Will the legal market crash lead to a legal technology resurgence? I suggested so in my post January post Economist Magazine: Expect Profound Structural Shift in Legal Market. Two recent articles show how law firms add value with technology. Whether this is a new trend, however, remains to be seen. 

Intelligent Documents Controlling Legal Costs – Law Firms Capture: Expediting Outsourcing And Saving Legal Costs, an interview Alexander Hamilton, Partner in the London office of Latham & Watkins LLP (Metropolitan Corporate Counsel, [“MCC”] 1 Feb 2010) describes a sophtisticated intelligent document approach to managing complex outsourcing deals.

In big IT, HR, finance, procurement, and other outsourcing deals, it’s a lot of work to define services, performance standards, pricing models, and governance models. Rather than simply rely on a prior similar deal document, Latham’s “Capture” system is an interactive document that the client completes to specify key deal attributes. Based on what I call intelligent intake, Capture delivers “a first set of documents that is much closer to the final document and is much better structured because they are drafted with a good understanding of what the client wants, speeding up the process and saving costs for the client.” This halves the time of this phase of the deal and allows Latham to quote a fixed price for it. Further, it lets the deal team focus on the important elements that really need attention instead of distracting details.

Latham is not using a document assembly program such as Hot Docs or Deal Builder. Instead, the firm built Capture in recently available functionality in Acrobat PDFs, specifically, the ability to incorporate if-then reasoning to support an intelligent information collection process. “As the client answers a question, other relevant questions automatically follow.”

The firm has a suite of documents for outsourcing and is building others for M&A deals and other practice areas. A decade ago I worked for an expert system software company. My experience there made clear that the challenge in building interactive legal advisory systems is not the technology; rather it is capturing the legal know-how (“knowledge engineering”). Only a few large firms have built intelligent systems.

The key market question is whether Capture is another “occasional” example of an intelligent system or whether it reflects that even the largest and bluest chip firms now see the value of investing to create truly interactive know-how systems. The economics of law practice today may be more favorable than a decade ago for investing to build smart systems that reduce client costs.

E-Discovery Smarts. In the same issue of MCC magazine, Controlling Legal Costs – Law Firms King & Spalding’s Discovery Center Under Senior Litigation Oversight Produces E-Discovery Savings interviews three partners behind the firm’s large e-discovery operation. The firm has built a large e-discovery practice and processing capability over the last 15 years. Today, “the Discovery Center houses 150 discovery professionals, including 125 attorneys, focused exclusively on providing high-quality, cost-efficient document services both in litigation and in transactional matters.”

This center “follows protocols.. [uses] advanced screening methods to reduce the number of collected records that ultimately require attorney review for production… and [has] developed the most efficient procedures for drafting responses to written discovery requests for entire dockets of
cases with a computer tool that catalogues and indexes approved responses and objections by subject matter…”

E-discovery professionals have recently debated in articles, conferences, and blogs whether to insource or outsource e-discovery. K&S cleary has decided on the former and the prior quote suggests some document assembly capabilities as well. What I find interesting is that the firm is now using this long-standing capability to differentiate itself and position itself as offering higher value.

Can We Draw Conclusions. I wish that I could say two points form a line and that these examples reflect a new round of legal technology. And indeed they may though we will not know for some time. Clients say they want better value from firms. (Whether they spend their budgets wisely to achieve this is still, in my view, and open question.) Firms do not have that many options to provide higher value. Typically it requires some mix of improved process, sophisticated technology, project management, and smarter staffing. Assuming the new normal is flat, which is my expectation, then firms may find to maintain and gain share, they will need to compete with technology.