Technology and the modern law practice
In my return to regularly reading weblogs, I've found a lot of recent discussion about law practice management, billing, and the future of law and technology.
For example, consider Laura Owen's article — or dare I say manifesto — The Tech Evolution: Change or Die [Law.com], in which she signals law firms that it is time to take advantage of information technology at least to the same extent of other successful businesses. Owen is the director of worldwide legal services for Cisco Systems, Inc. In her article, she articulates nine strategies to improve the efficiency of legal services. She specifically has corporate counsel in mind, but the law firms armed with those tools could use them to the benefit of all manner of business clients, small businesses as well as large corporations. Dennis Kennedy read the article and recalled a presentation Ms. Owen gave last year on many of the same themes. He reports, "In the room were reps of some of the largest and most prominent law firms in the country. Not one of them was willing to say that they could do even one of the items on the list. I was stunned." [See also Ernie the Attorney's post.]
Carolyn Elefant wondered, could the demand for higher-tech law practice reflected in Ms. Owen's article could run to the benefit of smaller law practices, or will the large firms ultimately dominate all of business law?
Even as forward thinkers like Owens or Dennis argue for lower costs, at the same time, firms continue to merger growing larger and larger. I simply don't believe that a ginormous firm will have the same efficiency as a smaller one if only because it relies on the power of hundreds of associates and multiple levels of review to generate revenues. So how to reconcile the merger trend with the increased calls for flexible billing and the like? In five years, will the legal market be dominated by ten giants (who will rewrite conflicts rules to enable them to retain more clients?) Or will it be populated by small, lean high tech operations responsive to client needs? Naturally, I'd love to see the pendulum swing to the latter but I am not always so sure that is where we are headed.
I wonder how many small firms will really be able to achieve the level of high-tech efficiency that Owen has in mind. I am mainly worried that small firms do not have the capital (both financial and human) to invest in the level of technology that the large firms can achieve.
Ms. Owen probably began her article with larger firms in mind; she specifically praised McGuireWoods (~750 lawyers) and Reed Smith (~1000 lawyers) for their efforts in developing electronic services and technologies for their clients.
I worry about the smaller firms because the kinds of technological systems Owen envisions can require significant investment. That investment takes at least two forms. First, the firm must pay for IT staff and equipment to design and contain the system, or it must find a well-designed and flexible commercially available system to use as a foundation. Second, attorneys must take time to populate the system with information and maintain it.
These systems — I draw mainly on the example of document preparation systems — require an investment of attorney and staff time that might otherwise be dedicated to "paying work." If one cannot afford to spare that time, one cannot establish and maintain the system. I worked for a firm where we sometimes tested document preparation software, but we never had time for an associate or paralegal to go through the firm's collection of documents it had prepared over the years, which were scattered among hundreds of client files, and to reduce them to templates upon which a document preparation system could draw. Thus the software was worthless. (It was morbidly unimpressive software anyway, as I will note below.)
One also needs enough combined legal experience and understanding to populate the system with all of the commoditizable bits-of-transactions upon which one will draw. The system's value derives from the information it contains and the ease and speed with which one can put that information to use. On this point the large firm may also have an advantage. That is, at least, assuming that the larger firm has broader experience and more personnel upon which to draw in constructing the system.
Still, I think there is a market out there for anyone who can develop good frameworks that would help smaller-firm practitioners commoditize routine transactions and use technology to process them (Owen's points 1 and 5). Much of the document preparation software my old firm tested had interoperability or usability problems. Two of the programs worked exclusively with Microsoft Word and were prone to err if, for example, we upgraded from one version of Word to the next. Also, it appeared that the software designers had given little thought to interface design, so that none of the programs was especially intuitive to the template designer or the document preparer.
I hope that there will be room in the legal market for small, business-oriented law firms to serve sophisticated business clients, and that the large firms will not overwhelm the smaller firms. Owen warns that if a business law practice of any size does not or cannot begin to invest time and resources in technology to improve its long-term efficiency, it will find itself competed out of the market by those who were able to make the investment earlier. Not every client is Cisco, and not every business client will have the same kinds of demands as Cisco or its peers. But smaller firms that can come closer to offering those kinds of efficiencies sooner than others will probably have sunnier futures than those that cannot.
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You make several valid points, particularly in relation to the future of the smaller firm servicing large clients.
I would encourage you to keep an eye on developments in document assembly tools - two I am aware of here in Australia are making real inroads into the issues you describe around interoperability and interface - Speedlegal and I Deal Docs. Importantly, the cost entry point is not necessarily prohibitive. The challenge will remain in the resources required to organise those precedents - more of a "knowledge management" issue than a technical one.