Law Firm IT Whiplash

Head and Neck - Gray1194The Mayo Clinic staff describe whiplash as,

a neck injury that can occur during rear-end automobile collisions, when your head suddenly moves backward and then forward — similar to the motion of someone cracking a whip. These extreme motions push your neck muscles and ligaments beyond their normal range of motion.

Whiplash is what I experienced this weekend. The backward movement happened when I read early reviews of the newly released ILTA 2014 Technology Survey. The forward movement occurred when I read Riverview Law’s announcement of its new Software-as-a-Service offering entitled “In-House Solutions.”

Without a doubt, the ILTA survey is an enormous undertaking that provides a real service to the legal industry by shining a light on current IT practices among law firms. As Jobst Elster of Inside Legal reported, the survey results reflect the input of “454 law firms (33% of the ILTA membership representing more than 106,000 attorneys and 217,000 total users) responding to almost 200 questions about what technologies they are using to run their firms.”

Legal IT for the rest of us

While ILTA provides this incredible resource to the legal industry, it is not responsible for the data. That responsibility lies at the feet of law firm technologists and the senior partners of each firm who make the technology decisions. In reviewing the survey’s findings, Ron Friedmann of Prism Legal noted the following:

  • Social Networking and Collaboration Tools: “The results here disappoint but do not surprise.”
  • Legal Project Management and Budgeting: “The survey did not ask about  legal project management, pricing, or budgeting software. … As clients demand value and as more firms respond, demand for LPM, budgeting, and pricing software surely will grow. So I hope the survey will cover this area in the future.”
  • Contact Management and Marketing: “Corporate CMOs looking at these results, if they understood all the software listed, would undoubtedly chuckle.”
  • Predictive Coding / Computer-Assisted Review: “…I was surprised to see what I consider fairly low percents of larger law firms using what I thought was a well-established (if not universally accepted) technology and process.”
  • Document Assembly: “Less than half of responding firms report using any document assembly.”
  • Chargebacks to Clients: “Many firms continue charging for items that many clients likely consider overhead.”

There may be good news inside the survey, but the items noted by Ron Friedmann, Randi Mayes (ILTA’s executive director) and Jobst Elster suggest that, among survey respondents, law firm IT is constrained externally by client concerns about security and internally by partner concerns about cost.

Legal IT for the best of us

What’s behind the new Riverview Law product? According to their website, they are responding to a clear client need:

Having met our people and seen what we do, visiting General Counsel and In-house lawyers often ask whether we will license our technology. Whether we can help them design, implement and roll-out processes, workflows, and data analytics tailored to their in-house function. As one General Counsel commented “If I had your systems, if I could tailor your model to my function, it would help my team make quicker and better decisions.”

In the words of Karl Chapman, Riverview Law’s CEO,  they are “taking the Riverview Law model and enabling general counsels and legal teams internally to actually tailor it to suit their business.”  This means that corporate legal departments that purchase these tools get the benefit of the technology platform that gives Riverview Law a competive advantage in delivering managed legal services. Their SaaS customers can now use the Riverview expertise embodied in a collection of modules to

  • manage the flow of matters,
  • manage “new contract creation from start to finish via multi-channels (desktop, tablet, mobile)”, and
  • manage their processes and productivity through the analytics module that “provides detailed management information and business insight” to help GCs “preempt risk and reduce future cost.”

As Katy Robson, Riverview Law’s head of IT, observed: they have built these tools from the bottom-up, from the lawyer’s perspective and reflecting lawyer user requirements. Equally, they have built these tools from the top-down to ensure the tools provide the necessary data and analytical capability to run a legal business more efficiently.

 Treating whiplash

So what happens after you suffer from whiplash? According to the helpful Mayo Clinic staff:

Whiplash injuries can be mild or severe. Treatment typically begins with over-the-counter pain relievers and ice applied to the painful neck muscles. If pain persists, prescription medications and physical therapy may be helpful.

Most people recover from whiplash in just a few weeks, but some people may develop chronic pain after a whiplash injury.

While most people recover within a few weeks, I suspect the denizens of the legal industry will take much longer. However, all is not lost. Karl Chapman has kindly offered to license their technology to in-house counsel who do not use Riverview Law’s managed services. I wonder how other law firms will respond when their clients purchase Riverview Law’s In-House Solutions? The contrast between a client’s new software-enabled efficiency and their external counsel’s approach could be quite striking.

[Photo credit: Wikipedia]

 

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Living in a Fact-Based World

data slide What dataset informs your mindset? That’s the question that Dr. Hans Rosling would ask you if he could. When he probed this issue with his university students in Sweden, he discovered that some of their views in the 21st century were based on a dataset that reflected the reality of … the 1950s.  In fact, their responses to his questions were so bad that he said that chimpanzees could do better. (Apparently chimps are able to get the answer right 50% of the time.)

Dr. Rosling is a Swedish professor of public health who has become famous for his ability to take dry statistics and convey them in a clear and compelling fashion.  Along the way, he has been dispelling many of the myths that inform our mindset.  He challenged a US State Department audience in 2009 with the following words:  “Does your mindset correspond to my dataset? If not, one or the other needs upgrading….” The unspoken premise was that his dataset should trump the flawed mindset of anyone who does not have a fact-based view of the world.

Building a Fact-Based Worldview

If you go the website of Gapminder, the organization Dr. Rosling co-founded, you’ll find the following appeal:

Gapminder is a non-profit foundation based in Stockholm. Our goal is to replace devastating myths with a fact-based worldview. Our method is to make data easy to understand. We are dedicated to innovate and spread new methods to make global development understandable, free of charge, without advertising. We want to let teachers, journalists and everyone else continue to freely use our tools, videos and presentations.

Your contribution will help us in our efforts to explain how the world is changing. Your generosity will strengthen our independence.

Help us achieve a fact-based understanding of the world. Support our work by making a donation today.

As I read the appeal, I found myself wishing that the legal industry had a Gapminder-like organization to help us move from myth to a fact-based worldview. What data is your firm collecting? Do the data have integrity? Do you have capable people who can analyze that data and communicate what’s meaningful? Or are your firm leaders making decisions that reflect their favorite myths?

Ron Friedmann has a recommendation for law firms intent on developing a fact-based worldview:  “Law firms should collect data to measure the multiple aspects of `service delivery’ and the `client experience’.” If you were to follow Ron’s recommendation, what would that mean for your firm?  What would you count? What would matter? I suspect you’re going to have look far past billable hours and realization rates to examine the profitability of matters and individual lawyers. What about measuring the rate at which lawyers of your firm innovate? Or the rate at which they convert business development opportunities into sustainable income streams? How do you measure client engagement and client satisfaction? How do you measure the contributions of law firm administrative departments? (In terms of dollars under budget? Or in terms of value delivered to clients?) And, how do you measure the contribution of each person in your firm towards the health and welfare of the firm?

There are many opportunities for us to learn more about our business through the careful gathering and analysis of data. However, I don’t mean to minimize the challenge.  Most folks in law firms are not trained statisticians. We don’t always know what to count or understand the problems implicit in how we collect and analyze what little data we have.This is an area in which our entire industry could benefit from some training and some standardized approaches.

What dataset informs the mindset of your law firm leaders? That’s the question Dr. Hans Rosling would ask them if he could.  But, since he can’t, shouldn’t you?

[Photo Credit: Tom Woodward]

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Law Firm Investment Portfolios

Times Square Stock TickerEvery good conversation invites participation, and I’ve found it impossible to resist jumping into the very interesting conversation Toby Brown and Ron Friedmann have begun online regarding possible business models for large law firms.  The genesis of the conversation was a session at the 2010 International Legal Technology Association Conference in which Ron Friedmann, Gerard Neiditsch, Jeffrey Rovner and I proposed two extreme law firm business models:  “bet the farm” practices and “law factory” practices.  (You can find our slides, as well as links to some discussion summaries, in  Ron’s blog post regarding the ILTA session.)  While we limited our discussion to the purest form, where a firm focuses on one business model or the other, real life isn’t quite so tidy.  In fact, law firms may reluctantly discover that they need to support examples of both business models simultaneously.  But what’s the best way to handle this? Toby draws inspiration from large banks, while Ron analyzes the example of large hotel chains.  In both cases, they show how it is possible for an organization to offer a variety of services at different price points without damaging that organization’s brand.  In so doing, Ron and Toby challenge a large law firm concern that moving away from marquee (bet the farm, high-touch) legal practices will cause such confusion in the public’s mind that the firm’s brand will suffer.

While both the banking and hotel examples have much to commend them, I have a smaller, more personal example in mind intended to help law firms understand that they may no longer have much choice regarding these business models.  What if law firm leaders were to consider their firm’s practices in the same way any prudent person considers the investments in their retirement savings account? For example, one golden rule of investing is to diversify your investments to achieve the correct balance of growth and protection.  Consequently, it won’t be appropriate for most investors to invest solely in high-risk high-return targets.  Typically, investors are advised to put some portion of their money in fixed income investments or money market accounts.  While these investments may provide lower rates of return, they also tend to preserve the monies invested.

Now what happens if law firms were to treat each practice area as a type of investment.  For example, a mergers & acquisitions practice might be likened to a higher risk investment that provides great returns at the top of the business cycle, but may not perform so well in an economic downturn.  By contrast, a bankruptcy practice theoretically should provide better returns during a downturn, as should any practice (such as project and infrastructure finance) that depends on governmental stimulus funding.  In each legal market, the mix of high-risk and high-security will differ depending on local conditions.  Of course, things become more interesting (and undoubtedly more complicated) when a firm spans many legal markets.  Achieving the correct balance between risk and security across geographic boundaries requires even more insightful investing.

Another way of thinking about various investment opportunities for law firms is to compare “bet the farm” (or “bet the company”) practices with “law factory” practices.  Ron Friedmann has written extensively about these contrasting business models for law practices.  In brief, a bet the farm matter tends to be relatively rare and high risk, where the client is more willing to pay what it takes to get the right result.  In these practices, there may be less fee pressure and fewer opportunities for routinized (and cost-controlled) work.  By contrast, the law factory practice is high volume, low margin.  These practices operate under tremendous fee pressure and, therefore, put a premium on producing work in a reliable, repeatable fashion at a competitive price.  To achieve this goal, they tend to rely heavily on efficient business process, standard form documents, automated document assembly, expertise systems, and lower cost professionals.

Taking the investment portfolio approach suggests that a law firm should seriously consider “hedging” each of its bet the farm practices by investing in some practices that thrive in economic downturns as well as some law factory practices that produce steady results despite fluctuations in the state of the economy.  Given the pricing pressures on these practices (e.g., court or governmental oversight of legal fees or a well-established market that prices legal services efficiently), these hedging practices need special attention from law firm leadership. This means focusing on making these hedging practices super-efficient and properly packaged and priced for the relevant market.  It may mean making additional investment in practice support lawyers, automated processes and the kinds of rigorous business performance standards that we are told apply to the best manufacturing facilities.

While the wisdom of a well-balanced, diversified investment portfolio is self-evident, this approach is not entirely without its challenges.  For example, since the bet the farm practices operate under some different constraints from that of law factory practices, law firm management will have to be careful to calibrate firm support services and infrastructure investments so that they are appropriate for each type of practice.  Further, how do you handle the potential for income disparity and differing levels of respect for the lawyers in each practice?  To be fair these challenges are not entirely new.  Even a firm that focuses entirely on bet the farm work may accord different levels of  compensation and respect to the rainmakers versus the service partners.

While large law firms may be comfortable with the notion of building practices areas that thrive at different points in the business cycle, they may have a tougher time accepting the idea of off-setting their high risk bet the farm practices with some lower risk law factory practices.  Then, they may have an initial struggle as they realize that their traditional bet the farm approach to work will not yield the intended economic results when applied to law factory work.  The resulting self-examination and re-engineering will not be easy, but is critical for success.  Firms that accomplish this may well find that the efficiencies forced on them by the law factory business model have a salutary effect on the parts of their bet the farm practice that are relatively repeatable.

At the end of the day, the key is to focus on a well-balanced array of practices that are designed for optimal results under the business model that governs them.  Unfortunately, although we’ve all heard the advice to diversify and re-balance our portfolios, there will always be those investors who forego diversification and decide to stake their lives on a “sure thing.” Let’s hope your law firm isn’t that type of investor.

[Photo Credit: th.omas]

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Times Are Changing — Are You?

For the last few Sunday nights, my family has been completely absorbed by the upstairs downstairs drama of Downton Abbey. This English import provides a glimpse of life in an aristocratic home just before the First World War. One very poignant moment occurs early in the series when a man trained to be a gentleman’s valet realizes that the skills he has spent a lifetime perfecting are no longer needed.

I found myself thinking of that valet as I read some recent posts on the shifting boundaries of law firm knowledge management. There are some who seem bewildered to find themselves in a world where the traditional things they have done don’t seem valued anymore. Meanwhile, there are others who are finding increasingly inventive ways to stretch their job descriptions.

If you think we are not in a period of flux, you would do well to read some of the posts below. Taken together, they present a picture of law firm life and the role of the knowledge manager that is rather unsettled and unsettling. In the face of these tensions several law firm knowledge managers I know are looking for ways to ensure their continuing relevance. As is so often the case, the interests and innate abilities of particular individuals lead them to explore avenues (and hidden alleys) that may not have been within the traditional territory of knowledge management. I expect this will only accelerate. No matter what our views are on these developments, it’s hard to ignore the pace of change around us. The question for each of us is how are we going to reshape our jobs before the oncoming revolution does it for us?

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Hiding From Bad News?

Are the lawyers you know hiding from bad news? Whether you work in a law firm or an in-house law department, this is a question you have to ask yourself.  As you survey the range of lawyer responses to the economic challenges of the last few years, think about the lawyers you work with.  How honestly have they faced the mirror? How penetrating has their analysis been of the facts on the ground? How creative their proposals? How open have these lawyers been to change?

This last question is particularly difficult.  I’m not talking about the change that inevitably comes from making tough decisions about cutting costs. After all, nearly every law firm I know has done some belt tightening over the last few years. Some are even considering deeper cuts in 2011. Rather, I’m talking about a willingness to think hard about an alternative business model. Are the lawyers you know doing this?

As my regular readers know, my tendency is generally towards optimism in most things.  However, there are signs that indicate that optimism may not be entirely warranted in this instance.  While there always are some noteworthy law firms and in-house counsel who actively look for better ways to do things, what about the rest of the profession? Consider the following:

  • Ron Friedmann commented recently on two disturbing observations: the challenges in-house counsel face in demanding changes from their external counsel (see his posts on the under use of ebilling and buying power) and the unwillingness of lawyers to admit that they can no longer run from numbers.
  • Doctors undergo a mandatory peer review to determine the causes of failure in patient care.  (For a layman-friendly introduction to these morbidity and mortality (M&M) conferences, see the work of Dr. Atul Gawande (or read this review).) Similarly, members of the military undertake after action reviews.  Some organizations have begun to understand the value of “failure parties.” When was the last time members of your firm completed such a review on a client matter or a business initiative? A doctor I know offered to do an M&M conference-style review for the partners of a major US law firm.  Even though this doctor is an expert in this type of analysis, the lawyers in question decided that they would just rather not open themselves up to this level of scrutiny. How would your firm have responded?
  • Aric Press recently reported that The American Lawyer’s annual Law Firm Leaders Survey indicates that the heads of the firms surveyed are frustrated by the slow rate of change within their firms and the profession.  And what was their response when asked what disappointed them the most? “The most common response was the failure of their partners to develop new business, understand the new challenges they faced, and/­or give up their bad old habits.” Interestingly, the resulting preferred course of action appears to be to switch teams: “If the current partners are the problem, the expressed solution is all too clear: a new and better set of partners. In fact, the failure to recruit just such stars was a frequently expressed disappointment.”

While a handful of anecdotes may not add up to an overwhelming case, they may suggest movement in a direction that is not altogether encouraging.  If you’re reading the tea leaves in the same way, what’s to be done?

[Photo Credit: Susan NYC]

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Light Bulbs in Las Vegas [#ILTA10]

How many light bulbs are in Las Vegas casino lights? According to WikiAnswers, 9,000,000 light bulbs per floor. Last week, however, the International Legal Technology Association’s 2010 annual conference resulted in a great deal more light in Vegas as one informative session after another caused “light bulbs to go off in my head.”  There were several “aha” moments in the sessions I attended, but here are some of my favorites that I don’t want to forget:

  • Ron Friedmann, Gerard Neiditsch and Jeffrey Rovner presented a compelling case for analyzing more carefully the business of law as practiced by most firms.  Their session provided a practical way to take some of the provocative ideas presented by Richard Susskind at ILTA 2009 and make them a reality.  The key take away: different business models may require different technology and business processes, and a mismatch can lead to great inefficiencies.  Do you understand the business drivers at your firm? (For more information on this session, see the presentation slides and  a summary by Andrew McLennan-Murray.)
  • Paul Domnick, CIO of Freshfields, described the viral way some of their social media initiatives behind the firewall have taken off.  Most striking is how they have been willing to stretch and experiment to achieve fantastic results.  In one experiment, they replaced their traditional intranet with a wiki.  That wiki now receives an amazing 1,000,000 page impressions per day.  Further, they did this using Atlassian’s Confluence — NOT SharePoint. In explaining his team’s approach, Paul said: “We need to be the broker between the art of the possible and the real needs of the organization.” (For more details on this session, see the presentation slides and  David Hobbie’s terrific notes.)
  • Kingsley Martin’s astonishing KIIAC software is able to analyze precedent documents and generate a form automatically in a matter of hours.  This will transform the creation of model documents and the role of practicing support lawyers. Above all, if this software allows firms to generate an “at market” form of a complex agreement at the push of the button, what will that do to the practice of law?
  • Keynote speaker Jason Jennings reminded conference attendees that “the right [corporate] culture is the ultimate competitive advantage.” His research indicates that companies achieve and sustain success by engaging their employees in a “shared, noble purpose.” This is an interesting litmus test for both companies and law firms.
  • From a fantastic session on  developing a social media policy by Julia Montgomery and Karen Sheehan:  Education is the key to a social media policy. Without education, it’s difficult for employees to understand both the opportunities and dangers presented by social media.
  • In a session on Supporting Alternative Fee Arrangements, Jason Epstein of Baker Donelson said that most firms were already doing AFAs in one form or another, but most likely weren’t doing them well.  As a result, these firms were probably losing money on them.  In his view, AFAs should be “a spur to make the practice of law better.”
  • From my notes on the Matter-Based Budgeting Session: “Budgeting is an iterative process. Once the lawyer puts a draft budget on the table, that opens up an important ongoing conversation with the client.”
  • Major General Clyde Tate (of the US Army’s JAG Corps) on dealing with massive change: Perseverance is key. “Bureaucrats love it when you give up…your job is to wear them down.”

What were your “light bulb moments” at ILTA 2010?

[Photo Credit: Zetson]

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