** template ** Strategic Legal Technology <$BlogRSDUrl$>

Saturday, August 16, 2003


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

Friday, August 15, 2003

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.

Wednesday, August 13, 2003

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.

Tuesday, August 12, 2003

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.

Monday, August 11, 2003

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.

Thursday, August 07, 2003

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.

Wednesday, August 06, 2003

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.

Tuesday, August 05, 2003

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.

Monday, August 04, 2003

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.

Friday, August 01, 2003

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.

This page is powered by Blogger. Isn't yours?