Strategic Legal Technology

CIOs often champion law firm innovation but frequently face a tough battle. Why? 

I’ve advocated innovation as a large law firm manager, legal technology consultant, and software marketer. Getting buy-in is a challenge. Eric Mankin, an expert in business innovation and an old friend whom I’ve cited previously, offers a great analysis of legal market innovation in his weekly e-mail update.

Eric notes that the business of law is bound by the ideas of legal precedent and the billable hour. What passes for innovation in the legal market is old hat in most industries. He notes that the average of income of lawyers (not just BigLaw partners) is high and therefore the incentive to change low. Law firms are late adopters: innovation is a cost of business, not an opportunity. I certainly can’t cite a single instance of the market punishing a BigLaw firm for being a late adopter.

His entire “Looking for Law Firm Innovation” analysis is here, with permission and is worth reading. And I personally look forward to hearing more about the fruits of Eric’s research, which he will present at the annual meeting of the College of Law Practice Management (PDF link).

Document review in e-discovery is costly. Contract lawyers are less expensive than associates. Going offshore can lower costs yet more. 

I await published case studies detailing offshore document reviews. In the mean time, several offshore companies or US companies with offshore operations now offer discovery document review services. Here is what vendors say on their websites:

Aphelion (formerly BPL Services): “Aphelion’s management team has been involved with substantial document review projects in litigation matters handled by the firms DLA Piper Rudnick Gray Cary and Womble Carlyle.”
ITELS: ” ITELS document review team includes top-tier US and Indian lawyers experienced as litigators and corporate attorneys for international and domestic corporations…. Review of documents in complex matters and corporate due diligence… Review for relevancy, privilege, and issue coding.”
Lumen Legal: “Lumen Legal dramatically lowers the cost of document review typically associated with major litigation…. as a pivotal provider delivering the right mix of on-shore and offshore talent, we can provide 24/7 workflow at cost savings of 50% or more over traditional models.”
Pangea3: “Analyze documents for materiality, privilege, and responsiveness to discovery requests, subpoenas, informal and formal regulatory requests… Conduct large-scale electronic file reviews.”
QuisLex“Our highly trained and specialized litigation support team works closely with your legal team and performs the following services… Subjective coding (creating substantively coded indexes etc)… Relevance and privilege analysis”. (See also SQ Global Solutions.)
Tusker Group: “Tusker Group has the ability to align domestic and international attorneys to provide high-quality, cost-effective first level document review: relevancy, privilege, confidentiality, issue content and responsiveness.”

I have included in the above list only those vendors whose web site clearly indicate that they perform document review in litigation. Other vendors may also do so (see the list of outsourced legal services).

LexisNexis announced yesterday (7/24/06) that it has acquired DataFlight, maker of Concordance software and CaseSoft, maker of CaseMap. 

From a L-N press release: “The addition of Los Angeles-based Dataflight (www.dataflight.com) enables LexisNexis to offer attorneys evidence management capabilities via the Concordance solution. Law firms, corporations, and government agencies use Concordance as the repository of choice to organize, identify and produce critical documents in litigation.” The company will unify “data repository and workflow tool for Total Litigator, linking its own capabilities with those of LexisNexis’ other litigation products such as LexisNexis® Applied Discovery®, LexisNexis® File & Serve and LexisNexis® Court Link®”. The press release also has details on the acquisition of CaseSoft.

Another leading lit supp product, Summation, was acquired by CCH a while back. With the continuing consolidation of e-discovery generally and the moves of big legal information providers CCH and L-N to bulk up in EED and litigation support, it will be interesting to see if West or Thomson Elite makes a move.

Who’s better at making decisions - people or PCs? 

Maybe We Should Leave That Up to the Computer (NYTimes, 7/18/06, c4) reports that professor Chris Snijders of Holland argues that computers often make better decisions than people. He has experimental data supporting this hypothesis.

Before dimissing this as having relevance in law…. the article notes that “a Dutch insurer, Interpolis, whose legal aid department has been expanding rapidly in recent years, called in Mr. Snijders to evaluate a computer model it had designed to automate the routing of new cases — a job previously handled manually by the department’s in-house legal staff.” The law department manager reports the model is faster and more accurate than the old manual system. He’s quoted: “We’re very satisfied about the results it’s given our organization,” he said. “That doesn’t mean there are no daily problems, but the problems are much smaller than when the humans did it by hand. And it lets them concentrate more on giving legal advice, which is what their job is.”

Ok, so this example is not the main point of the article. It is still interesting for law department managers. Given how many surveys paint general counsels as unhappy about their outside counsel, maybe they should consider computer models to pick them.

More on the general point of the article in a future post.

Ark Group will host its annual knowledge management conference in Chicago on October 10-11. I’m helping develop the program. We’re looking for a law firm willing to present a case study on new collaboration approaches, especially blogs or wikis. 

A new generation of collaboration tools is, at minimum, a data source for KM to mine, if not a KM tool in own right. Press reports suggest that blogs and wikis are big in corporations but penetration in law firms seems small.

In one conference session, we would like to discuss the state of collaboration tools in large firms and how they may affect KM. If anyone knows of a law firm using a new generation of collaboration tools that would be willing to present, please contact me.

More information on the conference will soon be available on the Ark events page.

It seems that RFPs to buy legal services are like alternative billing - much discussed but limited impact. 

I’ve suggested in prior posts that auctions relate to BigLaw technology because “price pressure should drive even top law firms to think more creatively about how they can deploy legal technology to deliver high quality results at lower cost.” Similarly, I’ve thought that growing use of RFPs would also drive efficiency and innovation.

Law firms eschew movement toward bidding for business (Baltimore Business Journal, 7/14/06) reports that “Only about a quarter of in-house counsel, 23.9 percent, reported that they had issued one or more RFPs in 2004, according to the newest survey of members of the Association of Corporate Counsel. That percentage has stayed consistent over the past six years.”

Doctors and lawyers are often mentioned in the same breath. Yet doctors have been subjected to incredible economic pressures to change in recent years. Lawyers have not. Health care is driven by third party payers who create huge pressures to change (and who have bargaining leverage).

BigLaw faces no no equivalent outside pressure. General counsels may say they are unhappy with outside counsel and are managing costs, but survey results like these and BigLaw profits suggest that complaints do not translate to actions.

A recent Business Week article explores how the “rise of mobile workers has companies unloading space and rethinking what’s left." 

Square Feet. Oh, How Square! (7/3/06) opens with the fact that on any given day, 40% of employees are not in the office. They are on the road, working at clients, cafes, or home. “Left behind are dead zones of empty cubicles and dark offices.” In response, corporate America is re-thinking real estate. Companies are “dumping square footage” and re-designing what’s left to accommodate a mobile work force and support more effective collaboration.

I wrote The Future Law Office: Going Virtual over 2 years ago to suggest law firms consider enabling lawyers to work more easily from any location. Are law firms any different than corporate America? Yes. They typically rent the most expensive offices in town. So law firms probably have even more potential to save on occupancy than corporations. As I explained in my article, however, firms still need downtown offices. But do they need as much? BigLaw CIOs have an opportunity to help their firms save on their second biggest cost (rent) by enabling lawyer mobility.

In May, Hummingbird, one of two main document management vendors to large law firms, announced it was being acquired by Symphony Technology Group. That announcement may not, however, be the last word. 

On July 5th, Opentext, an enterprise content management (ECM) systems company, announced “its intention to make an offer… for all of the common shares of Hummingbird.” Today (July 11th), Hummingbird announced “the formal commencement of an unsolicited offer” and that its board “will thoroughly evaluate the Open Text offer.”

I am a legal technology consultant, not a financial analyst, so make no comment about how this will unfold. I do note though that years back, Novell acquired SoftSolutions and “upgraded” that document management product to make it much less useful for law firms. With this history, BigLaw customers of Hummingbird should watch the outcome here carefully. Symphony’s bid appears a financial play and therefore unlikely to affect products. Opentext, however, as a player in the same space, seems more likely to influence Hummingbird product direction. Of course, any changes could be positive or negative for law firms - only time will tell.

This roundup looks at some recent articles on outsourcing, knowledge management, and e-discovery. 

Outsourcing
LPOs here head for consolidation in IndiaTimes (5/22/06) reports that legal process outsourcing “may be headed for a phase of consolidation in its bid to move up the value chain.”

“Large Firms Sets Technology Precedent” in Law Office Computing (June/July 2006, p. 20) provides some details on how and why Baker McKenzie set up a center in the Manila for document production and numerous IT functions. The Global Services Center employs 200 people today and expects to have 240 by year-end.

KM
Finding experts–explicit and implicit in KMWorld (June 2006) discusses current trends in approaches to finding experienced people within the enterprise.

E-Discovery
Civil Rules: Navigating New Data ‘Accessibility’ Standards on law.com (6/22/06) offers a good analysis of the likely impact of the pending changes in the Federal Rules of Civil Procedure concerning e-discovery. These rules are slated to take effect in December.