Differentiating Your Firm With Technology

Law firms were late adopters of information technology. In 1990, when clients were providing all employees with standalone personal computers running DOS and Lotus 1-2-3, law firms were still buying Wang terminals for secretaries and dictation equipment for lawyers ' and many lawyers never expected to touch a keyboard.

Differentiating a firm with technology was easy in those days: The firm simply had to have technology.

Of course, there's little evidence that clients cared much about their firms' technology in those days. In contrast, some clients today will base their choice of law firms in part on the firms' technology. Clients want to know about a firm's technology for reusing and sharing work product (and other information under the general rubric of “knowledge management”). Clients want to know that they can access task, contact and other information through a firm's extranet. And clients want to know that their firms are generally capable of providing the technology that clients need to receive efficient and capable legal services.

In this environment, what should a firm do to maximize the return on its technology investment? Here are some thoughts.

First, Ask Why

Decide whether you want to distinguish your firm with technology.

“Of course,” you are thinking, “we want to distinguish ourselves by our technology.” It's tempting to add: “and by our knowledge of the law of asset securitization, and our intellectual property knowledge, and our detailed knowledge of admiralty law.” We all want to be above average in all things, but that's statistically impossible.

Not every firm needs to distinguish itself with technology. It is perfectly respectable for a firm to accept that it will save some money and provide just a baseline technology. Indeed, even as anecdotal evidence suggests that some clients are impressed with certain firms' technology, a review of the various measures of firm technology and firm profits suggests that there is no direct correlation between the money that a firm spends on technology and its ultimate profit.

Accept that your firm will need some baseline technology ' and the baseline may be higher than you think.

No one tries to practice law without a telephone. Similarly, no lawyer with a sophisticated practice can afford to be without a computer.

Most clients will not inquire about a firm's internal technology, just as few clients inquire about a firm's phone system. However, an increasing number of clients will ask about a firm's technology resources. They want to know that firms have extranets that provide billing information, task lists, contact lists and the like. They want to know that firms are making at least some effort to reuse knowledge. Clients may seek integration with their particular technology.

Unfortunately for partners' short-term bottom line, much of this technology does no more than buy a seat at the table. Without it, a firm won't make a would-be client's shortlist. With it, the firm will be in the running ' but will probably have to distinguish itself more with traditional differentiators such as quality, cost and turnaround.

Expenditures Plus Commitment

Realize that technology differentiation will require significant expenditures – and a commitment of lawyers' time.

It's easy to buy technology. Indeed, most large firms have pretty much the same basic platform: Windows, Microsoft Office, a document management system (usually Interwoven/iManage or Hummingbird/PC DOCS), and InterAction (for contact management), to name a few packages.

Firms that distinguish themselves must go beyond the software packages that they have purchased so that they can trumpet the application of technology. Upgrading a document management system may be admirable ' but it will probably have little value if it is implemented only out of a vague need to stay in the mainstream of technology and without careful consideration of the intended benefits. To add value, the upgrade must serve a further business end, such as the ability to manage e-mail in a structured fashion (ensuring access by all lawyers to each lawyer's relevant e-mail) or easier integration with client portals.

This principle ' that what adds value is the effective application of technology ' has two corollaries.

Don't mistake motion for progress. Some businesses still engage in the software upgrade cycle just because it's there. Who wants to be on Office 2008 if Office 2010 is available? Often, though, the real benefits of the upgrade are marginal, and the “brain damage” required to implement the upgrade is substantial.

Don't expect to change lawyers' habits unless the benefits are obvious to lawyers. Most lawyers are successful with their practices today. They don't perceive a need to change. Lawyers will be reluctant to embrace changes that require them to change their (successful) habits; reluctant to commit time to learning which habits they need to change; and reluctant to suffer the inefficiencies that accompany most changes in the short term.

Three examples illustrate the impact that lawyers' entrenched habits can have on software implementations.

Failure by Force of Habit. Document management systems have largely failed to deliver on their promise to provide meaningful access to a firm's work product. The reason seems simple: Lawyers generally will not take the time required to complete document profiles with any degree of accuracy. As a result, firms find memos classified as letters, recipes classified as asset purchase agreements, and termination letters classified as fax cover sheets.

Success by Obviousness. A lawyer who spends most of the day in his office starts tracking his time using software (such as Carpe Diem's Tracker program) that lets him push buttons on his screen as he changes from one matter to the next. The lawyer may find quickly that he captures an extra half-hour of time each day. The reward is obvious each day when he finalizes his time record.

Success by Stealth. CRM (contact relationship management) systems such as InterAction have existed in law firms for several years. However, the level of usage by lawyers has varied tremendously. Anecdotal evidence suggests that lawyers are reluctant to learn a separate application (the older InterAction client for Windows) when Microsoft Outlook (or Novell's GroupWise) works reliably for their personal contacts. The latest version of InterAction, though, promises bidirectional synchronization with Outlook, allowing a lawyer's contact information to be “harvested” for the benefit of all users without any change in lawyers' habits. While this stealth approach will not solve the problem of users who are overly protective of their information, it does respond to the many users who claim that they simply don't have time to learn a new application or maintain their contacts in a manner that benefits the whole firm.

Successful technology implementations that go beyond the baseline require a careful consideration of lawyers' habits, and that usually requires close collaboration with the lawyers themselves.

If You Choose to Differentiate

Recognize that your solution will be unique.

Even in this era of relatively common platforms, there is no cookbook recipe for technological differentiation. Firms have differences of culture: Some share information readily; some find sharing difficult because of the time that it takes; some find sharing difficult because each partner fears a loss of business, as if sharing information will expose the partner's tricks to every second-year associate.

Unfortunately, this means that a firm's technology direction must start with self-examination. That's harder than simply listening to vendors' sales pitches and buying their products ' but it's what allows a firm to distinguish itself in the marketplace.

Law firms were late adopters of information technology. In 1990, when clients were providing all employees with standalone personal computers running DOS and Lotus 1-2-3, law firms were still buying Wang terminals for secretaries and dictation equipment for lawyers ' and many lawyers never expected to touch a keyboard.

Differentiating a firm with technology was easy in those days: The firm simply had to have technology.

Of course, there's little evidence that clients cared much about their firms' technology in those days. In contrast, some clients today will base their choice of law firms in part on the firms' technology. Clients want to know about a firm's technology for reusing and sharing work product (and other information under the general rubric of “knowledge management”). Clients want to know that they can access task, contact and other information through a firm's extranet. And clients want to know that their firms are generally capable of providing the technology that clients need to receive efficient and capable legal services.

In this environment, what should a firm do to maximize the return on its technology investment? Here are some thoughts.

First, Ask Why

Decide whether you want to distinguish your firm with technology.

“Of course,” you are thinking, “we want to distinguish ourselves by our technology.” It's tempting to add: “and by our knowledge of the law of asset securitization, and our intellectual property knowledge, and our detailed knowledge of admiralty law.” We all want to be above average in all things, but that's statistically impossible.

Not every firm needs to distinguish itself with technology. It is perfectly respectable for a firm to accept that it will save some money and provide just a baseline technology. Indeed, even as anecdotal evidence suggests that some clients are impressed with certain firms' technology, a review of the various measures of firm technology and firm profits suggests that there is no direct correlation between the money that a firm spends on technology and its ultimate profit.

Accept that your firm will need some baseline technology ' and the baseline may be higher than you think.

No one tries to practice law without a telephone. Similarly, no lawyer with a sophisticated practice can afford to be without a computer.

Most clients will not inquire about a firm's internal technology, just as few clients inquire about a firm's phone system. However, an increasing number of clients will ask about a firm's technology resources. They want to know that firms have extranets that provide billing information, task lists, contact lists and the like. They want to know that firms are making at least some effort to reuse knowledge. Clients may seek integration with their particular technology.

Unfortunately for partners' short-term bottom line, much of this technology does no more than buy a seat at the table. Without it, a firm won't make a would-be client's shortlist. With it, the firm will be in the running ' but will probably have to distinguish itself more with traditional differentiators such as quality, cost and turnaround.

Expenditures Plus Commitment

Realize that technology differentiation will require significant expenditures – and a commitment of lawyers' time.

It's easy to buy technology. Indeed, most large firms have pretty much the same basic platform: Windows, Microsoft Office, a document management system (usually Interwoven/iManage or Hummingbird/PC DOCS), and InterAction (for contact management), to name a few packages.

Firms that distinguish themselves must go beyond the software packages that they have purchased so that they can trumpet the application of technology. Upgrading a document management system may be admirable ' but it will probably have little value if it is implemented only out of a vague need to stay in the mainstream of technology and without careful consideration of the intended benefits. To add value, the upgrade must serve a further business end, such as the ability to manage e-mail in a structured fashion (ensuring access by all lawyers to each lawyer's relevant e-mail) or easier integration with client portals.

This principle ' that what adds value is the effective application of technology ' has two corollaries.

Don't mistake motion for progress. Some businesses still engage in the software upgrade cycle just because it's there. Who wants to be on Office 2008 if Office 2010 is available? Often, though, the real benefits of the upgrade are marginal, and the “brain damage” required to implement the upgrade is substantial.

Don't expect to change lawyers' habits unless the benefits are obvious to lawyers. Most lawyers are successful with their practices today. They don't perceive a need to change. Lawyers will be reluctant to embrace changes that require them to change their (successful) habits; reluctant to commit time to learning which habits they need to change; and reluctant to suffer the inefficiencies that accompany most changes in the short term.

Three examples illustrate the impact that lawyers' entrenched habits can have on software implementations.

Failure by Force of Habit. Document management systems have largely failed to deliver on their promise to provide meaningful access to a firm's work product. The reason seems simple: Lawyers generally will not take the time required to complete document profiles with any degree of accuracy. As a result, firms find memos classified as letters, recipes classified as asset purchase agreements, and termination letters classified as fax cover sheets.

Success by Obviousness. A lawyer who spends most of the day in his office starts tracking his time using software (such as Carpe Diem's Tracker program) that lets him push buttons on his screen as he changes from one matter to the next. The lawyer may find quickly that he captures an extra half-hour of time each day. The reward is obvious each day when he finalizes his time record.

Success by Stealth. CRM (contact relationship management) systems such as InterAction have existed in law firms for several years. However, the level of usage by lawyers has varied tremendously. Anecdotal evidence suggests that lawyers are reluctant to learn a separate application (the older InterAction client for Windows) when Microsoft Outlook (or Novell's GroupWise) works reliably for their personal contacts. The latest version of InterAction, though, promises bidirectional synchronization with Outlook, allowing a lawyer's contact information to be “harvested” for the benefit of all users without any change in lawyers' habits. While this stealth approach will not solve the problem of users who are overly protective of their information, it does respond to the many users who claim that they simply don't have time to learn a new application or maintain their contacts in a manner that benefits the whole firm.

Successful technology implementations that go beyond the baseline require a careful consideration of lawyers' habits, and that usually requires close collaboration with the lawyers themselves.

If You Choose to Differentiate

Recognize that your solution will be unique.

Even in this era of relatively common platforms, there is no cookbook recipe for technological differentiation. Firms have differences of culture: Some share information readily; some find sharing difficult because of the time that it takes; some find sharing difficult because each partner fears a loss of business, as if sharing information will expose the partner's tricks to every second-year associate.

Unfortunately, this means that a firm's technology direction must start with self-examination. That's harder than simply listening to vendors' sales pitches and buying their products ' but it's what allows a firm to distinguish itself in the marketplace.