Strategic Legal Technology

In this Roundup: a report on success at working virtually, more on the rise of e-discovery practices at large firms, a comment on why software companies consolidate but service companies do not, a new directory of legal blogs, and a legal tech pioneer moves to government service. 

Working Virtually
Change of venue: Law profession is beginning to adjust to a diverse work force (Wichita Business Journal, 28 Dec 07) describes the success of a couple of lawyers from smaller firms that are succeeding in working virtually. My sense though is that resistance continues to run high. Over the holidays, I talked to a partner from a large, DC-based firm. She reports that her 500+ lawyer firm frowns on working virtually though one big rainmaker works from a mountain retreat. Rainmakers frequently bend rules; firms should institutionalize practices for a flexible workplace, including working virtually.

E-Discovery
My mid-2007 article 4 Ways an eDiscovery Attorney Can Make Your Firm More Successful discusses the rise of specialized EDD lawyers. The trend appears to continue. Litigation Technology: An Emerging Discipline And An Invaluable Service To The Firm And Its Clients (Metropolitan Corporate Counsel, Dec 2007) interviews Mollie C. Nichols of Goodwin Procter LLP, who is a lawyer and Director of Litigation Technology. She supervises 30 technology specialists.

The Difference Between Software and Services
Aaref A. Hilaly, the President and CEO of Clearwell Systems, Inc. wrote two good posts at the company’s blog. In Top E-Discovery Software Vendors, he compares two recent surveys of top EDD vendors (Socha-Gelbman and Gartner). I disagree with his conclusions (as does George Socha) but the lists are a helpful resource and side-by-side comparison. More interesting, however, is his follow-up post on software versus services, in which he argues that, over time, a handful of software vendors come to dominate any given market. The biggest reason: “in software there are increasing returns to scale which do not exist for service providers. The more companies that use a particular software product, the better that product becomes.” Anyone care to bet on the e-discovery software vendors? How about enterprise content life cycle management software?

Blawgs
The ABA Journal now offers a directory of legal blogs organized by category, author type, region, and law school. I could not find inclusion or exclusion criteria. The Journal also nominated its top 100 blawgs in the December issue in ABA Journal Blawg 100.

The ABA has no monopoly on awards. Long time blogger and legal technology consultant Dennis Kennedy lists his annual top blawg awards in The 2007 Blawggies: Dennis Kennedy’s Best Law-related Blogging Awards

Australian Legal Tech Star Has a New Role

Many legal technology professionals have probably met Liz Broderick, formerly a partner at Blake Dawson, one of the top Australian law firms. Liz pioneered developing a practice group around legal technology, creating several ground-breaking legal tech products, including CD-ROM-based content (pre-Internet), a web-based interactive advisory system, and online compliance training. She attended the ILTA annual conference in Orlando last August; this was not the first time she came to the US for ILTA or the Legal Tech show in NYC. Liz has also tirelessly pursued work-life balance; this work was recognized in the Australian government naming her as the the Sex Discrimination Secretary. Her move to this position has received coverage in Australia: Gender Agenda for Broderick (Lawyers Weekly, 6 Dec 07) and Profile: Liz Broderick (Sydney Morning Herald, 7 Nov 07).

In my prior post, I cited a survey that found a dichotomy between corporate knowledge management adoption and satisfaction. I asked but did not answer the question why. Now, a potential answer. 

I received a thoughtful e-mail message from a senior and long-tenured KM director of a large law firm that answers the question. I post it here with permission. It reflects well some of the inchoate thoughts I had as I wrote my prior post.

I read your blog post yesterday about the Bain study and the conclusion that KM usage is relatively high but satisfaction with it is relatively low among the executives surveyed. You also wrote that “I can’t explain why adoption is so high if satisfaction is so low.” I agree that this seems paradoxical, but one possible explanation might be that the users of those KM resources are much more likely to be the people working for the executives than the executives themselves, and that therefor the value of the tools isn’t apparent to those executives.

Based at least on measured usage in our firm, KM resources tend to be used much more by the “grinders” to do the work than by the “finders” to sell the work or advise the client at the board or executive level. Even when KM is used for finders (and it often is), it’s lower-level folks using KM to do the research and draft the decks or RFP responses rather than the higher-level execs. It may be, then, that the surveyed executives see that KM is present (and costs money!), but don’t derive direct satisfaction themselves from that presence and usage, because it is largely invisible to them.

The same dichotomy the Bain study found in corporations would probably be found if Hildebrandt, BTI, or Altman Weil interviewed managing partners and practice group leaders in law firms. Partners might well agree that their firms had KM and seemed to be using it, but weren’t particularly happy with it because they themselves weren’t personally using it and deriving direct value from it. However, if you talked to associates, paralegals, and secretaries – generally the main users of KM resources – you might get a different response.

I realize that this is just one explanation; another might be, of course, that the KM resources in the surveyed companies weren’t very good or useful, and that the executives’ lack of satisfaction with the resources was perfectly representative of organization-wide sentiment. I just wanted to make the point that sometimes when surveyer takers talk to executives (or senior partners), the opinions given in response aren’t always so perfectly representative…

Knowledge management is popular among corporations but not viewed as very effective. That’s the alarming finding of a Bain & Co survey of corporate executives. 

Bain has conducted since 1993 a management tools and trends survey in which it asks over 1,000 executives about management tools they use. The tool set numbers 25 and includes benchmarking, business process reengineering, corporate blogs, knowledge management, loyalty management tools, mergers and acquisitions, mission and vision statements, outsourcing, six sigma, and strategic alliances.

KM usage ranks high, #10, with 69% of companies using but satisfaction with it ranks low, #22. The findings note “Knowledge Management increases usage, despite itself - Knowledge Management moved into the top 10 most used tools in 2006 despite being ranked in the bottom 5 for satisfaction in every survey for the past ten years.” (Presentation PDF pages 29, 59, and 28 respectively.)

I can’t explain why adoption is so high if satisfaction is low. Do corporations feel obliged to try? The study does not make clear the relative effort but it does note (p. 56) that “Perhaps some tools should not be used on a limited basis at all.” The results of a similar study of law firms would be fascinating. I will leave speculation about what the results would be for another day.

I never thought I’d see an intersection between legal technology and the Holiday Season. 

This year I have received noticeably fewer holiday cards by US Mail and many more by e-mail. The e-mail greetings range from simple images in the e-mail body to links to extravagantly produced Flash or other animations.

I welcome cards with hand-written notes. Instead of pre-printed cards, however, I prefer bits over atoms: an e-mail greeting spares the environment the impact of the paper and moving it around.

Updated (12/24/07): E-Greetings Gain Ground at Businesses This Season, a front page business section story in the New York Times today reports on this trend. It reports “Eric B. Rothenberg, a partner at the law firm O’Melveny & Myers who directs its green committee, said his firm sent about 10,000 e-cards this year, but individual partners sent out an additional 1,200 traditional cards at their own expense.” The firm sent an image embedded in the e-mail so recipients would not have to click through to a web site.

I have long thought that rule-based systems have great promise for creating online legal advisory systems. So I am glad to see the entry of a new, web-based system for creating systems. 

Jureeka.net “is a web service that lets lawyers and law students automate their expertise and provide real-time guidance to clients. Jureeka was motivated by the belief that law can be made accessible to the public, given the proper tools.” It appears to offer an open-source approach for law students and professors and a commercial platform for others. A demo and tour provide some illustration for how the system works but absent registering and trying to build a rule-base (which I did not do), it’s hard to tell how easy or hard it is to build a system.

The About page does not provide information about the company or the people behind it. I cannot speak for the academy, but for business buyers, I think that the lack of information is a potential hurdle.

In spite of these caveats, I decided a blog entry was warranted because any development in the legal rule-engine / expert system platform arena is worth noting.

[More from Prism about online legal services: blog posts; articles; list of law firms offering interactive, online services]

Two senior Jones Day M&A lawyers have revealed that the Emperor has no clothes and suggest a plan to dress him. Their article raises thought-provoking questions about how deal lawyers practice law. 

It’s Time To Rethink The Lawyer’s Role In Dealmaking: Start By Facing Up To The New Realities by Robert A. Profusek and Lyle G. Ganske of Jones Day in Metropolitan Corporate Counsel, December 2007, makes several key points:

• “Many lawyers no longer add real value to dealmaking.”
• Lawyers do deals the way they always have while business has moved on: “merger papers for public company deals have become the intellectual equivalents of deeds in a real estate deal.”
• “[D]eal document creation has become a decidedly commoditized process.”
• Lawyers must re-think their roles in deals. Lawyers add value “in mobilizing and managing multidisciplinary risk assessment teams, not in shuffling reams of paper.”
• “We are spearheading an initiative to rethink deal documentation fundamentally, and we intend to invite other leading firms to join our effort.”
• “[W]e will completely deconstruct what it is we do. We will reevaluate how we should staff our deals, what expertise our firms really need, how we serve our clients, and how we bill for our services.”

I have written about several ideas that support re-thinking law practice:

• Document assembly and expert systems (online interactive advisory systems) to address commoditized elements of law practice
• Developing by empirical methods best practice guidelines for how law is practiced and deals are conducted.
• Business intelligence to help assess staffing models and alternative billing.
• Formal risk assessment using decision trees. Granted, I’ve only discussed that tool for litigation, but perhaps it or other quantitative techniques can be developed to understand, discuss, and perhaps even measure deal risk.
• Knowledge management to capture and re-use documents and to tap the appropriate expertise.
• Outsourcing to offshore lawyers routine, higher volume work such as due diligence and contract drafting and review.

The authors’ initiative “to dress the Emperor” includes other law firms. I hope they include the broader community of legal professionals who have thought long and hard about improving law practice. If this initiative does not succeed, does the profession go back to pretending the Emperor has clothes?

Just how far can concept searching and semantic analysis go in automating document review in discovery? 

No one knows yet. The answer depends in part on another question: Is the ability of software accurately to assess responsive documents in a large collection constrained by linguistics (algorithms) or by computational limits (the cost of raw processing power)?

Advanced e-discovery software has proliferated recently. My sense is that these products are limited by the underlying techniques of full-text search and analysis, not by limits on affordable processing power. (See my July 2004 post, Developments in Full Text Searching, in which I share comments of a computational linguist on this issue).

If, however, the limit is processing data in a reasonable amount of time, then advances in computing speed would improve results. A recent article suggests that the moral equivalent of supercomputing will soon be available to the mass market. Google and the Wisdom of Clouds in the December 24th issue of Business Week explains that Google and IBM are developing “cloud computing,” the ability to use the vast networks of servers as a virtual supercomputer. If this succeeds, then lawyers will be able to run search software “in the cloud.” (I am assuming confidentiality issues can be resolved.) At that point, we would know better just how much massive computing power can replace human review.

This is the seventh in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is! 

Tech Enthusiasts May be Your Worst Enemies. Value the lawyer tech enthusiast but beware. They often have great ideas – your challenge is to figure out which ones are practical now. They can be counter-productive by oversimplifying complex and expensive changes or by regaling other lawyers about adopting new systems. For BigLaw CIOs, managing the enthusiasts, who can verge on the fanatical, is often more of a challenge than managing the naysayers, who typically only go so far in their opposition.

Holiday toast overheard tonight: “Long live e-discovery confusion”. EDD confusion is good for service providers, vendors and law firms. Not so for General Counsels, who should do more to reduce confusion. 

CommVault, a provider of data archiving, protection, and resource management systems with e-discovery solutions, recently released a a press release on a survey of EDD preparedness. The key finding: of 375 IT managers responding “only 20 percent are aware of the [FRCP] amendments governing e-discovery, and only 6 percent of the total respondents have actually implemented a solution to address the issue.”

The amended rules are old news. Even eWeek and Information Week have carried numerous stories. So IT managers have no excuse, but the real responsibility lies with GC. They should educate IT, which would do a lot to reduce confusion.

The press release implicitly chastises IT managers: “Nearly as startling… only 14 percent of IT departments had made any effort to engage the legal department on the new standards.” Even IT managers with dim awareness of EDD have little motivation to learn more; they have enough else to do. Of course, GC are also busy, but it’s hard to argue that establishing policies to deal with data doesn’t deserve attention.

BigLaw has had an incredible run since the brief recession in the early 1990s, prospering even during the dot-com bust. If the good times end, law firms will be looking to shave expenses. Where should they look? 

Dan DiPietro, client head of the Law Firm Group of the Citi Private Bank, offers Storm Warnings (American Lawyer, Dec 2007). He writes that in large law firms, “for the first time since 2001, expense growth actually outpaced that of revenue from January through June, depressing profit margins.” The biggest expense increases are in associate salaries, occupancy, and technology. In closing, he notes “2008 is rife with uncertainty…. Will a slowdown in work necessitate layoffs?”

The storm may already have begun. Two law firms cut support staff amid fears of chillier economy (San Francisco Business Times, 12/7/07) reports that “Heller Ehrman LLP cut 65 positions and Howard Rice Nemerovski Canady Falk & Rabkin PC cut 20 positions – or 8 percent and 12 percent of staff, respectively – within the last month.”

I’ve written about innovative approaches that can contain costs and improve profits.

Working virtually: by creating both a culture that allows more flexibility in where lawyers work, firms can improve work satisfaction and lower occupancy cost.

Re-thinking the role of the secretary: a combination of secretarial teams and outsourcing document processing can upgrade the role of the secretary, reduce space requirements, and improve service to lawyers.

Business intelligence: BI can help firms improve profits.

Law firms seem more willing to lay-off lawyers or staff than they are to consider changing how they work. Reductions, however painful, don’t require those left standing to re-consider how they work. Innovation and change may not save jobs in a 2008 legal recession. It offers a path, however, for a law firm to prosper, differentiate itself, and survive future cycles with less trauma.

Are you surprised that disk drive maker Seagate Technologies acquired e-discovery software developer MetaLINCS last week? 

According to the press release, this and prior acquisitions allow Seagate to “offer corporations, law firms, and litigation service partners a technology leading analytics engine along with one stop sourcing for archive, recovery and collection, review tools and services”.

This acquisition continues the active e-discovery deal-making (see my October 2007 list of EDD acquisitions). By now, it should not surprise anyone that a disk drive maker is getting into e-discovery. First, storage system company EMC entered the EDD market almost 2 years ago (see EMC eDiscovery Services and my Feb 2006 blog post E-Discovery Convergence at Hand? ). And second, noted industry analyst Michael Clark of EDDix has long predicted the convergence of e-discovery with enterprise solutions providers: see his comments in my post Oracle and E-Discovery?, Nov 2006.

Those interested in how MetaLINCS as part of Seagate will play out can read Mark Reichenbach’s blog, On the Mark. Mark is an experienced EDD professional and MetaLINCS VP, Client and Industry Development.

Disclosure: My employer Integreon offers MetaLINCS services as part of its e-discovery and offshore document review services. That said, I blogged about MetaLINCs long before joining Integreon: see Another E-Discovery Tool (Aug 2005) and my listing it as one of my 5 legal tech picks for 2006 in January 2006.

Ever get the feeling that people are doing something but just not talking about it? 

It could apply to large law firms and law departments that outsource and offshore legal work. Now the secret may be out. Well-known legal blogger David Lat at Above the Law posted A Very Special Invitation from Seyfarth Shaw, which displays a Seyfarth invitation to lawyers to “join us for a cocktail reception to welcome the group of attorneys visiting from Manthan Services in Bangalore, India. The group is here to learn how we can together work to provide high quality and cost-effective legal service in specific areas. We encourage you to come to the reception, meet the Manthan team, and discuss your practice and ways that Manthan can help us grow our business.”

A Wall Street Journal Law Post reports a comment from a firm spokesperson: “Seyfarth Shaw is always exploring innovative ways to efficiently and effectively serve our clients and grow our business; this is one such example.”

Bravo. My 3rd blog post in May 2003 was about outsourcing and offshoring legal work to India. This perhaps unexpected PR seems favorable to me and the firm’s comment on the mark. Any client or prospect thrills at the idea that its BigLaw firm seeks ways to work more effectively.

With the proverbial cat out of the bag, perhaps other firms and departments will be less timid about being more effective and efficient.

This is the sixth in an occasional series of “maxims” on managing legal technology. Each one is a bit edgy - you have to decide where the line is on just how true it is!  

Let Chaos Work for You, Not Against You. Law firms governance is very different than corporate governance: organization and management lines are relatively loose. When it comes to practice support and knowledge management (as opposed to infrastructure), go with the flow. Work at the practice group level and meet the needs of individual groups of lawyers. Trying to achieve or impose a standard firm-wide often fails.

Appeal to lawyers’ sense of competition. If you achieve a victory with one practice group, advertise widely. Hope that envy / competition causes other practices to ask for the same.