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.
Recent Trends
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.