The Legal Industry & Information Technology
Like all other industries, the legal industry is not insulated from the tremendous changes in information technology over the past decade, and the challenges and opportunities it presents. If anything, the changes have more bearing on law firms & departments because information management is at the core of what they do – consulting with clients, colleagues or experts; increasing compliance & regulation demands, wading through a constantly expanding sea of legislation and case law; managing outsourcing partners; keeping abreast with latest developments; or managing a mountain of matter files.
Perhaps the most significant change in the legal services industry the decline of “relationship lawyering”.
Recent times have seen increased competition, & changes in underlying market structure. There has been a continuing trend of decline of “relationship lawyering”. Traditionally strong relationships between law firms and corporates are eroding, with more companies opting for in-house legal departments, or “shopping around” for the best deal. Another significant trend is the increasing convergence of legal markets, where competition is as likely to come from a firm in another state or overseas as from a local firm. These & other developments are exerting greater pressures on legal firms to be more efficient, an it is imperative that attorneys spend their time analyzing information, rather than organizing or managing it.
Drivers of Technology Adoption by Legal Firms
Possibilities of Technology – The primary driver of greater use of information technology by legal firms is developments in technology itself. New technologies & greater bandwidths allow great possibilities in the arenas of information management, productivity and remote collaboration. Information can be moved over the internet with greater security. And unlike yesteryear, law firms can access these technologies without hefty costs and the need to set up specialized IT departments.
In 2004, Forrester Research Inc estimated that some 39,000 legal jobs will have moved offshore by the end of 2008.
Outsourcing/Offhsoring – Legal firms are now increasingly open to legal process outsourcing of tasks they traditionally held close – research, transcription, coding and even legal research and the drafting of legal documents. It is commonplace to see a NY based law firm, subletting research work to a team of professional lawyers & paralegals in Bangalore, India. This enables firms to majorly cut down costs & concentrate on core legal functions. But it also necessitates a greater need to communicate, collaborate & monitor the functioning of outsourcing vendors hundreds or thousands of miles away. Security is also an issue, since performance of the services often requires access to regulated consumer data or other sensitive data.
In 2004, almost 60% of lawyers worked at multi-office firms and over 10% of lawyers work at firms with ten or more offices.
Geographic Diversification – As mentioned before, there is a distinct movement towards multiple office firms, with offices spread both nationally and globally. US based companies are now serving many foreign clients, or serving foreign interests of domestic clients. There was a significant presence of international clients in even the smallest law firms of 1 to 20 lawyers. There has also been a spate of global mergers and acquisitions of law firms in the new millennia. All this necessitates a greater need for communication, collaboration and information exchange between branches.
Regulatory Compliance – Since the Sarbanes Oxley Act came into effect, records management has become an essential requirement. Organizations are required by law to retain certain documents for predefined periods. Also, the amendments to Federal Rules of Civil Procedure went into effect on December 1, 2006, and apply to any firm involved in litigation in the U.S. Federal Court system. The amendments mandate that companies be prepared for electronic discovery. Firms have to drastically alter the way they preserve, retrieve and produce electronic data.
Competition is coming both from firms spread across the nation & the globe, as well as consultants & advisors who were traditionally not considered part of the “legal industry”
Competition – Because of the death of relationship lawyering, and “one stop shopping” by clients, firms cannot afford to be complacent anymore. Moreover, competition is as likely to come from the opposite end of the country or globe, as from local companies. Competition is also coming from other quarters, consultants and advisors who offer services that were previously the purview of lawyers. In this arena of intense competition, lawyers have to double up as “rainmakers” ; networkers (legal business development) in addition to traditional roles.
IT Needs of the Legal Industry
Centralized Document Storage – The legal profession generates a tremendous amount of digital information in the form of case files, contracts, court filings, exhibits, evidence, briefs, agreements, bills, notes, records and other office activity such as email. This information is the firm’s collective knowledge & learning which sets it apart from competition and needs to be retrieved again and again. Compliance also requires certain documents to be stored & retrievable for extended periods of time. Attorneys across different offices need to access and collaborate on this information.
In 2007, 53% percent of lawyers used a PDA outside of the office, 32% to check e-mail.
ABA Law Tech Report 2007
Remote Access – Ready access to crucial documents and information can sometimes be all the difference between a favorable or adverse judgment. Lawyers now have wings on their feet visiting clients, interviewing experts, or attending outstation court proceedings, and are often out of office. It is important that they are able gain LAN like access to documents from the firm’s repository even when they’re not at the office premises.
Document Collaboration – It is not enough to only be able to access documents from the firm’s storage. A single case file may need multiple inputs from attorneys with different expertise, clients, experts, researchers, and other associates spread over the country or even the globe (in case of outsourcing). Therefore it is important to have the ability to concurrently access and work together on the same file, from right where everybody is.
Remote Conferencing – Sometimes the ability to collaborate on a document may not suffice and actual discussion and knocking together of heads might be needed. Web conferencing allows multiple people to get together in a virtual meeting room and discuss issues as effectively as being there in person.
Security – A lot of the information a legal firm handles is highly sensitive client information, which it is bound my business ethics and contracts to protect. Since this information is mostly accessed and distributed over the public network of internet, and often distributed to third parties at some page, security is right at the top as a concern.
Access Control – Another level of security is the ability to manage who sees what information and what they can do with it. Since multiple parties like attorneys and associates across the company, outsourcing partners, and multiple clients access information from the firm’s central storage this is of prime importance.
Productivity Applications – Although managing documents and information is one of the most important things a law firms IT systems need to do, it is not all. They also need the ability to manage and share schedules, to maintain lists of important contacts, to manage and track different tasks and litigations teams or individual attorneys may be involved with, or billing management.
What They Don’t Need
41% of lawyers had no IT staff at any locations for their firm, while 17% have one person, 8% have two, and 38% have three or more
ABA Law Tech Report 2006
IT Hassles – If getting all the above goodies requires setting up a specialized IT department, installing expensive hardware, and managing ongoing maintenance and upgrades, it might just not be worth it for a small to mid sized law firm. Bigger firms have the deep pockets and incentive to set up dedicated systems, but it might not be sustainable for smaller firms.
Complexity – To ensure that attorneys embrace the IT system, attorneys should be able to concentrate on the information itself, rather than grappling with the nitty-gritties of the system.
Costs – Cost, of course is a top consideration for small to mid sized companies across industries. The ongoing costs and hefty capital investments needed for custom and enterprise systems are just out of reach.
The Software-as-a-Service Advantage for Legal Companies – HyperOffice as a Case in Study
SAAS allows firms to pay for using the software rather than owning it
About eight to ten years back, it was true that access to the above technologies was available only to huge firms whose budget and scale justified dedicated IT departments. Times have changed since then. The software as a service (SAAS) approach, allows even small to mid sized firms easy access to big business technologies, but without having to deal with the messy underbelly and huge costs associated with them.
Benefits of SAAS Solutions
– Low Implementation
– Cost Effective
– Mobile Access
– Enterprise Class Features
– Backup & Security
– Updates & Enhancements
Software as a service (SAAS) is an approach where the software vendor undertakes the burden of creating, hosting, maintaining and securing the application upon himself, and further lets it out to customers over the internet as a service. Customers do not pay for owning the software itself but rather for using it. Some specific benefits of the SAAS approach are as follows:-
No Implementation, No Dedicated IT Department – Since the backend is taken care of by the vendor, users don’t have to bother about hardware, software downloads, server security, configuration etc. Implementation cycles of months are cut down to just a few days. For example, HyperOffice just requires a sign up, and customers can get it up and running within minutes.
Cost Effective: Scale Up & Down as Needed – The cost structure of SAAS solutions is usually a reasonable monthly per user fee. This ensures that minimal costs are locked in, unlike enterprise solutions where tens of thousands of dollars are committed. Moreover, there is no cost uncertainty, as terms are clearly laid out, which allows for greater predictability.
Big Business Features – A range of big business functionality is available to users, but they don’t have to bother about the complex backend which goes with implementing this functionality, since that is the vendor’s headache.
Flexibility & Mobility: Keep Connected Always – These solutions are developed with a view to delivery over the web. This ensures that the system with full functionality is available over simply a web browser, saving users from tiresome downloads or implementations on local workstations. Moreover, since these solutions are children of the internet & mobility era, they also allow access over mobile devices. HyperOffice allows almost full functionality over many mobile device with internet access including iPhone.
User Friendly – Ease of use is of prime importance to a non techie attorney. SAAS solutions are out-of-the-box. Emphasis is on ease of use, with the messy backend taken care of. The entire HyperOffice solution can be managed from a central console and needs no technical expertise at all – truly child’s play!
Backup & Security: Let the Experts Handle It – Ensuring security and disaster preparedness requires effort. Antivirus software needs to be purchased and implemented, the system needs constant monitoring, and physical security of the servers needs to be ensured. Disaster recovery plans also have to be put in place in case of events like fire, natural disasters etc. Backup servers and magnetic tapes have to be maintained, frequency of backups has to be managed etc. Whew!
With SAAS, all this is a part of the messy backend taken care of by the vendor. Moreover, these vendors have developed an expertise hosting and securing applications, since this is their core operation. This is an expertise a mid sized law firm can not, nor would like to develop.
Updates & Enhancements – Since it application resides on the vendor’s servers, the vendor can simply add updates, enhancements and new features at his own end which are instantly available to the users of the application.