Getting IT together

The rapid growth of convergence technologies means IT law firms can no longer have a one dimensional practice. Anne McGrath reports.

The 1990s have seen a quantum leap in the practise of information technology law as lawyers race to keep up with the burgeoning technology.

IT law – or "computer law" as it was first, known – developed in the early 1980s with the advent of the personal computer. It was only in the late 80s and early 90s, when technology became more prevalent in everyday life, that firms began to develop IT as a specialism – a move which mirrored huge growth in the IT industry.

Now IT is "pretty much the guts of any business", says Raj Parkash, a partner at Clifford Chance. If things go wrong, the fact that few people can deal with a very important problem has led to the rapid growth of IT law as a specialism, he says.

John Yates, managing partner at Oxley & Coward, comments: "In just 20 years, we have gone from a situation where you could count the number of people involved in this area of law on the fingers of both hands, to one where no credible commercial practice can be without some IT law capability."

Yates, like other pioneers in the field, has seen a dramatic change in the type of work he does. In the early days, he focused on hardware and software procurement, with a basic software licence being a novelty you could charge a premium for. As the knowledge base has increased, in-house lawyers have familiarised themselves with IT contracts and outsourced work has had to be completed quickly and cheaply.

For lawyers, IT is one of the most innovative areas of practice, offering them the opportunity to be creative in the way they apply their knowledge. "You cannot just reach for a precedent from the shelf," says Rory Graham, a partner at Osborne Clarke. "You have to go back to first principles and create innovative solutions."

Baker & McKenzie senior partner Harry Small says one of the main challenges for leading firms is "to stay level, or as near to level as is possible, with the technology – to always be at the cutting edge".

Everyone agrees things have become much more dynamic in the past three or four years, as the internet has developed as a commercial tool.

The internet has thrown up a range of unresolved legal issues and proved to be a cornucopia for IT lawyers, most of whom have seen their practices grow in recent years. The big development has been electronic commerce (e-commerce) and attempts to advise and resolve the problems that lie in its path.

Any IT lawyer's workload might include: data protection issues, transborder data-flow contracts, encryption, digital signatures and trusted third parties, trade mark and copyright protection, domain name disputes, multi-jurisdiction issues, pirating and hacking.

There is also more work in other areas of IT law, such as advising on the millennium bug and euro-related issues.

One of the main issues in IT law is the convergence of technologies and industries, and the need for lawyers to offer a converged approach.

Convergence is the integration of IT, telecoms systems (as the distributive mechanism) and content (broadcast and media). The internet, for example, is a converged technology that has developed from these separate industries.

Traditionally, IT lawyers have had a considerable amount of industry specific knowledge, but have not needed to know about industries outside their sphere. This is all changing as the distinctions between areas blur and it becomes impractical – even nonsensical – to advise on them as separate issues.

Paul Barton, a partner at Simmons & Simmons, says: "All the larger players are certainly gearing up for convergence, and if some of the smaller ones are not, they will begin to see their share of the IT work diminishing over time."

Gill Andrews, a partner at the London office of US firm Sidley & Austin, agrees. She says any firm focused on IT will find it increasingly difficult to know where one industry stops and another begins. "Convergence is a reality which is taking place more and more, and across the board," she says.

Others such as Conor Ward, a partner at Lovell White Durrant, hold the view that convergence is an issue that only a handful of firms – his being one of them – will have to deal with. He believes there will always be enough "unconverged" work for smaller firms.

Firms are finding a number of different ways to bring themselves in line with the converging industries, whether by working across various groups as part of a firm-wide approach, or by forming distinct working parties.

Clifford Chance senior assistant Nick Elverston is a member of the firm's "media, computer and communications group", which seeks to reflect the converged approach. He points out that individuals have to broaden their knowledge base to include other core industries and have a general understanding of the legal and technical issues relating to them. Elverston says this entails developing specialisms in tandem with a more general approach to create greater flexibility.

Nick Gardner, a partner at Herbert Smith, says his firm chose to use cross-disciplinary working groups, where teams of individuals are brought together for particular projects.

Although more and more firms of all sizes are handling IT work, there is still a narrow band leading the charge, according to Rory Graham, a partner at Osborne Clarke.

Many IT lawyers agree, citing Clifford Chance, Bird & Bird and Baker & McKenzie as the firms that have succeeded in reaching full convergence capability.

Olswang has geared up for convergence through a series of lateral hires. Previously considered to be "skewed" towards broadcasting, it recently hired leading telecoms lawyer Colin Long and now sees itself as providing a converged approach.

Convergence has other strands, such as the need to finance all client projects, whether through merger and acquisition work or with start-up capital. "You don't have to be a full-service firm," says Denton Hall partner Stephen Rawson, "but you do have to have credible financing capabilities".

As convergence continues, clients increasingly expect their core work to be carried out by one firm. Some cherry-picking will always go on, says Small, although he believes this will decrease.

So far, the main check on the IT law sector seems to be a shortage of good lawyers at all levels. "There is a great shortage of IT lawyers," says Victor Timon, a partner at Olswang. "We are struggling to recruit all the time."

In fact, firms says they are increasingly hiring people from outside the UK. Small says this is largely because there are few firms with sufficient strength and breadth to offer good training. "The really good work is concentrated in the top three firms – Baker & McKenzie, Bird & Bird and Clifford Chance – and Masons, especially on the contentious side," said Timon.

"It is a very complicated area, requiring real expertise, and is not something that can be easily broken into. It requires a huge investment in technology and legal training."

Despite the phenomenal growth of this sector and the abundance of work, Bill Jones, partner at Wragge & Co, agrees: "It takes a considerable time for law firms to build the necessary expertise.

"And because technology, and the application of technology, moves so quickly, you need to work on a daily basis to provide reliable advice. So, while more people are being called upon to do it, this is not an area which can be dabbled in."

Which firms do IT lawyers rate as the best?

Bird & Bird

Birds is neck and neck with Clifford Chance.

It has some very good people, especially at the partner level. So long as none of them fly the nest, the firm should go from strength to strength.

It has possible weaknesses in the international arena, and on the contentious side.

Clifford Chance

Clifford Chance is joint favourite with Birds. If it has a toehold, it is down to the strength of its corporate practice and international presence.

Overall, it has an excellent IT practice, with maximum respect going to Chris Millard, whose visionary zeal helped build it up.

Telecommunications convergence may be called into question.

Baker & McKenzie

Baker & McKenzie is only a hair's breadth away Birds and Clifford Chance.

The firm has a very good, durable team with a reputation for international work. Harry Small is heavily mentioned. Strong telecommunications work; perhaps not so strong on media.

Masons

The only variable in the top four, but most people would put it in this position.

Very strong on the contentious side, but perhaps too reliant on client ICL.

The firm is seen as being too complacent about its lead in the North – watch out! The competition is seen as gaining ground.