Integration of Legal Technology and Legal Services

George Rudoy, CEO, Integrated Legal Technology, LLC

Owen O’Connor, Managing Director, Cernam Online Evidence

Disruptive Technologies

2

“Call me radical, but it seems to me that if we canenvisage a day when the average desk-top

machine has more processing power than all of humanity put together, then it might be time for

lawyers to rethink some of their working practicesand processes. This is not Google and hand-helde-mail plus a few bells and whistles. This is anunprecedented revolution in the power of the

tools available to man.”

Richard Susskind, The End of Lawyers?(2008), 64.

Agenda

Legal Industry TrendsCreating New EfficienciesNew Technology Advancements

Cloud Provider Engagement - a Structured Approach

The Gap Between ProfessionsDon’t forget external users!

Discussion and Q&A

3

Legal Industry Trends

5

“The overall marketplace for

legal services is fracturing. It's

unbundling and specialists are

emerging.”

“Firms have to decide where they

want to compete and how, and

what fits in their business model”“Trends come and go all the

time. This one I think is here to

stay.”

“General Counsel to Cut Legal Spending Up to 25%: Catastrophe or Opportunity?”

“The GC.…shifted his legal spending from 50 percent internal and 50 percent external to 70-30, thus reducing outside spending by 40 percent.”

Sources: ABA Journal; Legal Intelligencer; AmLaw Daily; HBR 2010 Law Department Survey

Legal Industry TrendsFundamental changes

difficult to determine what will change and what will remain same

Sellers market shifting (partially) to buyers marketIncreased need to demonstrate client value

not about discounts, it’s about how firm delivers valueproductivity, efficiency, loyalty

Alternative fee structurespressure for it not coming from clients as much as is being written aboutnot so often flat fee as more predictable fees, caps, etc.

Legal Industry Trends: 2010 Managing Partner Survey

Firm leaders believe current downturn will lead to more fundamental and lasting changes in the legal market.Within 3 years:

– 96% expect increase in use of alternative pricing models;– 81% expect increased investments to make practices more

efficient;– 55% expect increased use of non-lawyer project managers; – 43% expect an increase in outsourcing of routine legal

activities.

86% said they were innovatively changing the ways in which they engage in legal practice and conduct administrative functions.

Source: HBR LEIB Survey, Q2 2010

Gradual Rebound or Temporary Anomaly?

The HBR Peer Monitor Index was up three points in Q4 2010 to 55 (PMI of 65 or higher indicates strong performance). Q4 saw a 1% increase in demand for law firm services in Q4 versus prior year – first growth in 2 yearsProductivity (hours / lawyer) increased slightly by 0.7%. Headcount remained neutral.Direct expenses down 4.5% but moderating; overhead fell 0.5%. For 2010, small rise in rates, plus staff reductions and tight cost controls, improved PPEP by 3-6 %. Demands for 2011 are below pre‐recession levels and can dip lower due to a possibly of a double-dip recession

Source: HBR Peer Monitor Index Q4 2010 Executive Report

Bankruptcy

DEMAND GROWTH BY PRACTICE: ALL SEGMENTS

Gro

wth

Rate

(%

)

Litigation M&A L&E GeneralCorp

Tax CapitalMarkets

RealEstate

Period over Period Growth

20

15

10

5

0

-5

-10

-15

-20

IP-Lit

Proportion of Overall Market

2009 v 2008 2010 v 2009 Q4 ‘10 v Q4 ‘09

Practice Dynamics

Source: HBR Peer Monitor Index Q4 2010 Executive Report

A Shift In Client AttitudesClients are smarter consumers of legal services and tolerance for annual increases is gone

– In the past ten years, costs to U.S. companies grew 20% yet legal costs rose

76%

Diminishing perceived value of many types of legal mattersDesire for “better, faster, cheaper”Growing determination to bring the economic interests of the client and the law firm into better alignmentYet most corporations are not satisfied that current approach (to litigation) best meets their needs:

– 58% of companies prefer to litigate versus arbitration or mediation

– 40% of US companies expect to increase EDD spending in 2011

– Areas of greatest litigation concern include IP/Patents, Regulatory, Product Liability

Source: HBR research; Fulbright & Jaworski 7th Annual Litigation Trends Survey, 2010

New Practice Models

New PracticeModels

Evolving MarketForces

DisruptiveTechnologies

Creating New Efficiencies

Creating New EfficienciesTechnology & Support Structure, Information Management and Best Practices

Integration and Centralization of Legal Technology & Support functionsConsidering new ways of outsourcing (i.e. Cloud Technologies)Establishing clear business case process Key metrics and process for tracking performanceMobile workflows Categorization of efforts to drive organizational buy in and success: KM, LPM, CRM, Social CRM, Client Development, Business DevelopmentIntegration of contextually relevant content from external sourcesDeveloping primary information delivery mechanisms (i.e portals)

• adoption/utilization challenges• metrics to monitor usage

Integration of client data into attorney workflows/applications

Creating New Efficiencies

Legal Project Management (a few questions to ask)

What does LPM actually mean?Who in your firms is responsible for creating project plans, setting milestones, budgets and deliverables?What tools do you use for LPM?Project management is a professional discipline in its own right, do you feel your attorneys have the ability to become effective project managers?   

• Using certified PMPs• Training programs

What are the key ways LPM have helped create organizational efficiencies?

Creating New Efficiencies

AFAs (more questions)What are your longer range plans, and what are you looking to accomplish this year?What is working well, and where do you see the challenges?How prevalent are AFAs in your firms?How do you establish pricing for AFAs and what data do you use to evaluate?What mechanisms do you use to monitor & ensure profitability in an AFA arrangement?

Creating New Efficiencies

Cross Selling & Business Development

What are the untapped or not easily accessed sources of information that could be used for business development? What technologies are being utilized to make this information more easily accessible?What are attorneys asking for now that is not yet available to them?Has anyone yet begun to merge firm data with web-based social network data to help attorneys?

New Technology Advancements

Information management, litigation and discovery needs often become more diverse as client and case size increases

Firms Are Creating Strategic Partnerships That Meet the Diverse Needs of Their Clients

Many “Do it Yourself” and Outsourced

Solutions Options Are Available

Based on Clients’ Needs

70% of U.S. attorneys in private practice work in law firms with ten or fewer attorneys

Ten or less

2000 statistics from ABA: See, http://www.hg.org/marketing-us-market.html

Cloud and Software as a Service (SaaS) technology brings robust, modern technology all lawyers and clients—not just the big ones

Cloud Technologies

Emerging “In-House” Solutions:•Software-as-a-Service (Saas)•Platform-as-a-Service (Paas)•Infrastructure-as-a-Service (Iaas)

Advantages:•No up front investment•Pay only when you use•Reduction in overhead (staff and infrastructure) Emerging “Outsourced” Solutions:

•Discovery Repositories•Early Data Assessment Consulting•Computer-Aided Review

Advantages:•Ability to scale quickly•Diverse options•Partner knowledge and experience

Cloud Technologies

AmLaw Tech Survey 2010

80% of law firm respondents reported using cloud computing services

29% said it lowers costs

60% use cloud-based services for e-discovery or litigation support features

5% use the cloud for document management, while 6% utilize cloud computing for storage purposes

39% are worried about security

Cloud Security in 60 Seconds

“We have a SAS70 that proves we’re secure”Who has a SAS70? (Amazon Web Services? Your server hosting provider? A completely unrelated datacenter?)What exactly does it cover?

“Your data is encrypted, we use 128-bit SSL security / banking-grade security”

Must differentiate encryption in transit from encryption at restFew providers have meaningful at-rest encryption

Key Cloud Security Questions

If our data is encrypted, can your staff access the contents of our data?If we view the audit logs for your service, will they show access by your support staff?Outside of your staff, who else can access data (downstream providers, contractors)?What are your dependencies on other cloud service providers, specifically Amazon?How are your security features tested?

Cloud Provider Engagement - A Structured Approach

Managing Cloud Providers

Why would anyone run a project just to select a cloud service provider?

“There is only one vendor in the area, we just need to negotiate and contract with them”“This is a hosted cloud service, IT doesn’t need to deploy anything so it’s not an IT project”“This is just a pilot adoption, we don’t want to bloat the effort with project management”“The dollars involved mean this isn’t a project”

The $30 per month trap

“5 users at $30 each is pocket change, we’ll just use a purchasing card or expense it”

$16k starts to look more like a project.. and you’re storing what data in this service?

Month Users Total Monthly Cost Yearly Cost

1 5 $150

3 8 $240

6 14 $420

9 25 $750

12 44 $1,320 $15,840

Structured Cloud Engagement

Identify project stakeholdersIdentify outline requirementsResearch market players (never assume only one provider exists)Document detailed requirementsAssess specific providers (potential RFI/RFP)Validate choice of preferred provider

Due diligence, integration planning, security

Negotiate, contract, integrate / deploy

The Emerging IT PM Hero

Cloud provider engagement shows the range of skills needed in an IT project manager

Market awareness & researchTechnical writingVendor assessmentFinancial Negotiation

Managing cloud providers could become a full-time role based on current trends

The Gap Between Professions

Who are the stakeholders?

IT

COMPLIANCE

COUNSEL

LEGAL

RECORDS MANAGEMENT

PROJECT MANAGER

What do the Stakeholders Care About?

IT• Storage• Archive• Accessibility•Security

COMPLIANCE• Risk• Regulations

VENDORS• The Sale

COUNSEL• Cost strategies• Collect• Review• Risks• Case strategy• Mine from many sources• Greater responsibilities• Holds

CUSTODIANS/USERS

• Doing their job• Hassle-free

LEGAL•Manage Cost, Risk & Strategy•Contract

RECORDS• Volume• Records Retention• Preservation

Alignment Issues

Fit

Effort

Value

Maintenance

Systems Dept. Business

Divergent perspectives on implementing processes

Within technical infrastructure

Within process landscape

Within project scope/need

Legal/Outside Counsel

Increases(new process)

Increases/Decreases(process improvement)

Increases(response to new burden)

Within system portfolio

Profit, efficiency, savings, etc. Reduced Risk

Coordination, Burden

? ??

Partner26%

General Counsel9%

IT4%

Staff Attorney4%

Litigation Support53%

Paralegal4%

Who handles to intersection of law and technology – law firm perspective

General Counsel16%

IT28%

Staff Attorney44%

Partner4%

Litigation Support53%

Paralegal4%

Who handles to intersection of law and technology – corporate perspective

Budgeting Gaps

Depends on the company’s perspective.Proactive approach – typically involves DRP planning along with a sizeable software purchase – e-archival, doc management, etc.Usually, comes from the IT Dept. budget.Reactive approach – typically involves responding to a threatened/filed litigation by way of a sizeable services purchase.Usually, comes from the Legal Dept. budget.

Nomenclature Gaps

ArchiveFiles and FoldersBackup

Scheduling Gap

Scheduling Gaps

Don’t forget external users!

Clients are IT users too

Must clients experience law firm tech in some form

Portal and collaboration systemsDocument review platformsBulk file transfer toolsFirm websitesVoice & video conferencingBilling systemsAttorney access to client-hosted systems (portals etc)Secure email systems

Poor Client Experiences

Multiple equivalent systemse.g., multiple Sharepoint portals or file sharing sitesDifferent platforms or versions across different cases, between different offices or practice areasSeparate passwords etc within a single project or firm

Poor platforms / poor experience for core servicesDocument sharing, voice conferencing, electronic billing, secure email services

Inconsistency and initial confusion on e-discovery providers, review platforms and methodologies

Ideal Client Experience

Single client web portal, across all locations (globally) all and practice groupsClient web portal linked from website front pageTeam details, electronic billing, file transfer and basic collaboration provided via core portalAll secondary portals, web applications, third-party web services etc linked from core portalSingle set of authentication credentials with self-service password reset and direct helpdesk contactApplications updated/retired in a controlled manner

Integration of Legal Technology and Legal Services

George Rudoy, CEO, Integrated Legal Technology, LLCP: +1 347 208 2740

grudoy@integratedlegaltechnology.comhttp://www.linkedin.com/in/grudoy

Owen O’Connor, Managing Director, Cernam Online Evidence

P: +353 1 716 3793

Owen@Cernam.com

http://www.linkedin.com/in/owenoconnor

Twitter: @CernamOwen