Strategic Legal Technology

2004-01-10T14:43:00.000-05:00

Blog Has Moved

Please visit my new location at PrismLegal.Com.

If you happen to point to my blog, please consider re-setting your link to http://www.prismlegal.com/wordpress/. And if you do not currently link to my blog and would consider doing so, I would appreciate it.

2003-12-29T23:26:00.000-05:00

Blog is Moving

Below are this week's new postings, appearing at my new blog at PrismLegal.Com.

I am moving this blog to PrismLegal.Com, my main web site, that now incorporates my blog (based on the open source WordPress software). The new blog is categorized and offers RSS feed. I will continue dual posting for a while.

If you happen to point to my blog, please consider re-setting your link to http://www.prismlegal.com/wordpress/. And if you do not currently link to my blog and would consider doing so, I would appreciate it.

2003-12-29T23:25:00.001-05:00

Online Services Update

I recently came across a very well-done white paper, Online Strategies for Law Firms 2004, on online legal services by Charles Christian, Editor & Publisher, Legal Technology Insider. It provides an insightful analysis of the current state of online legal services, especially in the UK.

Christian discusses three strategies firms can follow: pure marketing, virtual legal practices (which includes both firms without a physical presence and automated services delivered via computer), and web-enabled practices (by which he means delivering traditional services in new ways such as a virtual dealroom). His "virtual legal practice" is what I call online legal services. He notes that "commoditised legal products" delivered over the web have not been very successful.

While that is consistent with reports I have heard elsewhere, that has not stopped firms from trying. In 2003, I identified online legal services from Allen & Overy, Foley & Lardner, Mayer Brown Rowe & Maw, MinterEllison, Morgan Lewis, PortfolioIP, ReedSmith, Shaw Pittman, VisaNow, and White & Case. Elsewhere on this site, I maintain a list of online legal services. (Note that inclusion in 2003 of a firm does not necessarily mean that the service offered in 2003 was new - I may only have come across it then.)

The bad news is that uptake is slow. The good news is that there is likely still a big opportunity for growth, both as firms find the right formula for online services and as corporate clients recognize that automated systems offer a promising way to deliver more legal advice for less money.

2003-12-29T23:25:00.000-05:00

Creating Best Practices at Chevron

Chevron spends more than $60 million on outside law firms that handle its litigation reports Refining Litigation (Corporate Counsel, Dec. 2003). A new general counsel who started one year ago has instituted a program to develop best practices in litigation.

Charles James, the new GC, charged 8 inhouse lawyers with "drafting a better plan for handling litigation from start to finish." He also invited a panel of 8 outside litigators to provide insight on how the company could better manage litigation. The new set of improved litigation practices is still under development. The article reports that it will include a new litigation management specialist position, the composition of the litigation team, how work should be allocated among the team, and how the team should communicate.

While the article does not explicitly mention technology, it will be interesting to see if Chevron publishes its guidelines and if these guidelines explicitly cover technology best practices. In my opinion, any plan should include quite a bit about technology. Examples include the use of spreadsheets for budgets and variance analysis, discovery management practices for paper and digital data (including collecting, processing, and reviewing files), standards for when formal risk analysis should be used, approaches to and tools for trial presentation, and a process to capture lessons learned at the end of the matter.

2003-12-29T15:12:00.000-05:00

Strategy and Technology to Support Law Firm Growth

The Wall Street Journal published Kraft's Stale Strategy last Thursday (12/18/03) describing how Kraft's line-extension strategy has failed to develop revenue growth. Before I relate this to lessons for law firms, some backgound...

Line or brand extension refers to taking an existing brand name and applying it to a similar product. Retailers use this to eke out additional sales and extra space on store shelves. When I was a kid, there was one type of Oreo cookie; now there are many. That's line extension. As the article says, in inimitable WSJ style, "this new cookie crumbled." The failure to develop new products and brands is coming back to haunt Kraft in slow growth.

After reading this, I was thinking if there are lessons in it for law firms. Law firms have increased revenues by merging, adding or creating new practice areas, and raising rates. But they have not created any fundamentally new service or offering. Where is the new concept or brand like a Starbucks or the derivative instruments Wall Street invented?

It's not easy for law firms to create new services, but they can probably do more to enhance revenue growth. And technology can contribute to that growth. Can I.T. Uncork Corporate Growth? , an article in the December 2003 issue of Optimize magazine, is a good read for law firm managing partners and CIOs. The article describes five ways to increase revenue growth:

"Base retention," which means avoid losing customers and get growth from them

Gain market share

Adjust market position (spot emerging areas of demand and grab a high share of that new demand before someone else does)

Penetrate adjacent markets (think, for example, of law firm affiliates or accounting firms' efforts to offer legal services)

"Invade new lines of business," which means create something new from scratch

The authors suggest that customer relationship management software can help across all fronts, but it is, at best a partial solution. Other operational systems and adjustments may be required, including devising new systems that support new business models, for example, Dell's direct selling and Wal-Mart's mastery of the supply chain.

While the model set forth in the article may be hard to apply directly to law firms, at minimum, firms should think through how to improve the service they provide using technology. Options that could help with top line growth via a better service include

using simple spreadsheets to budget every matter over a threshold size,

providing personalized access to the firm's work product,

delivering advice via interactive systems,

managing important relationships, including cross-selling, by effective use of a CRM,

relieving clients of certain routine work such as patent or trademark docketing with databases, or

providing customized document generation systems.

Achieving growth in excess of the overall economy or the legal market takes work and creativity. There are many capable competitors in the legal market and no firm has a lock on business. Technology by itself may not drive growth for law firms, but it is an enabler for many of the most readily available growth strategies.

2003-12-19T13:06:00.001-05:00

Blog is Moving

Below are this week's new postings, appearing at my new blog at PrismLegal.Com.

I am moving this blog to PrismLegal.Com, my main web site, that now incorporates my blog (based on the open source WordPress software). The new blog is categorized and offers RSS feed. I will continue dual posting for a while.

If you happen to point to my blog, please consider re-setting your link to http://www.prismlegal.com/wordpress/. And if you do not currently link to my blog and would consider doing so, I would appreciate it.

2003-12-19T13:06:00.000-05:00

Microsoft OneNote

Microsoft has recently released a new addition to its Office suite called OneNote. It's a "free form" text entry tool with a tabbed interface, outliner, and built-in search engine. I have been evaluating the product for about 30 days and like it so far. I think this is software that many lawyers are likely to find quite useful.

I am not generally a fan of Microsoft and have complaints about their products and market behavior. But I must admit that for a version 1.0, OneNote seems pretty good. I am using it to store miscellaneous information that formerly would be scattered across Word documents, Outlook, and other applications.

The "tabbed interface" across the top makes it easy to create multiple topics (e.g., for different clients or projects). Each tab allows creating an unlimited number of named "pages" down the right side of the screen, allowing quick access to multiple subjects by topic. On each page, you can arbitrarily click and start entering text or other data in it's own "block." A quick look at the outlining feature suggests that it is much easier to outline in OneNote than in Word. (I still miss PC Outline from the DOS days! OneNote may be the answer.)

From the reviews and articles I've read about it, I believe that Microsoft intends OneNote to be particularly useful and optimized for tablet PCs. I have not explored these features (I don't use a tablet), but I can see from the design of the software and my experiences using a friend's tablet that OneNote would work nicely with that hardware platform.

OneNote creates multiple files, one per tab. I think you can keep tabs at different places in your directory structure and access them from OneNote by navigating via the directory structure. I found this aspect a bit confusing, but did not fully explore because I decided it was best to keep all the tabs in a single sub-directory. The one peculiarity (I have not encountered any serious bugs yet with OneNote) is that when my automated back-up runs nightly (I back-up to a secure, web-based service), the log file shows a lot of OneNote files being updated that I don't see listed in Windows file explorer. I'm not sure what that means, but it seems innocuous.

If you have experience with or insights into OneNote, I would be grateful if you would leave a comment.

2003-12-19T13:05:00.000-05:00

Electronic Discovery and the Government
Last month I met with a technical team at a US government organization that has investigative and enforcement authority. The topic of our meeting was to discuss current developments in electronic discovery. This team is guiding the organization's strategy and tactics for dealing with electronic discovery. What I learned was very impressive.

The organization has clearly thought through the issues of dealing with large volumes of diverse digital data. They have considered how to integrate paper and how to deal with many different file types. While they do not have all the answers - after all, no one doing electronic discovery does yet - they have a vision and the toolset to back it up. I was impressed to learn that they are using products such as Autonomy and ClearForest, both of which offer sophisticated search, categorization, and meta-tagging features.

Lawyers in the private sector often assume that the government lacks technical skill and sophistication. Clearly, the DOJ's performance in the Microsoft antitrust case should have dispelled that notion. And this particular organization impressed me as being further ahead in both its thinking and its execution than most large law firms.

While there is no substitute for good lawyering, to some extent, modern litigation and government investigations are becoming an arms race. This race is about who can get a better handle on electronic evidence. After this meeting, I'd have to say that at least some parts of the government may be winning the race.

2003-12-13T13:06:00.000-05:00

Hildebrandt Report on Outsourcing

Brad Hildebrandt, one of the best known and most established consultants in the legal market (and founder and head of Hildebrandt International) has issued a very interesting special report on the potential to outsource legal work to India.

Mr. Hildebrandt reports that his firm will get involved in outsourcing and is considering several business models:

"1. To consult with our clients on outsourcing as well as developments in the Indian legal system.

2. To discuss with a number of clients their interest in coming together to invest in a captive company that will provide services to the profession.

3. To enter into a joint venture with an existing U.S.-based or Indian-based company where we can have input into the design of the services, security arrangements and service capabilities."

Regular readers of my blog know that I have been following outsourcing for some time and that I believe any effective outsourcing will need to make smart use of technology to distribute and manage work across disparate locations.

2003-12-13T13:05:00.000-05:00

Blog is Moving

I am moving this blog to PrismLegal.Com, my main web site, that now incorporates my blog (based on the open source WordPress software). The new blog is categorized and offers RSS feed. I will continue dual posting for a while.

If you happen to point to my blog, please consider re-setting your link to http://www.prismlegal.com/wordpress/. And if you do not currently link to my blog and would consider doing so, I would appreciate it.

2003-12-13T00:05:00.000-05:00

Strategic v. Operational Technology

Josh Fish of Hubbard One has a good article, Using Strategic Technology to Win and Keep Business, in the November 2003 issue of LawNet's Peer to Peeer newsletter.

In it, he argues that firms should view their technology budget in two bins: operational and strategic. The operational should be viewed with an eye toward cost saving whereas the strategic with an eye to revenue enhancement and profits. Furthermore, the strategic element should be considered from a portfolio perspective, meaning some projects will succeed and others will not; the goal is to earn a postive return on the portfolio.

This articulates very clearly a view I have always held. I hinted at this distinction - though not so eloquently - in my article The Business Case for Delivering Legal Advice Over the Web. I went a bit further in one respect though, which was to argue that firms need to consider the risk and return on technology investment in comparison to other investments they make.

The article, in part, promotes the idea of an online legal service, in particular a HIPAA service provided by ReedSmith (see my blog posting on this service). I am a long-standing advocate of online services (see my articles on and list of online legal services).

2003-12-13T00:04:00.000-05:00

2003-12-11T11:50:00.001-05:00

Paralegals in India

Legal Research And Back-Office Work To Go Offshore Next in Information Week (12/9/03) reports that "[l]egal research and other back-office work carried out at law firms may be among the next set of white-collar jobs to move offshore in big numbers."

The article quotes a Milbank Tweed partner as saying his firm is considering moving some backoffice functions to India. (An interesting aside here is whether the term "backoffice" is the reporter's or the partner's and, if the latter, it is meant to include paralegal work. Viewing paralegal work as a backoffice function is a different issue.)

Openwave Computing, an outsourcing company based in India, "is in pilot discussions to provide paralegal services for two or three major U.S. law firms."

As I have suggested in numerous prior posts, the same technology that allows lawyers to work from home (online research, remote access to firm repositories, and high speed net access) facilitate moving work offshore.

2003-12-11T11:50:00.000-05:00

2003-12-09T08:03:00.000-05:00

Outsourcing in the News

Two recent articles about sending work offshore caught my eye. In New Economy, Companies sending work abroad are learning cultural sensitivity - to their American customers, the New York Times (December 9, 2003) reports that some company's that have outsourced work to offshore locations have run into problems. Dell ran into problems providing service for some of its high-end products and had to re-route the call center back to the USA. In spite of this setback, the article quotes analysts who predict that technology jobs will continue to move offshore.

In prior posts on the topic of outsourcing, I have argued that law firms should consider moving some work to India or other countries where people are trained in English common law. The problem Dell ran into is not likely to happen to law firms. Dell and other companies providing customer service provide direct customer access to the offshore resources. As I see it, were a law firm or department to use offshore personnel, it would manage the resources directly, review the work, and not allow direct client contact. That does not guarantee that offshoring would work, but this approach would eliminate a risk customer service organizations face.

Adding fuel to discussion is Change of Venue in the American Lawyer Magazine December 2003 issue. This column's sub-heading says it all: "Cost-conscious general counsel step up their use of offshore lawyers, creating fears of an exodus of U.S. legal jobs." The article quotes Forrester Research, a market research firm, as predicting that 8% of lawyer jobs will go abroad by 2015. The article then sites examples of companies that are using the services of offshore lawyers. The head of one outsourcing firm "notes that foreign outsourcing could benefit large, multi-office law firms. Much of the work being done by junior associates, he says, could be handled offshore." He may not be exactly unbiased, but I believe this is true. The article concludes that with skepticism about the idea of associates losing jobs but nonetheless suggest law firms need to consider the offshore possibility.

2003-12-09T08:02:00.000-05:00

2003-12-04T07:29:00.000-05:00

Creating Value form Knowledge Management: Making it External and Syndication

LegalIT reports in Top Scottish firms pool know-how on KM project that several Scottish firms have teamed to create a "groundbreaking KM project to share knowledge across sectors." This is the first time that "a large group of competing firms have decided to pool and share their knowledge."

The project is driven by a product called Orkell from Legal Data Solutions. I spent some time on this web site and the company has a very interesting idea. The company provides a content management platform and, more importantly, uses that platform to aggregate and re-distribute (essentially syndicate) content from multiple law firms. Firms contribute content to the company and the company in turn re-distributes the aggregated content back to the contributors.

The Orkell product demonstration is worth reviewing. It is positioning the service to help law firms that serve consumers avoid losing share to publishers and start-ups offering alternatives to traditional legal services. The aggregated data is designed to help consumers via question and answer pairs, fact sheets, and documents. Providing this information can be a form of marketing or can be set up to generate revenue by charging for documents. The company provides content management and web sites, branding each site with a contributing firm's unique look and feel.

While this new and innovative service appears targeted at consumers and smaller businesses, there are two potential lessons here for large law firms. First, it makes knowledge management an external facing activity. By developing know-how that is delivered to the outside world, a feedback loop is automatically created. If providing know-how generates neither leads nor revenue, presumably this is an economic signal that the activity is not viable. Many internally focused KM programs lack such signals.

Second, it makes KM a collective undertaking. While there are many business and potential legal issues involved in syndicating legal content, it is a very interesting business model. The presumption appears to be that the participating firms do not have the scale to provide content across all areas of client interest. Large law firms can offer more content on their own, but it may be that even the largest firms do not have all the answers (if they did, why other than conflicts would any one corporation have more than one outside firm?). I am not suggesting that large law firms rush to share content, but it is an interesting idea. It seems to me that from a client perspective, that would be a desirable outcome.

2003-12-02T08:07:00.000-05:00

Social Networking Software as a type of KM and IBM's Web Fountain

Yesterday the New York Times carried two interesting articles that relate to knowledge management. Markets Shaped by Consumers reports on a constant dialog between producers and consumers about products consumers want. In the past, the dialog was primarily via consumers modifying products (e.g, the first mountain bikes were built from old-fashioned heavy bikes by enthusiasts) or consumers using products in unexpected ways (e.g., using Blue Tooth equipped cell phones not so much for data exchange with computers, but rather to message nearby strangers). Now the article reports software facilitates the conversation, citing both blogs and "social network software." The latter uses "search technology, referrals and rankings" to find helpful information and connect people (including producers and consumers).

I have previously reported on IBM's Web Fountain full-text project. According to the Times, IBM considers social network technology as one aspect of "what they term 'relationship-oriented computing'." The article provides a bit more detail about Web Fountain: "Using search, business intelligence and text analytics technology, I.B.M. researchers can look for trends, buzz and hints of shifting consumer attitudes as evident from Web postings. I.B.M. hopes to sell this market intelligence as a service to companies. 'It's the collective I.Q. of the Internet coming to your aid,' said James C. Spohrer, director for services research at Almaden."

A companion piece, Idea for Online Networking Brings Two Entrepreneurs Together, discusses social networking software in more detail. One of the products mentioned in both is Linkedin. I registered for this service a few weeks ago and am still trying it. The idea is to make use of your contacts' contacts. This can facilitate expertise location and relationship management. My initial and not yet very informed opinion of this software is that it is more likely to succeed within an organization or existing community than in the public at large. Law firm knowledge managers interested in expertise location and CRM, however, should keep an eye on this space.

2003-11-29T22:26:00.000-05:00

Deciding on an Extranet Strategy

Derek Smith and Peter J. Ozolin of Paul Hastings provide a good overview and analysis of law firm Extranets in Are Client Extranets Worth the Expense? published in the National Law Journal (December 1, 2003) and at law.com.

They explain that Extranets are not necessarily a client relationship builder. Before building (or buying) an Extranet, law firms need to define what their goals are and what the economics of establishing and maintaining the Extranet will be. The article also describes three kinds of Extranets - turnkey, litigation support and management, and customized - which can meet differing needs.

This is a useful article for law firms thinking about Extranets or for law departments that are considering asking their outside counsel to establish one.

2003-11-26T19:06:00.000-05:00

Corporate Counsel Outsource Work, Bypassing Law Firms

Several of my prior posts discuss the potential to outsource legal work overseas. I was therefore interested to read Legal-Work Outsourcing Cuts Costs; DuPont's pitch to in-house counsel: Save millions by sending legal work to companies other than law firms from the New Jersey Law Journal, Nov. 17, 2003, as carried on law.com.

This article describes how DuPont and other law departments outsource elements of legal work to “someone other than attorneys at law firms.” DuPont has used a temp agency for witness interviews and document reviews; Cisco estimates it has saved millions by outsourcing discovery work; and Sun Microsystems uses lawyers who do not work at traditional law firms for some patent work. Companies report saving significant sums with this strategy.

The article quotes a partner at a large law firm who questions the quality of the outsourcing approach. To me, quality is an empirical question – it’s easy enough to monitor quality and even to compare the quality of law firm work to outsourced work in a controlled test.

The same partner worries about the “caliber of person.. you get willing to do that kind of work for their whole career.” I have read several articles in the business press that report that customer service reps in India do a better job than those in the US because for them, the service job is considered high end. Perhaps the same is true for some types of legal work. I personally worry about the opposite: for example, the attention span and focus of "high end" associates with Ivy League educations and very high expectations spending days or weeks on end reviewing often mind-numbing documents.

I find it encouraging that inhouse counsel are looking at alternatives to the traditional way of doing work. Not every outsourcing or alternative work arrangement will work, but it certainly makes sense to explore alternatives and test their cost and quality against traditional approaches. Many alternatives are facilitated by the appropriate use of technology to transfer work, monitor it, and compare results.

[Note: After posting this item, a somewhat different and more detailed version of this article appeared on law.com based on Model Behavior from The Recorder; this version has an explicit discussion about outsourcing legal work to India and to LRN.]

2003-11-22T16:11:00.000-05:00

Is Electronic Evidence Mandatory?

At some point, perhaps soon, it may be malpractice if litigators do not ask for and obtain digital data from opposing counsel. An article by Patrick F. Dorrian, Jurists Offer Perspective, TIps on Electronic Discovery in the November 2003 issue of Metropolitan Corporate Counsel examines this and other questions about electronic discovery.

Dorrian reports on a recent conference where Judge Loretta Preska spoke. She wrote the opinion in an influential case on discovery (Metropolitan Opera Ass'n v. Local 100, Hotel Employees and Rest. Employees Int'l Union, 212 F.R.D. 178 (SDNY 2003)). Dorrian writes:

"Responding to a question, Judge Preska explained that it is 'hard to say' whether an attorney's failure to seek electronic discovery in a case could support a finding of legal malpractice. 'The rules talk about the production of relevant information," she said, "so we seem to create the burden to seek e-data." While noting that the increased costs associated with electronic discovery 'have changed the game,' she added that she 'can't imagine how counsel who is responsible cannot seek relevant electronic information.'"

Twenty years ago, not all lawyers performed online legal research. Today, many lawyers and judges would consider that omission malpractice. If history and common sense is a guide, a similar rule is likely to apply to electronic evidence discovery.

2003-11-20T09:17:00.000-05:00

The Impact of Technology on How We Communicate

As technology has evolved over the last few decades, we have an increasing choice for how we communicate: writing a letter and having it delivered, leaving voice mail messages (intentionally, by calling at off hours), e-mailing a message, transmiting a fax, sending an instant message, or posting information to an extranet. The mode of communication is not just about how information is transmitted. The mode has many other implications. Two examples help illustrate this point.

First, consider e-mail. We take it for granted now of course. But around 1994 I co-wrote (and had published by American Lawyer Media) an article extolling the virtues of using e-mail to communicate. At that time, many lawyers objected to e-mail and thought it would never amount to anything. Granted, cross-organization e-mail required complicated "gateway" connections at the time (this was pre-Internet for general commercial purposes). Among the benefits I recall pointing out were:
- communicating asynchronously (meaning the recipient did not have to be "there" to receive the message),
- copying multiple parties,
- keeping a written record (a sword that clearly cuts two ways in litigation),
- attaching files, and
- crystallizing one's thoughts for the benefit of the recipient (in contrast, for example, to the rambling voice mail message).
I contrasted e-mail to voice mail, which offered some of these benefits, but burdened the recipient with often rambling thoughts and the need to take notes.

Second, a friend told me a story this week about PowerPoint. She was asked by colleagues to write a memo explaining a particular issue. As she started writing, she realized that the memo would end up being long and detailed. Moreover, she realized that no matter how she argued the points, some readers would not get it and others would disagree. And she found it was taking way too much time to write. So instead of going down that path, she decided to respond to the request by "writing" a PowerPoint presentation and e-mailing it. This allowed her to communicate the main points and to provide some context and support. She reasoned that this would suffice for most of her audience and for those who did not believe the points, they would not be convinced by a memo version and would call her anyway.

This anecdote crystallized the idea for me that communication is deeply affected not just by the transmission method (e.g., e-mail versus voice) but also by the presentation of content (e.g., written memo, e-mail text, PowerPoint, or Visio diagrams). For better or worse, many business people are now accustomed to PowerPoint presentations and find memos longer than one page tedious. Lawyers who want to provide outstanding service to clients should consider carefully both how they transmit and how they present information. While there is no right or wrong answer, different choices are appropriate for different circumstances. Lawyers should be attuned to the mode and presentation format by which their clients would like to receive different types of information.

2003-11-17T23:23:00.000-05:00

Legal Technology's Shortcomings - or Not?

In my prior post I noted that in celebration of Law Technology News' 10th anniversary edition (October 2003), former managing editor Robert J. Ambrogi posed two questions to a dozen plus people, including me, who are deeply involved with legal technology. In The Future, The Past, Ambrogi asks one question about the future and one about the past. Excerpted here is the second question about the past and my answer. [Note that answers were intended be very short.]

What is legal technology's greatest shortcoming so far?

Ten years ago, technology was a limitation: hardware was expensive and software was underpowered. A look at corporate America is instructive. Many economists argue that the recent productivity surge is a direct result of corporations learning, over the course of a decade, how to deploy technology systems to full effect. During the many years it took to achieve gains, massive changes in how work is performed were required.

As for the legal market, technology has room to improve but is no longer the limit. There is no "magic technology bullet" that will make lawyers more productive and effective. Today, the shortcoming is in the ability of lawyers individually and firms/departments collectively to adopt new ways of working that take full advantage of technology.

Putative shortcomings in technology can no longer be an excuse for avoiding difficult process, culture and business changes that will be required to achieve lower cost and higher value legal service.

2003-11-15T16:40:00.000-05:00

Impact of Legal Technology in the Next Decade

In celebration of Law Technology News' 10th anniversary edition (October 2003), former managing editor Robert J. Ambrogi posed two questions to a dozen plus people, including me, who are deeply involved with legal technology. In The Future, The Past, Ambrogi asks one question about the future and one about the past. Excerpted here is the first question about the future and my answer. My next blog posting will answer the question about the past. [Note that answers were intended be very short.]

How will technology most significantly impact law practice over the next decade?

Large companies face tremendous risks for not complying with the law; at the same time, they are trying to reduce legal costs.

These pressures will lead them to begin using “embedded law systems.” Whether for preparing documents, managing contracts, administering benefits, tracking visa applications, or complying with regulations, the systems that run corporations will increasingly embed legal rules and reasoning.

This will reduce the demand for some routine types of law practice and create more competition for high-end work that cannot be automated. A key question is who will provide the content and expertise to drive the automated systems: law departments, law firms, publishers or new entrants in the legal market? The lawyers who work on these systems will need to develop new sets of skills, ones that facilitate translating legal expertise into systematic frameworks.

2003-11-13T09:35:00.000-05:00

More Lessons from Medicine

Last Monday (November 10, 2003), the Wall Street Journal, in Heart Studies Cite Treatment Gaps, reported that "[l]ess than one-third of Americans hospitalized for heart failure are discharged with four standard therapies that could help keep them out of the hospital and prolong their lives." A separate report found that "implementing a more-systematic approach to care - such as establishing a set of standing orders for heart-attack patients - can significantly improve a hospital's performance in providing basic medicine." A doctor in this second study said that having reminders and other aids that help doctors and nurses follow protocols is better then relying on habit or memory.

I have posted several items comparing medicine and law arguing that lawyers should emulate the movement in medicine to empirical studies of what works and adoption of best practices. I am fortunate in that I am not a big consumer of medical services. Were I to need more than occasional and very routine medical care, however, I would ask my medical providers if they (1) were current on the latest medical research, (2) followed a set of current and widely accepted treatment guidelines, and (3) had tangible manifestations of those guidelines such as checklists to ensure the guidelines were being followed.

So, how is this connected to law practice? The November 2003 issue of Corporate Legal Times reports in Budget Battles that law departments face increasing cost pressures. If I were a general counsel, I would want to make sure that my outside counsel had established best practice guidelines and followed them. To me, this would be as important as analyzing bills and getting discounts. First, it is still difficult to assess how much legal representation should cost. So I would want to know that my outside firms were practicing systematically. And second, I would assume that any firm that had systematically studied how it practices and rolled out those findings to its lawyers was, by definition, more effective and efficient than firms without similar programs.

The medical market has many third parties that study health care practices. Perhaps the time has come for the legal market to emulate this. A general counsel who spends a lot on outside counsel could consider paying an outside organization to audit how their firms perform. The cost of such an effort and the value of the results would be even better if multiple GC combined forces to buy such services. Such audits would focus on how the firms practice, not on the bills themselves. Without the intervention of third parties who employ disinterested and objective measures, it is not clear the lawyers will be subject to the same pressures as doctors.

Of course, any law firm that adopted an "evidence based" approach to best practices that withstands the scrutiny of objective audits would rely heavily on various strategic legal technologies.

2003-11-11T08:59:00.000-05:00

GE Procures Legal Services via Online Service

Law.com reports in Now for Law Firms, Too: Competing for Business Online (New York Law Journal, November 10, 2003) that General Electric Commercial Finance is using the online procurement service Procuri to seek competitive bids for legal services.

The article quotes a couple of un-named partners of large law firms who complain about this approach. One says that cost and value are not equivalent and that auctions don't value unique skills. Another suggests that the auction will drive away qualified lawyers who can get better pricing elsewhere; this same partner also suggests that the involvement of non-lawyers in the selection process is a bad idea. If I were GE, I would find such remarks insulting for they suggest that a sophisticated purchaser is unable to assess qualifications and pricing. It is also insulting to non-lawyers (let the record show that I am a lawyer) for it suggests that they cannot make intelligent purchasing decisions.

Any time a market becomes more competitive, it is disruptive for existing players. And it is no fun to have whole business systems changed. But that does not mean new ways are less effective. Perhaps the lawyers quoted in the article had visited the Procuri web site and were unhappy to see the services Procuri lists, which includes mail and delivery, waste disposal, lawn care, and security guards. Clearly the process for retaining lawyers is more involved than for these other services, but that does not mean it cannot be routinized and scrutinized systematically and qualifications weighed against price and other factors.

And speaking of other factors, from the strategic legal technology perspective, I would be very curious to learn whether GE considers the use of technology by a law firm when selecting counsel via Procuri. To some degree, the use of technology should be built into the price. But realistically, in complex matters, seeing the direct link between appropriate use of technology and pricing is hard. If I were making the purchasing decision, I would want to know not only what technology a prospective firm uses, but how the lawyers on the team serving me actually use the technology to provide effective and efficient service.

2003-11-09T21:45:00.000-05:00

Portals and KM

Law firms that are considering purchasing a portal product should read the November 3, 2003 issue of eWeek magazine for its review of the leading portal products (ATG, BEA WebLogic, Computer Associates CleverPath, IBM WebSphere, Microsoft SharePoint, Plumtree, Sybase Enterprise Portal, and Vignette). This issue updates a prior review and focuses mainly on WebSphere and SharePoint (reviewing both favorably). Not reviewed in this issue but of interest in the legal market is the "vertical market" portal product, LawPort by SV Technology.

Any firm that is thinking about a portal should make sure also to consider its knowledge management strategy and how the portal fits with it (or how KM fits with the portal). Portals are excellent enabling technologies and can serve as a platform for KM, but standing alone, do not constitute KM products. Portals present simple interfaces to numerous systems and allow integrating content from multiple sources.

But these features alone do not enable KM. Firms still need a way to capture useful documents and provide contextual information about them. Separate processes and/or software may also be required for expertise location. The firms that have attained success with portals typically have invested significant time and resources to customize the software, integrate disparate systems, and collect and catalog content.

While this may be obvious, I have been struck by anecdotes over the last couple of years of law firms that have portals and still struggle with content management and KM issues. The bad news is that KM requires more than just portals. The good news is that a portal can be a very important part of a KM strategy.

2003-11-06T22:55:00.000-05:00

Potential Competition for Google

The November 10, 2003 issue of Business Week has a short report about a company called Dipsie. Dipsie is a new search engine scheduled to go live in 2004.

My understanding of both the Dipsie web site and the BW article is that Dipsie will search not just static web pages, but those generated dynamically in real time, searching three times as many pages as does Google. It's not clear to me exactly how this will work since many pages are generated from database back-ends based on specific user inputs. BW also reports that Dipsie will use semantic analysis, "sensing content and context" and thus distinguish word meanings such as equity stock versus inventory stock.

Some lawyers want to use Google for searching their own work product. While it's not a bad Boolean search engine, the feature that makes Google so useful - link analysis - is of no value for internal use in a law firm. To the extent that Dipsie offers new or improved semantic analysis, it may be of interest to law firms. Of course, the search engine space is crowded and the company may not even target selling its software for internal use. But it will be interesting to see if a start-up can compete against Google. And for lawyers and law firm staff who rely on the Web to uncover interesting facts, a tool that indexes more pages than Google could be very useful.

2003-11-05T08:01:00.000-05:00

Sending the Wrong Signals to Clients with Technology

In Big Employer Is Watching yesterday (11/5/03, p. B1), the Wall Street Journal reports that many employers are using technology to monitor employee attendance. Employees at some organizations must use a web-based system to indicate their presence at their desk. Increasingly, employers use such systems to monitor salaried employees, not just those paid hourly. The article reports many employers have seen productivity increases, though it also talks about the issues such systems raise.

Featured in the article is New York law firm Akin & Smith LLC, where "paralegals, receptionists and clerks clock in by placing a finger on a sensor kept at a secretary's desk." Quoting the managing partner, the article reports "It keeps everyone honest."

I could editorialize on many aspects of the use of this system. I'll limit my comments to the observation of how I, as a client of this firm, might react to the use of this technology by time-keeping paralegals. From a client's perspective, this firm's use of the technology sends a bad signal. It says, in effect, we are really worried about the accuracy or honesty of our staff. In fact, we want to make sure we are getting our money's worth out of these people, so we are monitoring them. As a client, I'd have to think, what does that mean about how paralegals are billing me for their time? If the firm is so worried about what the paralegals are doing, shouldn't I worry about how they bill me for their time? I would want to ask the client why they don't use an equivalent system to make sure the paralegals are billing me accurately.

More generally, how a firm uses technology can send clients positive or negative signals about a firm. Clients who see their lawyers with wireless e-mail devices (such as a Blackberry) are getting a message that their lawyers are accessible. Walking into a lawyers office and not seeing a PC or seeing a stack of printed e-mails sends a signal that the lawyer is way behind the time (though, based on the market imperfections discussed in my prior post, that may not matter all that much).

The message for law firms is that one consideration in deploying any new technology is the signal it sends to clients - good or bad.

2003-11-02T21:05:00.000-05:00

Imperfections in the Market for Legal Services?

In my prior posting, I discussed some interesting comments I heard at a Legal Tech keynote conference. I also had an interesting private conversation with a general counsel of a mid-sized company.

This GC said that the company's outside counsel provided good legal advice but did not always offer the best service. For example, the outside lawyers rarely, if ever, provide budgets and even partners doing a lot of work for the company often bill their time to the wrong matter. I replied, "you're the customer - why not just switch outside counsel?" The answer was that one had to pick one's fights and that where the legal advice was good and the outside counsel understood the business, it was not worth the struggle.

It seems to me that this illustrates a larger problem - a possible market imperfection. In essence, the "switching costs" are high and so the customer will and can tolerate a certain amount of "bad service" if the overall “bundle of service” meets important needs. Putting on my hat as an economist (granted, the hat is a bit old - from my college days), this reminds me of "monopolistic competition." In monopolistic competition, many suppliers exist but they are somewhat differentiated and can therefore charge "monopoly prices" or, in this instance, provide less than optimal service. While there are many law firms from which to choose, once a relationship is established and a lawyer understands his or her client's business, then that relationship and knowledge differentiates the firm from competitors who are potential substitutes.

If this analysis is correct, what are the implications for lawyers and clients? For law firms, it's a “good news bad news” story for investing in legal technology. The bad news is that clients tolerate less than ideal service from established relationships. Firms that under-invest in technology are not necessarily penalized by the market. So firms that do invest may conclude they are not getting a good return. The good news, however, is that strategically deploying technology can help. First, it can provide better service than the client might otherwise receive and therefore further "lock in" clients by making the switching costs even higher. And second, in those situations where, for whatever reason clients are willing to incur switching costs, strategic legal technology investments that visibly provide better service can increase the odds of winning new business.

For clients, it means that when they select a new lawyer, they should be sure to examine carefully all aspects of the services provided. Most of the time, a GC will be able to find two or more lawyers or firms with the requisite skills. It makes sense for the GC to screen carefully for other service elements since once the relationship is established, the switching cost is high. I would, of course, advise GCs to look particularly carefully at the level of tech investment a firm makes and how the lawyers who will service the corporation actually use that technology.

2003-10-31T09:01:00.000-05:00

Decision Making: Lawyers versus Business People

This week I was at the Legal Tech conference in Chicago to present on knowledge management. One the first day, I attended the keynote address by Christine A. Edwards, a partner at Winston & Strawn. Until recently, she was the General Counsel of Bank One Corporation and, prior to that, of Morgan Stanley. She gave a very good talk about "Accountability at the Speed of Thought," which dealt with the role of technology in compliance, what GCs need from technology, and the role of tech decision makers.

She made what I thought was a very interesting distinction between how lawyers view decisions and how business people do. While the comment was in the context of technology decisions, it applied more generally. Ms. Edwards said that when business people face something new, for example, a new product or expansion opportunity, they ask "What are the benefits and the costs and how will this help our strategy and bottom line?" In contrast, she has observed that when lawyers are faced with something new, they inevitably ask "Who else is doing this?"

And therein lies a big problem with how law firms decide. Rather than assess decisions on their own merits as businesses do, they look left and then look right, then decide. Given how they make decisions, one has to wonder why they think there is safety in following their peers - do they simply assume peers have done the analysis better?

I have confirmation of this phenomenon from a friend who works for a tech company that sells some infrastructure-type products. He said a couple of years ago they were going after legal. I said it was a tough sell. His response was yes, but if we manage to get two of the top firms, the rest will follow. And he was right. In this instance, it was probably a good decision all around.

But firms that want to gain competitive advantage from the application of technology to their practice and serving clients need to behave like businesses, not lawyers.

2003-10-30T05:22:00.000-05:00

More Lessons from Medicine, this Time for Inhouse Counsel

Regular readers of my blog have seen several posts that draw lessons for the legal market from developments in health care. I have previously suggested that lawyers adopt "best practices checklists" (as the ICU at Johns Hopkins has) and that they demonstrate that their tried and true practice techniques are actually effective (as doctors are increasingly doing with "evidence based medicine," which is based on solid, clinical empirical evidence).

On Tuesday, October 21, 2003, the Wall Street Journal carried a fascinating article called The Real Drug Problem: Forgetting to Take Them. Only about 50% of people take prescription drugs as instructed, a problem that cuts across income and education lines. Compliance can be low even where lives are literally at stake.

Various efforts are underway to understand and correct this problem. One caught my eye as having potential lessons, this time primarily for in-house counsel. I was struck by what Kaiser Permanente is doing. Its pharmacy analyzes refills of asthma drugs. "It then alerts doctors when patients appear to be refilling medication that gives immediate relief to acute attacks more often than they are refilling the long-term medication to prevent attacks in the first place."

This prompted me to wonder if there are any law departments that are able to track the type of advice they give - long-term or preventive versus acute or crisis - and draw inferences from the mix as to how business managers are behaving. For example, in spite of compliance training programs, it may be that some managers are regularly getting into avoidable legal problems. Undoubtedly, inhouse counsel have a decent gut feel for this, but it would be interesting to see if one could sufficiently fine tune a matter management system to achieve the same effect in law as Kaiser Permanente is doing with drugs and asthma treatment.

2003-10-28T05:23:00.000-05:00

NJ Passes New Court Rule on E-Discovery

In New Rule on Discovery of Computerized Data the New Jersey Law Journal (October 23, 2003) reports on what may be an important new rule concerning discovery of digital data in federal cases brought in New Jersey. This rule does not yet seem to appear on the Court's own web site.

According to the article "Local Rule 26.1(d), requires lawyers, at the very start of a case, to review their clients' computer and information management systems 'to understand how information is stored and how it can be retrieved.'" The article reports that parties need to try to reach agreement on the preservation, scope, types of media, and who bears the cost of discovering digital data.

2003-10-27T09:26:00.000-05:00

Clients Paying for KM – Part 2 – Market Forces

One of my legal technology friends saw my posting What if Clients Were to Pay for Knowledge Management (23 Oct 03). In this posting, I suggested that it makes sense for general counsels to pay for law firms to perform a matter de-briefing or post-mortem for KM purposes. My friend relayed an experience in which he proposed this idea to the GC of a large company. Here is what he reports:

“My last direct encounter on this idea with the GC of a large company was so stunning that I have been somewhat at a loss ever since. His basic position (repeatedly stated) was that it is not for GCs to find ways for their vendors, including law firms, to become more efficient and effective. GCs ‘have enough other things to worry about.’ He believes market forces will achieve the desired outcome and repeatedly referenced his great faith in the market. For him, the “market” meant the cost-quality mix that directs work to increasingly lower priced vendors as the means to ensure improvement in services.’ My effort to redirect the conversation to explore the benefits that might accrue to his own staff, including career-development points (i.e. items he was then lamenting) were to no avail. This, too, he believed, would improve due to market forces. I left the encounter wondering which of us was smarter and questioning how many other major GCs held to a position which, to me, seemed very simplistic and painfully reactive. I believe in markets, but I want to see change faster than his model would seem to allow."

Regular readers of my blog know that I generally believe in market forces. I am not sure, however, that I accept this GCs perspective. Certainly any GC is free to direct legal work to the outside counsel he or she sees as best or most cost-effective. My question is very simple: by what metric does or any other GC measure quality and cost? I am not aware of any rigorous approach to measuring cost and quality trade-offs for law firm services. And to the extent that some law department have devised measures, my guess is that the extra cost of the KM debriefing, because it is likely to be such a small percent of the total bill, would be lost in the statistical noise of the analysis.

There is another serious weakness in this GC’s argument. He or she is not considering a kind of externality – that the market is not currently providing his or her law department with crystallized know-how that could be re-used and therefore lower future costs. If law firms are retained only once, they certainly have no incentive to invest the extra day or two to prepare a de-briefing. Only the client has the incentive aligned with this goal.

It may be that there are good reasons for GC not to pay for KM de-briefings, but the GC who put forth this argument seems, in my opinion, to be taking an ill-considered view of the question.

2003-10-25T12:33:00.000-04:00

Thoughts on the Paucity of Online Legal Services

Why are there so few commercial online interactive legal advisors (online legal services)? One explanation is lack of demand. This seems unlikely. Both corporations and consumers are desperate for affordable advice and, unlike lawyers, seem not to care who provides it or how. Lack of an appropriate software platform is almost certainly not the explanation. Document assembly systems and expert systems are well-established.

Another explanation is that the expense to build interactive legal advisors outweighs the return. Translating legal expertise into software is hard work; so are marketing, distribution, and maintenance. It seems likely however, that for "horizontal" legal topics - those that affect every business such as employment law - the size of the market would cover development costs. Is there someone who could develop and profitably market online advisors?

Law departments – the natural customers and users of such systems – do not typically have the people or budgets to develop systems on their own. They cannot amortize development costs over a big enough base. Law firms have the domain expertise but lack the “knowledge engineering” skill to translate the expertise into systems; they also have no marketing and distribution capability. Legal publishers have the competency and resources to create online advisors. That they have not suggests either that they think sales would not cover development cost or that they have better investment opportunities.

Enough law firms have experimented with online advisors that it is not clear many more will. A legal publisher could yet step forward. Or an entrepreneur might find a way, for example, by partially funding a development effort via pre-paid subscriptions from large law departments. The market has been very slow to develop but could “tip” very quickly – one demonstrated success could cause a rush into the space.

2003-10-23T17:06:00.000-04:00

What if Clients Were to Pay for Knowledge Management?

Many large law firms are trying various approaches to knowledge management (KM). The goal is to capture and re-use know-how. In a meeting of KM professionals earlier this week I had an "aha" moment....

First, two observations/concerns:
(1) I have always been concerned that without tying KM efforts back specifically to client-facing activity, that law firms will not continue to support KM.
(2) Most in-house counsel struggle with how best to capture and re-use the work product and expertise of their outside counsel.

The "aha" moment is that inhouse counsel should cause their outside counsel to create "debriefings" at the conclusion of most large matters. Such debriefings would require some or all of the lawyers who worked on a matter to:
- Summarize the matter, probably using a series of pre-defined questions
- Collect the final version of the most important documents, and, where necessary, explain in a cover sheet how the document relates to the matter
- Explain how this matter relates to other work the firm has done for the client
- Provide a list of the lawyers and any outside experts or consultants who worked the most on the matter

Clients could benefit directly from this type of KM effort, especially if they asked all their outside counsel systematically to perform such debriefings (sometimes called "post-mortems"). There would, of course, be some issues to resolve such as the most appropriate way to store and access this information.

So how should the client cause this to happen? One could argue that law firms should do this as a client service. But realistically, given billable hour targets and a tradition that any work done specifically for a client is billed to the client, it makes sense for clients to pay for the de-briefing. Clients often spend hundreds of thousands or millions of dollars on a specific legal matter. For a very small additional expenditure, clients could cause law firms to create a systematic de-briefing that the client would then have readily available for its own re-use, or for the re-use of outside counsel.

Of course, law firms would benefit as well because they would have incentives (the usual billable hours) to do the work and because they themselves would find it valuable to have their own work systematically "cataloged." But if most clients did this, they would benefit indirectly from the collective effort of law firms. Costs for all clients should fall if firms are more readily able to re-use know-how across matters and clients.

While there would be details to work out (e.g., sharing the debriefings and documents across outside counsel), a "pay for KM" system would work to the benefit of both inhouse counsel and law firms.

2003-10-21T21:10:00.000-04:00

Expertise Location and Knowledge Management

When knowledge management first emerged as a distinct discipline several years ago, the focus, at least among law firms, was on capturing and re-using documents. Now, at least anecdotally, it seems there is as much discussion of locating experts within one's organization as there is on documents. And this is a good thing. Ultimately, it is often more useful to find an expert who can explain the context and point to documents rather than to find a document, which, standing alone is often hard to use.

The "expertise location management" product space is evolving and new options arising. I just came across an interesting product announcement from Entopia. According to a recent press release, the company has new software that helps identify experts: "By combining Entopia's dynamic expertise location with its visualization techniques, Entopia's latest application identifies the social networks within the enterprise related to a specific topic. These "people maps" instantly illustrate the subject matter experts, information bottlenecks and disconnected communities with an enterprise." I have not had a chance to learn more, but it sounds interesting.

Knowledge managers in law firms should consider their expertise location strategy as well as their document strategy. Like any aspect of KM, expertise location is more about process than technology. But there are interesting technology options that can help automate the process. By way of example, two horizontal expertise location management products are Kamoon and Tacit and two legal- market specific product (though both have broader functionality) are LawPort and AdvanceKnowledge.

2003-10-19T16:04:00.000-04:00

Consolidation and Change in the Document Management Space

Document management systems (DMS) are an essential part of the infrastructure in most large law firms. A few do not use DMS or have created their own systems, but most use commercial products such as Hummingbird DM (formerly PC Docs) or iManage. Last August, Interwoven and iManage agreed to merge (see the press release). Last week, storage vendor EMC agreed to acquire DMS vendor Documentum (see Documentum press release and the article EMC Acquires Documentum in Portals Magazine).

The business dynamics of the DMS space may be changing and law firm technology managers - both operational and strategic - should keep an eye on the market. With luck, these changes will work to benefit law firms. I remember, however, an earlier chapter in the history of DMS. About 10 years ago a company called SoftSolutions was one of the first to market with a legal market DMS product. It was acquired by WordPefect, which in turn was acquired by Novell. Novell then "upgraded" SoftSolutions, though in the opinion of most law firms, that upgrade made the product virtually unusable because some key features were eliminated (e.g., client-matter lookups).

It's also important to keep in mind what Microsoft might do in this space. Between MS Sharepoint and discussions of a new file system based on SQL-Server in the next version of the Windows operating system (see, for example, Microsoft Details Longhorn Storage, it may be that a free-standing DMS will not be necessary in the future.

Law firms need not take any immediate action, but between what Microsoft may release and changes prompted by vendor consolidation, they may face some interesting choices in the next couple of years.

2003-10-17T08:38:00.000-04:00

Knowledge Management and Law Firm Compensation

Law firm knowledge management professionals frequently discuss the impact of partner compensation systems on the interest in and ability of a firm to invest in KM. The general consensus is that firms with "lock step" partner compensation are better able to support significant KM initiatives than are firms with "eat what you kill" compensation. "Lock step" means that partner compensation depends only on partner seniority, not on new business nor on hours billed. In contrast, "eat what you kill" means compensation depends on new business generated and hours billed. Of course, many firms have a blend of the two models.

KM professionals have three good reasons for thinking that lock step systems support KM:
(1) Lock step firms tend to view clients on more of an institutional than individual lawyer basis. On balance, this makes the firm more willing to invest generally.
(2) Partners compensated based on their tenure do not need to worry on a daily basis about business generation or hours billed. On the margin therefore, partners are more willing to invest their time - or have associates invest their time - in contributing know-how to a central system.
(3) Firms with lock step systems tend to be more collegial and therefore more open to KM.

The link between compensation and interest/investment in KM has not been empirically proven to my knowledge. That said, there is some pretty good evidence. In particular, the large London-based firms, which tend to have lock step compensation systems, have invested significantly more in KM than have most US firms, which tend not to have pure lock step systems. Furthermore, a few of the US firms with lock step systems (or at least leaning heavily in that direction) are the ones that tend to invest more in KM.

So, it is with interest that I read an item on law.com today that suggests pressures may be developing against UK firms maintaining their primarily lock step systems. In Clifford Chance Loses Four Partners to Weil Gotshal, the New York Law Journal reports that Clifford Chance has just lost four top antitrust partners to Weil Gotshal. The departing partners say that compensation was not a factor - the problem was conflicts. Nonetheless, these departures come "at a time when the British firm [Clifford Chance] is conducting a review aimed at determining whether or not it should bend its traditional lockstep compensation scheme."

Of course, many in the legal profession will watch the large UK firms and their compensation systems for a variety of reasons. KM professionals should especially keep an eye on this issue with particular emphasis on the impact on KM initiatives.

2003-10-13T22:30:00.000-04:00

Expertise Location (McKinsey Quarterly Article)

Knowledge management professionals frequently consider the question of how best to identify and locate experts within a large law firm. The current issue of the McKinsey Quarterly has an article titled Do You Know Who Your Experts Are? (Appears in the 2003, #4 edition - subscription required to access.)

The article notes that finding experts in a large organization is difficult. The authors note that companies that carefully manage other assets such as inventory and cash are rather cavalier about how they manage expertise. This is changing: "a growing number of companies... have adopted more systematic approaches to both finding and leveraging expertise."

The traditional approaches say the author - an expertise database or "mining" documents for pointers to expertise - can be replaced with new search technologies. "Achievements" of employees define their expertise. The authors say that using typical internal corporate sources, it is possible to find people with relevant achievements. They say that "internal databases can usually be assessed with considerable precision." All it takes is the right search engine that can access and sift multiple data sources (such as HR, accounting, knowledge management, and recruiting databases).

This article is helpful in increasing corporate awareness of the need for expertise location. I fear, however, that it oversimplifies both the process and technology and makes some unsupported assertions (for example, the reliability of internal data sources). The article would have served readers better had it presented some case studies and some specific technology solutions working against real databases.

Many law firms have struggled with expertise location and few have found a perfect solution. KM professionals discuss the automated approaches suggested by this article, as well as purely manual approaches that rely on lawyer self-assessment of their own expertise.

Though the article does not mention it, I suspect the authors have in mind a product like ExpertSeek Services by Digital Self. Future posts will discuss in more detail approaches to capturing expertise.

2003-10-12T20:50:00.000-04:00

Getting Closer to Clients - Learning from General Electric (GE)

In Will Jeff Immelt's New Push Pay Off for GE, Business Week (October 13, 2003) reports on an interesting initiative by General Electric. (A subscription is required to access this article.)

Jeff Immelt, GE's still relatively new CEO, is, according to Business Week, trying to increase GE's sales and profits by helping GE customers be more successful. One way GE is doing this is by sharing its best practices - at no apparent charge - with its customers. The story opens with a description of how GE sent teams of black-belt Six Sigma specialists (GE's term for people who are schooled in applying rigorous techniques to reduce defects and improve quality) to help Southwest Airlines address numerous operational problems, none related to GE products or services Southwest buys. Immelt says that up to 40% of customers are interested in such help. After describing some other ways GE helps customers, much of the article discusses whether this initiative will work and some problems GE faces in implementing it.

I have posted frequently on the potential value to law firms - both for purposes of production (that is, doing the work) and marketing - of identifying and adopting best practices. Beyond affirming some of my prior arguments, the fact that not only is GE "doing best practices," but now is even promoting them to its customers raises two interesting questions....

1 .What if GE came knocking on the door of some of its large outside counsel with the same proposition? How many large law firms would be comfortable allowing GE productivity and quality improvement specialists inside their doors to examine, comment on, and offer suggestions for how to improve law firm working practices? At most firms, I suspect GE experts would not find that best practices were in use; nor would they find uniform application of technology to support production processes. While the goal of the GE initiative is to help its customers, it would not be hard to imagine applying the same principles to GE suppliers, only with a stick rather than a carrot.

2. How many law firms that do work for GE would be comfortable making a similar offer to the GE law department? Granted, the GE law department is as big and sophisticated as many large law firms. So teaching the GE law department a trick or two might be quite hard. My sense, however, is that most large law firms would not even consider such a gesture. First, it is just not in the mindset to do so. And second, were they to consider it, they would probably be quite fearful of what the outcome might be.

GE has been a leader in management techniques for decades. Forward thinking law firms should at least undertake the thought experiments implied by the two questions above. Of course, the CIO and CKO should be part of the discussion as technology is integral to any best practices program.

2003-10-08T21:15:00.000-04:00

More Full Text Technology from IBM

In my posting IBM is Developing New Search Technology of 13 Aug 2003 I discussed new full-text software from IBM called Unstructured Information Management Architecture (UIMA). On September 13, 2003, the New York Times carried short piece reporting that IBM is introducing a new full-text service called WebFountain.

On its venture development web site, IBM describes WebFountain as "a new text analytics technology from IBM's Research division that analyzes millions of pages of data weekly. Using this technology, organizations can access critical business information and uncover valuable insights that are otherwise difficult and costly to acquire by manual methods." The IBM Almaden Research Center web site has some more information

This sounds very promising for both knowledge management and litigation support applications. Of course, as I have noted in prior postings, there are many interesting full-text technologies and evaluating them (and the cost-benefit trade-offs) is difficult. With IBM's history of innovation, this bears watching for those in the legal market. Also note that IBM now is specifically serving the legal market, including litigation management.

Being the eager type, I requested about 10 days ago more information (i.e., a white paper) via e-mail to a WebFountain information e-mail address. To date, I have not received a reply, which is surprising, especially in light of a litigation management offering. Nonetheless, I will keep my eye out because the IBM Systems Journal has accepted a paper in preliminary abstract form that describes WebFountain.

2003-10-06T23:00:00.000-04:00

The Business Case for and Background on "Offshoring" Professional Work

I have written several posts about the potential of outsourcing legal work overseas (Law Firms Outsourcing IT and Document Production, 27 Sep 03; Power Outages and Outsourcing , 15 Aug 03; Technology Outsourcing Example - Document Management , 18 Jun 03; More on Off-Shore Outsourcing, 14 Jun 03; Central Back Offices and Outsourcing; 30 May 03). Among other points I make is that that law firms and law departments should consider outsourcing certain tasks performed by lawyers here in the USA (or the UK for that matter) to lawyers in India or other countries where lawyers are trained in English common law and cost much less than in the USA.

My old friend, Eric Mankin, is a business consultant who specializes in innovation, new products, and new ways of doing business. He has an impressive background (check his Innovation & Business Architectures web site) and has thought hard and deeply about many important business issues. His weekly e-mail update today provided some interesting background and perspective on the question of "offshoring" the work of professionals and knowledge workers. With his permission, I have reproduced it here.

From Eric Mankin (click here if you'd like to e-mail him)
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The steel strike of 1959 shut down 90 % of US steel production for 116 days. In shutting down production, the US industry opened the door to steel imports, which had been a negligible factor before the strike.

Because they couldn’t purchase steel from their usual US suppliers, buyers were forced to look for alternate sources, and they found that steel produced by Japanese or Koreans could meet their needs at lower cost. This marked the start of the decline of the integrated US steel industry.

The information technology explosion had similar effects on the American software industry. In the late 1990s, purchasers of programming found that they couldn’t buy it in the United States or Europe. This wasn’t because of a strike; rather, for a few brief moments, there wasn’t enough programming capacity to meet exploding demand.

India played the same role in the capacity crunch of the late ‘90s that Japan played in the steel strike of 1959. India-based companies started as an unproven supplier of programming, but have rapidly become world-class providers of software coding, and have expanded into many other computer-related business processes, from backoffice to customer service.

Forrester, the market research firm, estimates that offshoring will grow at 30-40% a year for the next 5 years. They believe that 3.3 million jobs will be transferred due to offshoring between now and 2015. They estimate that 400,000 jobs have moved offshore, although estimates from places like economy.com run as much as 50% higher.

Applying the “four question” framework to offshoring reveals why it’s such a compelling product. Offshoring excels across three of the four criteria required to guarantee a product’s success. Compared to domestic alternatives, offshoring is cheaper and provides higher quality. The growth of intermediaries such as Wipro and Infosys makes offshoring easy to buy.

It fails only in its ease of use. All of the managers who work with offshoring warn about the difficulties of working across time zones, and of the importance of managing offshored operations closely.

Last week, I spoke at a venture capital conference in Boston, and offshoring was part of the discussion in a large number of the sessions. If you are forming a company that has customer service or technology needs, you have to consider India or the Philippines for getting this work done. As Jeff Robinson, the VP of Customer Care at UPromise, noted: “We couldn’t be in business if it weren’t for the cost advantages of having our customer service in India.”

At one point in the conference, a panel of CIOs from companies like Teradyne and Millennium Pharmaceuticals noted that they were all using offshore development houses for some part of their work. Which prompted John Logan, from the Aberdeen Group, to ask: “When will the CIOs themselves be offshored?”

If offshoring grows at the rate predicted by Forrester, what happens to all those software engineers, call center representatives, and CIOs in the US and Europe?

Economics provides a rose-colored answer – all of these workers are now freed up to tackle new jobs of even higher value. An August 2003 report from the McKinsey Global Institute framed it this way: “The United States has the world’s most dynamic economy and is fully able to generate new jobs … While still receiving services that employees were previously engaged in, the economy will now generate additional output, (and thus income) when these workers take new jobs.”

Personally, I would find this argument more convincing if McKinsey could give some examples of the kinds of new high-valued jobs that these 3.3 million displaced knowledge workers are going to be taking. If you have any suggestions that come to mind, please send them along.

I recently visited a beautiful new research facility on the banks of Pittsburgh’s Monongahela River. Carnegie Mellon has a building in the complex, as does Sunoco Chemicals. My hosts pointed out to me that, forty years ago, the same site was the home of a huge Jones & Laughlin integrated steel mill.

The steel strike of 1959 was the beginning of the end of J&L’s mill, and the local economy built a research facility in its place.

Now, however, companies like Sunoco can get the same research done by equally qualified personnel in places like India or China. Fifty years from now, what structure will stand where the research facility exists today?

For more information:
-The steel history comes from the Wikipedia’s entry on US Steel
-The McKinsey Global Institute published a report in August 2003 that gives facts and figures on offshoring.
-Offshoring as experienced by a hospital services buyer
- There’s a site that is 100% maintained in the USA – it’s Washtech – the website of the Washington Alliance of Technology Workers, Communications Workers of America, Local 37083, AFL-CIO
- This just in: The New York Times of 5 October provided a range of estimates of job loss in the U.S., as well as examples of Offshoring moving up the chain
======

So, in the legal market, will there be some one-time, "virtual accident" that causes a firm or law department to use lawyers in India and suddenly the market will realize what sense it makes? Only time will tell, but forward thinking organizations should be experimenting with this approach.

2003-10-05T20:58:00.000-04:00

Value Billing / Alternative Billing and Technology

The current (Fall 2003) issue of Law Firm, Inc. magazine has a very good article about why law firms need to think harder about value billing. In Stop the Clock & Make More Money, Jeffrey Carr and Mark Wolf, respectively the general counsel and assistant general counsel of FMC Technologies, Inc., argue clearly that the billable hour and the interests of inhouse counsel are not aligned.

They characterize the billable hour as a "recipe for customer backlash and attorney malaise" and make clear that general counsels don't want to buy what law firms sell, namely an inventory of hours. Rather, they want to achieve results and are willing "to pay for a law firm's efficiency." The authors describe various billing models FMC uses that align their outside counsel's interests with FMC. In one approach, for example, FMC holds a portion of standard billable hour fees and, based on defined criteria such as timeliness, value, and efficient use of technology, pay between 0 and 200% of the holdback. The goal is "to pay our outside counsel a higher effective hourly rate - we just want to buy less inventory and... condition that higher rate upon success." In their view, risk sharing arrangements can work in any matter, even highly complex and unique ones.

The market pressure illustrated by FMC's actions should, over time, cause firms to become more efficient and effective. As firms bear the risk of inventory (that is, their hours) going to waste, they will have incentives to use technology in time saving ways such as re-using work product, automatically generating documents, and communicating more clearly with their clients.

At the end of the article, the authors suggest that law firms put away brochures, ads, and branding and focus instead on what customer want as opposed to selling what law firms have. While technology is not a guarantee to providing more efficient and effective service, it is certainly a key ingredient. Firms that successfully service the FMCs of the world will likely be the ones that not only buy technology, but really figure out how to use it.

2003-10-02T13:53:00.000-04:00

Technology for Law Firm Marketing and Its Implications

Yesterday I heard Swati Agrawal of firmseek and Anne Balduzzi, a legal and technology marketing consultant, present on "Using Technology to Make the Most of Your Marketing Dollars" at a an event hosted by the Mid-Atlantic Chapter of the Legal Marketing Association (LMA).

Swati and Anne emphasized the importance of using a single database to drive the marketing function. Maintaining marketing materials such as lawyer biographies, practice area descriptions, and standard cover letters in a central database offers two key advantages. First, it allows firms quickly and easily to produce, modify, and update both print and digital media. And second (this one was music to my ears), it allows firms to create Web-based versions of proposals. This means that clients can navigate proposals for content of particular interest and firms can track hits to learn what clients find most useful.

I was surprised by a show of hands at the beginning of the session. When the speakers asked how many of the attendees had recently spoken to their technology colleagues, only a few hands went up. CIOs who manage databases and CKOs who manage knowledge repositories should take steps to be aware of the needs and resources of their firm's marketing department. On the one hand, there is a potential challenge in having to manage yet another repository. On the other hand, there are opportunities to integrate and combine data sources to provide better quality information and knowledge at lower cost. For example, firms that want to create an expertise database (skills locater) might consider whether they could at least get a first cut at lawyer expertise by doing full-text searches of the bios.

Law firms would be better off if they rose to the challenge of supporting marketing department technology needs and worked to integrate marketing data both at a technical level and as a knowledge resource.

2003-10-01T16:50:00.000-04:00

Office 2003 - Who Owns the Keys to the Kingdom?

In Office Buzz: Check the E-mail on September 25, 2003, the New York Times reviews Office 2003, the latest Microsoft upgrade to the Office suite. The review is mixed at best. The columnist notes that "Microsoft has made shockingly few changes to Word, Excel and PowerPoint." In contrast, Outlook has many new features. But the review is not the main point here...

The review notes that the corporate edition is "crawling with features that work only on networks." One of those is "Information Rights Management" or IRM. This feature allows users to determine "who can do what" with documents and messages, including controlling access to documents (view or print) and specifying destruction dates. See Microsoft's technical information on IRM for more information.

While protecting data has its benefits, lawyers need to be aware of who has a "master key" to open locked documents. Depending on how IRM works and is administered, it is possible that at least in some law firms, client organizations, or home offices, users will be able to create documents that are encrypted in ways that make it difficult or impossible to open them. As Peter Coffee points out in The Best DRM Policy May Be No Policy at All in eWeek's September 8th issue, "rights management technologies represent yet another way for the enterprise to lock crucial information inside containers defined and controlled by others."

Administered properly, IRM has the potential to protect privacy and confidentiality. But as Coffee suggests, problems may be lurking if users can create documents that cannot be easily opened. This would make it hard for law firms to access their own work product or to view documents in an e-discovery process.

2003-09-29T10:28:00.000-04:00

Don't Forget the Outside World When Thinking about KM

My friend and former colleague, Jean O'Grady, the Director of Information Services at Wilmer, Cutler & Pickering has written an article, The Importance of Targeted Information in the LegalTimes.

Jean writes a good overview of specialized sources for current business intelligence and legal developments. Her article is also a good reminder that knowledge management is not just about capturing and re-using know-how generated internally. KM should also help lawyers find, analyze, and interpret the business and legal developments that affect clients. The type of services Jean describes should be part of any fully developed KM strategy.

2003-09-29T07:34:00.000-04:00

Call to Arms for GC: Force Your Outside Lawyers to Avoid the Mistake Doctors Make

In my posting of 7 Aug 2003 (How Would You Rather Fly? How Do You Like Your ICU Stay? Checklists or Not?) I discussed a Wall Street Journal article that reported how the use of checklists reduced the number of patient-days and mortality in intensive care units. Last Friday (9/26/03), the Wall Street Journal again has a report about medicine with lessons for lawyers.

Too Many Patients Never Reap the Benefits of Great Research reports that many lives could be improved or even saved if doctors merely followed documented and well-established practices. The failure of doctors to follow best practices as established by national bodies is not "just at the margins." Why are patients leading lower quality lives and even dying prematurely? "To put it bluntly, many of these independent-minded souls [doctors] don't like being told that science knows best, and that the way they've 'always' done things is second-rate" reports the article. Doctors resist best practices because they say clinical trial results don't apply to their patients or because they take a "show me" attitude, waiting to see the impact of broad adherence to guidelines.

So what does this have to do with lawyers and why call to arms the general counsels? In many respects, lawyers behave like doctors. Lawyers practice law the way they learned however many years ago and think that that's the best way. Granted in law, no one is scientifically studying the best way to practice. But large firms have many lawyers and at least have the potential to identify best practices within their own firms. (I have previously written that law firms should adopt best practices in Consistency in Service Delivery, July 29, 2003 and When Clients Come Knocking, July 24, 2003).

Two examples of what may be sub-optimal practice illustrate the point. First, litigators often deal with massive paper and digital document discovery challenges. It seem demonstrable to me that building databases early, using full-text searching to cull collections, and reviewing documents on-screen is more efficient than never building a database, dealing with all documents rather than culling, and printing all digital documents and reviewing them as paper. (Perhaps I am wrong, but then shouldn't all lawyers be doing it the other way? Of course, the same approach is not right in all cases but I have seen no evidence that the choices lawyers make in individual cases are based on a realistic and conscious assessment of cost and efficiency.)

Second, transaction lawyers deal with complex and inter-related documents. Maintaining consistency across documents (e.g., defined terms) is hard. Quickly reviewing a set of documents is daunting. Tools are available (for example, Deal Proof by Expertease) to facilitate document review and to help ensure consistency. Some lawyers I know speak highly of such tools. I would be surprised that the many lawyers who do not use them have actually even made a conscious decision by evaluating such products or even speaking to lawyers who have used them.

Resistance to the equivalent of "evidence based medicine" among lawyers is likely to be at least as high as it is among doctors. I recently proposed ideas along these lines at a conference. A senior, widely respected lawyer took the floor and pooh-poohed the idea saying something to the effect that "what I do is art, not science, and there is nothing I do that could possibly be studied, systematized, made more efficient, or improved." If he were your doctor, would you continue seeing him?

The Wall Street Journal article points out that there are external forces at work to change how doctors practice. Employers pay for most health care and are now realizing that bad care hurts their bottom line. I am not sure that general counsels of corporate America have come to the same realization. It is not obvious to me that even those law departments that analyze outside counsel bills - whether manually or using e-billing services - are able to detect "good" versus "bad" law practice. It seems to me that there is "low hanging" cost-savings fruit for those GC willing to examine not just bills, but how their outside counsel practice and apply pressures to identify and adopt demonstrated best practices.

And if GCs do not see the light, there are external parties - CFOs in particular - who may someday step in.

2003-09-27T10:05:00.000-04:00

Law Firms Outsourcing IT and Document Production

In my posting of of 3 Sep 03 Allen & Overy Testing Outsourcing, I conveyed reports that Allen & Overy was pilot testing outsourcing document production to workers in India. In UK firm set for outsourcing deal in India, Legal Week reports that A&O has decided to move forward with this plan on a permanent basis. Legal Week reports that one-half of the 85 document production specialists of the firm will remain in London and that the firm has signed an agreement with outsourcing company Office Tiger for services in India.

Separately, Legal Week reports in Bakers relocates IT functions to Asia that Baker & McKenzie will outsource three IT functions to Asia: network operations, document support, and systems development. According to Legal Week, this includes a data center and call center.

I have written several posts about the potential of outsourcing legal work overseas: Power Outages and Outsourcing , 15 Aug 03; Technology Outsourcing Example - Document Management , 18 Jun 03; More on Off-Shore Outsourcing, 14 Jun 03; Central Back Offices and Outsourcing; 30 May 03.

It strikes me that the ingredients are increasingly in place to outsource some elements of legal work. First, law firms will now start gaining experience with managing offshore outsourced "back office" functions. Second, at least based on anecdotal evidence, it appears that more large firms use contract lawyers to review documents in complex litigation, antitrust second requests, or government/internal investigations. Why not put those two trends together and use lawyers in India to conduct such document reviews?

2003-09-25T12:19:00.000-04:00

Can a CRM Support Viral Marketing?

I came across a press release for the latest version (5.1) of customer relationship management software InterAction by Interface Software.

One feature caught my eye and made me think about how law firms can try to extend their reach to clients. The press release describes a feature that can automatically verify contacts. The "new InterAction Contact Verifier module lets the organization request updates directly from their clients or contacts. The module allows organizations to send contacts customized communications that display core business card elements including name, company, address, etc. Recipients are directed to an editable secure Web page that allows them easily to update their existing contact details and submit any changes directly to the InterAction database for real-time automatic updates."

It would be nice (and perhaps already possible, I'm not up on all of the technical product specs) to integrate this feature with e-newsletters that law firms regularly broadcast (or perhaps narrowcast is a better description). If each message contained contact data verification at the beginning or end of the substantive news, law firms might find it easier to maintain up-to-date contact information.

It's not a great leap of concept to add one more feature to an e-newsletter, namely the ability to click on a link and add a new contact for a subscription to the same newsletter. This would allow an existing subscriber to add a new subscriber or, more likely, the recipient of a forwarded message to add his or her contact information. Some caveats are in order. First, one would have to manage the links and data so that a forwardee could not alter the original recipients contact information. And second, any new contacts added this way would be best vetted by someone in the law firm rather than blithely added to a central database.

I'm not sure that this would result in rampant viral effects of expanding the reach of newsletters, but it offers the possibility of using existing clients to help maintain their own contact information and to generate new contacts as well.

2003-09-24T08:00:00.000-04:00

Unauthorized Practice of Law ("UPL") Suit and Implications for Online Services

Law.com reports in Group Alleges Document Prep Service Provides Legal Advice by Nonlawyers (9/24/03) that the Texas "Unauthorized Practice of Law Committee filed suit on Sept. 17 against a California-based company, alleging that it operates a document preparation service which provides legal advice by nonlawyers." In brief, the Texas state bar is taking action against the company We the People, alleging that the company's service of helping consumer fill-out legal forms constitutes the unauthorized practice of law.

This may sound familiar too readers who keep track of UPL actions. Several years ago Texas tried to ban self-help publisher Nolo in a UPL action. After a public outcry, the Texas legislature intervened to change the law and make clear UPL did not apply to publishers of self help books. See a summary of what happened on Nolo's site.

As I pointed out in my posting Online Legal Services for Consumers of 12 June 2003, large law firms that offer online legal services to their clients probably do not have to be concerned about UPL statutes. Where a service is delivered in the context of an attorney-client relationship, especially if in-house counsel is involved, it's not clear the UPL statutes apply. (Disclaimer: I am not providing a legal opinion in saying this. This is merely my understanding from talking to several lawyers over the years about this issue.)

On a personal and editorial note, I find this Texas action disturbing. On the facts, it is not obvious to me that helping a consumer fill in the form can be considered practice. Even if it is, it appears to me a simple case of lawyers erecting an artificial barrier to entry against non-lawyers. When state bars focus their energy on lower cost alternatives than seeing a lawyer without a demonstration of actual harm while at the same time ignoring the incompetents in their own rank, it cannot but help smack of self-interested protectionism.

2003-09-21T13:30:00.000-04:00

My Knowledge Management Week

Last Friday (9/19), I attended an all-day meeting of KM professionals from large NYC, Toronto, and West Coast law firms that I co-organized and co-moderated. Separately, last Tuesday (9/16), at Legal Tech I co-presented with Kingsley Martin on KM; our topic was determining an organization's readiness to undertake KM. Both events were interesting and useful exchanges of current law firm KM practices and illustrate the many different approaches possible. I will use this posting and a couple of additional ones to explore some of these different approaches.

I'll start with my presentation with Kingsley Martin. Kingsley and I have been professional colleagues and friends for many years. He is the author of a West-published KM workbook (really, an extensive treatise) and an LLRX.com article titled "Show Me the Money" - Measuring the Return on Knowledge Management, among others. Like me, Kingsley is a consultant, a lawyer, and has years of experience focusing on technology in large law firms.

Kingsley's favored approach to KM is to collect, catalog, and classify a firm's work product as the first step. Using automated tools such as LexisNexis Total Search or WestKM, it is possible to gather a significant portion of a firm's work product with relatively little human intervention.

I agree that this is valuable. For firms unwilling to invest lawyer time or employ numerous non-practicing lawyers to gather and catalog work product, it may be the best and only feasible step. My reservation is that this automated approach may not create a "feedback loop" within the firm that shows that the activity is worth continuing. Many firms undertake KM programs but most do not put in place metrics to assess whether the program is succeeding. Without measuring the impact (for example by monitoring usage or surveying lawyers), it may be impossible to ascertain the return and the value created.

My favored approach is to start with a practice or sub-practice group that wants to define a set of best practices. As part of their best practices, they would inevitably need to define model documents or collections of research as "inputs" into the best practices. A forward-thinking firm would use the best practice both for marketing to clients and for internal "production." Especially if the best practice is "exposed" to clients, either directly through some type of web-based access or indirectly through relationship management, the likelihood is that the appropriate feedback would occur to sustain the effort. As firms see the value in discrete and measurable settings, it might create more support for a broader effort.

Of course, neither Kingsley's "broad" nor my "narrow" approach is mutually exclusive; moreover, the right approach depends on many factors, especially a firm's culture and business. In fact, for a firm committed to KM, there is merit in using both. We had fun presenting in point / counter-point style and hope that our friendly "reasonable people can disagree" approach helped illustrate the choices firms face.

2003-09-18T11:02:00.000-04:00

Legal Tech NYC - What's New

I spent two days and spoke at Legal Tech NYC September. A couple of my legal technology friends observed that there was nothing new and asked if I agreed or not. Drawing on my training as a lawyer, I said "yes and no."

My first observation is that in the economy at large, the pace of technology innovation has slowed. To be sure, there are interesting developments such as Wi-Fi (wireless net connections) and grid computing (tapping the processing power of multiple PCs to solve complex problems). In reading e-Week, Information Week, and other technology trade publications, however, I have been struck over the last two years how the focus of editorial content has shifted to infrastructure upgrades and efficiencies rather than totally new systems. The "zeitgeist" is to do more and better with what's in place today rather than buy new systems.

I think it's safe to say the same is true in the legal market. The emphasis now is to integrate and adopt the systems that are in place. Most law firms have decent infrastructure. The challenge now is primarily to adopt new business mindsets, processes, and culture that take advantage of what's in place; the challenge is no longer primarily one of technology acquisition.

My second observation was that there were some interesting developments at Legal Tech. E-discovery is a hot bed of activity. An increasing number of vendors offer software and services to harvest and process digital data in the discovery process. Though not necessarily visible to that many lawyers, there is a lot interesting happening behind the scenes.

More visible - and very impressive upon first viewing - is an e-discovery digital document harvesting and review systems from Attenex (a company affiliated with law firm Preston Gates). The most striking aspect of the Attenex offering is a new way to visualize large document collections. I have always been a fan of visual displays in law practice and the works of Edward Tufte on creating powerful graphic representations. Attenex has taken Tufte principles to heart in creating a compact visualization of digital documents that looks like a very promising way to identify and review large volumes of documents. I was impressed by the demo I saw.

Attenex also has an interesting product they call Knowledge Assembly Software, better known to many of us as document assembly software. The company's literature shows a clean and intuitive interface to manage documents at a clause level. I ran out of time to see a live demo of this one.

Also new is LexisNexis Total Search, which is an automated knowldge management tool that integrates with a law firm's document management system. The software integrates searches of LexisNexis with searches of the firm's own work product. The video presentation and white papers explaining Total Search suggest that it is quite powerful and potentially very useful for law firms interested in better and faster access to and re-use of their work product.

2003-09-16T22:12:00.000-04:00

How Much Information Technology Support is Enough?

How much IT support should firms provide to users? Many firms answer this question via benchmarking (that is, comparing spending and staffing to comparable firms).

Lawyers are demanding "customers." They want a lot of support and, when they want it, they want it now. By and large, that is probably a good thing since the opportunity cost (potential lost billings) of slowing down a lawyer is high. And few managing partners or COOs want to hear or deal with partner complaints about lack of support.

But firms may overinvest in support. It may be possible to achieve a high level of IT support at lower cost by applying some market principles. (I am a believer in the power of markets - see my posting The Power of Markets - Is It Applicable within a Law Firm? of 12 Aug 03.) The September 8th issue of Information Week has an article about how Dell runs its business. Imagining What's Possible reports on how Dell runs highly efficient manufacturing. Because Dell manufactures in virtually real time, the company can change the order in which PCs are made to accommodate important or rush orders. Until recently, sales people could expedite certain orders through informal relationships. Now, to expedite, "they can assign a priority ranking from one to seven, but they have only a limited number of those rankings." Rationalizing how sales people influence the manufacturing queue helps Dell be more efficient.

Law firms could do something similar. Lawyers and staff could get a "bank" of points to use for priority IT service. The bank might, of course, depend in part on how much business a lawyer generates. Such an approach might serve to reduce the number of instances of unnecessary "fire drills." It might also more closely align support with real business needs.

In most firms, client work always takes priority. That may not be the best rule. Suppose there are two IT emergencies - one for a small client in billing arrears and one for a partner about to do a non-billable marketing activity. The marketing may well be the higher value activity and be more deserving of support. Right now, IT departments have to allocate sometimes scarce support resources based on incomplete information and on who is most likely to raise a stink.

Rationalizing the allocation of support when resources are tight via a point-like market mechanism could lower costs while also ultimately improving performance. A lawyer trying to get support for a low profit client would probably not "waste" points while a lawyer preparing for a meeting with a hot prospect would likely happily spend points for expedited service.

Of course, the mechanics of such a system are probably rather complicated and the effort to adopt a new approach large. But it is at least interesting to think about ways to more carefully and systematically match resources to true needs.

2003-09-15T22:51:00.000-04:00

Scenarios of Future Law Firms Rely Heavily on Technology

This past weekend, I attended the annual meeting of the College of Law Practice Management. The attendees are a mix of lawyers and law firm managers (including chief administrators, marketers, HR, and technology). We spent an entire morning working in small teams. Each team had the task of envisioning two types of law firms in the future (e.g., a firm handling commoditized work or a 25-lawyer firm focusing exclusively on IP work) and what the critical resources would be. Teams had about one hour to think through the scenario for each firm type. While I did not keep precise count of the 16 "reports" we generated concerning what the firm would be like and the resources it would need, many of the scenarios required very heavy use of technology. In quite a few, technology was the lynch pin that would allow the firm to exist and thrive (given the constraints imposed by the facts of the exercise). It was interesting to see that a diverse group of lawyers and managers, many with several decades of experience, focusing on the importance of technology. Perhaps this bodes well for the future of legal technology.

2003-09-14T12:44:00.000-04:00

Morgan Lewis Announces "Morgan Lewis Resources"

In a press release dated September 10th, Morgan Lewis announces Morgan Lewis Resources, the firm's "NEW ENTERPRISE TO ASSIST COMPANIES WITH FEDERAL COMPLIANCE NEEDS." According to the release, "Morgan Lewis, one of the 10 largest U.S. law firms, today announced the launch of Morgan Lewis Resources, a major initiative to help corporate clients meet their increasingly demanding federal regulatory requirements by providing companies a full spectrum of legal risk containment products and services." It quotes the managing partner, who says "It is our vehicle for expanding the corporate compliance, training and immigration services we already provide to offer companies the higher level of protection they need today at a reasonable cost.” The service will "provide competitive, value-added products in immigration law services, employment training, OFCCP analysis and auditing, and HIPAA related compliance, counseling and training. Morgan Lewis Resources will later offer OSHA auditing, training and compliance, and employee benefits auditing and compliance." The firm has created a separate web site at morganlewisresources.com.

Unless I missed something on this new web site, it's is not immediately clear how this new service differs from traditional legal services. The site references the use of "templates" and "procedures" and "checklists" though I cannot tell if these differ from what many other law firms have. One explicit reference to technology is an immigration status tracking system (see Services > Immigration); another is "specialized software and census data packages" for developing "affirmative action plans specifically tailored to our clients' needs" (see Services > OFCCP Audit).

It's exciting to see a law firm offering a new package of "products and services." To me, in the legal market, this would mean offering fixed-price services or using technology (beyond shared databases and portals) to deliver interactive advice or rich content. It's possible that I missed such offerings on this web site or that the firm will offer these in the future. I look forward to seeing what innovations this service will offer in the future. From my perspective, there is much a firm could do using technology (see a list of firms offering online legal services) that would allow offering higher-value, more cost-effective guidance than is typically available today.

2003-09-11T09:29:00.000-04:00

The Limits of Technology

I recently had a personal experience that perhaps illustrates the power and limits of technology. I was grocery shopping when I noticed an employee using a hand-held wand to scan the shelf bar code for out-of-stock items. It surprised me that a person had to walk the aisles, look for empty facings (the supermarket term for each column of goods), determine if the empty facing meant the item was out of stock, and if yes, then scan the bar code. I asked the employee why this was necessary given that the store knows or should know how many units of each item it receives and the check out system keeps track of every item sold. I would have thought that by subtraction, a supermarket could determine when an item goes out of stock.

Of course, asking the person doing this job how the whole system works is not the most promising way to obtain a conclusive answer, meaning he had no idea. I suspect that several factors prevent this approach from working: the number of items delivered to a store's loading dock may not be the number ordered, check out clerks do not always properly scan items (so that my mix of yogurt flavors may be scanned as all one flavor), and shop lifting is obviously not tracked by scanners.

Bar codes and scanners have had a tremendous impact. Arguably, the data supermarkets have collected has shifted the balance of power from manufacturers to retailers. And clearly, scanning has sped the check-out process (and is now enabling self-service in some stores). In spite of tremendous investment and tremendous benefits, bar codes and scanners simply do not solve all the problems a supermarket faces.

The lesson here for the legal market is that one should have reasonable expectations about what technology can do. I don't know if the supermarket industry even expected bar codes and scanners to track out of stock items automatically. But my expectation about the power of that system was clearly overly ambitious. Lawyers and law firm managers need to be realistic about what problems technology will solve and what problems will remain, even after significant investment.

2003-09-10T11:31:00.000-04:00

Internet Telephony and Lawyers Working at Home

More and more, technology allows workers at all skill levels to work at home. Should law firms think about this option in their long term planning? This posting is prompted by an article the The New York Times ran, More Companies are Routing Calls via Internet (01 Sep 03). It reports that "[i]nternet telephony... is no longer restricted to adventurous techies."

Technology Background.The Times reports that the technology "has matured to the point that voice quality is virtually indistinguishable from that of a conventional phone call." Some background: Internet telephony, also known as Voice Over Internet Protocol or VOIP, uses the same cables and protocols that transmit computer data to transmit voice. Whereas traditional phone calls reserve a dedicated circuit for each call, VOIP sends each call as a series of data packets over a shared line. Some law firms have already switched or are switching to VOIP.

VOIP Allows Working at Home. But this post is not about the technology. I was struck by another fact in the article. JetBlue uses VOIP "to create a 'virtual call center' for is 700-plus reservation agents, who work from home... The commute to work is as quick as a mouse click."

Do Lawyers Need to be in the Same Location? In a prior posting, my answer to this was "Clearly, being able to meet in person has tremendous value. And clearly, downtown meeting space is required to serve client needs. But modern technology allows working effectively from remote locations. And as more and more large firms attempt to become truly national, it means lawyers from multiple offices should be working together. If lawyers across cities, states, and countries can work together effectively, then surely lawyers located in the same metro area can." (See More on Offices: Downtown v. Suburban, 01 Jun 03.)

Most law firms already have remote computer access. Increasingly, firms will have VOIP, which will allow routing phone calls anywhere there is high-speed web access. Firms could save significant occupancy costs if lawyers worked more hours at home and therefore required smaller offices. Furthermore, if lawyers are spared daily commutes at least some days, they could either bill more hours or have a better life.

For national and international firms, breaking some of the local bonding that occurs purely as a result of geography - while risky - might actually result in more effective team work across the firm. Moreover, if firms are not constrained by thinking about offices, they might form teams that are based exclusively on meeting client needs rather than on the coincidence that several lawyers happen to be in the same office.

In the past, I would have said that reservationists need supervision and therefore must be in a central location. Clearly, JetBlue is disproving this. I assume that lawyers do not need supervision. The question then is what percent of the time do they really need to have in-person meetings or access to central resources. The instinct is to say they need a lot of both. That may be true, but at minimum, I would treat the question empirically. If it turns out that in-person meetings and access to central resources are needed a relatively small percent of the time, a dispersed work force may be feasible.

As technology allows new flexibility and eliminates what we previously thought of as immutable constraints, law firms will have to confront what the true constraints of their business requirements are. It may be that central offices are indispensable. But just assuming that's so is no longer justifiable.

2003-09-09T07:49:00.000-04:00

New Analysis of Cost, Value, and ROI of KM

Stuart Kay, the Knowledge Manager of Sydney-based Gilbert & Tobin has written a very good and thorough analysis of knowledge management called Cost, Value and ROI for Knowledge Management in Law Firms, which appears in the August 31st edition of LLRX.

Kay starts out by saying that "in a knowledge intensive industry like law, knowledge management is simply a critical component and an overhead cost of doing business." But he then acknowledges that many law firm managers and partners will want "hard" metrics to support a KM program. After summarizing Kingsley Martin's "Show Me the Money" - Measuring the Return on Knowledge Management in 15 Oct 02 LLRX, Kay sets out his own analysis of how best to measure the cost and value of KM. His analysis, particularly the cost and value financial models, are important reading for anyone interested in KM. He acknowledges that the assumptions driving his models can be tweaked to yield different outcomes, but the models present a very useful way to think about returns.

Consistent with his introduction, after laying out a detailed approach to analyzing the value of KM, including many impossible to quanityf benefits, Kay concludes that "it is important not to get lost in the minutiae of internal measures of cost... It is valuable for all the intangible benefits previously listed. The bottom line is that knowledge management enables us to be better, more effective, more productive lawyers, and to give better service to our clients."

2003-09-08T14:10:00.000-04:00

CT Corporation Acquires E-Billing Expert TyMetrix

I just came across a September 3rd press release, on the home page of Tymetrix, announcing the purchase of Tymetrix by CT Corporation (which is owned by legal publisher Walters Kluwer). Tymetrix provides e-billing software and tools for measuring law firm performance. CT provides registered agent and other corporate services. (See also the press release at the CT Corporation web site.)

Quoting from the press release: "'The TyMetrix acquisition strengthens CT's ability to deliver comprehensive, customer-driven solutions and furthers our overall strategy to become a full-service provider of enterprise software and services for corporate legal departments and the law firms that serve them,' said Chris Cartwright, president and CEO of Wolters Kluwer Legal, Tax and Business North America. "

With West's acquisition of Elite, Lexis' of Applied Discovery, and now this, perhaps we will see some consolidation among legal market technology vendors. I have always been struck by what seems like more fragmentation in the this market than in many others. It will also be interesting to see how CT integrates Tymetrix features and systems with its existing offerings.

2003-09-08T07:46:00.000-04:00

New Online Service: 50 State HIPAA Study

The September issue of American Lawyer reports, in Robert J. Ambrogi's article Making Money Online (Finally) about a new online service, statehipaastudy.com.

Ambrogi explains that a healthcare coalition wanted a 50-state guide to medical privacy law, prior to the April 14, 2003 deadline for compliance with the Health Insurance Portability and Accountability Act. The organization put the request out to bid, which was won by law firm ReedSmith. ReedSmith, working with Hubbard One, created a web site driven by a database and that presents results in tabular format. It covers 50 states, 32 types of health care entitites, and close to 50 topics; according to the web site FAQ page, the "Privacy Study consists of a database which includes summaries of state laws and regulations that relate to the privacy or confidentiality of health information."

The article reports that ReedSmith was paid well and that the firm has been retained by several companies as a direct result of the web site. (The full-text of the Ambrogi article appears on the ReedSmith web site.) The statehipaastudy site lists subscriptions prices: $5,000-$10,000 for a single state; $20,000 for a single organization for access to the entire site; and $50,000 for a law firm to use the site in representing multiple clients. Estimated annual update fees are less than $3,000.

This site strike strikes me as well-designed and comprehensive. I am unaware of other arrangements where a coalition of companies paid a law firm to create a web site that is sold on a subscription basis. (Regular readers of my blog may recall that Prism Legal maintains a list of online legal services.)

The article also reports that ReedSmith's managing partner would consider eventually developing a product without industry backing. It will be interesting to see whether ReedSmith does so. Presumably, if the firm earns sufficient direct profit (from subscription fees) or indirect profit (from new matters obtained via the web site), then it will have motivation to create other content rich sites. I do not know how ReedSmith compensates lawyers, but if it is like most firms, it would need a mechanism to treat the content-creation work of another site as billable. As a general rule, unless lawyers who work on developing content for such sites are able to bill their time as if the work were an ordinary matter, there is a big disincentive to do the work.

Whatever the long-term outcome, I think that this is a good sign that online services are still emerging and proving valuable. With my experience working for Jnana Technologies, a provider of a platform for creating interactive expert systems, I wonder if it would be possible to further extend the functionality of this web site from providing information to answering questions based on specific facts.

2003-09-05T08:08:00.000-04:00

A New Constituency for CRM in Law Firms?

Many law firms have purchased Customer Relationship Management (CRM) software. I have talked to lawyers and staff at numerous firms that own CRM systems. My sense is that few are getting full value from their software. CRM presents challenges similar to KM. It’s hard to get lawyers to contribute data (contacts) and keep them current. Furthermore, incentives to share frequently are missing; in fact, at some firms, the compensation system creates disincentives to share contacts. It can therefore be hard to use CRM as a central contact list. It is even harder to use the software to actively manage relationships.

A new constituency may be emerging – sales professionals – that increases the pressure to realize the potential of CRM. The August 18 – August 25 issue of the National Law Journal, in the Voir Dire column, reports that the “Legal Sales and Service Organization (LSSO) was unveiled at the ABA’s convention in San Francisco.” The advent of sales professionals in law firms is a new trend. The fact that there is now an association of legal sales professionals suggests a growing number of firms have made such hires.

I assume that most sales professionals depend on successfully closing sales for a significant portion of their compensation. Moreover, a good sales professional recognizes the value of understanding and mining existing relationships. So perhaps a new force will emerge in law firms that starts driving more effective use of CRM.

2003-09-04T07:40:00.000-04:00

KM Update in Information Week

The August 18th issue of Information Week has an in-depth report on knowledge management, The Need To Know . It reports that although companies expected too much from KM and have experienced disappointments, many continue KM programs, albeit with simpler efforts. According to the article, "[c]ompanies are focusing less on technology to gather lots of data and more on processes for reusing information and on tools to locate and connect people with information and experts." Part of this shift is reflected in an emphasis on more sophisticated search tools and expertise location management software. Collaboration tools are increasingly important. The article also reports an increasing awareness of the importance on focusing on how people work and incentives to share. It's a good overview of current KM practices and issues in the corporate sector.

2003-09-03T08:07:00.000-04:00

Allen & Overy Testing Outsourcing

I have written several posts about the potential of outsourcing legal work overseas: Power Outages and Outsourcing , 15 Aug 03; Technology Outsourcing Example - Document Management , 18 Jun 03; More on Off-Shore Outsourcing, 14 Jun 03; Central Back Offices and Outsourcing; 30 May 03.

Now, Legal Week, in its September 2nd issue, reports that Allen & Overy may transfer some of its document processing to India. A&O set for radical India staff transfer reports that the firm has recently completed a six-week pilot test and will soon decide if it will permanently move some of its document intensive work to India.

Assuming quality control can be maintained - and the experience of many other industries suggests it can - this appears to be an excellent way for law firms to reduce client expenses. With the Internet allowing instant transfer of information, easy collaboration, and controlled workflows, it frequently makes little difference where work is performed. Large law departments concerned about reducing costs and improving turnaround times (remember - the work day in India is virtually offset from the US and UK) should engage their outside counsel in a discussion of outsourcing aspects of legal work offshore.

2003-09-02T07:19:00.000-04:00

The Importance of Standards

I just returned from a 2 week vacation in Switzerland and Germany. While traveling back, I reflected on three “technology experiences” in Europe: (1) I rented a cell phone that worked in both countries, as well as at Heathrow, where I changed planes; (2) no surprise - it was easy to find Internet cafes everywhere to check e-mail; (3) I found it was very easy to use pay phones to call long distance. (It turns out that it is MUCH cheaper to use a phone card than to pay the minute rate on a rental cell phone.)

The common thread here is standards. A single cell phone standard means one phone works throughout the continent. A single standard for the Internet and computers allows easy web access anywhere. And a fairly standard approach to pre-paid phone cards makes calling from a pay phone easy.

Contrast this to where standards do not prevail. Most US cell phone users cannot use their cell phones outside the USA. Although the Internet is standardized, keyboards are not. German is not that different than English, but just the transposing of the Z and Y key on German keyboards illustrates what happens when a standard you are used to is not followed. (For those of us who are touch typists, this means lots of typos.) And in the US, the idea of using a pay phone to make a long distance call induces anxiety. Who knows how much it will cost or whether/how it accepts credit cards. That’s because we have no standard approach to how pay phones work.

The moral is that standards are a good thing. As I have written on several occasions (most recently on August 7th in How Would You Rather Fly? How Do You Like Your ICU Stay? Checklists or Not?), law firms and their clients could benefit if firms were to adopt standard approaches to how they do their work.

Perhaps I belabor the point, but seeing the power of standards – how they allow individuals easily to operate in foreign environments – further illustrates the power of standard approaches and best practices.

2003-08-16T11:31:00.000-04:00

Away

I'll be away for a couple of weeks. See you in September.

2003-08-16T11:28:00.000-04:00

Total Cost of Ownership and Technology Upgrades

Law firm technology managers regularly face the question of when to upgrade software or hardware. The answer is neither easy nor obvious. Beware the Underlying Costs of Using Dated Technology from the New York Law Journal on law.com provides a good analysis of some of the hidden costs of not upgrading.

The important point - and one on which corporate IT managers have increasingly focused - is the "total cost of ownership" or TCO. TCO reflects all of the costs of acquiring and operating systems. Hardware makers are fond of pointing out that the hardware acquisition cost is a relatively small percent of TCO (I recall seeing numbers of about 15%) and therefore purchasers should be willing to spend a bit more on hardware if it is less costly to operate. While self-serving, the general point is true.

For example, some law firms that have postponed upgrades of PCs because of budget considerations find that "playing catch up" a year or two later ends up costing more than if they had stayed on a regular upgrade cycle. This may make sense in partnership accounting and in managing profits per partner year over year, but the underlying economics are not favorable.

I am not suggesting that law firms or departments rush out and always buy the latest upgrade. Rather, the goal should be consciously and carefully to analyze TCO and make rational economic decisions. If the economics must be over-ruled because of political or budget considerations, that should factor explicitly into the decision. And if that does happen, firm management should not blame IT staff for higher costs in the future.

2003-08-15T10:56:00.000-04:00

Power Outages and Outsourcing

One theme of legal technology and this blog is outsourcing: Orrick's move to W. Va. (May 30th), downtown v. suburban offices (June 1st), the move of professional work off-shore as reported by Fortune (June 14th), Dorsey & Whitney's move to outsourced document management (June 18th), and the move of legal work to India (July 10th).

In Zapped by Outage, Firms Scramble to Cope, the Recorder (8/15/03) reports on the impact of the Northeast power outage on law firm operations. The lead sentence aptly summarizes the situation: "One of the problems with going global is that when disaster occurs in some far-flung locale, every corner of the law firm is affected." In spite of preparations post-911, the article reports that several law firms experienced significant disruptions firm-wide because key servers are located in Manhattan.

One benefit of outsourcing computer services is that power outages are less likely to disrupt the operations of an entire firm. Take as an example Dorsey & Whitney, which is migrating its document management system to an outsourced service. The firm's documents will reside in a highly secure facility that has power back-up and a mirrored back-up site. The likelihood of their documents going offline is very low. Of course, any Dorsey office in power blackout zone might be out of commission, but other offices would be unaffected. Contrast this to a firm whose primary document servers reside in Manhattan. When key services are outsourced, it's even possible that those in the blacked out area could do some work. For example, my brother, who lives in Westchester and works in Stamford was able to use his notebook PC (battery powered, of course) and a dial-up connection (the phones continued to work) to finish essential work.

When law firms consider their back-up and outsourcing options, it would be wise to factor in the cost of business disruption. Firms with central operations in the affected area will now have the potential to quantify the cost of disruption. Once the emergency is over, finance departments should be able to analyze time billed to determine if the outage reduced billable hours or merely shifted them forward to the weekend and subsequent weeks. Even if an outage of less than 24 hours does not reduce billable hours, there is the service element to consider and the value to clients of being able to operate continuously.

I do not mean to suggest that every firm should outsource all of its computer operations. But firm and IT management should explicitly consider the possibility and carefully weigh the costs and benefits to reach a conscious and well-reasoned decision.

2003-08-13T00:15:00.000-04:00

IBM is Developing New Search Technology

In my July 30th posting, Thoughts on Full Text Retrieval (a KM and litigation support topic), I discussed lingering questions I have about the value of advanced full-text retrieval. My questions notwithstanding, I do believe that more sophisticated tools offer value, at least when used appropriately. And of course, as tools grow in sophistication, the answer may change.

The current issue of eWeek magazine (8/11/03), in the cover story IBM Takes Search to New Heights, describes new search technology IBM is developing. It appears that the new software, dubbed Unstructured Information Management Architecture (UIMA), combines multiple approaches to searching, including statistical algorithms, rule-based reasoning, symbolic reasoning, and artificial intelligence. An IBM spokesperson is quoted as saying the software understands text and tells you what's in it.

An IEEE publication provides a bit more information: "The Combination Hypothesis states that using a variety of techniques— such as natural language processing, statistical analysis, and syntactical and grammatical rules-based intelligence — together may result in significant data analysis improvements." More detailed information is available in an IBM white paper on Architecting Knowledge Middleware, presented in May 2002 at a conference.

IBM has developed many interesting technologies so, at a minimum, this initiative bears watching. Some readers may remember the early days of Optical Character Recognition (OCR). There were "voting engine" systems that used multiple brands/approaches to perform OCR on the same documents and let the the majority result rule. Perhaps this analogy is overly simplistic, but it sounds conceptually similar. The key of course, is how the voting algorithms work (and I could not find detail on that).

Law firm technology managers interested in KM and searching document stores should stay tuned for more information on this promising approach. A conceptual breakthrough in search - or even an incremental step forward - could be important.

2003-08-12T00:11:00.000-04:00

The Power of Markets - Is It Applicable within a Law Firm?

On Monday, I read two articles that made me think about whether law firms could apply market principles to improve their efficiency and effectiveness.

Futures Trading and the Internet in the New York Times business section (8/11/03) discusses the power of the Internet to create markets: "The Internet's ability to move information instantaneously and cheaply makes it possible to push decisions down to the level of the individual... This capability has made it possible to imagine making a market out of almost anything." The article discusses how the free flow of information on the net makes it possible to create all types of markets. But there may be ethical ramifications in doing so, as the recent Pentagon proposal to create a futures market in terrorism illustrated.

Navy Turns Auctioneer, Lets Sailors Bid for Unpopular Posts in the Wall Street Journal (8/11/03) describes how the Navy is using an eBay-like system to fill certain positions in online auctions. "The online auctions are one piece of a new Navy plan to unleash the power of the free market on its personnel system... In the new system, sailors will be able to bid on jobs that no one wants." The Navy views this approach as an important way to help retain highly skilled personnel. Sailors indicate how much extra compensation they would require to fill certain slots. The system is new, so the Navy is still wrestling with how to balance various factors. The lowest bid is not dispositive; prior performance counts, as do the views of commanding officers.

Reading these articles, I wondered whether law firms could use an internal market place to staff matters more effectively than they now do. The allocation of lawyers to matters is an art, not a science. It depends on availability, skills, interests, personal chemistry, among other factors. But as firms grow (both in number of lawyers and offices), it seems increasingly difficult to allocate bodies and time. If lawyers were always allocated within relatively small practice groups, perhaps there would be no issue. But some practice groups are large and it seems uneconomic to restrict staffing within a group - load balancing considerations suggest going across groups, at least where the skill sets are compatible.

Some products are emerging that help law firms address the work force allocation issue (see for example, information about a product called Maven that assists with goal setting, assessing performance, tracking availability, and allocating resources). It may be that such products are the best way to maximize utilization and performance. But it is worth considering whether an internal market place like the one Navy is creating could help law firms staff matters when resources are tight or a matter is unpopular.

2003-08-11T08:24:00.000-04:00

Memory is Not Enough for KM

Last week I posted two items related to knowledge management: “Advertising Practices Applied to Law Firm Marketing” discussed mining documents to determine client interests; “Relationship Mining” described software that allows determining who knows whom within an organization.

After writing these, it occurred to me that some lawyers may wonder why KM systems are necessary. Of course, addressing this is a big topic, so I will only touch on a couple of key points. One reason systems are needed is that memory is imperfect. An example illustrates this point. In 1990, I was involved in creating work product retrieval systems at Wilmer Cutler. A managing partner wanted to use the system, so I showed it to him. He did a search and reviewed the documents returned. One of them caught his eye as being particularly on point. He became curious who the author was. When he scrolled to the end, he was surprised to find that he himself had written the document a couple of years earlier. We both had a good laugh as we realized we had just demonstrated the value of the beta system. In my experience – observing my own workings and others’ – it’s just hard to remember everything you’ve ever written.

Just as we don’t always remember what we have written, we don’t always remember, especially out of context, whom we know. Even a lawyer inclined to answer an all-points e-mail asking “does anyone know someone at company XYZ” may not, in a vacuum, remember that she in fact has a contact there.

The automated systems I described last week would do far more than jog memories. But as law firms consider how technology can advance their business, it is useful to keep in mind that even seemingly simple things like remembering what you’ve written or whom you know may not be as easy as we think. Technology can help with this – plus do far more.

2003-08-07T10:30:00.000-04:00

How Would You Rather Fly? How Do You Like Your ICU Stay? Checklists or Not?

Let's say you're the General Counsel of a company on a business trip. At the airport, you find, to your surprise, that you have a choice of two flights, equally convenient, at the same price, both going to your destination directly. There's only one difference. On one, the airline is like every US carrier today: the cockpit crew, even though they have flown innumerable times, goes through a thorough checklist prior to take-off. On the other, the professional pilot and cockpit crew view themselves as professionals. They think they know how to do the job. How dare someone else tell them how to do what they've been doing for years. They would not dream of using checklists - after all, they're professionals. So which flight do you take?

Yesterday, the Wall Street Journal (8/4/03 at D9) ran an article, ICU Checklist System Cuts Patients' Stay in Half. The lead sentence: "A simple checklist for doctors and nurses in intensive-care units can cut a patient's ICU stay in half and perhaps save lives, a study shows." The study was conducted at Johns Hopkins. Prior to using the checklist, there was "no systematic method of ensuring all the necessary steps were taken before" moving a patient out of ICU. Quoting a doctor, the article reports "[t]hings sometimes fell through the cracks." The same doctor said the checklist forces staff to remember to ask and answer all necessary questions.

I have previously written that law firms should adopt best practices (Consistency in Service Delivery on July 29, 2003 and When Clients Come Knocking on July 24, 2003). Pilots and doctors are highly compensated professionals who, in many respects, operate independently and exercise tremendous judgment. And, unlike with lawyers, lives are at stake. So the question seems obvious - why don't lawyers develop and use best practice checklists?

Presuming the GC selects the typical carrier - where pilots do use checklists - and arrives safely at her destination, let's say a law firm she's considering retaining, what should she do? We don't ask to see pilot or doctor checklists because we lack the expertise encapsulated in them. The GC, however, has sufficient expertise that, were a law firm to have a checklist, she could evaluate it.

It will be interesting to see if any GC starts down this path. And if they do, what will law firms do? Of course, a forward thinking law firm could, even one known for unique and high-end work, could take the lead and create a real competitive distinction.

2003-08-06T07:39:00.000-04:00

Relationship Mining

On Monday, the Wall Street Journal ran an article called Six Degrees of Exploitation (8/4/03, Page B1). The article describes a new class of software designed to mine relationships across an organization. It cites as examples Visible Path and Spoke Software.

The lead paragraph reports that the “programs scan workers' contacts from their computerized address books, instant-message buddy lists, electronic calendars and e-mail correspondence. They then make maps of all the relationships they finds [sic] among the employees and all their contacts.” The idea is that if a lawyer wants to pitch company XYZ, she can consult the software to find out who in the firm knows someone at XYZ.

Products in this category are based on “social network analysis,” the academic version of six degrees of separation. The software infers the strength of relationship from such data as whether a contact listing contains a cell phone number or IM buddy name. According to the article, the software provides various privacy safeguards. So the lawyer in search of the contact would not be able to access someone else’s contacts directly.

A couple of points of clarification are in order. First, this category of software is distinct from expertise location management software, which is designed to locate and manage expertise within an organization (Kamoon is one example).

And second, the features the WSJ article describes appear already to be available in some CRM systems. For example, one of the market leaders in law firm CRM, Interaction offers a Relationship Intelligence feature: “Relationship Intelligence is a firm-wide asset that reveals the unique and complex connections between people, companies, relationships, experience and expertise, empowering professionals to leverage who and what they know to uncover new revenue opportunities, differentiate themselves from the competition and enhance client service.”

And a final closing note: I read this article after my Tuesday posting ("Advertising Practices Applied to Law Firm Marketing") concerning mining documents for information about clients. I am convinced that over the next decade, we will see more and more software that “mines” and analyzes operational computer systems and the data users store and create to understand more about clients, employees, and relationships.

2003-08-05T07:09:00.000-04:00

Advertising Practices Applied to Law Firm Marketing

Google and Overture are fairly regularly in the news for their service of placing ads based on the content of the Web page a visitor is viewing. Amazon is known for recommending items based on an analysis of what other buyers of the same item have purchased. Netflix recommends film titles based on prior selections. What does any of this have to do with law firms?

Law firms know a lot about their clients. But they do not typically apply this know-how systematically. Many large firms have purchased CRM (Customer Relationship Management) systems in an effort to manage client relationships more systematically and sell more services.

Firms also have a lot of documents they have written on behalf of clients. In theory, one could “extract” client needs and interests from work product by using semantic or full-text software. As lawyers write new work product and as the firm collects external information (such as new case law or industry updates via Web feeds or crawlers), it ought to be possible to apply similar analysis to these new and incoming documents. If new internally created or externally obtained documents match client “interest” as defined by prior work product, then the software could alert the client relationship partner about a possible “match.” That partner could then make a judgment call as to whether to contact the client to provide an update.

This approach goes well beyond clients subscribing to law firm e-newsletters. Like Google, Overture, Amazon, and Netflix, it would require “mining” and analyzing prior data against new data. I have not seen software to accomplish this, but many knowledge management tools rely on sophisticated textual analysis and categorization. So it seems likely that such a capability could be developed if it does not already exist.

From a knowledge manager’s perspective, this would facilitate cross-selling and repeat business – a good way to make KM more client-facing and produce a more visible return on investment than may currently be possible.

2003-08-04T08:31:00.000-04:00

Legal Technology Intelligence

How should lawyers and law firm/department managers charged with making decisions about legal technology go about gathering information? This post deals with collecting information about and analyzing legal technology options, not using legal technology intelligently.

I am prompted to ponder this subject because in a recent issue of a legal publication, I read a software directory. The directory was presented as editorial content, not paid listings. I was struck how the directory appeared to omit some prominent vendors. Whether this was merely an oversight or driven by advertising or other considerations, I don’t know. Moreover, although presented as editorial content, it appears that the information about each product or service was provided by the vendor.

The point is that law firms and departments looking for technology should not rely exclusively on one or two published directories. Many directories I have seen are either based on “pay for placement” or on some unspecified editorial judgment. Of course, such directories still have value, but they must be supplemented with other sources.

I would say the same about most surveys of legal technology. Perhaps I apply too high a standard to surveys. Prior to going to law school, I was an econometrician and regularly used data collected by rigorous standards. After law school, I was a management consultant and did a lot of work in the consumer packaged goods industry, where many highly refined market research reports are available.

Given my experience with surveys in other fields, I find that many legal tech surveys have three problems. First, it is hard to write questions that are unambiguous. The ambiguity arises from the variation in labeling and categorizing of both software and staff. Second, it is hard to collect statistically valid samples. And third, organizations may own software products and list them in surveys but may not really use them or use them in only a very limited manner. As with directories, surveys have value, but decision-makers should rely on multiple sources.

So what is a decision-maker to do? Fortunately, the legal profession has a tradition of sharing information about legal technology. Whether at conferences or through informal networking, most law firms and law departments will share quite a bit of valuable information about their experience with products and services and about how they are organized and staffed. For anyone contemplating a significant legal tech decision, the moral is to consult directories and surveys but not stop there – go beyond them and network with professional peers to learn the true story.

2003-08-01T10:07:00.000-04:00

e-Discovery Update - Cost Shifting Ruling

Very few documents these days begin as paper; most are created on computers. In the discovery process of litigation therefore, dealing with digital data is of growing importance. As litigants increasingly seek computer files, issues concerning who bears the cost of the production have arisen. The rules governing discovery and cost-shifting have not changed, but the move from paper to digital files has changed the factual circumstances. The days where one side could point the other to a warehouse of boxes and allow the other side to look through them may be coming to a close. While one might be able to point an opposing party to your server farm and other digital storage sites and allow "looking through them," doing so would be a very bad strategy. Especially when it comes to restoring back-up media or other relatively inaccessible data, some litigants have tried to shift the cost of recovery to the requesting party (typically the responding party pays).

Last week, an important case in the Southern District of New York further clarified the rules of cost-shifting in e-discovery. While this is a district court opinion only, lawyers with whom I have spoken tell me that the opinion is likely to be very influential. In Opinion and order re: Zubulake v. UBS Warburg, the court lays out a set of factors to consider in cost shifting. This decision, along with a prior ruling in the same matter lay out clearly the legal reasoning for when cost shifting is appropriate. The two decisions also include a useful discussion of different types of computer storage and point out that the media/systems issues can often be thought of in terms of what is accessible and what is (relatively) inaccessible. It is the accessibility that is important, not so much the media.

For those interested in e-discovery, these decisions are worth reading.

2003-07-30T06:45:00.000-04:00

Thoughts on Full Text Retrieval (a KM and litigation support topic)

Most knowledge managers say that KM is 80% process/culture and 20% technology. I agree and usually focus on the 80%. One of the interesting 20% issues is the appropriate role for and expectations of full-text retrieval systems in KM. (This issue also applies to managing documents in discovery.)

Broadly speaking, search tools fall into two classes: simple and advanced. By simple, I mean software that allows Boolean and proximity searches, which means using “connectors” such as AND, OR, NOT, NEAR, WITHIN, etc. By advanced, I mean software that finds related words (and therefore documents that do not contain the search terms), distinguishes among related meanings of individual words, and applies advanced methods to rank how relevant documents are. The latter use pattern-matching techniques, neural networks, state space vector analysis, and other approaches.

Although I have worked with full-text software for over a dozen years, I have two lingering question:
1. What is the incremental value of sophisticated search over simple search and
2. How much upfront investment is required to get the sophisticated search to provide that incremental benefit. The "upfront investment" includes cost of software, set-up/integration, user training, and perhaps most important, the need (in some systems) to build taxonomies or provide training documents that are already categorized.

Answering this question, which in my opinion is an empirical, not theoretical matter, is expensive. Ideally, one would create test data sets containing large collections of documents, each of which was well known to a few individuals. Then you would run different search engines against each, letting the knowledgeable people “drive.” Ideally, a statistician would help set up the test and measure the results.

Some law firms have tested some advanced engines and they tell me that they have been under whelmed. And at a recent trade show, the rep for a fancy search said that his product usually does not work that much better than plain Boolean and his company no longer pushes the search feature and instead focuses on other features. Sobering.

All this having been said, I do believe that there is probably value in using sophisticated search tools. It depends on the nature of the collection and the level of training of the folks doing searches. Over a decade ago at Wilmer Cutler & Pickering, we developed one of the first integrated scan-OCR-full/text-structured/db systems. We found that, in the right hands, using a sophisticated search tool was better than a simple one. “In the right hands” was key though – without knowledge and/or training, the advanced engine was not that useful. Given some recent reports show that most users of most search engines don't do more than one or two word searches, it may be the power of advanced engines needs more support than we think.

What we need as a profession is a mechanism to perform real-world tests, both on how the search tools perform under the most favorable conditions and how they work when actual users operate them. Unfortunately, this is costly and the incentives and structures to do so just do not exist.

2003-07-29T07:36:00.000-04:00

Consistency in Service Delivery

Last week I posted an item, When Clients Come Knocking, that suggested law firms could take standard approaches to how they perform their work and that clients could, and should, "audit" these processes. So yesterday, I was struck by an article in the New York Times called Monitoring Calls in New World of Quality Assurance. It describes how customer call centers have started going beyond merely monitoring calls for service quality. They now use specialized software that records both the voice and computer data sessions with the goal of mining "customer interactions for insights into ways to improve their business."

Supervisors and analysts can use the software to reconstruct customer interactions and see how well service reps performed. An airline uses it to check whether agents are sufficiently well trained always to find the lowest fare; hospitals or insurers use it to make sure their reps understand HIPAA requirements; and financial service companies use it to make sure "their employees are going by the book."

So, why do I mention this? On the one hand, being a professional means exercising independent judgement about how to accomplish a task. On the other hand, I believe it is demonstrable that there are better (if not best) ways of doing certain tasks. Doctors are held to a high standard in how they perform their duties. As a junior management consultant years ago, joining with a class of MBAs from the leading schools, we were all pretty much told how to do a lot of tasks and closely supervised. Some of my friends have pointed out that the law is a guild. I've disagreed, saying that at least in the age of the guild, the seniors truly taught the juniors how to perform the craft.

The point is that few law firms establish best practices, much less even closely monitor how their lawyers perform the work. Anecdotally, I sense that more firms are hiring professional development directors and taking CLE and training more seriously, which is certainly a step in the right direction. I am not suggesting that firms use the software described in the Times article. But I think this article does illustrate the direction corporations are moving. And as client move to more rigorous analysis of their businesses, how long will it be before they expect the same of their service providers?

Of course, for firms that do want to move toward standard practices, technology will play an important role.

2003-07-25T08:01:00.000-04:00

Online Legal Services: Distinguishing B2C from B2B

A recent article on law.com, Online Divorce Services Spark Debate, discusses Web sites that offer consumers assistance with divorces via document creation. The two sites featured in the article are CompleteCase and legalzoom. The article explores the pros and cons of self-help sites: "Pioneers of the services claim that it is an affordable alternative to exorbitant legal fees. Many divorce attorneys say potential customers ought to beware, because divorce is a complicated process that requires legal counsel."

Business to consumer (B2C) legal sites have raised ethical concerns since the first sites went live in the dot-boom. But business-to-business (B2B) sites, that is large law firms offering online services to their clients, likely raise fewer issues. The online services offered by large law firm typically deliver advice via in-house counsel or directly to sophisticated business users; in either event, the use of the service typical is part of an established attorney-client relationship. Consequently, large law firms offering or considering offering online services to their corporate clients probably face fewer ethical considerations than a B2C site.

2003-07-24T07:59:00.000-04:00

When Clients Come Knocking

Last week I met with some knowledge managers for large law firms. One reported that the General Counsel of an existing client, in connection with the firm possibly doing additional work, would be paying the firm a visit. The GC was coming for a full day to see how this firm "did KM."

In my experience, this is unusual. But I think it's a good idea. In-house counsel are increasingly concerned with the cost and effectiveness of their outside counsel. Budgets, alternate fee arrangements, and analysis of law firm bills only go so far in controlling costs. At least in more complex matters, these tools seem limited because it is so hard to know in advance exactly what tasks will be required and how long each should take. Consequently, paying attention to the process seems at least as important as evaluating the "outputs" such as results and costs. By this I mean that in-house counsel should pay attention to how their outside firms do work.

I suspect that if a GC visited several firms, he or she would see significant differences in the processes law firms use to work. One could even imagine formally analyzing the processes to determine best practices across firms. It seems likely that the firms using better processes will produce better results at a lower cost. So I commend this GC for taking the time to inspect in detail how a firm does it work. Perhaps if this happened with regularity, firms would invest more in training their lawyers, analyzing how they work, and developing standard approaches and best practices. And that would likely significantly lower costs while improving results. Of course, in this scenario, various technologies would play an important role.

2003-07-23T07:18:00.000-04:00

Selecting Vendors and Taking Chances

Yesterday I wrote about the difference between making good decisions and achieving good outcomes. I am reminded of another example of this distinction by a Jim Rapoza eWeek column (July 14th issue), Choose Excellence. He discusses the interplay between innovation and vendor size, complaining that many IT buyers do not consider quality or innovation sufficiently in their purchase decision. Instead, they tend to select products from established vendors, "even if the product is mediocre." He sights the old saw that "nobody ever got fired for buying IBM." Yet often smaller, less well-known, and perhaps smaller vendors may offer superior products at lower prices. He does not say it, but these buyers are worried about bad outcomes flowing from their good decisions.

Law firm and department technology managers can face the same issue. When they consider vendor options, they should remember that “big and established” is no guarantee of continuity. For example, one of the first document management products designed for law firms, SoftSolutions, started as an independent company. It was purchased by WordPerfect, which in turn was purchased by Novell. Novell then "upgraded" SoftSolutions in a way that made the product no longer useable by law firms. More recently, Hummingbird, an established technology company, discontinued the development of its Corporate Law Pack product, stranding some 150 or more corporate law departments. (See Ado Over LawPack).

And companies that start small do not always stay that way. When iManage first came to market, some firms were reluctant to consider the product because it came from a software start-up. Yet iManage now is an established player in document management (and is publicly traded).

For me, the lesson is to focus first on the software features and the services the vendor provides. If a particular vendor appears to have the most attractive offering but may be small, most law firms and departments are well-equipped to analyze the business stability and protect their interests (for example, through source code escrow agreements). In short, make a good decision and hope for a good outcome.

2003-07-22T07:31:00.000-04:00

Maxim of the Day: Outcomes versus Decisions

My approach to legal technology has always been informed, in this order, by what lawyers need to practice, by business considerations, and lastly by the technology itself. Recently, I was thinking of some maxims and catch phrases when I realized that many apply to strategic legal technology. So, I am starting an occasional post called “Maxim of the Day.”

When I first studied litigation risk analysis (for more info, see Marc Victor’s Web site) I learned "to distinguish good decisions from good outcomes." This seems surprisingly simple. Yet many seem not to understand the difference.

You have to evaluate the quality of a decision based on the information available at the time you made it. Not all good decisions result in good outcomes. If a good decision leads to a bad outcome, that does not mean the decision was bad. Similarly, achieving a good outcome does not necessarily mean you made a good decision. The decision may have been bad and you merely got lucky.

One legal technology example concerns whether and when to invest in building a database to manage and analyze documents. Many litigators postpone too long the decision to build a document database, thinking the case may settle or there may not be that many relevant documents. Both may be true but in my experience, not building the database is usually a bad decision. That's because usually there are a lot of documents and usually cases don't settle before a significant amount of discovery. On average therefore, I have found that it pays to build databases relatively early in a case.

Of course, there will be times that a litigator decides not to and the case settles soon thereafter. While it may seem that money has been saved, that does not make the decision good, it just means luck saved time and money. Against these “lucky” outcomes one must balance the cases where lawyers or paralegals wastefully spend hundred or thousands of hours manually reviewing documents – with few controls over the process – because there is no database to cull the documents and record lawyer comments and designations of privilege, responsiveness, or issues.

I have a personal example as well. In the early 1990s when I was at Wilmer, Cutler & Pickering, I ordered 10 copies of Lotus Improv, taking advantage of a new product introductory offer. Improv was a “revolutionary” spreadsheet that allowed entering formulas in an easier way and allowed easy data slicing and dicing. I was convinced that if I had the copies in hand, I would find lawyers who would want to use the product. Before I could proselytize and demo its advantages, Excel started gaining market share rapidly over Lotus. And then Microsoft put “Pivot Table” features in Excel, which replicated many of Improv’s innovative features. We soon switched the whole firm to Excel from Lotus 1-2-3 and the copies of Improv I had ordered were “wasted.” I like to think that decision was good, but just had a bad outcome. At the time I ordered them, there was no way to know what would happen with Excel.

The more general moral here is that legal technology managers and strategists as well as their bosses - executive directors, COOs, and managing partners - need to understand that not all decisions work out well. And not all good outcomes are the result of good decisions.

2003-07-21T14:33:00.000-04:00

KM Flash: LexisNexis Announces Total Search - Appears to Compete with West KM

In a July 14th press release, LexisNexis announced a new service, Total Search. According the the press release, "LexisNexis Total Search provides easy access to internal work product including briefs, pleadings and memoranda while simultaneously searching the comprehensive and authoritative content available from LexisNexis." I have not had an opportunity to evaluate this product, but it appears positioned to compete head on with West KM.

2003-07-21T08:00:00.000-04:00

Legal Technology and Organizational Change (Interesting McKinsey Quarterly Article)

Many law firms and law departments are interested in applying technology to improve law practice. Sometimes, new technology is merely a matter of a bit of back-end technical work and user training. Such changes do not require organizational or behavioral changes. An example of this is switching word processors or document comparison software.

Sometimes, however, gaining the benefit of new technology requires significant change. Firms and department can run into problems when they expect to reap rewards but do not understand this. For example, some firms and departments start a knowledge management initiative expecting that they will be able to capture and re-use valuable expertise and documents without changing lawyers’ behavior. Often, that does not work.

A McKinsey Quarterly article, The Psychology of Change Management (2003, Number 2), provides useful insights into the steps required to change organizational behaviors. Firms that deploy technology that requires behavioral change should consider the lessons presented here. The article points out that is not enough to ask for change. Rather, organizations must take four steps:
(1) persuade people that the change is desirable,
(2) align the reward and recognition systems,
(3) create compelling role models, and
(4) train people in new skills.
For anyone trying to engineer change, this article is worth reading (free registration required).

Separately, an article in Optimize magazine (July 2003) covers some similar ground. The IT Productivity Gap argues that IT pay-offs are only "realized when the IT investment is coupled with new strategies and business and organizational processes."

2003-07-18T10:02:00.000-04:00

Extranets at Work at Shaw Pittman LLP

Many law firms offer their clients extranets. Anecdotal evidence among law firm knowledge managers and IT professionals is that clients do not use them very much. Perhaps that is because most extranets are focused on exchanging documents. For that, e-mail will do (or at least that is the view of most lawyers).

My July 12th post described how Morrison & Foerster created a popular extranet by populating it with a patent docket. Earlier this week, I had an opportunity to see how another firm, Shaw Pittman LLP, has created extranets that are used because they do more than share documents. Three examples are noteworthy.

For a large real estate company, the firm uses an extranet to track the clientâ€™s multiple legal entities and each entityâ€™s property holdings. The same system also tracks key dates for rights and obligations in leases. For both the firm and the client, the extranet is the sole and central repository for this information.

For a large financial services company, the firm hosts an extranet for a particular type of high-volume transaction. Most transactions have multiple parties and require multiple types of documents. The extranet tracks all parties and documents and uses checklists to make sure each deal is complete.

And finally, for a retail franchise operation, the firm uses an extranet to assist its client in trademark enforcement. There is a relatively high volume of potential or actual infringements. The extranet is used to manage background research, the issuance of cease and desist letters, and follow-up to the letters.

Shaw Pittman LLP develops its extranets using Lotus Notes/Domino, which it adopted in 1996. The firm has a group of Notes/Domino developers who know how to use the platform to quickly create easy-to-use customized systems to meet specific needs.

It is clear that all of these systems are used regularly by the firm, its clients, and third parties. And that regular use demonstrates the value of the technology to help cement client relationships.

2003-07-17T17:33:00.000-04:00

RFID and Presence Detection

Reading the July/August issue of Law Practice Management magazine, an interesting ad caught my eye. On page 3, 3M corporation advertises RFID to track paper files.

RFID means Radio Frequency Identification. This is a passive chip that, when subject to a radio query, broadcasts back identification information. It's likely to replace bar codes for many applications. This is not a futuristic technology that may or may not happen. It's here. Though there have been bumps (see Wal-Mart Cancels RFID Trial As Companies Get Realistic About The Technology in the July 14th issue of Internet Week, many consumer product manufacturers continue to test the viability of RFID tags to track pallets now and perhaps individual consumer units in the future. The 3M ad suggests that law firms tag files or boxes with RFID so they can always be found.

So much for background. Just last week I was meeting with a law firm about some tech issues. A partner expressed interest in knowing who was in the office via a Web-based, check-in/check-out system. Since we had our "vision hats" on, we talked about the possibility that lawyers might someday wear RFID tags and the building would "know" if they are in our out and where they are. Of course, this raises many privacy concerns and I am not sure this is a good idea. But certainly the technology is available if the goal is to know - automatically - if someone is available.

Along these lines, instant messaging offers a similar feature - presence detection. That is, most IM programs broadcast whether a user is available or not. Various features are available to control revealing this information or automatically sending a message that you are away from the PC (because, for example, you have not touched a key in 20 minutes). I know that many firms have tried or actually rolled out IM, but I am not sure many are using this feature.

I would be curious to hear if anyone has reactions [not flames:-)] to using RFID or IM presence detection in a law firm. [By the way, I am working on upgrading my blog to allow comments and other features.]

2003-07-16T07:35:00.000-04:00

Make versus Buy for Legal Techology

In my prior post, I reported that Linklaters is building its own knowledge management software. Reading this article prompted me to think about the decision to make versus buy software, a decision most organizations face. Law firms and law departments are no different.

For many categories of software, the decision is obvious. It’s hard to imagine “making” e-mail, word processing, spreadsheet, or presentation software. But for many software categories, the decision is less obvious. For example, some law firms have created their own document management software and some law departments have created their own matter management systems even though commercial products are available for both.

As a general rule, there are seveal reasons why I believe it is better to buy than to make:

Vendors typically develop deeper expertise than any one customer can.

Vendors have incentives to keep products current, both by introducing new features and updating them so that they work with new operating systems or new versions of companion software.

Vendors are better positioned to provide support and maintenance.

Developing software is not an easy process and most law firms and law departments are not structured to facilitate the process. Keeping internal developers focused on a project in the face of competing demands (development or maintenance) can be hard. Furthermore, documenting home grown systems sometimes never happens.

Nonetheless, there are times when developing software makes sense. For example, it may be less expensive because an organization will only create a fraction of the features that the vendor choices provide. Or the needs of the customer may be unique and tailoring the vendor product not worth the effort.

It would be interesting to know what drove Linklaters to make rather than buy.

2003-07-15T07:22:00.000-04:00

KM at Linklaters – Developing a Customized System

Continuing my reading of the July 14th issue of Legal IT (UK), I came across another interesting feature article. Knowledge Management: Capturing knowledge describes how Linklaters is creating its own knowledge management software. The firm's system uses both a taxonomy for classification and full-text searching. It interacts with other firm systems including HR, customer relationship management (CRM), and document management (DMS). Users will be able to personalize the interface.

This sounds like a significant undertaking. It would be interesting learn what commercial products the firm considered and how it approached the decision to develop its own software. In my next posting, I will offer some thoughts about the make versus buy decision for legal technology.

2003-07-14T07:51:00.000-04:00

Wither KM?

The July 14th issue of Legal IT (UK) has a feature article by Matthew Parsons of interest to knowledge managers. Knowledge Management: Measuring success reports on KM cutbacks at US firms.

The article notes that in March of this year, Jones Day eliminated its 2-year old, multi-million dollar knowledge management program. Writing that this "pattern is being repeated in other US law firms," the article then reports that, prior to its demise, Brobeck lost its CKO. Given the ultimate demise of Brobeck, it's not clear how much weight to ascribe to that data point. Any two points indeed form a line, but I am not convinced that there is trend here. While US firms do struggle with KM, and Jones Day has made this cutback, and there has been staffing changes among knowledge managers at other firms, my impression is that law firm interest and investment is growing on balance, not shrinking.

This quibble aside, the article is worth reading for its analysis of the role of KM in a large law firm. I do not agree with every point made but the article covers a lot of ground and raises several interesting ideas.

2003-07-13T19:16:00.000-04:00

LexisNexis Acquires Applied Discovery

LexisNexis announced in a July 11, 2003 press release that it has acquired Applied Discovery, an e-discovery company.

I have always been struck by the seeming fragmentation of the e-discovery and litigation support market. My recollection is that a couple of bigger companies tried a roll-up (consolidation) in the mid- to late-1990s but that the market nonetheless remained fragmented. In the age of paper, litigation support was primarily about process and labor. As such, it is not clear that scale mattered all that much.

Now, with digital data, litigation support is becoming more focused around process and technology. Arguably, with technology playing a bigger role, scale matters more. A bigger company can invest more to develop software. And with this merger, there is the potential for synergies between both LexisNexis technology and content and e-discovery enhancements. That said, there are plenty of smaller players developing interesting technologies that are useful in e-discovery. Many an entrepreneur would say that scale works against technological innovation.

It will be interesting to see how the market evolves with a much bigger company now involved. From the law firm or law department as customer perspective, there seems to be little apparent downside. There is no lack of choice of vendors and this merger may create new offerings or spawn other transactions with the potential to create new competition on features or price.

2003-07-12T12:18:00.000-04:00

Making Law Firm Extranets Work

Many law firms have established extranets designed to share documents and other information with clients. The anecdotal consensus among law firm technology managers is that neither clients nor firm lawyers have used these extranets as much as had been expected. The generally accepted explanation for this is that lawyers - both inside and outside counsel - are wed to e-mail and do not want to bother with multiple interfaces.

In the current issue of Law Technology News, the CIO of Morrison & Foerster, Jo Haraf, describes in The Killer App? (note, free registration required to view full-text) how her firm's extranet evolved. The initial extranet was not used much. But when the firm put its patent docket on the extranet, clients were excited and started using the extranet regularly. With the success of the patent docket in hand, MoFo is moving to make its litigation docket available via the extranet.

Technology is an important tool for law firms to master in serving clients. Achieving success, however, is not necessarily easy; first attempts do not always work. But those firms that listen to their clients and to new ideas generated internally and that are willing to keep trying can succeed.

2003-07-11T16:20:00.000-04:00

The Virtual Law Library

Law.com has posted an interesting article from The National Law Journal by Elizabeth D. Kenney, the director of libraries at Dechert in New York. In her article, Revolution or Evolution for Law Libraries, the author offers a useful discussion of the trade-off between the "digital" or "virtual" library versus traditional print products.

A key point is to understand what lawyers need: "A potentially money-saving move away from print resources to online services seems particularly attractive these days. The difficulty comes when a firm focuses on one type of format or the other, without doing sufficient library due diligence." I second this idea.

Some years ago I was very impressed with the approach of my colleague Jean O'Grady, the Director of Information Services at Wilmer, Cutler & Pickering. She wanted to get a better sense of how often certain print volumes were being used so that she could make an informed decision about whether to continue updating them. She placed a paper band around some of the volumes. On the band, printed clearly, was a statement to the effect that the library was conducting a useage survey and if anyone needed the book, they should simply tear the band. Measures like this, combined with more traditional circulation control systems, helped provide a solid analytic basis for deciding what print to keep.

I also second the point in the article that training is essential. Online searching is not always intuitive. I have met lawyers who do not understand the basics of Boolean searching (that is, combining key words with connectors such as AND, OR, and NOT and using parentheses), even though they should have learned this in law school. Just yesterday, I spoke to a contact at a large law firm who told me - with some mortification - that one lawyer had no idea of what using quotes around a search term would do in Google or other search engines. Unfortunately, this incident is not an isolated event.

In my experience, the themes of collecting data (whether formally or informally) to make informed decisions and training users are consistent across both basic and advanced uses of legal technology.

2003-07-10T07:56:00.000-04:00

Legal Outsourcing in the News (Again)

The July 2003 issue of Corporate Legal Times in an article titled U.S. Companies Dsicover Cost Savings Down Under, describes how General Mills is saving up to 50% on outside lawyer fees by using Australian and New Zealand law firms to draft US patent applications. Lawyer rates there are 30% less than in the US and the exchange rate adds to the savings.

A sidebar to the article reports that GE has saved $1.7 million in outside lawyer fees in the Plastics and Consumer Finance units by sending basic legal work to GE lawyers in India. (See my prior post on this topic.)

Large corporations are under tremendous cost pressures, which transmit to law departments. I think the surprise is not that legal work is being outsourced. Rather, it is that a much larger volume is not sent offshore. Corporate America is not the only one to feel cost pressures. The current issue of American Lawyer, the annual AmLaw 100 issue, reports that one reason many law firms were able to increase profits in 2002 was careful cost control.

Technology easily allows sending documents, spreadsheets, presentations, and the other raw materials of lawyers' work anywhere there is an Internet connection. That same connection also allows anyone to access online legal research services, collaborative tools such as extranets, or even formal work flow systems that control document flows.

Certainly the legal market has seen many other significant structural changes, for example, the use of staff attorneys and the growing ranks of non-equity partners. Not every AmLaw 100 firm works on unique matters and even those that do perform some elements of commoditized work. Which global law firm will be the first to test seriously routing work to lower cost locations?

2003-07-09T09:19:00.000-04:00

Back to the Future - Imaging Returns

Reading the June 23, 2003 issue of Information Week magazine was a trip down memory lane for me. An article titled Imaging Gets a Second Look reports on renewed interest in imaging. In the early 1990s when I worked at Wilmer, Cutler & Pickering, I was deeply involved in developing one of the first litigation support systems to integrate scanning, images, optical character recognition (OCR), full-text, and structured data. At the time, imaging was technically challenging but clearly the superior means of dealing with paper-based discovery in litigation. By the mid 90s, with the advent of the Web, interest in imaging among business-at-large waned.

Now, according to Information Week, the pressure to operate more efficiently is causing many businesses to take “a fresh look at some more mature, established technologies such as document capture and imaging software.”

Law firms too are looking again at scanning and image management. Ideally, this should not be necessary – everything should start and remain digital. But that is not realistic. So firms must still manage paper. In an effort to improve operations, some firms use scanning to share and distribute incoming documents (such as pleadings) as images or as part of a coherent records retention strategy.

In my opinion, the “file copy,” that is, the final retained version of client and client-related documents would be only digital – either files in native format or scanned images. Of course, this means having human processes to scan documents and to serve as gatekeepers that prevent each lawyer from sending redundant paper files for long-term storage (which not only costs money to store, but makes retrieving files more difficult).

2003-07-08T06:48:00.000-04:00

More on How Running Law Firms as a Business Could Affect Clients

Continuing my reading of Law Firm Inc., mentioned in a post earlier this week, I was intrigued by another article titled Audit Your Auditors. Two CPAs offer a list of 10 factors for law firm managers to consider in evaluating/scoring their audit firms. For the most part, this same list could just as easily be applied to how clients evaluate law firms.

The authors list 10 factors, including communication, industry knowledge, client knowledge, and pricing. Technology, used appropriately, can help law firms deliver information on a more timely and effective basis, can help lawyers develop deeper industry and client know-how, and can support more competitive pricing.

Perhaps there is an emerging trend these two articles/posts suggest. As law firms manage themselves on a more business-like basis than has been true historically, they should apply the lessons learned internally to serve clients more effectively.

2003-07-07T14:02:00.000-04:00

Blogs In the New York Times (again)

On May 19th, the New York Times reported on wikis (a shared web space in which anyone in a group can add and delete content). Today, the Times reports on the growing popularity of blogs in the corporate workplace in an article titled "Blogs in the Workplace."

In an effort to deal with e-mail, the article reports that "a growing number of businesses, government organizations and educational institutions are using Web logs to manage and improve the flow of information among employees.” The article cautions, however, that it is too soon "to tell whether the corporate blog will emerge as a genuinely useful tool for business communications or simply another way for bores and blowhards to blather."

Toward the end of the piece, a corporate user describes how his company now uses blogs to archive instant message transcripts. I don't know if this is common, but knowledge managers beware!

2003-07-07T07:31:00.000-04:00

The High Cost of Litigation, the Contribution of Technology

A recently posted article in the Automated Lawyer area of law.com titled The Litigation Arms Race
describes the ever increasing costs of litigation.

The focus is on product liabilities contingency fee work, but the lessons may well apply across a wide range of commercial litigation. The article explains that modern practice requires hiring more and higher priced experts to establish the case. It goes on to explain that "[n]ew technology has also made discovery more costly." Since 90% of documents are digital and only 30% are ever printed, litigators need tech experts, particularly data forensics experts, to help with e-discovery, especially with identifying "meta data" and dealing with backup tapes.

What the article does not make entirely clear, however, is that forensics expertise is not always required. Nonetheless, the costs of e-discovery can be very high because of the huge volume of digital data. The techniques to screen gigabytes, terabytes, or petabytes of computer files located across multiple computers are not cheap. And that says nothing about the cost of lawyer time to review the materials identified. Even where forensic expertise is not required and even where a law firm does apply appropriate technology and planning, digital discovery and the document review process is expensive. Fortunately, appropriate use of full-text retrieval and semantic analysis software can help control the costs. (See my posts from June 20th and 25th for more on e-discovery issues.)

The remainder of the article explains that "high-tech evidentiary displays" used at trial also add significantly to costs.

2003-07-06T11:38:00.000-04:00

Applying the Internal Discipline of Budgeting to Client Service

The Summer 2003 issue of Law Firm Inc., a new American Lawyer Media magazine about the business of law firms and targeted at senior managers of law firms, carries an article titled When Culture Clashes with the Bottom Line. It describes the benefits of budgeting techniques in law firm management. The article is in a roundtable format and quotes several senior law firm managers on the virtue of budgets.

An interesting question is whether firms that have learned the value of budgeting apply these lessons to provide more effective client serve. One interviewee from a firm that experienced financial difficulties reports that budgeting is the “single most important thing we did to make the firm healthy again.” Their budgeting focused on planning, particularly controlling costs and forecasting revenues. Surely this same approach can easily be applied to any large client matter to help prevent the matter management from going awry.

Another interviewee stresses the importance of sharing data so that all partner and associates know how the firm is dong. Surely clients would like to know how their law firms are doing on a big matter.

Another reports on the issues of managing multiple offices and says that they use budgets to encourage consistency across offices. Surely law firms that handle multiple matters for the same client ought to strive to achieve consistency in how they manage those matters.

Another uses budgets to manage expectations internally. Surely clients have expectations that need managing.

And finally, one reports that budgets initially had been a reflection of how operations happened to occur and the firm had to shift to budgets as a tool to plan and drive the business rather than merely reflect what occurred. Surely matter managment would be more effective if there was a plan in place to drive toward particular results.

The technology to support budgets for client matters need not be complicated. Simple spreadsheets may suffice. Collecting data from the time and billing system and systematically analyzing it to understand performance is another step. A firm that was really serious about budgeting client matters could develop a Web-interface that collected planning inputs systematically from the firm’s lawyers and then generated variance reports monthly. Of course, once a Web-interface is in place, sharing it with clients is a relatively easy step.

2003-06-28T12:22:00.000-04:00

Blogs Create Potential KM Challenges

As my blog grows, I wonder about some of the KM implications of blogging. Of course, I am still relatively new (one month) to blogging and have yet to explore the various software options. But it strikes me that blogs are yet another source of potentially useful knowledge to capture and re-use. As with collections of documents, some blog postings are worth keeping and others not (yes, even some of mine are not worth keeping!). So the question is how to capture and re-use the good postings.

As someone who’s pretty disciplined, I would value a feature that lets me add fielded meta-data to my blog postings. I’d use these to assign a taxonomical classification and a measure of “half-life,” that is, an indicator of whether a posting might still be interesting in 3, 6, 12, or 24 months. Without some type of meta-data like this, capturing postings will rely either on manual review or advanced semantic analysis. The former is expensive and the latter not necessarily reliable.

I would love to hear from any experienced bloggers if I'm overlooking an issue or if there is an easy software solution.

I will leave my blog readers to ponder this for about 10 days as I will be on vacation starting June 29th for about one week

2003-06-26T07:23:00.000-04:00

New Ways to Reach Out to Clients

Yesterday I noticed an ad in the Wall Street Journal for a new service that deliver news and quotes via instant messaging (IM). I tried it just now and it seems pretty useful and unobtrusive, at least so far.

A few years ago, most law firms would have scoffed at the idea that they would regularly send e-mail updates to clients or allow their clients to sign up for subscription alert services from the firms' web sites. Yet many firms do this today. So, is IM the next wave? Will law firms begin to emulate the WSJ and deliver legal news via IM?

Arguably legal news and analysis requires some thought and reflection and therefore is not appropriate for IM. I suspect those same arguments were made about e-mail years back. The point is not necessarily just speed - it's operating in the medium clients find most congenial. I now have a WSJ "buddy" name on my AOL IM list. I can send a message ("main") to receive a menu of options or a message containing my menu selection to get headlines ("1") or quotes ("2").

Firms that want to occupy a high share of mind of their clients should consider a service that emulates what the WSJ is doing. For clients who use IM, having the firm name right there on the buddy list (or equivalent) can be a powerful awareness builder. And if that client has a legal question.... well, I'll let you fill in the rest.