Technology in the Law Department

Transcription

1 Technology in the Law Department

2 Technology in the Law Department AN OVERVIEW OF WHAT YOU REALLY NEED AND WHY By Robin Snasdell, Huron Legal There is a vast array of technology systems available to law departments today, ranging from core products like matter management/e-billing systems to highly sophisticated management reporting systems and web portals. How do you identify the technology your department really needs, and how do you justify its expense? A systematic approach to technology planning understanding what is available, identifying your department s needs, and evaluating the proposed system s cost effectiveness will help avoid costly mistakes and will lead to the selection of the right technology to yield the most effective long-term benefits for your organization. Why Does Your Department Need Technology? The right technology helps today s law departments meet their clients evolving needs and expectations. Where once in-house counsel were expected simply to provide legal subject matter expertise, over time that role has evolved. Clients expect today s in-house counsel to have business acumen in addition to legal proficiency, and to provide legal services in an efficient, cost-effective manner. While technology cannot substitute for substantive legal knowledge and experience, it can help law departments meet their clients expanding expectations. Technology can facilitate the collection of information to make better informed decisions, allowing counsel to answer business questions on a timely basis and to communicate insights based on the most current information. Technology also can help law departments and in-house counsel operate more efficiently and cost effectively. All the functions of a typical law department can benefit from technology: corporate and securities; litigation and compliance; commercial; intellectual property, including patents and trademarks; and general counsel functions such as executive reporting, workload and resource balancing, and board management. There are a number of business and operational challenges that can arise from the use of manual processes or outdated technology, common across all sizes of law departments serving most industries. Well-planned technology can help resolve or avoid these issues and can provide additional, sometimes unexpected, benefits. Because of the direct and indirect costs associated with these challenges, postponing a technology purchase or upgrade can be false economy. The following are some of the ways technology can alleviate common business and operational challenges. Becoming More Efficient Manual processes can lead to inefficiencies, redundancies in data tracking, and inaccuracies because they rely entirely on human input. Automation of processes eases workflow. Technology can potentially assist any workflow process both within and beyond the law department that is somewhat repeatable and would benefit from tracking and management. Today s technology can take even fairly complex processes, such as invoice review pursuant to a delegation of authority, and automate the process including allowance for exceptions. Technology also improves consistency by standardizing processes. Communicating Value The inability to easily retrieve data, lack of a common data repository, or inconsistent and unconnected systems can impede communications within the law department, with clients, with outside counsel, or with other external parties. For example, it takes longer to input and retrieve from manual or disjunctive systems the information that may be needed to make decisions. Because of the availability of shared information and consistency in processes, technology provides the opportunity for improved, consistent internal communication and collaboration. It can also help close the gap between inside and outside counsel through platforms for shared information and communication. In essence, technology can virtualize the team, reducing barriers between parties and bringing outside counsel closer to the inhouse team huronconsultinggroup.com

3 Technology in the Law Department Reducing Risk Manual or outdated processes can also increase risk caused by incomplete data for decision-making, data from multiple unconnected sources, multiple versions of documents, or the inability to access or disseminate important policies potentially leading to non-compliance. For example, it can be difficult to retrace manual reports or special reports underlying calculations and rationale, leading to potential questions regarding data integrity. Technology-driven consistency in processes and information reduces risk because of a smaller chance of human error or misinformation. Informed department members, clients, and outside counsel can act within the established guidelines with improved communication and more readily available information. Becoming More Proactive and Facilitating Change For the same reasons that manual or outdated technology can impede communications, it can limit the ability to act proactively. When information is not easily retrievable and must be gathered on an ad hoc basis, the tendency is to remain in reactive mode. With easier decisionmaking because of technology, both the law department and its clients can be more proactive. Law department management can be more proactive in running the department, and the law department can easily provide the necessary information to business clients and company management so they can act proactively to take advantage of short-fuse opportunities. Technology also enables change, both behavioral and organizational. By standardizing processes the related behavior is also standardized, thereby expediting behavioral change, for example, driving consistency in budgeting practices. Technology can ease growth or, if necessary, contraction of the department. Manual processes or outdated technology lack scalability and make it difficult for an organization to position itself for growth. As law departments grow, their old methods of communicating and sharing information often do not work as effectively, since processes that may work for a law department of a few people can become unwieldy or unmanageable as the department grows. Manual processes can be equally problematic when organizations shrink: information can be lost and manual processes may be changed, inadvertently or intentionally, when department members leave. Technology that is scalable facilitates organizational change by allowing the law department to grow or contract more seamlessly. The right technology provides continuity and facilitates effective communication regardless of size. Managing Cost With poor or no technology, managing external costs and resources is much more difficult. The lack of effective technology can also lead to the disadvantageous use of internal resources. Multiple stop-gap solutions ultimately cause more work. High value staff may be required to perform low value, manual tasks when they could be better focused on higher priority work. Not only is this potentially expensive, it can also lead to job dissatisfaction and turnover. On the other hand, sustainable operational efficiency typically results in cost savings over time. Technology makes information more accessible, resulting in improved reporting, which facilitates better cost management. Better decision-making information can also lead to additional departmental improvements and cost savings. Because law department management can track who is working on what, technology can improve work allocation and resource assignment. Management can determine whether sufficient resources are being allocated to work that is higher in priority relative to its risk, and can better align resources to give higher value employees more time to devote to higher value work. Benchmarking and Improving Advocacy Making sure your technology is current is also important from the perspective of the overall marketplace. The entire legal community is moving to more sophisticated technology it is important for your organization to be able to keep up. Your law department must be able to provide services and information in a way that allows your organization to maintain its competitive edge, and your department must be able to respond effectively to e-discovery requests, regulatory investigations, and other challenges. What Technologies are Available to Your Law Department? Law departments can turn to a range of technology tools to meet the business challenges discussed above. Most tools are available commercially and many can be customized to meet the department s specific needs. Large organizations may occasionally choose to develop their own technology if it makes sense based on other systems within the organization. 3

4 LEGAL TECHNOLOGY Figure 1 below illustrates a best practices schematic identifying some of the more common law department technology systems. Of course, not all of these technologies are appropriate for all law departments. Circled in the center of the schematic are foundational technologies including e-billing, matter management, and document management systems. On the right side of the schematic are technologies that help the law department relate to others within and outside the organization. Below those are technologies related to cross-business functions in which the law department may play a leading role. At the bottom of the law department square are technologies that facilitate the management of the department and certain legal functions. And at the very bottom of the schematic are web portals to provide platforms for shared information. Many of these tools are interrelated and can input or retrieve information from one another. FIGURE 1 - Common Law Department Technologies Outside Counsel integrated and are generally sold as a unified product, although they still exist separately in many companies. Management reporting systems are illustrated just below the foundation technologies. They are not core systems but are discussed in this section because they build on the foundation technologies. Matter Management Systems Matter management systems track the progress of individual legal matters and projects from all practice areas. They track tasks, deadlines, and numerous other factors, facilitating management of time and resources. Matter management systems can be used to connect the dots between detailed information about matters and the financial information usually stored in electronic billing. E-Billing Systems E-billing systems allow outside counsel to submit their bills electronically, using standardized billing codes and identifiers. E-billing systems can be tailored to incorporate rules to enforce the company s billing guidelines and outside counsel management policies. Law Department Systems Foundation Technologies Discovery Document Management Matter Management Management Reporting ebilling IP Management Accounts Payable Enterprise-Wide Tools Company Functions where Legal is a Stakeholder Contract Management Records Management Governance Matter management and e-billing are core systems that would benefit most law departments and their attorneys. They allow individuals within the department to understand their workloads, and they also allow department leadership and other executives to track and budget work allocation, as well as to manage external legal expenses and budgets. When implemented correctly, a combined matter management/e-billing system can help provide answers to complex analytical questions, almost at the touch of a button. For example, with a well-implemented system, inhouse counsel could quickly provide a data-based answer to the question, Which law firm is providing us the most cost effective, highest quality trial preparation for personal injury cases in Illinois? Web Portal Business Segments Legal Department Foundation Technologies Circled at the center of the diagram are three technologies that are often considered fundamental tools for the law department matter management, e-billing, and document management systems. They are the foundations for other, more sophisticated technologies. Matter management and e-billing systems were originally developed as separate products. In the last few years they have been completely Many of the new matter management/e-billing systems are platform-based, allowing easier integration with other applications. In essence, they become the hub for other information. Document Management Systems Document management systems are electronic document repositories that allow secure collaboration on content, including document editing via check-in/check-out, version tracking, and audit trails. In the law department, document management systems can streamline document creation, leverage existing work product, facilitate collaboration in document drafting, and provide a central repository for storage with secure access. 4

5 Technology in the Law Department Whether a document management system should be foundational in a given law department depends on a variety of factors including the industry, the type of work in-house counsel does, and the departmental philosophy regarding providing legal services, i.e., whether the department provides direct, hands-on legal services or whether it focuses on managing outside counsel to perform the work. Management Reporting Systems Management reporting systems (illustrated beneath the circled foundation systems in Figure 1) build on the foundational systems. Management reporting systems can generate reports such as monthly status reports, operational reports, financial reports, and management and performance reports. Management reporting systems can receive input from and provide output to most of the other central systems, and the most sophisticated ones can pull from multiple systems. Some newer technology systems, including many e-billing systems, have embedded ETL (extract translation language), allowing one system to communicate with another. Web Portals Web portals (shown at the very bottom of Figure 1) can provide internal business clients, the legal department, or potentially outside counsel with access to information and applications. The web portal aggregates data from a variety of systems to provide information in the appropriate, usable form. These systems might be considered icing on the cake for a law department that has in place the optimal combination of foundational technologies and other appropriate supporting technology. Enterprise-Wide Tools The technologies on the right side of Figure 1 represent tools common to the entire organization that also support the legal function. When integrated with other systems, they may also enhance those systems effectiveness. is often integrated with other programs such as Outlook, and can be tied into other departmental or enterprise systems for notification of events or other steps in processes. The company s accounts payable (A/P) system is relevant to the law department s external spend. Many A/P systems can obtain input from or provide output to e-billing and matter management systems. Other enterprise-wide tools not reflected in Figure 1 include Microsoft SharePoint, collaboration software that allows the creation of websites to share information, manage documents and publish reports, as well as basic business tools such as those in Microsoft Suites Word, Excel, Access, OneNote, and PowerPoint. Tools Supporting Specific Legal Services At the base of the legal department rectangle in Figure 1 are specialized systems that can facilitate the provision of certain legal services, depending on the nature of the business. Two of the most common are discovery systems and intellectual property management systems. Discovery Systems Organizations with large amounts of litigation or an abundance of electronically stored information (ESI) may want to investigate discovery technology, which can facilitate a variety of the discovery functions. Tools are available to facilitate tracking legal holds, the collection of potentially responsive information, archiving, processing of ESI, privilege and responsiveness review, and the ultimate production of documents. IP Management Systems Intellectual property management systems can be helpful to organizations with large patent portfolios. IP systems track patent applications, patent expiration dates, payments on annuities, associated countries, and perform other functions integral to patent management. Tools for Company Functions where Legal Is a Stakeholder The three boxes below the enterprise tools in Figure 1 represent technologies that support functions in which the law department plays a key role: contract management, records and information management, and corporate governance. Governance, risk, and compliance (GRC) systems, although not reflected in Figure 1, have similar supporting roles. 5

6 LEGAL TECHNOLOGY Contract Management Systems Contract management systems may be appropriate for businesses with a large number of relatively standard procurement or sales contracts. Contract management systems manage the complete lifecycle of contract processes negotiating, drafting, executing, and administering contracts. They can give business people the ability to initiate certain contracts and may include standard templates with language provided by the law department. A good contract management system, properly used, can actually influence the sales or procurement process managing and tracking pricing, managing risk through standardized language and avoiding unforeseen clauses, and providing information for timely renewals from a sales perspective or for negotiation from a purchasing perspective. Records Management Systems Records Management tools manage the retention and disposition of an organization s official records, including legal hold/preservation and discovery, according to both legal and business requirements and schedules. Records management systems can be integrated with other systems for example, pulling documents from document management systems or other tools. Document management systems differ from records management systems in that document management systems manage the creation of and collaboration on work-in-progress documents while records management systems focus on those completed documents that are classified as records. Corporate Governance Systems Corporate governance systems are particularly helpful to large or publicly traded companies. These systems help companies track their entities and subsidiaries, manage securities filings, and facilitate corporate secretary functions such as minutes and resolutions. Risk & Compliance Systems Governance, risk, and compliance (GRC) systems assist in managing the organization s risk and compliance. There is a wide range of available GRC software serving a variety of functions. GRC systems can be enterprise systems or can focus on specific functions and processes. They can take a variety of forms they can manage or track risks, compliance obligations, incidents and cases, policies, procedures, legislation and lobbying activities, and more. What is Your Department s Current State of Technology Maturity? Before investing in new technology, it is a good idea to assess where your law department falls in the continuum of technology usage, taking into consideration the department s functional needs. What Do You Need? As a best practice, the law department s business needs and process requirements should drive technology solutions, rather than the technology itself being the driver. Technology neophytes sometimes acquire systems before fully assessing their needs, and then are disappointed when the technology does not provide as many benefits as expected. Determining what your department wants or needs to accomplish is a key starting point for evaluating your technology needs. What services does or should your department provide? What are the essential processes for these functions? What are the growth plans for the company and the department over the next few years? You can ascertain where technology might be of use by examining the routine and non-routine work processes for each essential function. Common and standard processes, assisted by technology, will improve productivity and efficiency. Consider also how different processes overlap and interact with one another. The most effective processes embrace a lifecycle approach, addressing the entire function from beginning to end in order to make the best use of common information and actions. How Mature is Your Technology Model? Once there is a clear understanding of the functions that need to be accomplished and the processes that can potentially be improved with technology, the department s current technology level can be mapped against the continuum of system maturity. Does your department have the core technologies in place? Are they performing all the functions you need, or should they be updated? Law departments maturity levels vary widely. Some are very basic developing manual processes from scratch, or using programs like Microsoft Access or Microsoft Excel. Some have established systems that could use updating. The most mature have optimized technology use. A surprising number of law departments have limited or no technology in place, and even some larger departments 6

7 Technology in the Law Department have inadequate technology and would benefit from technology upgrades or additions. Figure 2 illustrates the continuum of technology maturity levels, with a sample assessment of an organization with a relatively immature program and some of its functions that technology may benefit. FIGURE 2 - Sample Maturity Assessment INITIAL Process is ad-hoc. Few activities are explicitly defined. REPEATABLE Some processes and tools do exist. However, they lack alignment. DEFINED Processes are documented, standardized, and integrated. MANAGED Detailed measures of the process are collected and controlled. OPTIMIZED Processes are improved through qualitative feedback. Identifying and prioritizing the department s needs and comparing that analysis to the department s technology maturity continuum will help you recognize the areas where new technology or a technology upgrade is likely to provide the most benefit to your law department. For each technology tool there is a variety of vendors. Every vendor s product has its strengths and weaknesses, so it is important for the law department to carefully evaluate which products can best meet the departments needs. Matter Management Document Management Contracts Management Financial Management Discovery Management/ Early Case Assessment Outside Counsel Management Where to House Your Technology: In-House or in the Cloud? Once you have determined the type of technology you need, there is one more important consideration as you evaluate vendors or tools. Where do you want to house your technology in-house or in the cloud? In the current market, this question is generating a lot of attention and debate. There are pros and cons to both alternatives; a detailed analysis is beyond the scope of this paper. In general, keeping your technology in-house gives you more control and more security, but it also costs more and utilizes storage capacity. The cloud is typically lower cost, has virtually unlimited storage capacity, allows smoother upgrades, requires less IT involvement, and allows external access, but also has more associated risk. Some of the possible risk considerations can include data security and privacy, access control, back-up and archiving policies, records management and e-discovery issues, and your exit strategy for terminating the relationship and transitioning your data. Most vendors will provide ROI information that can serve as a starting point. Since vendor ROI models tend to be fairly generic, you may want to expand on the vendor-provided information or use it as a benchmark against which to make your own calculations. Practical Tips for Your ROI Model Following are a few practical tips to consider as you develop your ROI model: Extend the analysis over several years, since the expenses are likely to be heaviest on the front end of the investment, whereas the projected gains are likely to increase over the course of several years as use of the system matures. A technology ROI should typically include costs for system selection; licensing and hosting costs; basic implementation costs; costs for integrating with other inhouse systems; project initiation costs; and the cost for any advanced features or customization of the system. How Do You Justify the Cost of Technology Improvements? Identifying the right technology solutions for your department is a major hurdle but by no means the end of the race. Especially with today s shrinking budgets, it is important to be able to financially justify any technology investment. Many law departments find it helpful to use return on investment (ROI) models when making the case for technology purchases. Carefully consider the assumptions built into your cost calculations. Make sure the model takes into account variables such as department growth or other factors that will add to the cost. For example, many providers bill for software licenses based on the number of users, so if the law department is expected to grow in the next few years licensing costs may go up. 7

8 LEGAL TECHNOLOGY Take into account both hard and soft savings when looking at the projected gain. For example, implementation of an e-billing system typically results in savings through better invoice validation and control over timekeepers, rates, and fees. It is Huron Legal s experience that e-billing systems can yield a savings of 2-4% within the first year or two simply through the correction of basic validation errors. (Depending on the circumstances, we have occasionally seen savings of up to 40% deriving from initiatives that were implemented because of the available data.) E-billing/ matter management systems also can trigger indirect savings they can provide data for more effective rate negotiation with outside counsel or for development of convergence programs, and can facilitate improved management of internal and external human resources leading to related savings. Closing Thoughts A well-planned investment in the right technology for your law department can yield both financial and operational returns. Planning and selecting the technology is only the beginning. In order to get the most from your technology investment, a well-thought out and thorough implementation is crucial. Technology does not implement itself. Maximizing its success will take planning, effective design, quality development, thorough testing, and wellarticulated training along with the appropriate hooks and cookies to get user buy-in. Equally important is choosing the right people both to implement the technology and to support it once it is in operation. But that is the subject of another article. Do not forget to include savings related to the improved efficiency and cost avoidance from using technology instead of people for various tasks. Huron Legal provides advisory and business services to assist law departments and law firms to enhance organizational effectiveness and reduce legal spend. Huron Legal advises on and implements strategy, organizational design and development, outside counsel management, operational efficiency, and discovery solutions, and provides services relating to the management of matters, contracts, documents, records, digital evidence and e-discovery v 2.1 Jan Huron Consulting Group Inc. All Rights Reserved. Huron is a management consulting firm and not a CPA firm, and does not provide attest services, audits, or other engagements in accordance with the AICPA's Statements on Auditing Standards. Huron is not a law firm; it does not offer, and is not authorized to provide, legal advice or counseling in any jurisdiction.