Oregon State Bar Bulletin — MAY 2003

Battle for Control
Legal technology predictions for 2003
By Dennis M. Kennedy

For the last few years, many firms could, and did, put off major technology decisions. The 'dot-com' implosion, the current economy and budgetary requirements provided justification for delay of and retreat from new technology initiatives.

2003 will be different. A variety of factors will come together in a way that will make 2003 a year in which firms must make major technology decisions and gain control of increasingly unfocused technology budgets. The already significant gap between law firms and lawyers who are 'technology haves' as opposed to 'technology have nots' continues to grow. Firms that do not wisely navigate the decisions to be made in 2003 are likely to find themselves at a distinct competitive disadvantage.

Many firms have found that technology spending has grown to be a significant portion of their annual budgets. Unfortunately, in too many firms, management does not have a clear understanding of what technology dollars are buying and whether those dollars are being well spent. What is understood, however, is that there are both internal and external pressures for law firms to bring their technologies in line with current business standards, often at the prodding of major clients. The tension between these trends will come to a head in 2003.

Here are seven major technology themes and trends for lawyers and law firms to expect in 2003. These items should be on every firm’s agenda.

For many firms, the last significant round of equipment purchases came in 1999 as part of dealing with the Year 2000 problem. Lawyers in those firms use older computers with a fraction of the power and capacity of even the lowest priced computers available today. Aging hardware actually hinders the ability of many lawyers to work effectively and contributes to retention and recruiting problems.

Hardware upgrades will also be driven by what attorneys use at home. Traditionally, lawyers had better computers at work than at home. Now, lawyers commonly have faster and more powerful computer equipment at home than what they have in the office. Scanners, color printers and CD-writable drives are inexpensive and standard features in most home systems. Many lawyers complain about the decrease in power and features when they move from home to office. You should expect this phenomenon to lead to dissatisfaction and demands for upgrades in the office.

Today’s lawyer uses PowerPoint for presentations, needs a computer when traveling and has other mobility needs. Shouldn’t all lawyers have a notebook computer, probably with a docking station, as their primary office computer? Certainly this is true for litigators. Most lawyers can make a case for PDAs, wireless devices, wireless access or other specific items. Don’t let aging hardware embarrass your tech-savvy lawyers or diminish your firm’s reputation in the eyes of your clients who have state of the art equipment.

Firms will need to consider serious investments in new hardware in 2003 and find ways to control costs, such as by leasing equipment or looking into refurbished or secondary market equipment.

It is surprising to see the number of firms using software that is five or more years old. Old software raises questions of compatibility, security and lack of support. Newer software tends to have many improvements, better usability and important features geared to lawyers. For example, Microsoft’s Word XP includes a number of lawyer-specific features developed in connection with an advisory board of lawyers. However, the adoption of Office XP in law firms has been surprisingly slow given the presence of these features. If more lawyers were aware of these features, there would be greater pressure on firms to upgrade software.

As will be the case with hardware, office software upgrades will be driven by what lawyers have at home. Any recent purchaser of a computer will have the newest versions of standard software. Lawyers are increasingly frustrated when their office software lacks features of the programs they use at home. Older versions of Internet Explorer and some other Microsoft programs, to name just a few, also raise significant security concerns.

Attorneys are increasingly aware of highly useful and valuable programs for presentations, litigation management and other specialized software for lawyers. The 2002 AmLawTech Survey indicates that over 50 percent of the largest law firms are using CaseMap as a litigation strategy tool. An increasing number of trial lawyers and their clients consider litigation tools such as CaseMap essential for modern litigation.

Firms need to audit their existing software, their ongoing license costs, the actual usage of the software and look into upgrading and moving to current versions. Gaining control and streamlining software choices will be essential. At the same time, firms will need to learn about the current software products for lawyers that can improve productivity and then make wise choices about which software to move to, different licensing options and the costs involved. Firms will also want to know what their clients and competitors are using.

As technology becomes a bigger slice of a firm’s budget, the dollars spent and choices made must be subjected to business analysis and decision-making. In other words, if you don’t know what you are getting for the dollars that you spend on technology, hadn’t you better find out? The notion of return on investment ('ROI') has been a huge issue for non-legal businesses for several years. Law firms, in general, have not taken a similar approach.

In order to measure ROI, a firm needs to develop standards and methods to quantify and analyze results. There are resources available to help firms measure and analyze ROI. An audit of current projects and review by an expert would likely save most firms thousands of dollars just by eliminating redundancies, unused software and dead end or unnecessary projects.

In simplest terms, you want bang for your buck. Technology must either save you costs or help you produce income. If you don’t measure, you can’t know.

In 2003, we will see firms take a variety of approaches to ROI. Most firms need at least a high-level technology audit of existing systems and projects, education of decision-makers and analysis of initiatives and projects. Costs must be checked carefully and options such as outsourcing, leasing and purchase of refurbished hardware should be considered as ways to get control over your technology budget.

As I mentioned earlier, the gap between the technology haves and the technology have nots is increasing. One key sign of a technology have is the presence of a strategic planning group that integrates technology decisions with the business plan and goals of the firm. In many firms, a complete restructuring of existing technology committees will be appropriate. Your technology committee might need an expanded profile, more decision-making power, a more streamlined process or new energy and fresh ideas.

Planning becomes much easier with ROI standards in place. At the same time, client needs and requests will definitely force firms to consider carefully and plan for technology initiatives. Strategic technology planning will become a larger part of firms’ strategic business plans.

I also expect to see more of a 'portfolio' approach to technology planning. In a portfolio approach, a firm takes a diversified strategy of creating a reasonable mix of low risk, low return technology investments and high risk, high return technology investments, much in the same way as we diversify our financial investments. This approach balances the risk and return of a firm’s entire technology 'portfolio.'

As a result, 2003 will be a year in which a wide variety of old and new technologies are tried. For example, I would expect firms to address older ideas, such as document assembly in particular, as well as new client driven technology initiatives, such as extranets and knowledge management. All this planning will happen, however, upon a bedrock of greatly increased attention to security issues.

There have been three stages in the use of technology in law firms. First, secretaries and staff got the best equipment and software and attorneys were almost an afterthought. Next, technology became almost exclusively the domain of IT departments who determined what was appropriate for attorneys and most stable for networks. In these two stages, attorneys with specific needs felt neglected because they did not fit the technology template. In 2003, we will see the third stage of legal technology — the attorney-focused stage. Interestingly, solos and small firms have already started to take this approach.

For example, Word XP was designed with features that would benefit attorneys more so than secretaries. PDAs, laptops, scanners, color printers, wireless and the like can all improve the life and productivity of attorneys. Young attorneys are accustomed to significantly more powerful technology than what they find in today’s law firms. In some of these cases, the technology does not necessarily benefit staff and might even make the job of the IT department more difficult. However, as many attorneys have complained to me, shouldn’t the firm be catering to the technology needs of attorneys first and help them service clients in the best ways?

This 'attorney first' stage requires that firms thoroughly research and understand and educate attorneys on the tools that are available to them and to make choices that are appropriate for individual attorneys.

Here’s a simple test. Enter your name or your firm’s name into a search engine like Google and look at the results. Those results are your Internet reputation, or your 'Web Presence.' Now, take a look at your favorite websites, the ones you use on a regular basis. Think about what you like about them and how they are useful to you. Now, go visit your firm’s website. See the difference?

Law firms who do not 'get' the Internet and the need to manage and control their Web presences are paying a price every day. Clients who use Web and e-commerce strategies on a regular basis are going to drive their law firms into adopting similar Internet strategies, or they will go elsewhere.

In 2002, there were a large number of substantial redesigns of law firm websites. There is still quite a way to go. 2003 will see another significant round of website upgrades, use of extranets and client-centered or personalized approaches to websites.

The recurring theme throughout 2003 will be client-driven technology. Most of the firms with really interesting technology initiatives have taken such efforts at the request of clients or as a result of seeing a client need that could be filled. Clients who used Word and wanted compatible documents forced the sea change of law firms moving from WordPerfect to Word. Clients largely drove the early use of e-mail at many firms. Many of your clients are doing cool things with technology that you should know about. They see the benefits in cost savings and otherwise and will want to bring those benefits into play to manage increasing legal costs, which are in no small part due to the lack of use of productive technologies. In fact, companies are considering going to flat fees for legal services and expecting law firms to adopt more efficient technologies.

In 2003, law firms should expect to see increasing pressure from clients to change outdated technologies and adopt new and compatible technologies. The law firms who see this trend coming, and prepare for it, and know which options are available, will end up in the best place.

In the last few years, many firms could and did sit back and let technology developments happen elsewhere. In 2003, however, firms will be forced to make major technology decisions. An aging stock of hardware and software must be replaced. Technology budgets and decision-making that seem out of control will need to be focused and an emphasis placed on return on investment. Pressures from Internet developments and client needs will place a premium on excellent strategic technology planning and careful attention to cost issues. Finally, we will enter a third stage of legal technology where the primary focus will become which tools are best for lawyers. Firms who drift through 2003 are likely to find themselves on the side of the line with the technology have-nots rather than with the technology haves, and that is certainly not a place that any firm should willingly want to be.

Dennis M. Kennedy practices in St. Louis, Mo., focusing on transactional matters in information technology, e-commerce and intellecutal property law. He speaks and writes frequently on these topics. He is also an adjunct professor at Washington University School of Law, where he teaches a course on intellectual property licensing and drafting. Many of his articles can be found at www.denniskennedy.com. Reach him at dkennedy@thompsoncoburn.com or (314) 552-6232.

This article originated in TechnoLawyer, a popular legal technology and practice management resource that consists of a network of free, critically acclaimed e-mail newsletters, and a searchable web-based repository of all TechnoLawyer content since January 1997. To join, search, or learn more about TechnoLawyer, visit the website www.technolawyer.com.

© 2003 Cliff Collins

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