Innovative Online Legal Products For Clients

This top-notch panel shared important lessons about ways to use to technology, not to simply improve attorney efficiency, but to actually change the way that law firms deliver legal services.

Formal Title: Should You Create Innovative Online Legal Products for Clients?

Description:

Expert systems, document automation and other online tools have come a long way, and innovative law schools and legal aid organizations are using them to provide “self-help” legal services. Given this explosion in legal technology, we’ll tackle a question looming for law firms: Is it time for firms to consider using innovative legal technologies to create online legal products and services for their clients?

See tweets at #kmpg4 .

Speaker(s):

·         Michael Mills - Neota Logic

·         Meredith L. Williams - Baker Donelson Bearman Caldwell & Berkowitz

·         Scott Rechtschaffen - Littler Mendelson, P.C.

·         Kingsley Martin - KIIAC LLC

Scott Rechtschaffen introduced the topic.

It's important to learn from failure. Littler attorneys sent 10-15 emails each day about "who knows these labor arbitrators." His group set up an (internal) database about them. It was not a good endeavor. It's best not to be guided by the attorneys. They wanted everything, not reviews of arbitrators of the arbitrations, complete with briefs. They didn't do anything, it required too much of the attorneys.

They later made a database of international employment lawyers. This one did get some use, but you had to remember where it was.

They then turned to Courtroom Insight. It creates a Yelp-like reviews for experts, judges, arbitrators, and mediators, all in one place. People who use it like it very much. Buying it created a lot less anxiety and stress.

They also have a database of 50-state comparisons with 50-60 surveys, which also includes a database of legislation and regulation. They charge clients for access to this. They've covered the cost 3x-4x.

I described the Littler CaseSmart system elsewhere.

The clients love the dashboard on the CaseSmart tool. It has a heat map, the type of charges, and the like. One client caught the impact of a minor policy issue that led to charges around the country through the

They also recently launched the Littler Healthcare Reform Advisor, a tool that runs an online questionnaire and indicates the potential penalties under Obamacare.

Buying off the shelf and adding the legal nuance

Meredith Williams showed dashboards where clients can drill in and see details about their matters. These dashboards wins over clients.

They will help map out the data collection processes for clients using their in-house eDiscovery experts.

They also have an "emerging company institute" extranet that startups are charged to access. They developed 30-40 documents that clients purchase from them and let them create documents via document assembly. They use Contract Express, the same document assembly my firm uses.

These systems stickiness with clients. A relationship partner left and the client stayed with the firm because the extranet had all the documentation they needed and used on the site.

If you try to create an app, use someone external. Baker provided an app with a quick guide to labor and employment law. They also provide compliance education at the staff level via an online service. They didn't want to have that compliance training for executives, since they wanted the attorneys in front of the executives talking to them in person.

Keeping It Simple

Martin--Simple and clear is the best way and is the hardest thing in the world.

Online client systems are the way forward. We may not get a seat at the table unless we start to produce revenue.

In our law firms we have collective experience resulting from millions of hours of experience.

His tool takes a pile of documents, decomposes them into clauses, and aggregates the clauses into one common outline. For example, in employment agreements, what clauses are required, what are optional, and which are frequent or common.

Simplification lessons also apply to the practice of law. We need to simplify and make clearer contracts and briefs that we produce.

A simplified, focused approach might put most frequent clauses up top.

He draws a lesson from Silicon Valley--"Get Going--Build something!"

Analyzing documents might start with clause elements. Organizing documents addresses document structure.

He's released a an app for a non-disclosure agreement. He completed it on the airplane ride to conference. www.kmstandards.com/kmauthor/mobile

The content is HTML, library is JQuery Mobile, presentation by ThemeRoller (lets you drag colors around when you design).

What's out there?

Baker McKenzie has some great apps on global equity. Goodwin Procter has the Founder's Workbench. OMelveny has an FCPA app. Wilson Sonsini has a term sheet generator.

Pointer & Squirrel has an "eForeclose" site allowing clients to generate foreclosure papers.

At a lower end, on the Kimball, Tirey & St. John LLP site you can start a collection case, upload documents and start the case.

This helps law firms be more efficient, because the client supplies a lot of the information lawyers need directly into the system.

How do we assess the viability of potential projects?

Leon Litigator corners you. He's assessed 2000 cases and determined 56 variables that determine the likelihood of success at trial.

His kid sister is a Google engineer who's already written the algorithm.

Always ask:

1. Is there a market for this? Who would purchase it?

2. Do we have any support in-house to build this?

3. Is there a product on-market that does something like this already?

Law firms are not product companies, and online services are products. They do spend time thinking about acquiring lateral partners. Michael Mills would start with what the business purpose is. It may be that revenue is critical.

It requires substantive infrastructure as well as technical. Online resources about substantive legal issues will decline if not maintained. Building a product is a major commitment. Will they invest the effort necessary to keep it up to date?

Martin--lawyers do want to monetize the experience that they have. The two pieces are expertise and software development.

Williams--they've had most success when they partnered with outside vendors who had the development expertise, they provided the “legal gloss.”

Incentives & Maintenance

You also need the incentive systems to align. Product building is different from the billable hour. Firms may not have the right structure to incentivize attorneys to contribute to online services.

Expanded revenue fund program. Meredith has a laundry list of projects, with lists of people who would do the work. They set up client-matter numbers for the projects, people bill their time.

They get 75% of the credit, so that they have an investment in the success. The "Developers" get a coupon from the firm, they get a percentage of the sale.

Once you start handing over services to your client, you develop a real responsibility. If you can't sustain it, it's better not starting at all.

Attorneys regularly churn out articles for potential clients. If they are willing to do that, shouldn't they be willing to give content to developers who can productize it?

A reputation for being innovative doesn't help. What helps is delivering value that helps clients in very specific areas. Helping lawyers gain business in particular areas, capturing some of the business development activities and redirecting that energy, is useful. It's more useful to clients because it's direct service.

Clients are coming to firms are asking for things at lower cost or for free. Online products are one way to do that.

Does it skew the analysis when a client asks you to develop an on-line service? Maybe, if it's a high-level client as a percentage of revenue.

Development of online products should be considered a part of the essential business of law firms. They are perceived as completely different worlds from traditional concerns like practice area development or opening offices.

The first stage involves some benefits to "first movers."

A second level is systems that create client "stickiness."

The third level is to move to revenue generating services. The big concern is how to scale. Each app currently used is focused on a very narrow area.

How do you take the Founder's Toolkit and move to licensing?

Michael has seen great examples of client stickiness developing from building excellent online services. It makes clients less portable.

"Our employees are so used to what you have, we don't want to replicate that somewhere else."

How do you assess a market?

Market research is an outside expertise for most lawyers, but there are people in firms who do that kind of work. You probably have good market research people. There are also services you can subscribe to.

The trick is how to estimate revenues or sales on something that hasn't been sold before. The business analysis looks for competitors.

They'll start small, offering something to a client and seeing the interest. You have to be willing to pull the plug.

The Shark Tank is a great way to hone your idea. Think of standing in front of the people who will pay for it. "Kawasaki, the art of the "

The questions Meredith gets are around the economics.

Who does it?

Williams--She brings together developers, IT Project Management people, a representative from the attorney group that's asking for it, and a knowledge management attorney. They may also bring the marketing team to the table. They keep the lawyer population to just a few people. Lawyers tend to add unnecessary bells and whistles.

Kingsley--He's been able to involve clients as well. Develop in an agile matter. Set parameters, a lot of things will take care of themselves. Set quality metrics for what you aim to do. For instance at Cassels they set a target for a level of plain English with a specific metric. It really hones the result.

Develop the "minimal sustainable product."

Mills--The front end of these systems are pretty simple. There are mock-up and prototyping tools that let you set up something, and start showing it to clients.

Insourced or Outsourced?

Williams--Do we have the expertise? They don't with app development.

Time constraints also come in. Internal resources may have significant internal demands already.

Mills--Most projects need aspects of both. The Contract Express tools, for instance, can't be reproduced by a law firm. Law firms are talking to clients all the time, and may be good at getting feedback from clients.

Which Idea? What if something that looks better comes along?

Martin--Kawasaki would say, set you milestones and stick to them.

Williams--Don't be distracted by the shiny object (like the dogs in "Up" distracted by squirrels). Think about what you might be losing in what you've already invested. The economics come into play. Look at it as a business decision, not a technical one.

Products and projects have constituencies.

How do you convince partners that they should invest in the future?

Martin--The business of law has one of the lowest budgets for research & development of any industry. What if law firms spent 0.25% of revenue on these new services?

He's tried to convince them that this is an extraordinary opportunity. You could take advantage of the growing tsunami. It's hard to pick the winners. He admits his pitch didn't work.

Mills--It is a year-to-year decision, and the way firms are organized financially. Firms do make huge decision like opening an office, these are small change by comparison.

Williams--It's easier today because they've had success with retaining and obtaining clients.

She scenarios out how it works. She spells out what will happen if we invest or if we don't. Boards are bottom-line driven.

Rechtschaffen--There's a false assumption that an hour spent on direct client service is more assured than an hour spent on product development. Each hour is speculative, albeit in different ways.

What's the future of online services? Will law firms be the providers of online legal services?

Williams--As long as a product is viable and has a legal spin, then we have an area we're going to firmly hold onto.

Martin--The future must involve the delivery of online legal services. Law firm websites will enable the delivery of legal services.

Buyers don't modify a market. They vote with their money, but they pick winners. A lot of this will be driven by vendors.

LexMachina is analyzing and creating data around all patent litigation.

Mills-Some publishers are starting to behave like lawyers. Users don't want search results any more, they want answers.

eDiscovery is an online service. It's managed in the cloud by people who for the most part work directly with clients. Why shouldn't the rest of legal services delivery follow?

Williams--If you aren't in this space, you need to be in this space. The biggest request from clients is for these type of services?

Martin--Online technology will disrupt the $260-270 billion market. Institutional VCs are showing some interest in changing the market.

Take technology you've used to create reputation or stickiness and move into products.

Law2020: Emerging Legal and Business Opportunities

These are my notes on the second keynote session at the ILTA conference. I found it to be an intriguing presentation, interesting in the projects of long-term impacts of some current technology trends, a bit flaky on a few of the projections, but also effectively coming back to some approaches to effectively talk to law leaders about the future.

Formal Description: The next ten years could see a dramatic rewriting of the law firm playbook as innovators and entrepreneurs break from the pack to change the rules of the game. What's driving these changes and how can law firms respond?

...Global futurist Rohit Talwar will deliver a keynote presentation and then be interviewed by Monica Bay, editor-in-chief of Law Technology News. In his presentation, Rohit will draw on ILTA's latest 'Future Horizons' research to highlight how law firms can leverage emerging technologies coupled to new paradigm thinking to transform everything from firm strategies and business models through to the way tomorrow's lawyer is recruited, developed and rewarded. Rohit will illustrate his talk with the latest findings, technology opportunities and case examples emerging from ILTA's Legal Technology Future Horizons research Project. The study is designed to examine how emerging technologies could impact the design and delivery of legal services over the next 10-15 years. The research is also exploring the resulting implications for how law firms need to evolve the management of the IT function to address an ever-quickening pace of technological change.

Speakers: Rohit Talwar, Monica Bay

See twitter conversation at #key2.

He's the CEO of Fast Future in London. He's the project director of ILTA's Law 2020. His legal sector clients include LinkLaters and Norton Rose.

How do we use insights on emerging technology to drive better decisions today?

Where could technology impact legal organizations?

The study involved interviews with vendors, peers, and legal technology thought leaders.

His cross-industry research concludes that organizations that innovate and adjust to technology change think in three time horizons. Over 12 months they look for operational excellence. Over 1-3 years they try to innovate, grow, and be efficient. Over 4-10 years they create the future. Corporations need to allocate people to these different areas and allocate time at management meetings for future-oriented discussions.

The next decade will be quite turbulent. The global economy is $65-70 trillion, there are still around $700 trillion in derivative contracts. There is no historical model from which we can learn because of the internet and rapid changes in technology.

The growth of the middle class will occur in Brazil, China and India.

Business cycles are faster. There are talent shortages, disruptive technologies, and rapid spread of science and technology advances.

For instance, if autonomous cars can't have accidents, why would consumers buy insurance? How would we work out who is responsible in accidents between manual and autonomous cars?

The landscape by 2025 will be quite different. The population is aging and life extension technology is evolving. We're looking at extending life by 4 to 10 times. How do you motivate a 190 year old network manager? Looking after the elderly will be a phenomenal growth sector for the economy and the legal industry.

Every business is having to think about the potential impact of rising energy costs.

The "23 and me" website will provide a personal genetic profile for $99-299. We'll be starting to use the information in contracting or purchasing.

New materials might lead to novel energy sources or indestructible materials.

The internet will be more immersive, conveying touch, taste and smell.

Could we knock out genes for rage, obesity, and stress? Human enhancement is a real present development.

Every industry will have to go through 2-3 iterations. Vertical farms may transform the food industry. All the industry changes will lead to opportunities for legal work. Let's make our partners and associates have the same awareness of the future of the industries as the industry participants.

Clients will press to innovate around making information more available and online. Traditional services will be provided at a commoditized price.

Don't panic, ask how you want to engage and stay informed.

There are five strategic challenges for the legal industry.

How do you leverage transparency, and artificial intelligence?

What are the new working practices and models for delivery of legal services?

Is there an over capacity of talent at all levels?

New technologies and investors are driving new players into the marketplace with a different perspective ("legal is about big data and process improvement")

New types of companies have different expectations for their law firms.

He's set out recommendations for the legal industry in a series of ideas organized around words beginning with "M."

Markets

Technology gives us the ability to create new services. 60% of the world is in Asia. With the new technologies come opportunities to focus on growth industries, like 3-D printing, energy, robotics, and biomimicry.

Mastery

You can't wait for others to do things, you need to have foresight. What are the big trends in a sector that have been announced? Lawyers and accountants create maps, for instance, about the future of travel and tourism. Taking an insight map to a client shows that you're thinking about their business.

Process excellence is another aspect of mastery. In the Narayana hospital in India they can do heart surgery at 4% of the cost with a higher success rate. They do a lot of the same kind of surgeries and work out the complete process with all of the possible variations.

How do we create more insight from the data? One insurance defense firm looked at the characteristics of success & failure at trial and created a platform for analyzing & predicting when to go to trial. They are then selling that platform to insurance companies.

How will we gear up technology solutions for the future platforms?

Instantaneous translation will change business.

Artificial intelligence-IBM's Watson is being used to diagnose cancer, and it does better than human doctors at that and at recommending post-diagnosis care.

Muscle

The anatomy of faster decisions is part of muscle. Coke looked at a UK firm that put out smaller tasty drinks at great speed. How to execute faster is also muscle. A company in China can build an energy-efficient office building in six days (after the foundation is laid).

Internal social media might be more effective than traditional knowledge management systems at providing good answers. For instance, someone looking for help with an oil contract in Uzbekistan might post about that need, and receive not only sample contracts but a message to call a particular subject matter expert.

Magic

How do we give our clients access to the scarce knowledge of our partners?

Latham has a series of apps called “The Book of Jargon,” on various corporate, capital markets, and investment topics.

Mofo has a court analyzer / dashboard that shows the key information about complex financial litigation.

Baker Donelson is providing client access to workflow, so the client can see what is happening on their matters.

Mindset

Build in the three-time-period orientation. Be tolerant of uncertainty, encourage people to try things.

Management

Make time and space for change.

Conclusions

Turn risks into opportunities. We can choose how to address the future.

Survey

Monica Bay then interviewed Mr. Talwar. The Law2020 survey will close in January. Take it at http://s.zoomerang.com/s/futurehorizons and http://s.zoomerang.com/s/ILTAEmergingTech .

30% of respondents see the role of CIO shifting to embrace innovation. You also have to reengineer to deliver to mobile.

Key Takeaways

It's very hard to maintain a strategic conversation if the DMS isn't working. CIOs need to talk to firm leaders about using technology to create new business opportunities and delivery models, how to create value and open up innovation.

Motivate lawyers to change by framing the problem as the risk of losing something.

Some of the most disruptive technologies are artificial intelligence, the next generation of collaboration tools (spanning law firms and law departments), and human enhancements.

Structuring For Innovation--Ark Conference

John Alber covered his firm Bryan Cave's journey into innovation in greater detail than I heard before.

Innovation is not accidental.  There are steps you can do and thought changes you
can undergo yourself to foster innovation.

Innovation is the bedrock of what clients like Boeing and Google do.  Innovation for them covers business processes as well as technology and product development.

John Alber pointed to his spiffy albeit conservative Brooks Brothers jacket and tie ensemble as a metaphor for the conservative state of legal innovation.

There are many opportunities to help clients reduce legal spend.  Not just fees, but also insurance, eDiscovery costs, settlement payments, and the like.

IT as Source of Innovation

IT has been the source of some innovation, but innovation is not driven by technology, and IT is inherently conservative.  As with Finance, "one person's innovation is another person's disruption" (Rosabeth Moss Kanter of HBS).

You may have to restructure organizations--(though leading legal tech innovator when at Mallesons Gerard Neiditsch would argue that you can keep existing structures and innovate within that. )

Bryan Cave set up three groups to foster innovation.  Each named around a benefit.

Client Technology Group 

This was a sanctioned and uncontrolled "skunk works" with web developers, business analysts, graphic artists, etc.  They are charged with business process mapping and automation.  They are more change-focused than IT.

They have created decision support systems ("Trade Zone"); a socially enabled intranet; and more.

Practice Economics Group

This was spun out of CTG; goal was to focus on a different mission, more on managing for profitability & success with engagements.  People on the team include web developers, financial analysts, and now attorney project managers.

Goal is to create processes, and then manage them.

They have tools for pricing new engagements; tracking & monitoring engagements; and comparing engagements.  They also created a tool to extract task codes from billing entry before LSA.  Reporting includes intranet and extranet reporting to clients.  

Providing right information in a timely way has measurably increased profitability.  Chris Emerson is its director and is very active in sharing best practices through ILTA and other groups.

They've had high success of uptake with partners of their monitoring systems.  It's taken a long time.   88% of partners have looked at it over the past year at various degrees of intensity. It's a function of focused attention from management committee and has propagated throughout.

Accelerated Review Team

The ART (!) covers e-discovery, due diligence, and the like.

Every partner retreat, practice group meeting hears about success stories.  Separate visibility and naming helps.  Because it's broken out, it is easier to give it credit than to say "this part of the IT group" was responsible for a given success.

In 2004 uptake of dashboard was around 10%.

Key to uptake is getting people at many many levels to buy in. Everyone has to feel they have a stake.

Spectrum sales is one area where these groups have applied their efforts.

They analyzed work flow and tracking, and then extracted rules of decision for these complicated sales from the most experienced attorneys.  They used checklists and decision branches (what happens if you find X problem...).

"Data collectors" become guides for first-level lawyers.  The goal is to let a low-level lawyer do the day-to-day work at a very high level of quality.  Other tools manage the work at a higher level (as with eDiscovery management tools), looking at who is productive, quality of work, and the like.

They started with a few lawyers working very slowly under tight supervision, and then were able to scale it up and get a lot more people.  

The program has "dendritic logic" like that of a document assembly, allows people without FCC experience to analyze leases for necessary clauses and optouts.  Metastorm or Neota Logic can also build system like this.

One big client outsourced all of its spectrum.  Average turn time went from months and months to three weeks.

Tools and processes got applied to many many engagements.  They expanded to financial sector litigation.  With enough information you can produce first drafts of motions to dismiss.   These have reached a high level of complexity.  

ILTA 12 Keynote: Frans Johansson on The Medici Effect

The keynote speakers on the first day of conference have been routinely excellent.

This morning, Frans Johansson is talking about "The Medici Effect:  Groundbreaking Innovation at the Intersection of Disciplines and Cultures in Law Firms and Law Departments."

The formal description:

The world of technology is changing faster than any other area of business. How can IT develop insights that will propel your firm or law department in the midst of all these changes? In this highly dynamic and energetic talk, Frans Johansson will apply the lessons from his international best-seller, "The Medici Effect," to vividly showcase how the best chance to innovate lies at the intersection of different fields, departments and industries. IT is connected throughout the organization and can leverage a wide array of knowledge and perspectives to develop new insights. IT can also dramatically increase collaboration across the enterprise in order to unleash both innovation and efficiency. Finally, the IT professional can super-charge their own creativity by drawing inspiration from completely separate fields. Understand why and what you can do about it. Frans will clearly and persuasively show what happens when legal and technology cultures collide and ignite an explosion of extraordinary new ideas and discoveries. See how technologists and attorneys can work together to create the perfect “intersection” of cultures.

See video at http://conference.iltanet.org/MainMenu/EducationalProgram/Keynotes

Below are my notes on this session.

What drives innovation?

Technology increasingly  drives new operational and buisness models.

He created a magazine "Catalyst" to bring stuff together, started a software company that "went really well until it didn't.".

He investigaters how intersections lead to innovations.

We have the best chance to innovate when we connect across our differnces.

Innovation is important because the world is changing very quickly.

Example:  Spanish fashion company Zarra can go from design to selling a dress across the world in 7 days.

A more sobering example;  only 68% of recent law school graduates are working in a job that requires a J.D.

Yet our ability to innovate constricts as our firms get larger.  Innovation tends to come from newcomers, upstarts.

One reason is that we tend to use logic as the only guidance for reaching success.  For instance, Audi and Volvo might both to decide to address their minor deficiencies, then end up with cars that look quite similar.

Architect for a large building in Harare used the ventilation approach found in termite mounds.

"The Medici Effect" is named after the Medici family that ran Florence in the 15th & 16th centuries.  They sponsored creative and effective people from all kinds of backgrounds.

New Ideas Are Combinations of Other Ideas

Frans proposess that all new ideas are combinations of existing ideas.  But not all combinations of ideas are created equal.

For instance, a Muslim woman had the idea of using bikini material and combining it with a burqa-style swimsuit.

Some People Have More Ideas

We are horrible at predicting what will work.

Jimmy Wales initially tried to develop a large online free encyclopedia.  He initially tried a model that had experts vet all proposed content.  We consider him a genius now because he tried again when this model didn't work.

Diverse Teams Can Make More New Ideas

Intersection of classical and rock / pop music created a big hit for Richard Branson at Virgin Records.    He does math on ideas within rock.  Normal rock approaches would lead to about 2,400 different approaches.  If there are comparable numbers of combinations in classical music, combining the two leads to over six million different ideas.

How can we use this?

1.  Leverage the diversity of our own organizations.

The designer of "Battlefield3" and "Mirror's Edge" video games brought programmers and designers into the same room and got collaboration out of email.

We can drive collaboration in our firm by enabling it in our organizations and by connecting with people who are different from us.

2.  Use technology to drive and not just serve new business models

If we are at the intersection of technology and business we are in a position to drive new business approaches.

He talked to Meredith Williams.  Baker Donelson developed a technology toolkit for one health care client of theirs that was valuable enough that the firm captured all of that client's work.

He talked to me.  Goodwin Procter has worked with PBWorks to create a space where clients, cocounsel, experts, and lawyers in the firm can work together better.

Interactive Element

He asked us to find inspiration from a picture of a bunch of workers fixing a fancy car at a pit stop.

He asked three people who had various ideas about monitoring client performance, watching and learning from matter teams, and the like.

Do we have time to innovate?  It's hard to find the time.

3. How do we make ideas happen?

Directional ideas often are executed in step-by-step fashion.  More innovative ideas can take longer and get developed less directly.

We use up energy, money, and reputation in getting to a goal.

He addresses the idea of the "Ice Hotel."  He started out with ice sculptures, then made an exhibit hall out of snow, then made an event hall out of ice, then he realized people would pay to sleep on a bed of ice.

Driving change within a firm starts with the "smallest executable step." It's not about the end goal, it's about taking the next step.  Start with the easiest part of your idea that you can execute, and then adjust.

Innovating may be risky, but doing the same thing over and over again is riskier.   We can be the people in our organizations driving innovation.

Innovation Engine--Belated Post From ILTA 2011

I was looking back at ILTA Conference 2011 and at Mary Abraham's good post on Chris Trimble's August 22 keynote, and I realized it didn't lay out quite as clearly as my notes the central "performance engine" vs. "innovation engine" dilemma.  So, this extremely belated post to correct the issue covers that keynote (and also provides an opportunity to note that Mr. Trimble just published "Reverse Innovation:  Create Far From Home, Win Anywhere" with Vijay Govindarajan, also of the Tuck School of Business at Dartmouth, on April 10 2012.)

The keynote was on the subject “What are the best practices for executing an innovation strategy?” While Mr. Trimble had a great topic, he did not entirely succeed in engaging his audience. He had a very important main topic, however, that ongoing operations and serious innovation inevitably conflict within organizations; the corollary is that you won’t get major change without changing the organizational model.

 

Through innovation we improve the economy and lives. Information technology has been the most innovative sector over the last 20 years.

 

He knows how much of our time is spent dealing with everyday battles, “keeping the trains running on time.”

 

There is a “Mt. Ranier-like” story in every innovation journey. When you finally get the big idea, it can feel like a victory. The breakthrough from big idea to innovative product can be very challenging.

 

Trimble’s First Law of Innovation: Innovation and ongoing operations are always and inevitably in conflict.

 

Finding a way to navigate through those conflicts is an art.

 

He defines innovation as any project that is new to you and has an uncertain outcome. How do we execute high-degree-of-difficulty projects?

 

Only three models of innovation work. Model 1 addresses easiest innovations; Model 2 slightly more challenging; and Model 3 for hard innovations.

 

In Model 1 (Innovation=Ideas + Motivation) , every employee can be innovative, and just needs some encouragement to pursue innovation on their own initiative. It is limited by individual slack time.

 

In Model 2, (Innovation = Ideas + Process), innovation is treated like any other business process. It gets scripted, made efficient and routine. An example is the auto industry. It is limited to situations where every innovation is similar to innovations that have gone before.

 

In Model 3, innovation breaks or changes ordinary business processes.

 

Companies struggle with an innovation myth. “Innovation Man” struggles against the bureaucratic octopus, “one person fighting the system.” He is brilliant and clever and determined to get things done. Improve innovation by defeating this myth.

 

We have to put less emphasis on creativity, more emphasis execution of ideas. We need less on individual achievement and more on organizational excellence.

 

Organizations were designed to be “performance engines” not on innovation.

 

Performance Engines focus on: 

• Today’s customers & competitors
• Efficiency
• Accountability
• Getting things done on spec, on-budget, and on time
• Profitability

 There is great power in repeatability and predictabilities. Innovation is fundamentally incompatible with that. Breaking the rules doesn’t work, because innovators need the “performance engine”; it sounds too much like “no rules.”  Strive for mutual respect between performance engine leaders and innovation leaders.

 

Innovation leaders have to remember that conflict with the performance engine is normal.

 

Performance engine leaders should remember that no performance engine lasts forever (e.g., Blockbuster).

 

Too often innovators and companies skip the planning and strategy requirements for execution.

 

In Model 3, you need a special type of team and a special kind of plan. Model 3 always needs a dedicated team. There needs to be a partnership between shared staff and the dedicated team.

 

Special Team

 

Anything more than adding more people will disrupt shared staff’s responsibility for the performance engines.

 

Managing the partnership is quite challenging. The project leader of the dedicated innovation team will be in conflict with the general manager. The general manager will win every time. The senior leader needs to intervene and adjudicate those conflicts.

 

He turns this approach to legal issues.

 

Under the Law2020 Innovation Challenge, clients want more help with IT. They want efficient legal processes, and they want full and easy access to all of their legal information.

 

You won’t get major change without changing the organizational model.

 

The most experienced lawyers typically manage the business, have the most authority, and manage relationships, because that works (in his terms, makes the performance engine run).

 

With innovation, you need to run experiments while doing no harm.

 

Are there some clients or projects where the normal organizational approach does not work? Do we need informational professionals comfortable partnering with clients? Do we need to consider client IT when building our own systems?

 

Trimble sets up the Grey Lady’s attempt to go on-line in the late 90s as a very challenging innovation problem.

 

The New York Times had smart people with lots of money and plenty of time. They had set up a “little performance engine”, a mirror copy of what they had been doing. They brought in an executive from outside, but early on, everyone who reported to him was an insider.

 

NYT spun off the web site. Martin Niemeyer (?) set up a new compensation plan, new job descriptions, changed product development process, moved to a new location, and built a new IT infrastructure. They treated it as building a new company from scratch. It was working really well, except for the relationship with the newspaper. There came to be conflicts about client relationships, branding, and use of news. That had to be resolved by a senior executive task force.

 

There were three phases in the relationship; cautious growth as an integrated organization, rapid growth as a separate organization, and finally profitable growth as a carefully managed partnership.

 

Every innovation initiative is an experiment. If you run a disciplined experiment, you learn fast. Learning is about turning guesses into estimates into forecasts. This is the learning curve you need to focus on. Better predictions lead to better decisions (which lead to better results).

 

A quick and inexpensive failure can be a learning experience.

 

For a special plan, recognize that every experiment deserves a custom plan, don’t use standard templates. A separate forum should discuss innovations and meet frequently. Review plan. Focus on what you don’t know and your assumptions. Spend a little to learn a lot.

 

Performance evaluations for innovation leaders are challenging.

ILTA 09 Panel--Technologies That Will Disrupt Traditional Legal Practice

This was an excellent session that provided a good list with lightly described examples of disruptive technologies and three more in-depth case studies from two of the more technologically sophisticated firms.

I am putting up these notes with fairly minimal review as I am presenting on matter management in an hour.

What is disruption?

Susskind recommends "The Innovator's Dilemma"; Christianson. Technologies that come and challenge the way that business works. What are the implications of disruption for market leaders? Often they dismiss these technologies when they first appear. Sometimes the innovators end up challenging the market leaders. For instance, Kodak ignored digital cameras and for a while were able to argue that film was better. They lost market but now are invested in digitial photography as well.

For Whom is it Disruptive?

For innovators, disruptive technology can lead to competitive advantage. Most law firms are far more afraid of being left behind than they are of leading the pack.

It's hard to motivate lawyers. It's more persuasive to say that other firms are doing this.

He's surprised by the persistance of the billable hour. He offered to pay his 12-year old daughter by the hour for a chore and she smiled and said "Well I'll take my time then." (You really have to say this out loud with a Scottish accent to get the full effect).

About 50% of general counsel are still comfortable with it.

Ten Disruptive Technologies

The legal world does change slowly. It will take 5-10 years.

1. Automated document assembly.

A lot of work is still hand-crafted. There us a fair amount in small shops with commoditized work. Automation has changed only a few sophisticated practices (European bond market).

Making them available on-line changes the ball game. You can go from a production level of several hundred to several thousand.

The automatic assembly of documents is disruptive because it takes the lawyers out of the business of producing documents.

2. Relentless Connectivity

We'll never be less connected than we are today. 24/7 availability is scary for senior lawyers. You need to put in place systems to have someone be responsive or accessible. Email is not going anywhere. "The calls on our time electronically are increasing."

3. The Electronic Legal Marketplace

We know we can auction services on-line. Clients can more quickly find out what services are available at what price. The idea that clients can find out about the availability of resources outside those of the law firm is fundamentally disruptive. Can a corporation find out that a law firm in Ohio has a week's worth of resources to throw at a due diligence project.

4. e-Learning

The romantic vision of bespoke services draws people to the law but does not reflect the current practice of law. How should we be training them?

There are simulation and learning techniques that afford a far more realistic view of legal practice. A lawsuit simulation might include a large filing the night before a scheduled oral argument that attempts to totally change the argument (which happens in practice but not moot court).

5. Online Legal Guidance

Current websites are fairly crude but still provide some information. There's great potential to provide legal services to a much broader pool of people, cheaply.

6. Legal Open-Sourcing

This will be more directed at citizens than at corporations. If people are networked together they can offer each other much in a community spirit. We'll start to see people coming together who have similar problems.

7. Closed Legal Communities

By and large there aren't many truly new problems. Big London banks collaborated to force law firms to deliver their legal know-how in a portal. Clients are also starting to come together.

8. Workflow and Project Management

We need to systematize and organize our project better. Rigorously apply well-tested techniques to project management. It is laughable to think that a lawyer can become a project manager by at most attending a 3-day training course.

Project management in principle and practice reduces the time and cost in providing legal services.

Project management becomes more necessary with multi-sourcing. Chunking up projects is a separate type of challenging task and needs to be managed.

Global tax compliance efforts are underway at large accounting firms. It's worth hundreds of millions. Accenture won it by saying that it was a complex project that needed a strong management instead of tax expertise (that was subcontracted out).

Are law firms ready to implement and train on project management? No, not currently.

9. Embedded Legal Knowledge

Rules are embedded in systems like computer Solitaire.

Self-monitoring and self-assessing legal systems will reduce need for lawyerly attention.

10. Online Dispute Resolution

He asks, "are courts a service or a place?" Cybersettle uses "double-blind bidding system." to resolve dispute. Over 30 days you negotiate until you're within 10%. The State of New York (?) has resolved hundreds of personal injury suits through such a system. Moneyclaimonline is a UK based dispute resolution.

********************

You know there are other ways to deliver legal services. The economy has catalyzed the uptake of new ways. There are radical new ways of delivering legal services that will be enabled by technology.

*********************

John Alber of Bryan Cave then addressed an online service his firm provides in the trade/export restrictions area.

Automating Low End Legal Advice

A good opportunity has:

• a recurring legal problem (import/export restrictions),
• perceived value/cost disconnect where paying for solving the same type of problem every day
• high-energy practice group accustomed to tight publishing deadlines

The goal is to solve common problems and answer the "easy" questions. Clarifications provided at no additional cost. Typical pricing is an hourly fee.

Legal Advice for Clients: Import/Export Tool

They set up a client-facing decision tree tool for a client who needed information about import/export restrictions. Clients like it. They obtained all of the trade business for the first client. The service was completely repriced. They use it as a training toool.

Workflow for Due Diligence

They also applied technology to wireless spectrum sales. Radio station sales are very expensive, especially the due diligence.

They developed an automated workflow that walked 50 contract lawyers through a set of review steps and captures the information at issue. It has a significant reporting feature to track work. You can use Sharepoint workflow (it is not technically complicated). They put the people in large rooms and ran the paper flow through them.

The result is that the cost per unit of due diligence roughly by 2/3 and deal turn time is measured in months not weeks. Client's deal process is changed and they can do deals they could not have before. It's a real competitive advantage.

*****************

Gerard Neiditsch of Australia addressed "Mallesons Connect."

Mallesons did not want to provide "black box" services where what is happening with the matter teams is hidden from their clients. They are trying to provide greater client access to information about the work.

Clients most wanted financial information, project progress, and alerts.

They were also interested in current awareness and client training.

The security model is quite challenging. Making correspondence securely available to the client is critical.

They'll be introducing these "Dashboards" later this year.

At the top it lists the total and active matters (a number) and the number of unpaid invoices. Sometimes bills aren't paid because the general counsel doesn't know they are paid.

All links are active. Hovering over matter gives matter summary of financials. A person's availability (live!) is shown next to their name. Drill-downs also available.

a Search page provides access to drill down into projects through guided / faceted navigation (number of projects by category, location, partner responsible, etc.)

Financial information is shown in friendly form including "Aged debtors", 10 most recent invoices with a link to unpaid invoices, project estimates and which are over/under/near/ or no estimate. Making this visible makes project management start to happen inside the firm.

This was a very sophisticated approach to exposing client information, focusing on the information they expressed they wanted.

The project has seen pretty good adoption by clients. Using web 2.0 tool sets that are very rapid to fix makes it possible to change the technology.

*****
In the questions session, Susskind makes the point that you shouldn't base your decisions on having one reluctant client. If even half or three-quarters of clients want one of these then it is still probably worth it.

Rachelle Rennegal asked how Bryan Cave established pricing for the export tool. They now have sophisticated pricing tools. At first they took a guess at the economics and left the pricing flexible. The initial goal was to generate more high-end premium counseling business and break even on the software tool.

Susskind said that the skill and talent in chunking up the projects and planning outsourcing is significant.

Richard Susskind on "The End of Lawyering"

Legal innovator and passionate speaker Richard Susskind spoke in a "super session" this morning at ILTA. He is also spoke on a panel titled "Technologies That Will Disrupt Traditional Legal Practice."

His point of view is "radically different" from that of other lawyers.

Post revised September 11 to link to later post and fix a typo or two.

The Future
Black & Decker doesn't sell power tools. It sells something customers use to make holes in the wall.
Lawyers deliver 1:1 consultative services now. But what is the real value we bring? For what are we paid?
"We exist to turn knowledge into value." We bring insight to bear on customer's problems.
By avoiding discussing the means of service delivery in defining what lawyers do, you open yourself up to new methods of providing service.
You bring knowledge and experience to the situtation. Methods of capturing and sharing knowledge are therefore critical. KM has had pockets of success but has not changed the whole profession.
He finds that general counsel "don't want dispute resolution, we want dispute avoidance." They want a fence at the top of a cliff instead of the ambulance at the bottom.
Knowledge capture and management and legal risk management are really important.
Automation v. Innovation
Automation is systemetizing some aspect of your work. Applying technology to preexisting processes is automation. The most dramatic impact of technology is where it has allowed you to do things that previously weren't possible. We're just warming up in legal technology.
We have to look at ways in which IT can change the way we do things.
The ATM is an example of an innovation. It was a very different way of delivering that service.
Our challenge is to change the way legal services are delivered.
The Client's Three-Part Dilemma
In-house lawyers have been asked to reduce internal head-count and external spend as well at a time when compliance pressures and changes in the law are raising the complexity of their challenges.
Clients Want More For Less
It is simply not the case that clients will be going back to the old ways, at least with respect to "shareholders at a board meeting."
How Can This Be Done?
Susskind belives that the two paths to providing more for less are the efficiency strategy and the collaborative strategy.
Efficiency Strategy
He believes that routine and repetitive legal work can be done differently. It doesn't need expensive lawyers.
In 1996 he said that email would be the primary way of communicating in law firms.
"Bespoke" services are those customized and tailored to the particular situation just as a spoke suit is tailored to the wearer.
Lawyers project the idea that most problems are bespoke. But clients come to you because you've faced similar problems before.
There are five levels on the path to commoditisation.
Bespoke / Standard / Systematised / Packaged / Commoditised.
Pckaging is a radical step. Packaging is the delivery of a system that lets the client come in and produce the solution or document required themselves.
Another example is the term sheet generator by Wilson Sonsini and Allen Overy.
Deloitte's tax practice lets their clients come in and use their tax system on a licensed basis. "We exist to turn knowledge into volume." Not the way we learned to practice but clients will go for it. Deloitte has 70 of top 100 clients using their tax software.
There is a red line in his diagram before commoditisation. The costs of commoditised work rapidly drop towards zero. The marginal costs of delivery are reduced as you move towards commoditisation. There are huge opportunities in the standardization level.
No decent firm is not standardizing.
Work can be "chunked up"
The clients want to move towards commoditisation because it enhances certainty of cost. Some clients want certainty of cost even more than lower cost.
Standardization can be of very high quality.
He's predicting a fundamental move of the amount of work towards commoditisation.
Collaborative Strategy
You can divide litigation into different chunks. It's hard to argue that a law firm is uniquely qualified to source all of them.
There are many ways of sourcing the work:

• Multi-sourcing
• in-sourcing
• de-lawyering
• relocating
• offshoring
• outsourcing
• sub-contracting
• co-sourcing
• leasing
• home-sourcing
• open-sourcing
• computerising
• no-sourcing

Rio Tinto is requiring external counsel to work with *their* junior lawyers and is not paying for junior lawyers at firms. Axiom in the Netherlands is providing services at a 40-50% discount to typical costs as compared to 10-15% of most efficiency or cost-cutting approaches.
He recommends Ray Kurzweil, "The Singularity is Here." We have an exponential curve in technology. Kurzweil claims we are in the "knee" of the curve.
By 2050 the average desktop machine has more processing power than all of humanity.
Web 2.0 and Disruption
Technology is now changing the way we relate and work. We've seen this most in social networking.
We're no longer passive recipients of news. We're now participants. He knows general counsel who are on Twitter. Half of the people in most firms are on Facebook (just not the partners).
Sermo
A hundred thousand doctors on-line, sharing knowledge in a cross of Facebook and Wikipedia. Clients and in-house lawyers are sharing costs in a similar way. These resources (Legal OnRamp?) may become the first place in-house lawyers go.
eBay
There are dispute resolution mechanisms on eBay. Why won't they spread?
India
Outsourcing different kinds of work to English-speaking India or South Africa may be a real challenge to Western law firms.
Cisco
85% of their external spend is fixed fee. When they negotiated the deal the external lawyers wanted to start attending meetings that involved legal risk. Cisco said that was what they wanted--to have the lawyers participate in managing risk and avoiding the disputes.
What is the profitability model?
Huge amounts of lawyers' work can be done more cheaply and effectively.
We can be confident that some lawyers are going to be adopting the new ways of doing business.
In this room, there are significant advances in technology that would already change the practice of law. These are just not evenly distributed yet.
Conclusion
"The best way to predict the future is to invent it." It's up to lawyers to fashion their own future. The message today is to legal technologists. We typically support existing strategy. But now information technology can change the very business model that underpins law firms.
We live in a time of flux and pressure for law firms. Technologists can help our firms adapt. "Our time has now come."