An exploration of the benefits of technology for law firms.
Even before the advent of the internet as a marketplace, there was already a large body of ‘repackaged’ legal services made available to the public that hitherto would have been delivered one-to-one by a lawyer. The DIY market
for legal services long exploited by publishers include S$40 wills, powers of attorney and simple business contracts. Today, the client is able to log on to a website, enter the relevant details when prompted, and receive a
completed custom tailored agreement or legal opinion based on the answers he provided. These ‘expert systems’ or ‘legal Web advisers’ collect facts from the client by asking him a series of questions. Through a decision tree
system, the software deploys a sequence of decisions based on user input to classify the problem and deliver the solution.
While such systems do not attempt to work independently of legal expertise (software engineers require the input of relatively high-end specialised legal expertise to prescribe the information used to determine a solution), the
benefits are obvious — something created once is sold many times over. The lawyer makes money while he sleeps, so to speak.
As early as 1996, Richard Susskind, widely regarded as a thought leader in legal technology, predicted that the internet will transform the law from an advisory service to an ‘information service’ as lawyers package their work
product in electronic form good enough to meet clients’ needs and far cheaper than one-to-one legal advice (The Future of Law: Facing the Challenges of Information Technology).
Even the sceptics who pointed out that specialised, high-end, high-value type of legal advisory services could not possibly be commoditised have been forced to rethink their position when Linklaters launched BlueFlag and
Clifford Chance followed shortly with their own online product called ‘NextLaw’. Deploying the ‘expert system’ knowledge engineering described, BlueFlag delivers legal advice online, covering regulatory compliance, investment
funds, derivatives documentation, employee share plans and transaction management. NextLaw is also an online service that helps clients to assess legal and regulatory risks in e-commerce across 36 different jurisdictions,
including online contract information, electronic signatures, data protection and banking secrecy laws.
What does this mean for law firms?
Paramount is the Fact That Technology Has Opened Up the Legal Field to Competitors Who Are Not Law Firms
Legal publishers and accounting firms, who have embraced technology with far less cultural resistance than law firms, have made vast inroads into the legal service market. Ernst & Young’s online business advisor, ‘Ernie’, has
been delivering customised, fact specific tax advice to their clients online since 1994, and has today expanded its services to include advice on business and financial management.
Corporate clients with sufficient resources and dynamism have developed their own legal Web advisors in order to minimise their dependence on outside lawyers. General Electric, in collaboration with a market leader in the
development of Web advisory platforms, Jnana Technologies Corporation, has built a ‘Virtual Patent Adviser’. This application seeks input from GE engineers and matches the criteria with patent registrations of similar inventions
worldwide. Sony Electronics deploys an enterprise-wide compliance application that processes queries relating to customs regulations and trade laws in different jurisdictions.
How Have Law Firms Responded to the Encroachment Into What Was Traditionally Their Exclusive Domain?
Clifford Chance has responded by creating two independent e-business units — ‘CCLab’ undertakes research and development of technological innovations for the legal market; and the other, ‘CC Online Services’, manages their
online services as an independent profit-making enterprise. This year alone, CCLab and CC Online Service have launched two new online services — Cross Border Acquisition Guide (‘CBAG’) and Alerter for Communications & Media (‘The
Alerter’). CBAG is a cross border mergers and acquisitions structuring tool that provides users with a themed analysis of key issues and potential problems arising from public and private acquisitions. The CBAG, which covers 12
jurisdictions in Western, Central and Eastern Europe, is accessed via a secure extranet site. The Alerter is an online news tool providing users with structured updates on legal and regulatory developments in radio, television and
telecommunications.
Richard Harroch, corporate partner at Orrick, Herrington & Sutcliffe, is an ‘Internet Entrepreneur’. Last year, he founded LawCommerce.com, an online marketplace for lawyers. Enlisting the financial backing of an impressive
group of international firms, including Clifford Chance and Ernst & Young LLP, LawCommerce is currently developing a ‘worldwide common technology platform for Web-based collaboration deal sites for lawyers, corporate counsel,
banks and investment companies’.
Instead of developing new technology applications themselves, some law firms buy into successful online businesses that provide legal services traditionally delivered by lawyers. A consortium of lawyers from US law firm,
Mischon De Reay, have become shareholders in LegalPulse, one of the largest online providers of legal business forms (employment contracts, business plans, shareholder agreements and insolvency ‘packs’) for small - and medium -
sized businesses. Other shareholders include the National Solicitors Network, a thriving network of small to medium - sized law firms in the UK.
Blake Dawson Waldron, widely acknowledged as a legal technology pioneer in Australia, created webLAWww to provide a Web-based framework within which specific matters are progressed from start to finish. webLAWww enables the law
firm to set up dedicated websites for specific deals, used internally for working teams to share files and resources, and accessible on an extranet to clients who use the site to monitor work in progress and collaborate on
documentation.
Affordable Solutions for Smaller Law Firms
Undertaking technological innovation of such scale and depth requires substantial financial resources and commitment. According to AmLaw Tech magazine, Linklater’s BlueFlag system comprises a directory tree with more than 2,500
variables taking a team of experienced lawyers more than two years to figure out at a cost of US$15m! Small firms simply do not have the resources to develop their own legal Web advisors or deal rooms. To retain a competitive edge
against the ‘big boys’ and their cutting-edge high-tech tools, here are examples of affordable technology solutions that have helped smaller (but no less dynamic or progressive) law firms hold their turf and turn a profit.
Automated Document Assembly
Most smaller law firms today use a combination of legislated forms and their own standard agreements for routine low-value, high volume type of legal processes in such areas as conveyancing, home financing, corporate
secretarial and debt recovery work. By building its own library of standard forms and precedents and deploying a document assembly tool, stored data relating to any specific client/matter is easily ‘popped’ into the correct
documents without operator input. In Australia, where conveyancing and home financing have been de-regulated for the last four years (legal fees for a home loan mortgage cost just A$280 in legal fees), the use of document assembly
systems, such as LAWDOCS, has become commonplace. In fact, law firms that continue to run thriving conveyancing practices will testify that they would not have been able to return a profit without such productivity tools.
Enterprising law firms have gone even further by linking up with online document publishing/assembly websites, such as desktoplawyer.com and directlaw.com, to their mutual benefit. These sites allow the consumer to assemble
their own documents and then have them reviewed by their panel of lawyers for an additional fee. By unbundling the low-end routine work (document assembly) from the value-added legal input (lawyer review), a law firm can leverage
on third party online services to attract value-added advisory work.
Extranet Technology
Even small firms find that the initial investment in browser-based ‘extranet’ technology has paid off tremendously in terms of boosting client retention and winning new corporate clients. Clients like using extranets because it
saves them time and money. In a simple example, the distribution of documents in a commercial transaction involving multiple parties located in different countries is costly and time consuming. Corporate clients who wish to
maximise the collective value of legal services provided by their lawyers use extranets to reduce duplicative work by different outside counsel and hopefully save costs. Better yet, an extranet gives clients instant access to
information about their cases without having to make a phone call or wait for the courier.
Richard Susskind makes a cogent argument for the effectiveness of extranets as a communication tool when he observes that clients rarely complain about the inadequacies of legal expertise from their lawyers, but they frequently
express concern over the mechanics of the working relationship, principally, at the poor levels of communication between themselves and their lawyers.
Today, almost all market leading legal technology software developers are working on basic ‘Web integration’, ie developing front-end Web interfaces and integrating their applications with Web-based technology so that their
users have access to the functionality and features of their applications through their browsers. The Web-interface will provide, at the very least, basic dealroom features such as remote access to matter details, calendars and
documents. Using their Web-browsers, corporate clients can monitor work in progress, access and collaborate on related documents, check billing status and give/receive instructions on their matters on the Web.
For law firms wishing to ‘pay per use’ instead of building their own dealroom, there are now several established ASP services available in the market — eRooms, market leader in dealroom technology, charges US$249 per month per
room. Midware System charges users a mere A$850 per annum for use of their Web-based client-interface called CONSERO, provided the law firm is already running Midware’s excellent practice management software, Open Practice, in
their office. CONSERO is a collaborative browser-based working environment in which the law firm and their clients share information including matter details, billing status, work in progress and documents (data that is already
processed and stored in the Open Practice database in the law firm).
Today, most top tier law firms are involved in legal e-commerce projects of great depth and expense. This alone bodes well for the continued development of Web-based tools for the delivery of legal services. Technology that has
driven the commoditisation of legal services will continue to make inroads into the legal sector over the next few years, as the tools deployed in ‘artificial legal intelligence’ become increasingly sophisticated. Lawyers who fear
being replaced by computers are challenged to think outside the box and find new ways to optimise the way their knowledge and skills are delivered.
Sylvia Low
Bizibody Technology Pte Ltd
E-mail: sylvia@bizibody.biz