By Ron Friedmann, May 2001Published in the Litigation Management & Economics Subcommittee Newsletter of the ABA Section on Litigation, Summer 2001; it also appeared in the conference materials prepared for the Practical Legal Knowledge Systems Workshop of the International Association for Artificial Intelligence and Law (March 2002, IIT Kent School of Law, Chicago)
The dot-com bubble has burst but the Internet is here to stay. Start-ups with unproven ideas and questionable business plans are out. Established organizations that use the Web to extend and enhance their traditional products and services are in.
To date, the Web has had a limited impact on how lawyers deliver their services to clients. For the most part, lawyers use the Internet to communicate with clients via e-mail, share documents using extranets, or provide information about their practice with a firm Web site.
The Internet has the potential to fundamentally change how lawyers deliver their services to clients. Law firms in the USA, England, and Australia have developed innovative Web-based services to deliver advice to clients. This article briefly surveys some of these innovative services and discusses some of the questions such services raise.
Brief Survey of Innovative Ways of Delivering High Quality Legal Advice Over the Web
Linklaters & Alliance
Linklaters is a top-5 London law firm, offers “Blue Flag,” a Web-based service that consists of related advisory services including, for example, regulatory compliance advice for business managers in financial institutions, advice for derivatives professionals on making sure transactions are binding, summaries of shareholder disclosure rules by country with links to detailed information, and interpretive materials on the regulations governing fund managers. On its Web site, the firm extols the benefits of online advice:
“Using technology and the Internet the legal expertise of Linklaters can now be accessed at the touch of a button, wherever you are and whenever you need it. It is an innovative approach which brings the following key benefits:
- Instant access from your desk top
- 24 hour global availability, 7 days a week
- Continually updated
- Cost effective
- Improves your business process through technology
- Based on Linklaters legal expertise you can trust “
“This Website is made up of three principal parts:
- Guidance and information on the drafting of arbitration agreements for inclusion in international commercial contracts;
- The text of arbitration laws (with summaries) and procedural rules; and
- A drafting engine, which may be used to prepare an arbitration agreement”
Clifford Chance, yet a third top London firm, offers a suite of online services. “NextLaw” offers guidance on the regulatory risks of e-commerce (e.g., digital signatures and data protection. “Alerter” is a service for the financial sector that has push e-mail tailored to the subscriber’s personal profile, daily digests of regulatory developments, and directories of regulators. “Cross Border” provides information and practical guidance for cross border transactions across a wide range of jurisdictions.
Bryan Cave (a large St. Louis-based firm) has developed two Web advisory services. The National Law Journal on June 26, 2000 reported:”A client preparing to import or export goods can access the firm’s “Trade Zone” site. On the site, a client answers a series of detailed questions about its trading partner, the goods to be shipped and other relevant information.
“The site flashes a “red light” if an answer indicates the deal is likely to run into international trade snags. When that happens, a client can “link” to a Bryan Cave lawyer for immediate help. The firm’s international trade attorneys take turns staffing the site.”
Davis Polk & Wardwell
Davis Polk & Wardwell (a top NYC firm) offers advice over the Web for selected financial institutions clients. AmLaw Tech in December 1999 reported:
“Davis Polk’s Global Collateral Project focuses on cross-border financings. It allows clients to enter information about a specific transaction (the jurisdictions that apply, the type of collateral at issue) and pull up an on-point legal analysis.”
Blake Dawson Waldron
Blake Dawson Waldron, a top Australia and Pacific Rim firm, has developed a suite of online advisory services covering a range of topics including advertising law compliance, privacy, and fair pricing. As the firm explains on its Web site:
“A Virtual Lawyer system takes the user through a question and answer session. Each question posed depends on how the previous question was answered. Once all relevant questions have been answered the program generates a summary report in plain English. The report may resolve the inquiry or provide initial advice as to whether a certain transaction is compliant. The report can be e-mailed to the legal compliance department for review or further action A Virtual Lawyer system provides answers instantly. It is available 24 hours a day, 7 days a week, from anywhere in the world.”
All of these law firm services have received favorable press reports and client reaction. The economics of these services and organizational support behind them vary. Some firms have set up separate groups to develop systems; others do so in the context of their ordinary practice. Some charge clients upfront for customized systems, others develop systems first and then sell them on a subscription fee basis. All appear to be backed significant investments to develop both content and technology.
Questions about and Implications of Delivering Advice over the Web
The advent of large law firms developing these systems raises many interesting questions. The remainder of this article addresses a few of the most interesting questions and offers some preliminary answers.
Will clients find these systems useful?
The answer is yes. To be sure, such systems cannot answer every question a client has. But the appropriate metric is to compare these systems to the available alternatives. For many employees of companies small and large, legal advice is often not available on a timely and cost-effective basis, even for relatively simple legal questions. For these employees, automated systems can be extremely helpful, providing at a minimum a “triage” answer: you have a problem, you do not have a problem, or consult a lawyer for this problem. At least from the perspective of the in-house lawyer or employee, these systems can help address the high cost and limited availability of legal counsel. (These systems can also provide a complete audit trail, another benefit for some in-house lawyers.)
Will Web-based legal information and advisory systems mean that business people seek advice from lawyers less often?
At least with the current state of systems, the answer is most likely no. Web-based systems can answer many questions but not all. They are more likely to extend the reach of lawyers to employees not currently receiving advice than they are to reduce the demand for advice. As mentioned, these systems are a form of triage. Where they cannot definitively answer a question, they can collect information for a lawyer to review. The likely impact is to free lawyers from mundane question and to allow them more time to answer hard ones. In effect, by meeting the demand for simple legal advice, these systems will increase the demand for more complex, and hence higher value, legal advice.
Will Web-based legal information and advisory systems increase or decrease business litigation and/or regulatory actions against businesses?
It seems likely they will decrease litigation. Many business people operate without legal guidance because it is too expensive to obtain or because obtaining it unacceptably slows down decision making. Web-based advisory systems are low cost and always available. Consequently, they can guide business people where it may not be feasible for lawyers to do so. Assuming some disputes stem from outright mistakes (as opposed to calculated risks), then Web advisory systems, by making advice less expensive and more readily available, will reduce the amount of litigation. Two other factors tend also to help avoid litigation. First, these systems free lawyers to spend more time on the hard questions, which, on balance, should reduce the potential for disputes. And second, these systems can significantly reduce inconsistency in corporate decision making, thus removing yet another potential cause of disputes.
What legal topics are ripe for creating such systems?
Where a lawyer is developing a system for a clearly articulated need of a specific client(s), then virtually any legal topic is possible. If thinking about the market at large, however, then it is best to consider legal issues that 1) occur in high volume across many businesses and 2) present many questions susceptible to answering with an automated system. The obvious candidates are employment law, certain trade practices (e.g., advertising and pricing), environmental regulations, and financial regulations.
What does it take to build such systems?
There is no one formula for creating automated Web advisory systems, but here are several steps in a process that would typically be useful to follow:
- Identify a need in the market, that is, a legal topic to address. Of course, it should be a topic in which the firm or lawyer has expertise.
- Determine what type of information or advice to provide to users of the system. For example, decide if the goal to provide advice, collect information for a lawyer to review, generate a regulatory filing, or draft an agreement.
- Select a “technology platform,” that is, the type of software and system to deliver advice. Many choices are available: a set of simple Web (HTML) pages; simple or sophisticated document/content management software; relational databases; document assembly software; FAQ (Frequently Asked Question) software; expert systems; and a wide range of customized solutions. Even where commercial off-the-shelf software is selected, some integration with other systems is likely to be necessary. It may also be necessary to purchase one or more servers or upgrade the speed of the Internet connection.
- Develop the content. Regardless of the technology selection, lawyers or professionals working under lawyer supervision must develop content to deliver to clients. Even where a lawyer or firm has a well-organized collection of relevant work product, it is likely that a significant effort will be required to translate the content into a more useable format. And, more typically, there will be a need to develop new content. This does not necessarily mean legal research; it may mean that the leading expert must articulate aspects of his or her know-how in a way that can be captured in software for re-use.
- Make plans at the outset to keep content current.
- The functional tasks involved — selecting technology, developing content, and keeping content current — may require developing a new organizational structure and compensation scheme to support them. Furthermore, it may also be necessary to create new positions (e.g., a “knowledge engineer” who works with the legal expert and puts the expert’s expertise into software).
- “Beta test” the system with selected clients. (That is, introduce the system on a trial/test basis to a small number of users for feedback and debugging.)
- Roll out the system and market it.
- Collect feedback about how it is used and its value and have a process to improve the system based on user feedback.
- Measure the costs and benefits, both direct and indirect.
- The need to test a system, develop a marketing program, collect feedback, and explicitly measure outcomes suggests a need for close collaboration among several discrete functional departments (at least in larger organizations).
Should litigators build such systems or, what are the economics of building automated systems?
The economics are not yet clear. The fixed costs of this process can be high as the enumerated steps above suggest. Lawyers and firms should consider carefully what the potential return is. Until the market moves further ahead, earning a return on just subscription fees may be difficult. It may be possible, however, to achieve a high indirect return. One way is by cementing important client relationships. Another way is to position these systems so that when they identify difficult issues, the law firm is retained to resolve them. For example, some software can automatically send an e-mail message to a lawyer that indicates further advice is required.
It would be hard to argue convincingly today that every lawyer or firm should rush to deliver its services over the Web. But the advent of the innovative law firm services described above and the ongoing investment in Web initiatives by most established companies suggests that the Web will continue to change the way we do business. At a minimum, lawyers need to keep an eye on these developments and regularly assess the impact on their practice and business. But lawyers who want to gain a competitive advantage and create tighter bonds with clients should think hard about how they can use the Web to deliver their expertise and service directly to clients over the Web. But do not think too hard or long — you may need to act soon!Ron Friedmann was Director of Computer Applications at Wilmer, Cutler & Pickering from 1989 to 1998 and Director, Legal Applications Division, Jnana Technologies, from 1998 until late 2000. Five months into another start-up, he became a dot-com casualty and is assessing his next steps. He is a 1986 graduate of NYU Law.