Strategic Legal Technology

Baker McKenzie has recently launched an online legal service, this one with a bit of a twist. 

Lawyers Weekly reports (4 April 2008) that “BAKER & MCKENZIE’S global climate change practice last week launched the CDM Rulebook website – a freely available, comprehensive online database of the rules relating to the Clean Development Mechanism (CDM) under the Kyoto Protocol.”

The CDM Rulebook is “the definitive online database of the CDM rules.” There is no hardcopy version because of green concerns and frequent updates; a separate page on the site suggests how to cite it. The site is elegantly designed, with multiple useful navigation features and extensive hyperlinking. It strikes me as an excellent paradigm for presenting other complex legal material on the web.

The twist is that “Baker & McKenzie has developed the CDM Rulebook with funding from eight donor organisations,” including the United Kingdom Foreign and Commonwealth Office, the Swedish Energy Agency, the Australian Department of Climate Change, the United Nations Development Program, and the World Bank.

Ten years ago when I worked for Jnana developing interactive legal advisory systems and the business models to support them, I did not consider the idea of not-for-profit funding. So it is interesting to see that a large law firm was able to take a creative approach to building a content-rich system

[Unrelated to above but to online services: See my 10 May 2008 “Roundup” post re the The Online Compliance Consortium, ” to help establish best practice and standards for larger law firms in the arena of compliance and specifically compliance training."]

I recently suggested lawyers call “timeout” when they see a problem in how law is practiced. 

Doctors and pilots use checklists and have the ability to call timeout. I think a big difference between lawyers and other professionals is that lawyer errors may never become visible. Who will know that a transaction term is bad unless that transaction is subsequently questioned? Who will know that the proverbial smoking gun document was overlooked? Who will know that a better regulatory strategy was available? To be sure, lawyer errors do come to light and clients do sue lawyers for malpractice.

In the absence, however, of systematic metrics and checks and balances found in other professions, lawyers are, at least relatively speaking, their own minders. BigLaw lawyers like to think of themselves as brain surgeons - “everything I do is one-off and delicate.” Continue that analogy (however mythological it might be). Look at all the prep, checklists, and folks looking on when the brain surgeon is prepping or in the O.R. Even if you analogize to great artists consider how much technique both modern and classical great artists apply.

If I were a general counsel, I might want an artist or brain surgeon lawyer, but I’d want her to be backed up by a bunch of engineers or equivalent. Someone to make sure the process is right.

Where is the discipline to control legal costs in business litigation? An innovation in the UK may usher it in. 

Radical Addleshaws venture to offer ‘cost-free’ litigation (legalweek.com, 22 May 2008) reports that

“Addleshaw Goddard is rolling out a groundbreaking funding package for disputes… [the firm will] assess all new and existing litigation cases to see if they can be carried out using a method of external funding. The scheme, called ‘Contro£’, means the firm will try to act on every case using a conditional fee agreement of approximately 50% as well as offering after-the-event insurance and third-party litigation funding. Where possible the three will be offered together, potentially allowing clients to avoid directly paying legal costs.”

Addleshaw Goddard has set up a separate web site, FundingControl for this service. The key statement:

“The ability to reduce financial risk is effected through sharing or transferring some of the risk to Addleshaw Goddard, to insurers, or to specialist third party litigation funders with no connection to the claim or its management. Our litigation funding package offers an integrated solution that will help you to retain control of litigation costs and reduce the financial exposure you face.”

What’s not said is the discipline that such an undertaking necessarily must include. Third parties presumably will not put up money without quantifying the risk. Nor will they tolerate inefficiency and bloated costs when money is at risk.

Diving deeper into the Funding Control website to the Estimate page, you learn that the firm has invested in a process to estimate litigation costs, including what sounds like proprietary software. Reading the more detailed pages, you will quickly see that this innovation is quite complex. But no one ever said litigation was simple.

[Two asides to an already long post…
1. See my related March 2008, Funding Law Suits: Market Discipline to Manage Legal Risk?.
2. The FundingControl site, in my opinion, needs a better design. It took me a while to figure out that clicking on the “Contro£” and box on the left takes you to more detailed pages. Plus I find the scroll feature in use archaic. But the concepts presented seem cutting edge so it’s worth clicking thru and using the scroll arrows on the lower right.]

Leading Japanese manufacturers are famous for letting any worker stop the assembly to correct a quality problem. Can lawyers say the same? 

I’ve been in automotive assembly plants and know that emergency stop buttons are critical safety features. It can also be a critical quality feature. Large law firm ethos discourages challenging authority. Lower ranking lawyers loath hitting the e-stop equivalent.

Yet e-stops have clear benefits. In hospitals, they saves lives. In Hospitals, Simple Reminders Reduce Deadly Infections (NY Times, 19 May 2008) describes - once again - how the use of simple checklists saves patient lives:

““Timeout!” a first-year resident called, as the medical team… was about to insert a catheter into the woman’s jugular vein. Then he reminded everyone to wash their hands. Timeouts to wash hands and put on hairnets, a simple checklist to ensure that such seemingly obvious precautions are done, and advertising campaigns directed at everyone from the most senior doctors to the poorest of patients have been credited with drastically reducing the number of serious infections at New York City’s public hospitals.” [emphasis added]

Lawyers have no easy equivalent. We should. When you see a lawyer create a document database in Word, hit e-stop. When you see a lawyer about to send a document without scrubbing the meta-data first, hit e-stop. When a lawyer wants to review produced e-mail in Outlook, hit e-stop. You get the idea.

Lawyers time-outs and e-stops require cultural changes. Furthermore, it will require that bar regulators not condone shoddy practices, protecting those who should have but failed to hit e-stop. Taking the High Road With Metadata (New York Law Journal, 13 Dec 2007) reports on how various jurisdictions rule on permissible use of metadata inadvertently sent by opposing counsel. To achieve best practices - to encourage a culture of timeouts - bar regulators need uniformly to put the burden on lawyers to act correctly in the first instance. Sadly, many jurisdictions encourage lax practices; the equivalent of ignoring easily stopped deadly infections. That parts of the profession condone bad behavior for something so simply changed suggests a long road to the ubiquitous timeout or e-stop.

Should courts accept e-discovery productions generated by concept searching? 

That’s the question addressed in When E-Discovery Is Put to the Test (Pennsylvania Law Weekly, 14 May 2008). This article takes a deep dive into a potential Daubert challenge to using concept searching. Some lawyers will find it tough reading but, as I argued in Lawyers’ Duty to Learn E-Discovery Search Techniques, that may be the price of admission for some litigators.

This article adds to an important professional discussion about e-discovery tools and it is worth reading. I take issue, however, with the author’s analysis, which contends that courts cannot evaluate concept search tools because the tools are proprietary. I see three issues with this assertion:
1. In my experience, only computational linguists can understand advanced concept search algorithms. I’ve tried reading academic or vendor literature on how the algorithms work and cannot get past the first paragraph. (Let the record show I have three years of college math major classes plus I worked professionally as an econometrician.) So even if you could get at the source code, it’s not easy to evaluate. Plus, my past conversations with computational linguists and software developers suggest that they typically do not agree on the efficacy of algorithms.
2. Even if everyone agrees an algorithm works, that does not mean the software works. You still have to show that it was translated into error-free computer code. It’s a rare piece of complicated code that is error-free.
3. Even if the code can be vetted, it may have to be vetted on a specific operating system or even on specific hardware. And modern software often interacts with other pieces of code - does all associated code need to be examined as well? (Along these lines, remember the problem Applied Discovery experienced.)

So the proprietary nature of the software seems only a piece of the problem. I would try to side step the whole Daubert issue . In my view, Judge Waxse’s comments at a Legal Tech session - legal system requires reasonableness, not precision; plus costs must be reasonable - offer a better framework for thinking about the most appropriate tools for e-discovery.

Benchmarking is not the same as analyzing a process. 

In Law departments rarely benchmark processes, law department consultant Rees Morrison explains that general counsel benchmark ratios but “very few law departments formally benchmark key processes, such as how to manage large numbers of contracts.” In my experience, you can say the same for outside counsel. This explains why it’s hard for me to find topics for my legal best practices blog category.

Paying more attention to process might accelerate the halting change in how lawyers practice and help address risk aversion. Take a look at one process: e-discovery nee litigation support. A chronology of developments - poetic license taken - illustrates what happens when lawyers don’t confront process:

• We can’ t use OCR (optical character recognition) because it’s not 100% accurate. Never mind that the alternative, objective coding, is at best about 98% accurate. [1992]
• We can’t use Boolean search of full text instead of objective coding because we will miss key documents. Never mind that there is good evidence that Boolean search, with all it limitations, typically finds more relevant documents than bibliographic coding. [1993-94]
• We shouldn’t ask for opposing party e-mail because then they might ask for ours. Never mind that it was obvious a decade plus ago that in many organizations, e-mail was critical. [1996]
• We can’t use a hosted repository, it might not be secure. Never mind that few firms had performed security audits on their own systems. [2000]
• We have to produce documents in fixed file formats such as TIFF or PDF with Bates numbers. Never mind that spreadsheets have no natural pagination and that many PowerPoint decks have crucial animation sequences. [2003]
• We can’t use software to screen for documents, it might not find all of them. Never mind that the alternative, human review, has errors and there is little data to compare the relative error rates. [Now]
• We can’t use offshore lawyers, they might make mistakes. Never mind that the alternative, armies of domestic lawyers, make mistakes. [Now]

For a profession that loves to dissect problems into issues, it’s surprising lawyers are typically unwilling or unable to dissect and examine processes. This reduces their effectiveness and the only reason they get away with it is that the clients don’t know any better.

Reminder: If you innovate, earn recognition. 

The College of Law Practice Management (I am a trustee) sponsors the InnovAction Award. InnovAction honors innovation in law practice management. Law firms, law departments, and other legal service providers (but not vendors) can apply. Innovation can range from creative office design, to technology, to a marketing campaign.

If you, your law firm, or someone you know has been doing something extraordinary – something never been done, or been done in quite this way – go to www.innovactionaward.com to learn more and to access the simple entry form.

If selected for an award, you’ll join some awesome company – DLA Piper, Mallesons, Holland & Hart and more. While you’re checking out the entry information, click on “Hall of Fame” to read about winning entries and enjoy some helpful Q & A about how these pioneers got it done.

The June 2nd entry deadline for the 2008 InnovAction Awards is fast approaching, but don’t worry – there is still time to submit an entry. Take a moment to review the InnovAction web site and submit an application. For more information:

• COLPM blog post about the award.
• Prior InnovAction winners.
• About the College.
• Download the PDF InnovAction Entry form.

The number of law practice management conferences has exploded in the last 20 years. What does this tell us and where are we heading? 

In 1989, I saw few conferences of any kind advertised in the legal trade press or by direct mail. To fill a gap in professional dialog, in 1991 I co-organized the Law Practice Technology Roundtable. The day-long, peer-organized meetings brought together lawyers and forward-thinking IT directors to discuss what we now call practice support. It met 20 times over a dozen years.

Now, reading American Lawyer, Inside Counsel, Corporate Counsel, Law Technology News, and other trade publications, I see many ads for law practice management conferences. For-profit companies such as ALM Events, Ark Group, IQPC, and Marcus Evans and not-for-profits such as ILTA, ALA, ABA, LMA, AALL, and SLA host many events.

So what changed and what does it mean? The growth and “business-ification” of the AmLaw 200 is a big driver. In 1990, many firms loathed the idea of firm as business. Today, law practice is simply a way to make big bucks. Growth in professional law practice managers has probably outpaced that of lawyers. Just consider functions today that did not exist or were embryonic in 1990: IT, marketing, business development, professional development, recruiting, sourcing, facilities management, knowledge management, practice support, and e-discovery / litigation support.

Professional sharing is great but I do wonder about the number of conferences. In KM circles, we have asked if there too many KM conferences – what’s new to justify so many conferences each year? Our answers are inconclusive. This post was triggered by Mark Ross of Lawscribe with his thought-provoking post: Legal Outsourcing Conferences - an Addict’s Critique. I too have noticed many legal process outsourcing conferences. (Re the LPO market: I share Mark’s concerns but I think the positive take-away is that we are at the tipping point of widespread outsourcing adoption; of course, I may be biased now that I work for an LPO!)

So, what’s next? Some of my thoughts about the future of conferences:

• Conference organizers should clearly distinguish between “here’s what you will learn” sessions driven by a speaker plus PowerPoint and real panel discussions. I find being talked to – whether by a single speaker or seriatim by 3 to 5 panelists - less useful than a truly interactive panel , one not overly rehearsed, that operates slide-less, and that engages in a real conversation on the podium and with the audience.
• On the commercial side, let’s hope for a shake-out. I’ve heard too many stories of sessions or whole conferences with just a handful of non-speaker / non-vendor attendees. As a marketing person now, I see way too many opportunities to sponsor conferences or pay-to-meet-buyer events. (Even worse, some of the for-profit conference organizers do not seem to understand CRM, so I receive multiple, uncoordinated calls from them soliciting sponsorships. The guilty shall remain nameless.)
• How about more “un-conferences.” I read a bit about these; I gather participants drive these in real time, meaning no advance agendas or speakers. Out of chaos, order emerges. Said another way, I find that at most conferences, the best action is in the hallways, small group discussions, and networking. Perhaps we should just do away with the fiction of sessions and focus on the “intelligence of crowds”, chance encounters, and networking.
• I imagine law firms and departments now spend a pretty penny on conferences. Is there a way to create a collective rating system so that lawyers and department and firm staff could, in a neutral forum, rate conferences, speakers, venues, etc. Any entrepreneurs out there who can start this rating business?

In this Roundup, cost savings from offshore document review, b-school training for lawyers, EDD convergence, and an example of open source law. 

Offshore Document Review
Tusker outsources to India; $25 an hour for an attorney (Austin Business Journal, 18 April 2008) reports on an offshore document review that saved between 80% and 90% relative to the cost of an onshore review. These savings enabled a small company to take on Dell Inc.

Law Firm Leadership Training Spreads
Over the last few years, numerous national law firms have partnered with leading business schools to provide business training. This trend appears to be moving beyond major metro areas. Columbus law firm joins forces with OSU to create leadership course (Columbus Business First, 11 April 2008) reports that Ohio State University has “customized [a] new leadership development program” for Bricker & Eckler.

E-Discovery Convergence
Information Week (21 April 2006) reports in Oracle’s E-mail Organizer that “Oracle is moving into e-mail archiving [which] let IT managers organize, archive, and search e-mail from Microsoft Exchange, IBM Lotus Notes, and SMTP-based e-mail systems.” [See also Oracle Universal Online Archive.] With this type of functionality, corporations should be able significantly to reduce e-discovery collection and processing costs.

Open Source Law
I recently learned about The Online Compliance Consortium in the article Online AML Compliance in Managing Partner (March 2008). The OCC web site home page states “The purpose of the OCC is to help establish best practice and standards for larger law firms in the arena of compliance and specifically compliance training. Founded in 2004 through the collaboration of 14 of the UK’s leading law firms the Online Compliance Consortium has now grown to include over 70 the world’s largest law firms.” The article suggests that the group was formed by leading law firms to “share their experiences and concerns to create a common standard and a portfolio of training programmes for compliance.” Sounds like open source law.

Flaky hotel internet access drains my personal productivity. Aside from whining, hotel connectivity illustrates interesting economic issues for law firms. 

In one of about every four hotel stays, I have to call tech support to get the net connection working properly. I waste a lot of time doing this. I can’t be the only one. Instead of going into gory detail, let’s look at some potentially interesting lessons for law firms:

• If you outsource a customer or client facing service, do NOT disown responsibility for it. I am a big outsourcing fan. Done right, it means improving service, not making it worse. To me, it feels hotels have outsourced AND disowned. This hurts their brand and repeat business.
• Both hotels and law firms provide a complex set of services. How do you decide what to bundle in the basic rate? Low-end hotels often bundle net access in the room rate; I’m not sure why high-end ones don’t. I occasionally choose a hotel based on free net access. Are law firms losing clients or prospects because they have unbundled too many services? I really don’t know, but it’s worth making a conscious choice.
• Metering a service is generally a prerequisite to charge for it. The fact that it’s possible to meter a service does not mean you should. Let’s not forget Skaddenomics (a famous 1991 American Lawyer cover story on Skadden Arps charging clients for coffee service).
• Everything I just wrote notwithstanding, the purchase decision is complex. With net connection problems pretty universal, loyalty programs and location still drives my hotel decisions. Since the core service offering drives decisions, improvements to extras may not be good investments.

All this leaves me concerned that in both hospitality and law, service problems will persist for a long time.

Lawyers are risk-averse. They frequently fail, however, to consider the risk of alternatives. 

Cutting a Winning Edge in Law Firm Blogs, an article about large law firm blogs illustrates this point. A blog-less BigLaw firm’s spokesperson is quoted, re firm blogs:

“They take effort, we have to generate the content and there’s a big issue when you’re communicating with the public: Are you giving legal advice?” If you say something a reader interprets as advice, you’re then in a situation you don’t want to be in.”

Never mind that e-mail alerts, articles, and content for web sites all take effort to generate. And never mind that the firm has large amounts of content on its public web site that readers might interpret as advice. Is this firm already in a situation it does not want to be in?

Fortunately, the rest of the article is a pretty good and well-balanced view of the pros and cons of BigLaw blogs. It also includes practical steps to take to minimize risks.

What are the right resources to solve a legal problem? How should you even think about this question? 

Many answers are possible. Below, I set forth one model - a classic management consultant’s 2-by-2. On the x-axis, plot complexity of work, from low to high. On the y-axis, plot volume of work, also from low to high. Draw lines at the axes’ centers and you define four quadrants. The bottom-left is low complexity and low volume, the top-right is high complexity and high volume, and so forth.

Intentionally absent are specific measures. The idea is consider the right resource for each quadrant without worrying about detailed measures. In my analysis, the simplest legal problems (lower left) can be solved with checklists. Automation (e.g., document assembly or expert systems) can solve low to medium (and even high) complexity problems given high enough volume (required to earn an ROI on the upfront cost to develop the system).

Off to right, for complex work, I assume lawyers are the right resource. But then there’s the big middle ground of medium complexity work at low or high volumes. Here, I suggest, a combination of paralegals, other professionals, temp lawyers, and offshore lawyers. Note that in general, shaded areas intentionally overlap.

Each person likely would draw the circles / ellipses elsewhere. The point is to use this approach to think about and discuss what resources to deploy to solve legal problems.

How many clients have systematically thought about their portfolio of legal problems and the optimal resource mix? Perhaps most general counsels intuitively choose the right resources for all their problems. I suspect that going through this or another systematic exercise / analysis might identify cost savings.

[I have previously proposed a different two-by-two framework for assessing investments in legal technology.]