Technology: Tweet Dreams
3 March 2014 | By Lucy Burton
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From billing apps to crowdsourcing and social media, technology is changing lawyers’ working lives
With an increasing number of clients complaining that their lawyers are inept when it comes to forecasting litigation costs, technology entrepreneurs are getting in quick to find a solution. When business magnate David Schottenstein had to use three law firms in five months because of wide disparities between his budget and the final bill, he had an idea.
“The greatest products are created out of need,” Schottenstein explains, of his decision to launch real-time billing app Viewabill. “I couldn’t find affordable clothes [so created a clothes business], then I noticed a lack of transparency among law firms in billing, so I created an app [to track legal bills].”
Schottenstein launched his clothing business with old school chum Robbie Friedman, a former Akin Gump Strauss Hauer & Feld associate who started working with Schottenstein when he needed legal advice for his former clothing range Astor & Black. Together, the pair took a change of direction, switching the Ohio-based fashion business – sold to private investors in 2011 – for a legal billing IT one.
“Robbie would send me all his hours in an email at the end of each day,” notes 29-year-old Schottenstein, explaining where the IT idea came from. “It made me wonder if I could create the same level of transparency in an automatic way.”
The Ohio-based whizz-kid refuses to name which three firms he used before launching the app (all three are now clients), but claims to have more than 350 law firms signed up to the service, US outfits Cadwalader Wickersham & Taft, Reed Smith and Duane Morris understood to be among them.
Not bad for a market seen as cautious when it comes to technology.
It is hardly surprising that the demand for this type of technology is growing.
Schottenstein claims that billing time on a monthly basis costs clients up to 23 per cent extra. In-house lawyers who responded to The Lawyer’s Global Litigation Top 50 survey are likely nodding in agreement – 14 per cent of in-house respondents said that in the past 12 months the difference between their forecast budget and final bill was between 80 and 100 per cent.
“Legal spend is a big topic for clients – it’s a huge cost to their business,” chips in Reed Smith director of client services Vincent Cordo. “Most of these clients are experiencing information overload so they are using technology to track what their advisers are doing. Clients want to find out quickly if they are getting the best quality for what they’re spending, so they use technology to see what others are doing and charging.”
And Schottenstein is not the only entrepreneur to have cottoned on. Technology start-ups are becoming big businesses for those looking to be the first to fill a void. Former Goodwin Procter associate Adam Ziegler left private practice to launch online legal tool Mootus, which uses crowdsourcing for legal research, last March, and is now working on the launch of several products at Harvard Law School.
Another start-up, Ravel Law, a spin-out from Stanford Law School, raised $8.1m (£4.8m) in funding last month.
“We’re in a period when you can take the law and you can do with it what firms have done with every other area of practice, which is to try to ‘rationalise’ it,” writes Stanford Law School director Mark Lemley in the Stanford Lawyer. “Computer technology has gotten to the point where we can parse and analyse big data in a fashion that we just couldn’t before.”
In on the IT action
With legal technology such a lucrative business, law firms are scrabbling to get a piece of the action too.
“You don’t want to be competing with computers because you won’t win,” laughs Herbert Smith Freehills’ (HSF) head of UK corporate Scott Cochrane. “But clients are asking for work to be done that’s lower down the complexity scale. The challenge is that other players are coming into the market, with big law firms seen as having expensive people in expensive buildings. A combination of good technology and [our Belfast support base] can offer the service clients want with the HSF brand behind it.”
The firm’s corporate department is working out how to further utilise its Belfast office, which launched in 2011 to review and analyse case documents.
“Litigation support work is now undertaken in Belfast and one of the things that they can do is set up specific word taxonomies which can be used to scan thousands of emails for signs of specific behaviours, for example fraud,” says Cochrane. “I’m now beginning to think about how we can use this sort of technology to assist in big due diligence exercises in the M&A space.”
Cochrane is not the only one blue-sky thinking. In a bid to encourage disruptive thought Taylor Wessing has launched its ‘lightbulb’ scheme in which staff at all levels can submit product ideas via iPads stationed in tea zones.
“There’s a need for more creative lawyers as more products come onto the market, and that need is likely to grow,” emphasised London managing partner Tim Eyles, just before the scheme launched.
An increasing number of firms are discovering that the quality of client relationships is their primary differentiator and that relying on networks of personal contacts is no longer sufficient.
“Lawyers have to get used to the idea that IT isn’t just there to enable them to do the same things more efficiently,” stresses Baker & McKenzie UK managing partner Paul Rawlinson. “It enables them to do different things and, most interestingly, come to clients with insights into their business and market trends, and so demonstrate a better understanding of their needs.”
Indeed, research by the Managing Partners Forum and consultancy Thriving Company last year found law firms are falling short when it comes to effective management of client relationships.
“Clients of professional firms increasingly expect them to manage relationships effectively,” noted Robin Dicks, director of Thriving Company, following the study. “They do it for their own clients and notice when other firms are not making the same effort. Since the integration of firms’ expertise is becoming more important as clients look to simplify their access to professional advice, we expect fee-earners and firms who continue to accept ring-fencing of relationships to lose out and lose market share.”
Rawlinson points to the systems used in his own department, IP, as an example of how the firm is trying to simplify its professional advice.
“We’re finding smart ways of helping clients analyse their competitive landscape using IT,” he continues. “We use patent-mapping technology, for example. This allows you to illustrate a patent portfolio simply and visually, by grouping innovations and mapping the equivalent competitor portfolio on top.”
This technology enables lawyers to act more like consultants, suggests Rawlinson, pointing out that technology can and should help clients make strategic decisions.
“For a legal team to show a business the value and relative competitive position of their IP rights has huge value and allows clients to make better decisions,” he says. “You also need smart IP lawyers to pick through the issues, but without the technology it’s like going through treacle.”
Lightening the load
But technology is also helping ease the burden internally. While a study by Thomson Reuters Australia finds that 57 per cent of fee-earners are now working 10 hours more a week than a year ago (see box), technology has lightened the workload.
In the study 37 per cent of respondents said workflow technologies had helped them save significant time, with 78 per cent claiming their legal research was quicker and 54 per cent saying administrative demands were less.
“There’s no doubt that the high standards demanded of law firms place enormous pressure on practitioners,” notes Thomson Reuters commercial director Carl Olson. “As the economy continues to be challenged these expectations will only increase, requiring legal professionals at all levels to work more smartly and strengthening the case for workflow technologies.”
As more firms and clients go global, technology is also playing a role in bringing people together.
“We’re using technology to educate our teams and bring offices together, but you’ve got to be careful about security,” adds Cochrane, who says he now uses e-books and graphs to capture visually what is going on in the department. “When I’m at home I can happily sit with my iPad and create a podcast for my son – I’d love to do something like this for work but wouldn’t want to have an internal video circulating on YouTube.”
US-headquartered firms agree, pointing to simpler technologies – videoconferencing equipment, for example – as a way of bringing offices closer.
“We use a number of technologies to help manage time zones, such videoconferencing equipment and having a videophone on every desk,” says Mayer Brown global chief information officer Philip Scorgie. “We also use a product called Yammer that works like Facebook and enables people from around the world to communicate at many levels.”
Could this focus on social media distract staff?
“Social media is no longer a technology just for personal interaction,” highlights Scorgie. “Of course, the double-edged sword of technologies such as instant messaging and social media is that it means it’s possible to communicate 24/7 and this increases the length of our workdays. The impact of these technologies on traditional businesses could be much more disruptive than email was 15 years ago, when it simply mirrored traditional mail.”
He’s not wrong – Yammer is used by 85 per cent of the Fortune 500 and was sold to Microsoft for $1.2bn in 2012 (when Orrick Herrington & Sutcliffe and Perkins Coie advised on the deal). Experts claim the heaviest users of social media in the workplace are not Generation Y, but 40- to 55-year-olds.
Berwin Leighton Paisner director of IT Janet Day pointed to the impact of social media on the firm’s technology strategy at last year’s The Lawyer Management Awards. The issue of return on investment had not yet arisen, she noted, since the firm does not invest a disproportionate amount of time or money in social media, so any business generated is a bonus.
“Businesses that ignore these technologies do so at their peril,” concludes Scorgie, speaking on behalf of a sector that has been slow to warm to social media.
While lawyers have not been the most avid buyers of legal technology or social media, the industry is starting to catch on. Technology entrepreneurs – the race is on.