Strategic Legal Technology

For several years I regularly wrote “Roundup” posts where I briefly covered several unrelated topics. Until now, Twitter has substituted for those original posts - my Roundups now are selected Tweets. I now see that - perish the thought - 140 characters does not always suffice. So I revert to my original format and cover here working virtually, a new contract drafting service, the digital v. analog, and the iPad. 

Working Virtually

Trends: The Death of the Office (as we know it) in Contract Magazine (May 2010, targets professional designers and architects), offers a concise overview of the trends and impacts of professionals being able to work from any locations. “Virtual work enables mobility within and outside the office ‘box.’.. the rise of computer networks means that computers are no longer just facilitating individual virtual work, they are facilitating virtual collaboration… enabling people to meaningfully connect across geographies and time zones in ways that actually enhance individual and group productivity.”

The short article is worth reading and then considering why BigLaw seems immune to these trends. I often wonder what law firms would be like if the burden of proof were on the advocates of the status quo.

New Contract Drafting Service

Ken Adams of Adams Drafting has partnered with ”Business Integrity, developer of ContractExpress document-assembly software, to develop Koncision Contract Automation, an online subscription-based service that will make available to lawyers document-assembly templates for business contracts.” Ken is the leading thinker about drafting clear contracts; Business Integreiy is a leading document assembly developer. The results should be interesting and very useful.

Read Ken’s Koncision Contract Automation blog post for details. In a post about features, he notes he will use KIIAC software “to help make sense of the precedent contracts that we’ll be reviewing.” Richard Susskind discusses standardizing law practice in his book, The End of Lawyers?. This is a concrete step in that direction.

Lessons from ILTA: The Digital v. The Analog

I was at the Aria Resort in Vegas last week for the annual International Legal Technology Association conference. I live blogged a couple of sessions and you can find many other blogs and Tweets about it. My focus here is the venue itself and the lessons I learned about digital versus analog.

I had looked forward to the Aria’s high tech rooms - you can see a video of the touch screen control. Pleasant anticipation turned to frustration as I used the room. Monica Bay, editor of Law Technology News, describes the problem at her blog the Commonscold: Fiat Lux. In sum, give us back regular old light switches.

Several lessons come to mind: Just because you can automate something, doesn’t mean you should. If you are a touch typist, think about switching from a QWERTY keyboard to a different lay-out. Now you have an idea of the adjustment required. Sometimes it pays to stick with the installed base; maybe light switches are as outmoded as QWERTY but we all know how they work. We need to think carefully about the choosing between electronic and mechanical and between digital and analog. Just because you can convert doesn’t mean you should.

Thoughts on the iPad

I had a personal mission at ILTA - talk to my friends (fanatics?) who have iPads to see if I should get one. After several conversations, I decided I am not ready for one. I create a lot of content at a keyboard using Excel, PowerPoint, OneNote, and MS Word - this requires the full-powered apps and a normal size keyboard. My iPad-using friends consume content more than they create it. Yes, I know screen typing works; indeed, one friend reports typing almost as fast on the virtual keyboard as on a real keyboard. But she mainly types to take notes and does not need a fat app. I realized that even if I got an iPad, I’d bring my PC with me for almost all travel. I suppose you could say this is sticking with the mechanical / analog over the electronic / digital. Hold the hate mail and leave a constructive comment if you disagree with where I come out.

The September issue of Inside Counsel presents its annual “IC 10″, 2010 IC 10 Winners Exemplify Innovation, winners for law department innovation. In this post, I summarize and comment on some of the winners. 

Sharing Information Internally and Externally with Legal OnRamp

Two winners this year created systems with Legal OnRamp [click here for my posts on Legal OnRamp].

FMC Technologies: Reinventing the RFP describes how FMC General Counsel Jeffrey Carr simplified the RFP process to select new counsel. The law department

“discarded a 56-page RFP it previously had used and instead invited law firms to fill out a one-page, yes/no questionnaire posted on Legal OnRamp, a social networking site aimed at in-house lawyers and their collaborators, along with one page of FMC’s engagement terms and a description of its pay-for-performance system—in all, three pages.” [FMC also used Twitter to select the finalists.]

Cisco: Making Connections explains how Cisco lawyers use OnRamp Exchange (ORX) by Legal OnRamp to “share information and correspond with each other… [and] pool resources and learn from one another.” Information shared includes sample documents, contract clauses, and substantive legal discussions within the law department.

Commentary: In one of my earliest blog posts (2003), I wrote “I have thought for some time now that if law firm Extranets do succeed, they will sow the seeds of their own destruction” linking to my presentation The Future of Technology in Law Practice. I’ve always thought that in-house counsel who work with multiple outside counsel would not want to use multiple systems and would end up owning a system that law firms would need to feed. Legal OnRamp increasingly looks like it will be that platform.

I also note that Cisco, which is a tech company, chose to buy versus build its intranet / wiki. The Legal OnRamp ORX product seems well suited for that purpose.

Appropriate Staffing

DuPont: Paralegal Aid describes how DuPont “created the DuPont Paralegal Utilization Model as part of the DuPont Legal Model” to expand the use of paralegals, who now work across multiple practice areas.

Commentary: That’s music to my ears and consistent with the ideas I set forth in my 2008 blog post, The Right Resources to Solve Legal Problems, which argues that GCs must consciously decide how best to staff matters. It’s clear that much work that lawyers do can be delegated to skilled but lower-cost resources such as paralegals or legal process outsourcers (LPO).

Matter Intake and Management

Healthnow New York: On Track describes Healthnow’s building an “interactive Legal Request Tracking Database, which went live in January 2009.” It sounds like a matter intake and management system with e-mail alerts to clients and lawyers.

Commentary: I applaud any law department that systematizes how it operates but am surprised that the legal market and a legal publication considers a system like this innovative. At one time, I might have described such systems as ante to stay in the game. Today, I thought you’d need such a system to even walk into the casino much less stay at a table. I am also curious what drove Healthnow to build rather than buy commercial off the shelf software.

This is a live post form the International Legal Technology Association (ILTA) 2010 Conference. Session: “Outsourcing: Safety First”. Speakers: David Stanton, Partner, Pillsbury; Nathan Hayes, VP Technology & Infrastructure Services, Integreon. For additional session reports, see Twitter hashtag #ILTA10. This session is also Tweeted with the hash tag #INFO7.  

Agenda: what can law firms outsource, outsourcing issues and risks, outsourcing alternatives, and “safe outsourcing”.

WHAT LAW FIRMS CAN OUTSOURCE: Chart shows penetration curve of outsourcing across IT, banks, law firms, and law departments. IT started in 1990s, banks around 2000, law firms around 2004, corporate law departments a bit later. Segment outsourcing into “Legal Support” and “Middle Office”. Latter includes all the support services for lawyers and law firms; former helps lawyers directly in their practice. Document review is probably the most prominent example of an outsourced legal support service. Increasingly, Stanton says market is seeing more and more outsourcing of contract support services such as review; also legal research, due diligence.

Middle Office services inclcude document services, library/KM, business development support, CRM DB management, finance and accounting, procurement management, IT services, and HR administration. Hayes says law firms are particularly interested in library outsourcing because many feel they do not have adequate scale to offer internally. Law firms face cost / profit pressure that is forcing them to look at middle office outsourcing. “Law firms need to run as businesses - this is a new idea.” Middle office outsourcing allows lawyers to focus on practice rather than running firm.

Outsourcing Examples:
1. CRM database management: systems development, user support, report and analyze, data cleansing. Stanton emphasizes the importance of good CRM to law firm business development. In many law firms, ownership of CRM is not always clearly defined. The opportunity with outsourcing is to fix this problem. This is easier than cajoling multiple lawyers and staff to work on CRM.
2. IT Services: consulting and planning, governance, programs and projects, held desk, training.
3. Document Review in litigation: sample work flow diagram. Not clear that law firms, when they do doc review internally, how quality and process is defined and assured. With credible outsourcer, process is better defined with clear QC metrics. Law firm partners assume that associates do good job on doc review but TREC and other studies show that without a lot training, process control, and metrics, associate doc review is “horrible.” More rigor is required for doc review and outsourcing can achieve this. With a more controlled and documented process, productions are more defensible. Need to approach doc review in more business-like manner.

OUTSOURCING ISSUES AND RISKS. Lawyers have long delegated work to more junior lawyers and to staff. Lawyers ability to supervise is not that different based on location. As distance grows, however, supervision needs to be more formalized and tracked. Delegation outside the firm is not that different than delegation inside - it just needs a more formal process and rigor.

Issues include defining support lawyers need, appropriate supervision, which functions are strategically core, and whether the support model should be inhouse v outsourced, central or de-centralized, and onsite or offsite.

General outsourcing risks include loss of control or knowledge. In dealing with any vendor relationship, firms need to make sure provider is financially stable. Operationally, firms have to make careful transition plans if they outsource.

Additional considerations: location, shared v dedicated delivery, vendor selection, service level agreements (SLA), metrics and reporting, ramp-up time, business continuity, and regulatory compliance. Many firms are not accustomed to SLAs, so moving to outsourcing means that a firm has to develop these - this can add to ramp-up time.

OUTSOURCING ALTERNATIVES:
Start with a reality check. Outsourcers are measured against a theoretic standard rather than in comparison to how law firms actually perform today. Many firms don’t measure performance - other than financial - so have not basis of comparison. For example, many firms don’t have a measure of how often errors occur. Are costs reasonable now? With outsourcing? Where does management focus: on keeping trains on time or or strategy. What is sacred cow and how does that fit with professional management, whether outsourcing or upgrading internal firm services? You have to answer these questions before you can consider outsourcing.

Third Party v Captive. Examples of firms doing 3rd party and captives. About same number of each. Pros and cons of captive versus outsourced versus “build, operate, transfer” model.

Additional Issues with Alternatives: outsourcing does not equal offshore. Internal expectations versus formal provider SLA. Investment capabilities. Economies of scale and repitition. Ability to scale up or down.

SAFE OUTSOURCING:
Contracting is key. Need a master service agreement (MSA) with service level agreements (SLA). Need reporting to monitor delivery and compliance with SLAs.
Firms also have to consider insurance - what is the coverage, does the firm need a rider, and what are the risk management issues?
Protecting client information. To answer this, firms must assess whether their existing systems are robust.
What are the security measures, encryption, access controls, policies, etc.
Governance - set up a strong governance model

Will law firms embrace or resist outsourcing? Market will decide but seems like pressures will lead to more embracing and less resisting.

This is a live post form the International Legal Technology Association (ILTA) 2010 Conference. This is the opening session, Five Secrets to Put Strategic Unity on the Fast Track, with Jason Jennings presenting. For additional information, see Twitter hashtag #ILTA10. 

Jason Jennings is a popular business speaker and writer. Jennings interviewed 15 ILTA members asking about the person, the firm, and what challenges the person and firm face. The results of the interviews:
- Getting everyone on the same page
- Changing nature of practices
- Relevance - are law firms like newspapers?
- Price pressure (down)
- Faster turn around times
- Embracing change

Jennings wanted to focus on five things that other companies do to gain strategic unity. Jennings has, in past, studied the fastest companies in the world. Speed has to do with fast thinking, fast acting organizations. Also the most productive companies. Then wrote “think big, act small” about companies that organically grew profit and revenue consistently. Then identified CEOs who created most value. From this research, he has distilled elements of strategic unity.

Found that some of the most successful companies are: Ikea, Smucker’s Jam, Staples, Koch Industries (largest privately held company), Nucorp Stell. From studying companies like this, Jennings has found five principles.

SHARE A COMMON NOBLE PURPOSE. It needs to be big and bold. Inclusive. Attitude more important than aptitude. The thrill of competition and winning is more important than making money. Shared noble purpose provides direction, drives momentum, and builds culture. “The right culture is the ultimate competitive advantage.” (RF note: compare to Peter Senge’s, The Learning Organization, who argues that the only competitive advantage is the ability to learn faster.)

LETTING GO. Most organization cannot let go of yesterday’s breadwinners. Gives example of GM failing to let go of Oldsmobile. They also cannot let go of ego. Example is Jack Welch ego getting in way of writing off original $100mil in Montgomery Ward and instead, trying to save with another $2bil over 10 years. Most organizations cannot let go of conventional wisdom. At most, this means you achieve conventional results. When you work hard to let go, you are better able to deal with change, innovation happens.

EVERYONE KNOWS THE STRATEGY. Tells story of companies that share widely, like Smucker, which gives all employees, shareholders, and partners. Contrasts that to companies that want you to sign NDA before they share strategy. Secret strategies don’t work. Workers don’t become emotionally connected to work when strategy is secret. Corners get cut and illegal things happen when strategy is secret.

EVERYONE THINKS AND ACTS LIKE AN OWNER.

STEWARDS. Great leaders see themselves as stewards of the organization. Stewardship means service over short-term self interest, abandoning power over others, preserving natural human resources (meaning do right by your employees). Stewards share information, are accessible, keeps their hands dirty (by spending time with clients), stand for something, get rid of superficial distinctions, make it better, are coaches and mentors, and are called to serve.

Since not everyone reads Twitter, I reproduce here a selection of my recent Tweets. 

law.com: New Hiring System Keeps Contract Attorneys Away From Law Firms http://bit.ly/bdMRUd || Staffing agencies > doc review co’s ?

RT @ChristianUncut Intelliteach wins 1st major UK #legal IT deal with Eversheds/MS Office outsourced service desk proj http://bit.ly/9pfpVy

Ian Dinwiddie new President of Hildebrandt Baker Robbins. Press release. ex Dir Fin + Biz Services Allen & Overy || new direction too?

RT @VMaryAbraham post: The End of Your #KM Job? http://bit.ly/cAPfG6 || Agreed. Legal KM morphing to practice support consulting

@ChristianUncut Re getting fax (from tech vendor no less), I notice in US, BigLaw still puts fax # on card. When will it go way of Telex?

RT @jfehrman: Spies’ Use of Steganography Just the Beginning http://tinyurl.com/2vcyh7s | When shd EDD collection consider stego search?

@Legal_Week Freshfields to offer job sharing and home working in new flexi scheme http://bit.ly/bSEzq1 || working virtually at last. maybe.

RT @GregBufithis: JD Supra is Now Linked Up to LinkedIn http://sn.im/zgjeu > world’s largest legal content distribution network

Is Adding a Second Tier for Law Firm Associates a Good Thing?, The Recorder http://bit.ly/9Dxxi1 || Great idea but requires real management

Private equity to target legal process outsourcing Law Soc Gaz http://bit.ly/cOnz33 || Might PE try to build next gen firm from scratch?

PLC white paper: Practical Considerations for Alternative Fee Arrangements http://bit.ly/9V8Ojm || Good AFA discussion, cites @gnawledge

A New Approach to Law Firm Regulation AmLaw http://bit.ly/cidDa3 || Argues for unitary US national oversight via @jordan_law21

The Lawyer: Eversheds staff bag £1K as firm achieves profit target http://bit.ly/adcWiy || have any US firms done this?

Hildebrandt Q2 PMI down. Lawyer headcount & overhead expenses down; collected rates flat. http://bit.ly/9ntj15 || Any upturn in sight?

Just found out about another AmLaw 100 firm pursuing legal project management (#LPM). When will market tip? #in

RT @paulceaston: Cowen Group Survey: Legal Project Management Has Increased in Importance - http://ow.ly/2lRzU ( #lpm #project-management )

UK survey: 38% GC v 14% CEOs say GC make significant commercial contribution to company. Corp Counsel http://bit.ly/atdblm || Mind the gap

Breaker 19. Was citizens band (CB) radio the first social media? Spontaneous groups, at a distance and ephemeral #in

Of 60 people in Morgan Lewis e-Data practice, 35 are not lawyers. law.com http://bit.ly/bisRRm || any other firms with comparable heft?

Eversheds to offshore more support work, 100 jobs at risk The Lawyer http://bit.ly/chrnCV || finance and HR to Accenture in India

Hildebrandt Baker Robbins Interviews Leonardo Inghilleri: Building Loyalty Through Client Service http://bit.ly/a0jtiR | law firms must read

RT @Legal_Week Not so demanding - clients not pushing legal forward http://tinyurl.com/29mvdkp || GCs whine, don’t act. Where are the CFOs?

RT @IntegreonEDD ABA Continues Examining Legal Outsourcing Ethics http://bit.ly/cfBxJP Integreon Blog (by Mark Ross) || eager to see outcome

Will general counsel and the ACC demand for more value from law firms drive firms to consider offering online legal services? 

Bob Ambrogi’s Crowdsourcing the Law (Law Technology News, 1 Aug 2010) describes some interesting new web services - OpenRegs and Spindle Law - that got me thinking about online legal services.

OpenRegs.com, according to the website, “is an easy-to-navigate regulatory portal. Every day, federal agencies issue dozens of rules that affect you, your business, and your family. We make it easy to keep track of proposed and final regulations and to submit comments to the agencies.” In the old days, clients used to pay DC-based law firms to deliver this type of information.

Spindle Law is “is a new kind of legal research and writing system”. It presents a taxonomy of law through which a user can drill down to find authority for points of law. It is a ’social media’ or ‘crowd sourcing’ approach. Ambrogi writes

“Spindle Law resembles a treatise, in that it assembles rules of law together with the authorities to back up those rules. Structurally, it organizes the law into a tree, with each branch leading to ever-narrowing branches. Thus, the broad branch “courts” leads to narrower branches for “evidence” and “civil procedure,” and each of those branches leads to increasingly narrower branches.”

I can see how Spindle Law’s graphic approach, coupled with community contributions, could lead to a valuable legal research tool. While not an immediate threat to law firms, a system like this could evolve to be an important resource for in-house counsel. Why pay even associate rates if a quick consultation of Spindle Law were to yield a reasonably reliable answer?

With all the talk about law firms providing value, I don’t see much evidence of law firms finding ways to deliver their collective know-how to clients. In fact, many large law firms barely have functioning knowledge management resources for their own lawyers, much less ways of delivering know-how outside the firm.

It seems to me that law firms could kill two birds with one stone. They could, by marshaling their deep know in practices in which they specialize, develop resources / systems that both support their own lawyers (especially for alternative fee arrangements) and that they could deliver to clients as ‘added value.’ Both OpenRegs and Spindle Law should serve as inspiration for forward thinking firms that want to add value.

The last 18 months in the legal market look very different than the last two decades: firms are actually differentiating their offerings. So perhaps we will see innovative online legal services that deliver firm know-how directly to clients.

Have you ever wondered what your e-mail says about you? Conversation is ephemeral; e-mail leaves a record. The e-mails you send and receive and the meetings you have tell stories. Now, there is fun software that extracts those stories for you. And I can see how the underlying code and concept could be helpful in e-discovery. 

Cataphora recently released Digital Mirror, which “is designed to help you understand your behavior and those of others in your digital ecosystem.” This software is released in connection with Cataphora CEO Elizabeth Charnock’s new book about the Digital You.

The company explains it has applied its “software and expertise to uncover evidence in major litigation and investigations” along with “patented data analysis technologies” to create this software, which “allows you to see a reflection of your digital universe and your role within it.” For now, the free download works only on your own Outlook files; future versions will do more. I’ve installed and run the software here. I share here my experience and comments.

Installation

The download is free (here). Installation ran smoothly. The first step is indexing your Outlook messages. Doing so is easy; the software automatically found all of my PST files. As warned, however, the indexing takes time. Mine took about 2 hours and I was able to use my PC during indexing.

Digital Mirror indexed 70,000+ items for me. I have PST e-mail archives that go back to 2003, so that’s a lot of years of e-mail. Nonetheless, the count seemed high since X1 indexed only 58,000. The Digital Mirror FAQs explain that it indexes events (appointments) and contacts. Adding those in, the count I would expect is fairly close to what was indexed. Once the indexing was completed, I could not find a way to see which PSTs were indexed nor how many items.

The Stories: What Digital Mirror Tells You

The Digital Mirror software opens with a dashboard displaying several tools to learn about the digital you. I discuss a few in detail:

Quality Time. “The Quality Time visualization gives you some insight into who you devote your valuable time to. Digital Mirror’s analysis draws on Outlook information about meetings you attend, along with how many emails you write – especially long ones that typically require more time and care to compose.” The website provides a top level explanation of how these results are derived. For example, the software uses semantic analysis to determine if e-mail messages are about meetings and gives these more weight than just e-mail.

The results are presented as a pie chart showing the “Top 5″ people. The pie chart changes every month and a time line at the top lets you look at one month or “play” the time line as an animation, which lets you can see how your Top 5 evolve month by month.

Playing the time line was a trip down memory lane for me. The pie slices showed names of people with whom I met or corresponded. I saw few surprises but was reminded both of big work projects and some periods of intense e-mail conversation with friends or family.

I think this is a good and simple display, easily understood. I look forward to a future version that shows more people and adds feature. For example, it would be nice to be able to control the speed of the animation or to show two pie charts at once from any two arbitrary months.

Social You-niverse measures “closeness” to contacts. “Closeness is measured using a wide variety of factors, including how you greet each other when writing emails (Dear Professor Einstein versus Hey Al! for example), as well as analysis of emotive tones used in emails between you. ” The display is solar system with you in the center and contacts orbiting you at very distances. It too uses a time line, which you can play as an animation.

I found a a fair bit of overlap here with “Quality Time”. It’s hard for me to tell the difference between “quality” and “closeness”.

Who? What? When?. This shows a grid of “hot topics” and who participated in the conversation. Hot topics are determined by linguistic analysis that includes how often you reply, e-mail length, “Whether you tend to store messages about the topic” (though if not stored, the software would not know about the topic so, hmmm?), and “Whether the topic is associated with a ‘good’ group of correspondents.” In this display, you can click on column heads, row stubs, and the cells themselves for additional information. Having more “drill down” features like this will be crucial for commercial grade software.

This is potentially the most interesting analysis but I found it very limited. Digital Mirror selected five topics across several years. (Interestingly, the analysis here only begins in 2007 - the others begin in 2003.) Five topics over 3+ years just does not tell me very much. And one of those topics “Google Alerts” is a red herring. I do forward a lot of Google Alerts but that is for their content and links. This shows the challenge of computer-based linguistic analysis.

Other Features. Digital Mirror also includes displays for
- Blow Off Scoreboard
- Pecking Order
- Buck Passing
- Loud Talking
- Temperature Gauge
- Stressful Topics
I found these less useful / interesting in the current version though they all seemed accurate as far as I could tell. I can see, however, where this type of analysis could be interesting. Note that in some displays, a mouse click in a matrix brings up a menu to advance or go back a topic.

Comments on the Visual Display

I find the analysis and some of the measures very interesting but the visual display could use some work. Backgrounds are too busy / distracting for my taste and both the dashboard and data display icons are, in my opinion, corny. The real work here, however, is the analysis and I suspect cleaning up and making the displays more business-like would not be a big task.

Implications

This is the first product I know of (or at least remember!) to bring semantic analysis to the desktop. Of course desktop search makes full-text indexing readily available. But Cataphora goes much further in using linguistics to derive meaning from all the words - and the metadata - stored on our hard drives.

For purely personal use, I suspect Digital Miror will remain more in the category of fun than genuinely useful. For e-discovery and investigators, however, I can see how the underlying technology could be very helpful. If I wanted to get a quick and easy sense of what someone worked on and who they corresponded with, I think the approach (if not all the actual displays) here would be very useful. Of course, this is not surprising since Cataphora had its start with e-mail analysis (see, e.g., my 2004 blog post, Using Visualization to Manage Legal Organizations, which mentions Cataphora.)

We see more and more articles about our digital footprint and how hard it is to eradicate. Today, it is hard to get a clear picture of what all the data say. Digital Mirror represents a very good first step in being able to understand the data. Being able to expand this approach to cover social media and websites, as well as the desktop, would be interesting indeed.

After the last two years of severe recession and huge corporate legal spending cuts, I thought it was safe to assume that general counsel buying behavior had changed. It turns out, perhaps not. 

Reading What’s Really Going On in Today’s Legal Departments? a survey of GC in the August issue of Inside Counsel, the results sound very similar to what I read a few years ago: complaints about law firms but little evidence of buyers exercising their power. Cathleen Flahardy, editor-in-chief, notes in From the Editor “We were surprised that the economy didn’t have the impact we expected—GCs overall are still satisfied with their firms.”

Let’s see why the surprise: Over 90% of respondents report economics are increasing pressured to reduce outside counsel spend. So far, that seems to be the new program. Almost 70% are happy with their outside counsel relationships. Reading that, I would guess that firms are performing the way GC want. But keep reading.

Additional questions reveal that 50% of GC don’t think law firms recognize corporate budget constraints; 65% say law firms don’t actively seek ways to reduce cost; under 40% of firms are open to alternative fee arrangements; and 60% report their firms don’t understand their businesses. There’s more: only 65% of GC require firms to submit budgets; of these, 46% of firms adhere to budgets. That means that only 30% of law firms have matter budgets that they meet.

How should a CEO or CFO interpret these results? I’m not sure, but I can see that they would conclude, among other things, that GC are among the most easily pleased people. They might also conclude that it’s time to put purchasing professionals fully in charge of outside counsel relationships.

Innovators at the Barricades by Bruce MacEwen at Adam Smith, Esq. argues that legal process outsourcing (LPO) is a disruptive force for law firms, citing Clayton Christensen’s The Innovator’s Dilemma. 

“Outsourcing is here to stay” writes MacEwen. He describes different flavors using a 2 x 2 grid: location on the x-axis with offshore or onshore ("foreign” or “domestic"); ownership on the y-axis with captive or 3rd-party ("owned” or “rented"). MacEwen notes that this model is “by no means exhaustive; it’s merely indicative and representative”. This is a good model for thinking about centralizing support services.

LPO will have a big impact: “Once clients begin to get accustomed to the notion of being able to unbundle, or unchunk, legal engagements - be they disputed matters or transactional ones - there’s potentially little end to it.” MacEwen argues that LPOs are likely to go upmarket, meaning they perform higher value work, which will threaten law firms - and also force them to innovate and move up the value chain.

Working for an LPO, my view is that there is a clear line between legal support and law practice. An LPO cannot practice law so I think there is a clear limit to how far “up the value chain” an LPO can go.

Turning the “LPO moving up the value chain” idea on its head may well be a more helpful way to think about the legal market. The very forces that enabled the birth of the LPO industry - globalization, technology, and shifts in buyer attitudes - continue to push legal work toward standardization and systemization (as Richard Susskind discusses in The End of Lawyers?). That means work once done only by associates can be performed by more efficient operating models offered by alternative sources such as LPOs, contract attorneys, virtual law firms, online legal resource providers, and still-to-be-invented providers.

So it is likely that repetitive tasks once the exclusive domain of partner-track associates will continue to be unbundled and move to more cost-effective approaches. Document review in litigation is the classic example. Even without LPOs, law firms’ ability to offer this service at associate billing rates is already threatened by corporate clients contracting directly with contract lawyer staffing agencies. An innovative law firm might even decide it makes sense to partner with an LPO to do the high volume, routine work.

Given this shift, MacEwen questions the fundamental premise of large firms, citing Ronald Coase’s Nobel Prize winning The Nature of the Firm. He suggests that LPO-enabled unbundling calls into the question the “why” of law firms: “Why create the management overhead, bureaucracy, and administrative friction entailed in any firm of scale? Why not just purchase whatever is needed, when it’s needed, on the open market?”

That is a good question indeed, but LPO is symptom, not cause. The cause is corporate client price sensitivity and quest for value. These have changed buyer (general counsel) behavior, which in turn has propelled growth of law firm alternatives. Smart large firms can still profit from their scale. For example, they can

• Coordinate across practices and geographies to serve global clients. Cross-selling is not only a profit lever, done correctly, it is a service enhancer.
• Assemble large teams of highly skilled and experienced lawyers to work on tough, big cases or deals.
• Serve as expert general contractors with project management skills to ensure the swift and cost-effective resolution of client matters. Many general counsels will happily delegate that function.

MacEwen raises provocative questions that large firms need to consider carefully. I have never been persuaded that “big is better”. Big is only better if size really confers benefit and the organization actively takes advantage of its scale. Big firms that adopt sound strategies and execute effectively will continue to thrive. Those operating on auto-pilot may indeed lack a good answer to the question MacEwen / Coase asks.

[Note: above is a modified version of my Integreon blog post, LPO as a Driver of Law Firm Innovation]

The College of Law Practice Management and The American University Washington College of Law are hosting “1, 2, 3, RESET! The 2010 Futures Conference and Symposium” on October 22-23 at AU in DC. I encourage anyone interested in the future of the legal market and law practice management to attend. (I am a COLPM Trustee.)  

This conference is for law firm leaders, managing partners, executive directors, c-suite law firm officers, consultants, law school deans and anyone else who plays a leading role in the business of practicing law. Click here to download the PDF program. Topics include The Impact on the Legal Business of Capital Markets’ Growing Interdependence, A Sea-Change in London (re equity investments and alternative business structures for law firms), and a wrap up session Now What? led by American Lawyer editor Aric Press. Other speakers include Peter Zeughauser, Simon Chester, Steve Matthews, Tim Corcoran, Marc Lauritsen, and Patrick Lamb.

I’ve attended many College meetings and they are outstanding. Unlike most conferences, vendor sponsorships play no role in the program or speaker selection. A committee of College Fellows works hard to identify topics and speakers based on the issues most likely to affect law practice management in the coming years. We are limiting the conference to 150 attendees so that we can ensure high quality discussion.

I hope to see you there.

About two weeks ago I got a new Dell notebook PC from my company. Ordering an extra battery for it on my own from Dell.com turned into a personal productivity nightmare. Dell’s famed model business model feels creaky, which may hold lessons for BigLaw. 

After getting my new PC, I went to Dell.com to order a docking station and battery. The docking station was easy to identify Not so the battery. I could not find the exact model of my PC, Latitude E4310, at dell.com. Hmm. I found batteries listed for Latitude E but the web descriptions did not include compatibility listings by PC model numbers. I lost quite a bit of time trying to figure out which battery was right yet ended up ordering an incompatible unit. As a veteran web shopper and ex-CIO, I found this rather frustrating.

Fixing this was a time sink, which I attribute to Dell’s, in my opinion, inadequate e-commerce capabilities. In getting the return merchandise authorization (RMA), the agent was unable to pull up my correct e-mail address, even though she had my order number. So I had to provide it orally. So much for back-end systems integration. The e-mail confirming my return lists the battery as ‘CUS BTRY 12C SONY’, which bears no resemblance to the ‘9-Cell/85 Watt-Hour Primary Battery for Dell Latitude E/Precision Mobile WorkStations M2400/ M4400’ that I ordered. This does not inspire confidence.

To compound frustration, I could not order the correct battery with the same person who takes care of returns. Transfer and hold. The sales person then tells me a part number to buy. I inspect it on the website but do not see a definitive listing that it is compatible. I ask for other choices. The second part number he gives me is not on the website at all. I ask about this and the agent tells me that not all batteries appear on the wesbsite. I find this baffling because I have no way to compare specs and prices.

So I ask to speak to a supervisor. After a long pause, I am connected with customer care. The agent immediately says “Our systems are down for updating, can you call back.” That is not what I call ‘customer care:’ I am amazed that Dell would take systems down at 9:30am Eastern. Further, one might expect customer care to offer to call back when the system is available.

At this point, I went to plan B: Twitter. My Tweet to @MichaelDell put me in touch with with someone in Dell Global Social Media. It turns out that since my company, a business customer ordered the computer, accessories for it are not listed at dell.com, which I was told was for consumers. That is not clear on the website. Moreover, I cannot be the only person with a company-provided computer who wants to order accessories and expense them.

Once I was in touch with a person, Dell did make the situation right and I got the battery I needed quickly. It is hard for me to understand though how or why anyone might consider Dell an e-commerce leader.

Dell was the PC king for years. They now lag HP and Acer in market share. Dell stock price is way down from its all-time high. A business model that worked magic for many years stopped working as well as it had. Beyond any IT and e-commerce lessons, law firms might take this as a cautionary tale about their own business models. How many ‘tried and true” law firm models will work in new economic circumstances. For an example of pressure on law firm models, see Adam Smith, Esq.’s post Innovators at the Barricades, in which he discusses the impact of legal outsourcing on BigLaw.

The Recorder 19 July 2010 article Is Adding a Second Tier for Law Firm Associates a Good Thing? asks a great question. The answer is “yes, but….”. 

The author, Justin T. Miller, J.D., LL.M., CFP®, is a regional director of the Legal Specialty Group at Union Bank’s The Private Bank. He writes

“Firms are finding that a two-tiered associate structure can be an efficient profit model in that the second tier of ‘non-partnership track associates’ are paid sometimes as much as 50 percent less than the first tier of “traditional associates,” but may be billed to clients with rates that are only 25 to 30 percent less than those of the traditional associates.”

Miller notes that multi-tier partnerships are common now but that tiered non-partner lawyers is a “recent development.” I agree. Though several BigLaw firms have staff attorney programs, these lawyers typically work only document review. Miller seems to envision a broader remit.

Such a move is consistent with Richard Susskind’s “unbundling” or “dis-aggretating” legal services (see The End of Lawyers? and the view I expressed in my post The Right Resources to Solve Legal Problems that in-house counsel must consciously decide what mix of human resources is most appropriate to work on a matter.

In concept, I think tiering associates is a great. To do it effectively, however, BigLaw needs a major “operating system” (OS) upgrade. That is, large firms would have to improve their management capabilities and approach. Here are some specifics to address:

CASTE MENTALITY. As Miller notes, “If implemented correctly, a non-partnership track associate should be considered a full-time member of the legal team.” The caste system still thrives in BigLaw and works against integrating professionals who lack the same pedigree as partners.

TALENT MANAGEMENT. Lawyer recruiting, assessment, and career management are all geared toward elite law school graduates. Who will recruit the new type of lawyer? What are the appropriate criteria for hiring? What is the career path for this new tier of lawyers? Firms would need to answer these and other questions.

PROCESS FOR DELEGATING WORK. Once on board, who allocates work to lower level lawyers and how? Partners and senior associates may (emphasize may) be good at assigning work to associates, but do they have skill, training, and know-how to delegate work “down the chain.” Doing so requires a deep understanding of the deliverables and what resources can most effectively produce them. For example, consider the common task of contract drafting. As Kingsley Martin notes in Contract Checklists-does sequence matter?, few lawyers approach contract review systematically. Without a process in place now, effective delegation is that much harder.

MANAGEMENT SYSTEMS AND GOVERNANCE. Large firms may carefully review substantive legal work but few have formal systems for consistently measuring its quality.The concept of metrics is, at best, new to large firms. So one element of a management system is developing new metrics. Another element is a way to coordinate multiple work streams, also known as project management. BigLaw is just beginning to digest and embrace project management.

So I think a successful non-partner track lawyer program will require a major OS upgrade. Firms that can upgrade their OS to manage a new lawyer tier effectively - and that includes marketing it to clients - stand to win the favor of their clients. And that should translate to market and wallet share, which is critical in the current environment.

American Lawyer magazine has just released its 2010 large law firm library survey. The results are interesting but not surprising. 

Law Librarian Survey 2010: More Bang, Less Bucks writes-up the results and has links to survey data (free registration required). Almost one-half of the 86 firms replying (45%) reported staff cutbacks. The article raises a good question - what next? Here’s the quote:

But in interviews with a dozen library chiefs, one big fear kept resurfacing: How long can they keep cost-cutting? “There was a lot of fat,” says one library chief. “But now you’ve gotten rid of the fat.”

In general, firms seem to recognize that they can no longer cut their way to profitability. Whether that recognition spares libraries future cuts, however, is not yet clear.

I enumerate below some of the results I find most interesting. Before doing so, however, I offer my usual caveat about ALM surveys. Year over year comparisons are most likely not reliable. Unless the same 86 firms replied in both 2009 and 2010, inter-temporal comparisons are risky at best. For example, in answer to “What other departments within your firm are you responsible for?” knowledge management rated 19% in 2009 and 40% in 2010. That is not consistent with anecdotal data I hear and I suspect a good part of the seeming shift reflects changes in the respondent mix year-over-year.

So, for my interesting finding, I focus only on same year data:

• Of 35% of firms anticipating moving to to a single online legal research service, 70% lean toward Westlaw and 30% toward LexisNexis.
• 82% or respondents do NOT plan to subscribe to WestLawNext in 2010. [Updated 15 Jul 10 - I inverted the yes/no responses accidentally when I first posted]
• 72% firms answered yes to “Is your firm’s library function centralized?” Yet in answer to “How many of the firm’s offices have libraries and library staff?", 37% answered more than half. Either I’m missing something or respondents have a different idea of what ‘centralized’ means than I do.
• About 85% of firms have flat rate contracts with both Lexis and Westlaw. I’ve heard a lot of talk about moving to sole source but it sounds like few firms have pulled that trigger yet.
• The average firm spends about $3.7mil for online resources; the median about $3.0mil. (I added up results of 3 questions to get to these totals.)
• WestLaw takes in almost 70% more than LexisNexis. Respondents spent, on average, $1.7 million with WestLaw and $1.0 million with LexisNexis.

It’s been six months since I’ve done a Twitter roundup. I was reminded that I had not done one by a friend who said he misses them.  

I definitely blog less since I started Tweeting 18 months ago. Articles I read or ideas I have that, in the past, might have led to a blog post now end up as a Tweet. Also, before I started Tweeting, I used Roundup posts to cover several short items, none of which seemed worthy of a stand-alone blog post. Tweeter has also assumed that function.

While I welcome additional followers @ronfriedmann, I don’t expect all blog readers to get into Twitter. So I reproduce here highlights of recent Twitter posts (in this instance, over the last six weeks). I try to make my Tweets interesting; when I cite an article or another Tweet, I try to add a “NanOpEd", which is short for nano opinion editorial, that is, a very short comment. It’s been a fun challenge to add a thought having only 20 to 80 characters!

Are any law firm Tweets interesting? I follow a few - all boring. Is that b/c I don’t practice? Or explanation?

Would a futures market for future success of BigLaw help us understand current market direction?

BigLaw move to budgets, AFA, + greater transparency may foster explicit price competition? What of value and outcomes?

Business Week on superstar athletes (LeBron James) and lawyers (eg Fred Bartlit) http://bit.ly/aKVE5Y || when stars can’t get enuf comp

Dechert Trades Help Desk for Keno Kozie LTN http://bit.ly/9XNmX1 || More BigLaw help desk outsourcing. Troutman Sanders earlier in June

RT @pwoldow Calling all General Counsel - Legal Project Management Moves In-House http://bit.ly/am53OV || common sense at last?

NY State Bar Launches Task Force to Examine Changes in Legal Profession NLJ http://bit.ly/d4h059 || NYSBA release http://bit.ly/9A1p5K

Reading LawShucks: Eversheds Lays Off 60 in Outsourcing http://bit.ly/dkFRDN

RT @reesmorrison Codean software maps + links defined contract terms http://bit.ly/aFNmWg || pr rls http://bit.ly/aSn364 | Like DealProof?

RT @AmLawDaily: Risky Business: What Law Firms Can Learn From Airlines and Hospitals http://bit.ly/db31Vu || #KM Value after action reviews

http://www.fronterion.com launches http://lpoethics.com/ || Good compilation of US and UK ethics rules and docs re legal outsourcing (LPO)

ALTI reports NetDocuments now has multiple large law firm customers. Will DMS cloud take over from enterprise systems?

RT @PosseList: Contract lawyer sues NYC law firm for not paying overtime http://sn.im/z6qiz || exempt v non-exempt. hmmm

Large law firms will almost certainly not return pre-2008-crash economics. BigLaw will remain immensely profitable but firms will need to manage themselves more effectively. And this includes how they staff to support lawyers. 

The most recent evidence of the ‘new normal’ is the Altman Weil Law Firms in Transition study. This ‘Flash Survey’

“found a clear consensus emerging among US law firms regarding changes… Over 75% of firms… believe that more price competition, more non-hourly billing and the use of project management to improve efficiency of service delivery will be permanent changes in the legal landscape. The primary impact… will be a greater focus on efficiency and productivity driven by client demands for cost control.”

Nonetheless, the study found that firms expect to maintain profitability by controlling cost. Of course, lawyer compensation and partner profit are the biggest cost items. Though profit is not usually considered a cost, doing so is a useful construct. First, profit per equity partner is the economic cost required to attract and retain a key factor input (economist-speak for the services a partner provides). And second, by re-classifying partners from equity to non-equity status, firms control the cost of that key factor input. Altman Weil found that firms will make fewer partners and rely more on contract lawyers (presumably in lieu of hiring associates).

The legal press focuses on what happens with lawyers; I focus on staff. On the staff side, the study found that two-thirds of firms cut staff in 2009 and 20% expect to do so this year. Altman Weil also asked about outsourcing: “Did your firm do any of the following in 2009? Will you do so in 2010? Outsource non-lawyer functions. Offshore lawyer functions.”

For outsourcing staff, 15.7% of firms said yes for 2009 and 13.8% for 2010. These results seem low. Already in 2007, the International Legal Technology Association (ILTA) staff survey found “37% of Large firms and 19% of Very Large firms obtain [various IT] services outside of the firm”. Further, in my day job at Integreon, I see growing interest in staff outsourcing in 2010 among large US law firms. For offshoring staff functions, the survey found virtually no interest in 2009 or 2010.

Outsourcing is not just about lower cost labor. It’s also about improving process and more favorable economics. I explain this rationale in some detail in my paper Outsourcing as a Strategy to Manage Support Cost and Variable Demand. It was first published in fall 2009 as a chapter in Implementing a Successful Legal Outsourcing Engagement, an Ark Group study by Michael D. Bell of Fronterion, an LPO analyst firm.

For a specific example of how outsourcing can control cost and improve law firm profit, see my Integreon blog post today, Middle Office Outsourcing Improves Law Firm Profit, which discusses an article in The Lawyer last Friday. That article explains that staff outsourcing helped UK firm Osborne Clarke improve profit in the face of flat revenue.

As a legal blogger, I fear living in an echo chamber. So it’s nice to find that some hot blawgosphere topics also engage the business world. I follow blogger commentary on Bloomberg Law as I suspect many do. So I offer here a different perspective on it, that of a financial analyst who tracks Thomson Reuters for a living. 

Paul Steep is an analyst at Scotia Capital. Reproduced here with permission is his June 29th analysis of Bloomberg law.

• “Our expectation is that Bloomberg’s revised legal offering will achieve a relatively small share of the legal information market over the next several years. We believe that the firm is continuing to work on developing and building out the product, which remains at an early stage in comparison to the entrenched offerings from Thomson Reuters and Reed Elsevier.
• Our expectation is that Bloomberg is focused on using a targeted strategy by leveraging its key assets in the initial iterations of the product to gain a foothold within the legal market. In evaluating the positioning of Bloomberg Law the firm appears focused on penetrating practice areas that best fit with the firm’s core assets (e.g., a sizable real-time news gathering force, and a large knowledge base of corporate information). As a result, we expect clients choosing to deploy Bloomberg Law will be in specific practice areas, most notably Intellectual Property, Insolvency, and Securities along with use for business development purposes within law firms.
• The firm has invested in developing a new web-based solution that offers clients the opportunity to access its legal research tools without incurring the expense of installing dedicated terminals. Bloomberg had previously tried to enter the Legal market with a product aimed at law firms, which was initially launched in 2004. The company faced issues in gaining adoption in the market primarily because it was only available through Bloomberg’s own terminals. A key difference in the current product iteration is the ability to have webbased access to the system, removing the requirement for a specialized terminal.
• In this iteration Bloomberg’s legal product appears to have improved its overall competitiveness with WestLaw and Lexis/Nexis. Bloomberg has made a significant investment in building links to relevant content (e.g., U.S. Federal and State legal information), aggregating legal opinions from a number of law firms, developing their own proprietary content in the form of legal digests in various topic areas. The firm has invested significant software development work in building a product that provides the key functions of a legal terminal (e.g., search, docketing, case citation, news). The company appears to be focused on building out the core data set across the product in order to meet law firms’ requirements.
• Our view is that Bloomberg represents a formidable competitor for the incumbent providers but WestLaw appears to remain in a dominant position given the strength of its data set and new product offering. We anticipate that Bloomberg is likely to gain traction in selected practice areas that build off the firm’s strengths in serving the financial community. Our plan is to closely monitor the adoption that Bloomberg Law is achieving over the next year as it continues to market its solution to law firms.”

Paul’s analysis is consistent with the anecdotal data I hear from my law librarian friends. Do not read too much into the fact that Reed Elsevier’s LexisNexis is mentioned only in passing. This is a financial analyst’s report focusing on the potential impact of a new entrant on a company he tracks; it is not intended to be a comprehensive analysis of the competition.

Comments on Bloomberg Law welcome.

What is the state of the practice support lawyer (professional support lawyer or PSL) among US large law firms? 

I have not heard PSLs discussed much lately. So at a recent knowledge management meeting, I asked each attendee to report his or her firm’s number of PSLs. We had 10 large, US-based law firms attending, with the number of lawyers ranging from about 200 to well-over 1000. Assume that this group is not representative; by definition, these firms self-selected for above average interest in KM.

The PSL numbers are low:

• Average: 1
• Range: 0 to 3
• Mode: 0 [5 firms]

However we slice it, the numbers are so low that normalizing for firm size does not even pay. And these reported numbers might even be bit of a stretch. Of the reported PSL, not all have that title or exact function. A few of these PSLs are staff attorneys who function as PSL. A few were simply characterized as “like PSL.”

Based on my KM experience over the last decade, these numbers were only a little bit lower than I expected. It’s not that the recession or Practical Law Company (PLC) did in PSLs, they never caught on in large numbers in the US or at that many large firms.

It will be interesting to see whether the alternative fee arrangements (AFA) become big enough to change the economics of employing PSL.

In In Law Schools, Grades Go Up, Just Like That, the New York Times reports today that some law schools have artificially boosted grades. It’s hard to know where to begin assessing what this means - and why it is awful. 

The article reports that

“In the last two years, at least 10 law schools have deliberately changed their grading systems to make them more lenient…. Law schools seem to view higher grades as one way to rescue their students from the tough economic climate — and perhaps more to the point, to protect their own reputations and rankings.”

What disturbs me most is the perhaps not so subliminal message that lawyers can fix problems simply by changing appearances without changing substance.

The schools argue that the grade adjustment is a competitive responsive. Inflating grades changes nothing except appearance. How about competing by changing the curriculum so that graduates are more valuable to employers?

With law schools saying, in essence, it’s OK to fake grades, surely it’s OK for lawyers to take other short cuts and ignore inconvenient facts or whole areas of knowledge.

With law schools ‘adjusting’ grades to make them look better, no wonder clients fear that alternative fees are just papering over old fashioned bill by the hour.

If it’s OK to paper over grades, then it’s OK to paper over ignorance of key aspect so law practice. (See, for example, Craig Ball’s excellent commentary on lawyers failing to understand digital data in Show No Fear - Lawyers need to — and can — learn the language of e-discovery, Law Technology News, 1 June 2010).

It’s OK for law schools to adjust grades to look better. After all, there’s no law against it. So it’s OK to advise clients to take imprudent and immoral course of action; after all, there’s no law against it.

Or perhaps by “adjusting” slightly what words really mean, it’s OK for lawyers to advise that acts long-considered torture are really, after all, not torture.

The public view of lawyers is already bad. The practitioner’s view of the academy is already bad. Gimmicks like adjusting grades can only contribute to cynicism.

Recent articles provide a good snapshot of law firm office design; sadly, working virtually does not appear to be on the agenda. 

Changing Space - Law firms (slowly) respond to egalitarian trends in office design (ABA Journal, June 2010) reports on BigLaw office design trends. A few firms are changing traditional design elements: Seyfarth Shaw in Atlanta has lawyer offices all the same size; Orrick in NYC has put associate offices in the interior; and Morgan Lewis in DC used the great top floor views not for partner offices but for a common dining area. These example notwithstanding and

“despite the trend toward more open, collaborative and flexible spaces, law firms have been slow to adopt practices common among their corporate clients and other professional services firms: one-size or universal offices, open floor plans, and ‘hoteling’ arrangements where professionals reserve offices when they need them.

Rethinking the Law Firm Workplace (American Lawyer, May 2010) reports that firms “want a lighter and brighter space that is progressive and sophisticated. They want more collaborative work settings where attorneys and support staff can mingle and share ideas openly and casually… The most important concept in creating a more effective workplace lies in designing space that fosters collaboration. For many firms, the opportunity to share information at unexpected locations in the office has proven invaluable.” I suppose this is some progress.

Contrast these two articles, however, to an Information Week blog post , Radical IBM: 200,000 Home-Office Workers (1 June 2010), which reports on an IBM employee who regularly works virtually (remotely) from the Canary Islands. IBM is moving from a culture of presence to one of performance. Since teams are formed by professionals located in multiple locations, it turns out not to matter that much where any given employee is.

I frequently hear lawyers and law firm managers assert that working virtually would interfere with collaboration. As I suggested in my January 2004 Law Practice Management article, The Future Law Office: Going Virtual, virtual work does not have to mean never coming to the office. Firms can take steps to encourage in-person collaboration when and as needed.

If being in the office is so critical, how do skeptics of working virtually explain that, according to a Gensler architect cited in the ABA Journal article, “as many as 25 percent of their attorneys are working away from the office at a given time"?

Could it be that lawyer and law firm managers are simply ignoring reality? Tradition dies hard but ignoring the truth has consequences. When I look at the average AmLaw lawyer overhead of around $200,000 per lawyer, I can’t but help think that’s buying lots of extra space. And whether lawyers bill by the hour or using alternate fees, wouldn’t many rather save commute times on some days and work from home?

Many law firms profess to be green - but how many take into consideration that a culture that requires physical presence in the office spews unnecessary carbon? Working virtually - either from home or suburban satellite offices - would save many a trip by car. Furthermore, maintaining individual lawyer offices means that much more space to heat, cool, or light.

So, what am I missing? Why aren’t firms moving to reduce occupancy and free-up lawyer time by supporting virtual work?

Last week I read with interest Jordan Furlong’s blog post The evolution of outsourcing. He notes that though LPO is “in its relative infancy, legal process outsourcing has already had a huge impact on the legal services marketplace”.  

Jordan focuses on two effects outsourcing has on the legal market:

“The first affects LPOs themselves: they now need to move their value proposition beyond cost savings in a market they helped to make more sophisticated. The second affects everyone: the legal profession’s response to LPO is having an unexpected effect on how legal work is distributed and how legal resources are allocated.”

Working for an LPO provider, I agree that that simply offering lower labor cost is not enough. I see my company and other established LPOs working hard to improve processes, introduce technology, increase efficiency, reduce cost, and achieve better outcomes for the lawyers whom they support. Personally, “I’ve put my money where my mouth is” twice. First, I joined an LPO three years ago. And second, I recently made a switch inside my company and now focus “legal operations consulting” to help do exactly that.

Jordan was perhaps even more prophetic than he realized when he wrote that “a surprising number of law firms are adopting — and adapting — the outsourcing model themselves.” Last Thursday, Legal Week published Taylor Wessing set to create arm in Cambridge for standardised work.

The article reports that the Anglo-German law firm will set up “an affiliated corporate services business to offer clients standardised work.” Their goal is to offer lower-cost options for routine work such as corporate due diligence. Eventually “it is likely that the firm will offer the service to third parties, including other law firms.” The firm may also partner with an IT outfit to streamline work.

“Adopting the outsourcing model” as Jordan suggests is exactly right. From the limited information I have, it sounds like the firm’s Cambridge unit will be a captive LPO.

I think this development is good news for the legal market. It further validates that law firms must respond to corporate pressure for (1) options, (2) lower cost, and (3) process improvements. Given that I’ve been writing about process improvement for a long time at this blog, I am glad to see more action toward that goal. Of course, I also see it as an explicit endorsement of the LPO approach.

Until recently, the corporate law market was served almost exclusively by in-house lawyers and large law firms. Today, however, clients can choose from among boutiques, regional law firms, LPOs, and now, law firms as LPOs. This choice and competition foster innovation and drive costs down - good news for clients. Firms like Taylor Wessing that innovate benefit. And LPOs benefit because in a diverse world of providers, I see LPOs as having the skills, experience, know-how, technology, and global platform to win a good share of the work to support lawyers.

I published a variant of this post last week at the Integreon blog, LPO Now Driving Law Firms?