint 2007 case study. 

Large Law Firm Leaders Forum
Adam Smith, Esq. has a fabulous report on the “Law Firm Leaders Forum” held in San Francisco last week. Many managing partners attend and participate actively in a discussion about the future of large law firms. My take: “storm clouds on the horizon.” [By the way, you can’t be strategic about legal technology unless you understand the legal business environment.]

Lest anyone think the discussion of the future of firms is just academic, see Law firm Goodman and Carr shutting down (Toronto Globe and Mail, 3/14/07): “the decision to shut down what insiders say is a profitable practice shocked its clients and competitors…. The law firm’s demise is the latest sign of stresses on mid-sized shops. Larger competitors are increasingly aggressive about recruiting top lawyers from mid-sized firms to boost their business.”

NY State Ethics Rule on Lawyer Advertising
New York State recently passed what I consider ill-advised (ridiculous?) ethics rules concerning advertising. One read is that the rules require lawyer-bloggers to keep hardcopy of every blog post (and update to posts). I’ve refrained from commenting because ethics and advertising are not my specialty. I was therefore pleased to see PR guru Berky Belser’s Rotten to the Core blog post commenting on the rule (at the College of Law Practice Management blog).
See also New York Law Firms Struggle With New Restrictions on Advertising (New York Times, 3/2/07).

Sheppard Mullin SharePoint Case Study
Microsoft SharePoint has gained remarkable mind- and market-share among large law firms. Sheppard Mullin is an early adopter of SharePoint 2007. Found at Sheppard Mullin CKO Tom Baldwin’s Knowledgeline blog, a Microsoft-published case study of SharePoint 2007 at Sheppard Mullin. This is a good read for any firm considering SharePoint; it has some tech detail but focuses more on the benefits the firm has achieved.

Is knowledge management sometimes dangerous? 

Sun General Counsel Michael Dillon’s blog post Contracts with clarity implicitly raise this question. Dillon describes an effort at Sun to simplify contract language. He notes that

“attorneys seldom create agreements from scratch. Instead, in the interests of efficiency, we build off existing templates and add additional language covering any contingencies that we have experienced or imagined. When the next attorney uses your template, he or she rarely challenges the necessity of the additions that you have made. With each revision, the agreement grows in size and complexity…. The result is lengthy and verbose documents that create more ambiguity than they resolve.”

KM is all about re-use. How many lawyers try to simplify as Dillon suggests? Simple requires re-thinking, not re-using. I am not sure how many Practice Support Lawyers fundamentally re-think documents when they develop models. And re-using the last deal’s documents certainly does not encourage simplification.

I’ve seen the high cost of a bad model document. I was recently involved in negotiations for a complex service as an IT department’s business representative on a team of lawyers. We spent 50% of our time just trying to understand the provider’s convoluted contract. The provider believed its document was clear, complete, and consistent. It was not. Frequently, after multiple discussions about a clause, the provider would finally say “Oh, now we see your point, we can change that language.” Once they clarified the language and we understood what it meant, we could either accept or negotiate on the business merits.

I am still a KM advocate, but Dillon’s post illustrates that KM has the potential to close our eyes to altogether better approaches.

Two acquisitions occurred in recent weeks, one in e-discovery and one in outsourcing. 

Integreon to acquire CBF Group Inc (2/22/07) notes that “Integreon Managed Solutions, Inc., a global leader in complex knowledge process outsourcing, announced today that it has acquired Fargo, N.D.-based CBF Group, Inc., a business process outsourcing company exclusively focused on enterprise services to law firms.” The press release notes that the combination provides law firms with onshore and offshore solutions from the same company.

Merrill Corporation Announces Acquisition of Lextranet (3/1/07) notes that “Merrill Corporation, a leading global provider of technology-enabled services for the legal, financial, real estate and other corporate markets, today announced the acquisition of Lextranet®, a leading provider of Web-based litigation support and case management systems.”

A court has ruled that an online legal service engaged in the unauthorized practice of law (UPL). 

A recent 9th Circuit case, In re Reynoso (2/27/07), holds that bankruptcy advice provided by an expert system “was the conduct of a non-attorney” and therefore “constituted the unauthorized practice of law.” When I first heard about this from a friend and then read Software Cited for Unauthorized Law Practice at Inside Opinions, I feared the worst.

Lest someone accuse me of UPL… what I write here is not a legal opinion. I think this case is easily limited by its “bad” facts: a non-lawyer created the system, arguably false advertising, and questionable software-generated statements placed on a bankruptcy filing. This case may even offer protection from UPL charges for a well-vetted system, prepared by a licensed attorney, and fairly advertised.

In any event, this business to consumer (B2C) UPL case is easily distinguished from a business to business (B2B) situation. My articles about online legal services suggest that law firms or law departments that use expert systems to deliver advice to existing clients are not at risk for UPL.

Almost a decade after Linklaters first introduced Blue Flag, one of the earliest online legal services, we can wonder why there are not more B2B expert legal systems. Though UPL may be a lingering concern, I suspect it is minor compared to business model barriers.

On a related note, for a very useful legal ethics resource generally, see legalethics.com (the UPL section is here). This site, originated and still co-written by Peter Krakaur, has just been re-launched as a blog.

I regularly write about the advantages – and challenges – of working virtually. Several recent items are good reading for anyone interested in this concept. 

1. Reasons to Hold Out Hope For Balancing Work and Home in the Wall Street Journal (1/11/07) reports that “What’s hot is informal flexibility that allows employees to alter their hours or to work at home on a more casual basis” and “More employers are bowing to workers’ desire to live and work where they want.”

2. Michael Dillon, the general counsel of Sun and a blogger, has a great post on why he gave up his office (1/15/06). Mr. Dillon works only virtually; he has no permanent office. His reasons: becoming a better manager, keeping less stuff, and work-life balance.

3. Blogger Adam Smith, Esq. offers an excellent analysis of the face-to-face versus virtual working together in 200,000 SqFt; Hi Flr; Park Vu (1/30/07, commenting on why law firms pay $100/sq ft for space). He reviews and analyzes some of the literature on the economics of cities, particularly why businesses pay so much to be in cities. The bottom line is that cities facilitate face-to-face meetings. I relate to that idea: when in NYC, I often visit with 4 to 8 people in a day (know the subways - don’t even think of taxis!) I agree with this analysis but still believe, for reasons I articulate in The Future Law Office: Going Virtual, that law firms over-invest in downtown space. My guess is that an analysis of interactions among lawyers in downtown offices would show that face-to-face time is not optimized relative to the space occupied.

4. Business Week has a series of articles in its online edition (as featured in the 3/5/07 print edition) examining the pros, cons, and mechanics of working virtually. The Virtual Workplace includes several articles, including Working from Home: It’s in the Details.

5. And one idea. If you had to decide where to locate a satellite office for a downtown firm, it would be cool to create a Google map mash-up with all lawyers’ homes as points on the map. Then you could visualize clusters and select a location(s) that maximizes convenience. (One could make partner and associate map dots different colors, but that’s another story.)

Update (3/10/07): According to White & Case assistants to choose their hours in Legal Week (3/8/07), two London firms are moving towards working virtually.
Update (3/22/07): SJ Berwin becomes latest City firm to tackle flexible working conundrum in Legal Week (3/22/07).

The large law firm talent arms race just got hotter; NYC first year salaries escalated to $160k. Money, however, is barely a weapon when you think about it. All firms pay the same, so cash is not a differentiator. There’s an easy and cheap way to differentiate. BigLaw has yet to use this weapon staring it in the face. 

In researching our just published large law firm blog directory, Joy London and I did not find any BigLaw blogs directed at law students.

Are Your Recruiting Efforts Geared for the Online Generation? in Law Practice Today (ABA, online, Oct 2006) describes how firms can use blogs in recruiting. It is simple and easy but unheeded advice.

Consider the cost of finding new talent: travel, admin overhead, and lawyer time. Firms sell students a product - their firms - but miss an easy way to explain and differentiate their product. OK, most firms have recruiting web pages - static and boringly similar.

A blog could bring to life a firm, its culture, and its personality . How much does this cost? Almost nothing. How do you motivate lawyers? Competition plus a reward. Host a weekly contest for the best short blurb about life and work at the firm. The winner gets a Starbucks card and her name on the blog. Other content being produced anyway - news on deals, press releases on laterals, substantive legal updates - can be re-purposed for a recruiting blog.

Money is fungible. Cultures are not. Blogs are not. Let a new arms race begin.

Update (3/22/07): I recently came across a very nice large law firm recruiting web site. ”Real Deal” is Cadwalader’s recruiting web site. It has excellent production values but no blog.

In my prior post, I described the challenge of searching across the AmLaw 100 web sites. 

Spotted today at slaw is a post about custom Google searches. My experiment below, which searches top US law firms, roughly defined by the AmLaw 100 survey.

This is made possible by Google Co-op. The “gadget” above also has its own home page.

Blogs are now old hat. How many large law firms write blogs? 

It turns out that not many. Joy London (of excited utterances) and I have compiled a directory of large US firm blogs. It includes only firm-branded blogs. It also includes large firms that have published Really Simple Syndication (RSS) feeds for their substantive updates (but excludes firms with an RSS feed just for firm news).

I am surprised that more large firms don’t have blogs, especially since they may well have lawyers blogging. Does this reflect institutional reluctance to blog or lawyers wanting to retain complete control and ownership of their own content (in case of a lateral move). Comments on this marketing question or suggestions for additions to the list to blogs @ prismlegal dot com.

An interesting side note here…. in looking for information, I wanted to search the web sites of the AmLaw 100. I was not able to find an easy way to do so. I ended up using RollYO, a site that allows creating custom searches across up to 25 web sites. Assembling a list of the URLs, setting up four search lists, and then executing the searches was time consuming. Do AmLaw 200 marketers have better tricks for searching the web sites of their competitors?

In this Roundup: why a law firm strategy may be an oxymoron, outsourcing is harder than it looks, law librarians are probably safe from outsourcing, an excellent article on law firm business intelligence, and a cogent analysis of why UK and Australian large firms are not likely to seek now-legally-permissible outside investments. 

Law Firm Strategy
Effective CIOs increasingly want to align IT strategy with business strategy. In some BigLaw firms, this can be hard because the firm’s strategy is not clearly articulated. Now, from David Maister, in Are We In This Together? The Preconditions For Strategy, comes an interesting argument that some law firms may find it impossible to develop a strategy. This is a good read for strategically-minded CIOs.

Outsourcing (2 items)
Legal Reference from Mumbai? (PDF) by John Cannan in AALL Spectrum (March 2007) presents a detailed analysis and balanced view of the potential to offshore legal librarians. He concludes that offshoring is not likely to threaten law librarians any time soon; in fact, he even sees potential upside in Legal Processing Outsourcing.

Behind Outsourcing: Promise and Pitfalls (WSJ, 2/26/07) reports that outsourcing “details – what work to outsource, to whom, where, for how much – can challenge even the biggest, most sophisticated companies.” Two take-aways are use consultants and don’t outsource if the only goal is cost-savings.

Business Intelligence
Business Intelligence: What It Takes and What It Does (Law Tech news, 2/21/07) by BI expert John Alber of Bryan Cave is an excellent analysis and explanation of BI for law firms.

Law Firms Going Public (or Not)
Outside influence (TheLawyer.com, 3/1/07)) by the chief executive and London managing partner of large Australian law firm Minter Ellison is an excellent analysis of why large law firms are not likely to seek IPOs or other outside funding. Law firm IPOs is a hot topic in Australia and the UK. This article is a general analysis of the funding issues but was prompted by a regulatory-mandated delay in Australia’s first law firm IPO.