This article originally appeared on 3 Geeks and a Law Blog on 7-July-2017 here.
Double-edged Sword: Protect & Deliver
2016 was a banner year for cyber incidents as records breaches increased by 556% with more than four billion records leaked. The regulatory and client response has been significant. The regulatory side brought the introduction of the New York State Department of Financial Services (NYS DFS) cybersecurity regulation, in addition to pending other regulations such as the General Data Protection Regulation (GDPR) which also mandate security requirements. From the clients, the Association of Corporate Counsel (ACC) released their Model Information Protection and Security Controls for Outside Counsel Possessing Company Confidential Information. The provisions of all these effectively create a standard of care for handling and protecting client data; that standard is fairly clear that firms must lock down access to only those who require it. This means that only those who clients authorize to have access to their matters can have it; this is commonly referred to as ‘need to know’ access.
Historically, firms have operated open access environments under the guise of knowledge sharing and collaboration. They must now fundamentally change an entrenched practice that has generally allowed everyone inside the firm access to clients’ sensitive documents. The challenge is that lawyers rely upon prior work product as the basis for new work product.
As firms scramble to comply with these new mandates, they’re concerned that locking down and limiting access to data repositories will impede knowledge sharing. They fear that cutting-off access to valuable work product will diminish operational efficiency, and that need to know access will destroy knowledge management. For those firms already thinking about the bigger picture and finding other ways to leverage their valuable data, need to know security may be an opportunity, not a hindrance.
Need to Know Access May Limit the Value of Prior Work
According to most indicators, electronic information is doubling every two years and will exceed 44 zettabytes by 2020. The amount of data firms manage has been growing, exponentially. Disappointingly, firms seem to have struggled to properly collect, maintain, and harness the vast array of data they process, or even make use of that which they already manage.
To enable their professionals to benefit from the wealth of experience learned from prior matters, firms allow lawyers to search for prior work product. It makes little sense to reinvent the wheel for every new, yet similar matter when lawyers can rather improve service delivery in terms of time and quality by re-using others’ prior work.
Logic dictates that implementing need to know access will throw a wrench in the works by limiting the pool of prior work product any one lawyer can search or access; specifically, it would limit them to re-using only the work product for certain clients from other lawyers who provide services as a team.
Many law firms’ document repositories already exceed tens of millions of documents; contrary to what some might assume, this actually may improve efficiency. This is because the more limited dataset being searched could ensure a greater relevance of results, making it easier to locate specific items that lawyers need, especially when searches are being conducted on such a regular basis. Nevertheless, this alone is not the answer.
The Solution for Efficiently Locating Prior Work: Matter Profiles and Experiential Data
The problem that needs to be solved is how to enable lawyers to find work product they don’t know exists and for which the firm does not yet have any published template. Firms need to enable their lawyers to find others’ work product. Thankfully, there is a solution.
If firms properly tracked and organized the correct metadata around their engagements and used it to create matter profiles, this challenge would be solved – and the firm would be positioned to improve numerous other aspects of its operation. Matter profiles are also beneficial to business development, marketing, and knowledge management. Having robust matter profiles makes searching far more powerful.
Matter profile search can readily drive key knowledge sharing needs. Profiles deliver a more holistic method for readily identifying the most appropriate work product, even when the lawyer already has access to the documents. Matter profiles provide better context as to the purpose of each document.
Some examples of the data that should be tracked in such profiles include:
- Matter type, sub-type
- Area of law
- Qualifiers or tags
- Deal / Demand / settlement amount
- Court / Location
Lawyers can track and easily find an appropriate matter and then request access to the data, without falling foul of maintaining need to know security. This ability to ‘pierce the veil’ allows a combination of need to know security while offering a method to enable awareness of the wealth of experience and prior work that exists within a firm.
These same matter profiles would also empower business development and resourcing decisions. Firms can make more intelligent decisions about where to invest and focus resources and marketing programs to improve pitch success rates. In this regard, that same metadata can drive:
- Opportunity Management for firms to track and forecast pipelines
- Proposal Generation to streamline and reduce costs and improve results
- Matter, Client, Lawyer, Staff, Vendor, and Other Profiles for better search capability; and,
- Comprehensive Firm Directory with integrated Experience Scoring to more quickly locate and identify appropriate personnel
Need to Know Security Doesn’t Apply to Public Data
The requirement to apply need to know security is not applicable to public data. As such, that data is easier to handle from a knowledge management standpoint. A significant portion of the data that law firms work with is or eventually becomes public. Examples of this type of data include pleadings filed in court (except for matters under seal, which are rare) and documents filed with most government agencies such as the SEC or UK Companies House. This data is still important to and plays and integral part of the broader firm knowledge management initiative. Although today it can be readily automated, prior to everything being made available in electronic format, lawyers manually created indexes to track this type of data; this included pleading indexes, closing indexes, bundles, and other various indexes.
Streamlining the creation of pleading and closing indexes is ‘low hanging fruit’ for process re-engineering. Ensuring the data is ordered in an optimal format is valuable to clients and lawyers for sharing and future re-use; almost all the valuable matter profile information is contained in these documents. Information such as closing dates or key court dates and transaction amounts are typically included in the closing index. A trained person can easily extract and capture such valuable metadata during preparation of an index.
Better Investments in Templates
In today’s competitive market for legal services, firms must be able to demonstrate expertise, understand cost structure, price competitively, manage a pipeline of work, and recognize opportunitites for cross-selling. Core to all of these processes is leveraging the firm’s data, and it goes well beyond knowledge sharing.
In the age of need to know security, the argument asserting the inherent value of sharing prior work product without any limitations can no longer eclipse the security needs and demands of clients. Rather, firm leaders should take the opportunity to invest in the right technology to complement the new processes. This includes better data collection and management as well as automation of processes such as creation of forms for volume practices. This is an opportunity to improve data practices overall. Everything firms do today is related and can be tied-together with the same core data—and the mandates of need to know security just provide another opportunity for improvement.
Barnes & Thornburg’s Efficiency Push: A Change Management Story
Roy Strom, The Am Law Daily, published originally on The American Lawyer
Starting around 2010, Richard Rezek realized that something was changing inside his clients’ legal departments. They were being put on budgets and were pushing those same cost controls onto their outside counsel.
So Rezek, an intellectual property partner at Indianapolis-based Barnes & Thornburg, came up with some of his own tools to respond, Excel spreadsheets mostly, which he said allowed him to “limp along” for a couple years.
“It was me being frustrated,” Rezek said.
Then, in late 2015, Barnes & Thornburg began seeing an increase in requests for proposals that asked how the firm would budget its matters and how it would manage those matters to stay within budget. So Esther Bowers (pictured below, right), director of client service initiatives, and Jared Applegate, director of pricing, set out to find a way to actually respond to those requests.
What they came up with is now branded BT ValueWorks, a legal project management system based on technology provided by the company Prosperoware that allows the firms’ lawyers to track their budgets in real-time and adjust how they handle legal work. Barnes & Thornburg has trained 125 lawyers to use the system in about a year and it is now tracking budgets on more than 500 matters that will account for about 10 percent of the firm’s revenue, which grew 2.5 percent last year, to $370 million.
Barnes & Thornburg is far from the first firm to develop a legal project management strategy, with others in the area being Baker, Donelson, Bearman, Caldwell & Berkowitz, Bryan Cave, Littler Mendelson and Seyfarth Shaw. Last year, Hogan Lovells announced an investment in the legal project management space.
But the Barnes & Thornburg story shows how firms can more quickly than ever adopt a strategy and put it in place to win work and control costs. It is also a case study in how law firms can adapt to clients’ demands for predictable pricing, something that has become increasingly imperative for firms as those clients push budget caps onto law firms.
A recent report by the Georgetown Center for the Study of the Legal Profession states that while alternative fee arrangements account for only between 15 to 20 percent of law firm work, that number rises to as high as 90 percent of matters when budgets are included. Firms that fail to manage their work to those budgets, according to the report, will face an increasingly uncertain future.
For most firms, that is an ominous warning. A study this year by legal consultancy Altman Weil Inc. found that a mere 30 percent of firms routinely link work done on a discounted or capped fee to changes in how that matter is staffed or delivered.
One reason why that number is so low has to do with the difficult nature of change within large organizations. No matter how enthusiastic managing partners are about fixing a problem, the task largely relies on the willingness of partners like Rezek, 59, to rethink how they work.
On that change management front, the traditional law firm hierarchy often stands in the way of new ideas. Partners who wield the most power within their firm are often the least likely to see any reason to change the system that has benefited them.
“Institutional insiders with the most power to bring about change will also be most likely to resist it, [while] institutional outsiders with something to gain from change will struggle to have an impact,” writes Laura Empson, a professor in the management of professional service firms at London’s Cass Business School in her upcoming book, “Leading Professionals.”
Inside Barnes & Thornburg, the pricing professionals Bowers and Applegate found a powerful insider who didn’t resist their idea in Allen Chichester, the firm’s chief marketing officer for the past eight years. Chichester helped win support from the firm’s broader C-suite.
“We expect that within five years, the partnership will look back at this program as the single biggest factor in the firm’s ongoing success,” Chichester said.
From there, Bowers and Applegate began providing training seminars on legal project management and Barnes & Thornburg’s software platform, Umbria, to its lawyers.
To select who would be the most receptive to the change, the duo looked for reasons why a particular group of Barnes & Thornburg’s clients would be more interested in project management. They chose to start with an office where the firm’s billing rates are relatively higher than the firm’s other offices. Lawyers in that office may be under more pressure to provide value for clients, they figured.
Applegate and Bowers found that lawyers had different reasons for coming to the six-hour training workshops. Some were struggling with how to present a budget to clients who requested one. Others felt price pressure from clients.
One misconception they initially had was that client requests for alternative fees would be what drove adoption of the program. Clients didn’t necessarily want alternative fees. They just didn’t want “scope creep,” or lawyers racking up hours on tasks that weren’t necessary for the project.
“How do we deliver matters at the expected price?” asked Applegate (pictured left). “That’s really the crux of changing attorney behavior.”
Keith Lipman, the founder and president of Prosperoware, said managing legal projects to an expected cost is the major behavior change for most partners. Even if they are not agreeing to alternative fees, their clients are asking for budgets, which in many cases equates to a capped fee. Without a system to manage costs to that budget, firms run the risk of burning past it and sinking profitability.
“It is not that alternative fees are taking over the world—it’s these unique client deals are taking over the world, all driven by these legal operations folks,” Lipman said. “That’s what’s happening. Partners are in essence creating caps because the client says, ‘How much does it cost?’”
The Umbria tool helps partners manage projects more proactively by providing real-time data for which lawyers are doing what work and at what cost. That has come in handy for Joseph Eaton, a Barnes & Thornburg litigation partner and co-chair of the firm’s toxic tort practice, who had a client request a fixed-fee, phased budget for a large class action matter shortly after he had an Umbria training session.
Working with the client, Eaton set up five phases for the litigation, each complete with coded tasks that timekeepers on the matter enter into the system on a daily basis. Eaton has a weekly meeting with the lawyers working on the case to update them on where they stand within their budget.
“It’s a little bit of getting the lawyers to come around to the idea that you can’t just go off and do a research project for X hours and see if you come up with the right answer,” Eaton said. “You’ve got to be more efficient.”
Eaton said he has used Umbria to work up internal budgets for litigation matters where clients are not paying on an alternative fee, and he is tracking and managing work on those matters in the same way he does for a fixed-fee case. He has used those budgets to propose to clients a fixed fee for certain phases of litigation.
“When we first started rolling this out, I didn’t see it necessarily as a proactive tool,” Eaton said. “But now that I am in it and I understand it a little better, and have utilized it on a daily basis for a large case, I can see that it can be proactive.”
The BT ValueWorks program still has a ways to go to proliferate throughout Barnes & Thornburg. About 20 percent of the firm’s lawyers are trained on the system currently, and there are eight trainers, including four practicing lawyers. Applegate said his team’s approach is “work with the willing.”
One of the most willing has been Rezek (pictured right), the IP litigator who jerry-rigged his own budget tool before the Umbria system. Rezek was involved in the internal rollout of the program and he agrees with Chichester, the firm’s CMO, that the program is vital for Barnes & Thornburg to sustain profitability as more and more clients seek to control their legal costs.
Rezek said he wants to dedicate a portion of his time to “exporting” the program to other partners at the firm and their clients.
“You want to be remembered for being able to be a change agent,” Rezek said.
Enterprise v. Application: Are Firms Ready for an Enterprise Class Solution?
In a changing marketplace, it might benefit law firms to choose an enterprise solution over ‘technology application gluttony.’
Mike Stern, Prosperoware, Legaltech News,
As the demands for improved financial performance continue to increase for law firms, solutions—technology solutions, specifically—seem to be popping out of the woodwork, all making similar claims about achieving stellar results. Let’s disabuse a few of these notions, starting with the obvious point that not all technology solutions are created equally. That’s OK, of course, as it’s dependent upon what problems a firm is seeking to solve.
Unfortunately, though, some firms have fallen unwittingly into technology application gluttony and find themselves experiencing symptoms of integration overload. Some of these firms have implemented hundreds of applications, and it’s simply too much to manage.
This we know: Market forces (shrinking demand, growth in alternative legal services providers, more work moving in-house, etc.) and the imposition of budget discipline on law firm matter delivery has pushed firms into a different business model from the traditional approach of “do quality work, without regard to cost, then bill.”
What this means is that, today, some firms are seeking a new approach to competing for, identifying, and winning new business; to the staffing, ongoing financial management and real-time monitoring of matters; and a new approach to reporting on all of this to clients. In essence, it’s a new business model—one that can properly be managed via an enterprise class solution, not piecemeal integration of various individual or legacy applications.
What is an enterprise class solution?
For the most part, corporations tend to be about 10 years ahead of law firms when it comes to this kind of technology. An enterprise application, as Microsoft defines it, “is a big business application.” Or, a little more meaningfully, enterprise solutions are, “complex, scalable, distributed, component-based and mission-critical … and satisfy hundreds or thousands of separate requirements.” Microsoft breaks this down into three basic requirements for enterprise class solutions:
• Large: The platform is multiuser, multimachine and multicomponent, can manipulate massive data sets and utilize extensive parallel processing, network distributed resource and complex logic.
• Business-Oriented: Its purpose is to meet specific business requirements. It encodes business policies, processes, rules and entities, is developed in a business organization and is deployed in a manner responsive to business needs.
• Mission Critical: An enterprise application must be robust enough to sustain continuous operation. It must be extremely flexible for scalability and deployment and allow for efficient maintenance, monitoring and administration.
Why would a firm consider an enterprise class solution?
Fundamentally altering business models is a big deal and requires a “big” solution—one designed for the greater complexity and modern paradigm. Work that needs to be done includes:
• Stabilizing the firm with an appropriate mix of high- and low-profit margin practice groups;
• Shifting the compensation system to incorporate the variance of matter profit;
• Protecting the firm against disintermediation;
• Enabling client relationship partners to plan, monitor and bill according to agreed matter plans;
• Standardizing processes; and
• Leveraging alternative staffing opportunities and labor arbitrage.
Consider the mix of expertise and data that each of the above necessitates. If we assume that the above list constitutes the changes needed, then this new business model firms are transitioning to requires a mature mix of “front of house” timekeepers plus administrative teams, including pricing, marketing and business development, HR, finance and LPM practitioners. Gone in this model is any vestige of the old “us” vs. “them” mentality.
Firms already have access to and are aware of the tremendous volume of data and expertise residing in their various departments, yet they’ve struggled to sew it together into something greater than the sum of its parts. This sewing requires technology. In terms of solutions, there are specific applications for everything: BI/MI dashboards, proposal generation, firm directory, experience management, pricing, budgeting, profitability and forecasting.
Unfortunately, the more point solutions a firm has, the more challenged they are to integrate them properly, which can result in integration overload, instability and simply inaccurate or inconsistent metrics. With multiple applications to look after, firms stretch already limited resources to maintain numerous databases and data sources as well as manage that data. Worse, firms can end up losing the value of capturing and correlating that data as lawyers and administrators waste time fixing integration problems—or missing them altogether—rather than benefiting from integrated intelligence.
Configurable secures knowledge transfer
An enterprise solution’s worth is in including the built-in integration firms need to leverage the intelligence which they already have. As importantly, with enterprise software, firms benefit from a “configurable” platform—not just a series of “customizations.” That is, all the decisions regarding setup can be completed in the software’s user interface.
This means that, once it’s up and running, the technology is not solely dependent upon the expertise of a small handful of expensive consultants or administrative users; if it was reliant upon customization, when those experts left the firm, that expertise would go with them, and the solution would be left to languish. A true enterprise solution would provide true, transparent configuration, ensuring secure knowledge transfer.
Applications that require customized scripts and behind-the-scenes setup visible to only one or two people put the firm at risk for knowledge transfer. Customized platforms are often touted as flexible, but those highly-customized systems create problems beyond that of knowledge transfer. Highly-customized systems can become unsupportable and difficult to maintain. A simple upgrade to a newer version can wipe out all of a firm’s customizations or make upgrades effectively impossible to perform. Conversely, a truly configurable enterprise solution is typically every bit as flexible as a customized solution yet doesn’t carry the inherent risk and significant downside of obsolescence.
Compared with more siloed applications that require separate data entry and data capture and disparate interfaces, there are solutions that utilize a common interface, common data platform and integrated and coordinated workflow and processes across all firm functions and departments. The various functions in the firm all rely on and benefit from a broad, common set of data. Firms can ensure that the platform they select to address a need such as business development will also meet knowledge management, LPM and even lawyer requirements for both capability and information delivery.
By selecting modern systems designed to address the new paradigm and necessary business model to compete in today’s market, firms can gain beneficial synergies from that core system warehousing a single, unified version of the truth.
Practice and Profitability: Prosperoware’s Data-Driven Take on Financial Management
Titled Umbria Profitability, the new practice management module offers a clearer window into law firm financial management. Here’s a look at how it gets its glimpse. Read the rest of the article in Legaltech News, here.
Partner and Firm Profitability in 3 Steps: Plan, Monitor, Bill (Part 2)
President of Prosperoware, Keith Lipman, discusses the 3 steps to sustainable profitability in Part 2 of this series: “Firm and Partner Profitability in 3 Steps: Plan, Monitor, Bill.” Read the article, here.
Winston & Strawn’s CIO Dishes on Choosing and Using Practice Management Technology
Winston & Strawn CIO David Cunningham discusses his firm’s experience with practice management tools.
Ian Lopez, Legaltech News,
Major law firms are being asked to do more with fewer personnel, and with lawyers taking a lot of the work previously given to administrators, practice management technology has become a more ubiquitous component of the workflow.
As found in the American Bar Association’s 2016 Technology Report, practice management technology use at large firms (500+ personnel) has jumped in the last year alone by about 40 percent. Among the major firms using this technology is Winston & Strawn, an international firm that touts a team of 850-plus attorneys and expertise with technology around issues facing law firms worldwide.
The man behind the gadgets is chief information officer David Cunningham. In choosing, implementing and overseeing the use of technology for one of the U.S.’s largest firms, he’s learned some lessons from his experience with practice management software.
Here’s Cunningham’s breakdown of and advice for using practice management:
What do you take into account for choosing and using firm technology? Thinking long-term and benchmarking against Big 4 consulting firms has a huge influence on us. Instead of simply replacing one system for another, we asked why law firms are 10 years behind how other professional service firms manage their resources. We knew we had an opportunity to fundamentally change the efficiency and effectiveness of the business.
Practice Management tool of choice and why? We spent four years analyzing our needs and assessing every product on the market. We custom developed a few solutions along the way to address important gaps, like an early matter budgeting and dashboard system and our app store-like intranet. However, we’re now in the midst of implementing a dozen aspects of Prosperoware’s Umbria platform, in conjunction with a natural language query system and a few data analytics and visualization tools.
Is this the first PM tech you guys have used and if so, why the switch? We’ve been using our custom Budget Manager tool for four years, but we will kill it this year. It allowed us to understand our historical matter data when developing a matter budget, but the Umbria system will replace it with more sophisticated analysis and better integration with experience management.
Pros of using this tool: Umbria moved beyond “legal project management” and is executing on our ambition for an end-to-end ERP/business/client Intelligence platform. It doesn’t replace our accounting, HR, library, or CRM systems, but it provides the core data model across these systems and, combined with our WinstonWay intranet, the lawyer interface to most of our information.
What can be better? PM Systems, Umbria included, are still in their infancy. Each capability takes a lot of design and workflow time to get in production. But, it’s an opportunity to shape the future.
Greatest struggle in implementing technology and how you overcame it? Even more than budget or time, our bottleneck has been having great tools. We’re finally at a place where we have all of our key vendors in place, so this year and next year are completely focused on the quality of our execution. Our challenge is to blend together the key systems so they provide a seamless (and mobile) experience so our lawyers see them as simply “the way you work at Winston.” Getting the data and design that good is a challenge for our entire firm; it’s not just an IS issue.
Key things law firms need to look for in choosing practice management technology and why? If the practice/project management system expects a lawyer to do more work than before or to stop what they are doing to go to a separate PM system, you will lose the battle. A great system will reduce work, lower the number of places a person has to find information, and give a lawyer more real-time insight when they are doing the work they already do.
Almost every system we considered expected us to replicate firm-wide capabilities in their PM system (e.g., financial/profitability analysis), didn’t adequately replace silo capabilities (e.g., time entry), and/or left key gaps (e.g., sophisticated experience/talent management).
Advice for other law firm CIOs getting staff onboard with using PM tech? Our staff is actually eager. We have 400 active projects just in IS, which is a bit crazy. We use tools like Microsoft Planner, Visual Studio, and Slack to track teams and tasks, but we’ll also experiment with using Umbria for our staff so we’re on the same page as our lawyers.
A firm without your PM Tech would look like… Without a broad “ERP” mindset to PM systems, I think it’s likely that “legal project management” will be adopted by only a minority of lawyers, with particular practices, clients, or personalities. That’s a more comfortable change, but not one that fundamentally kicks a firm into the world in which we now live.
What are some insights made possible with this technology that weren’t available before? These insights are still evolving, but this is what gets us excited. Some examples:
- Case Strategy: Learning from past cases to identify the strategy, team, timeline, and risks of a new matter.
- Client Intelligence: Identifying issues and patterns in industries and companies to understand how better to help clients and potential clients.
- Talent Management: Building the ‘best fit / best value’ team for each matter, based on experience, results, relationships, costs, etc. And driving recruiting, retention, and career development plans based on our pipeline.
How has PM changed the way you practice? We’re still early to claim big wins. But firm and practice management knows that practice management systems, data, and processes are key to our objectives to strengthen our culture, be a destination firm for top lawyers, increase predictability of costs and results, etc. It’s not about “practice management;” it’s about running a business well in a highly competitive environment.
Partner and Firm Profitability in 3 Steps: Plan, Monitor, Bill
President of Prosperoware, Keith Lipman, discusses the 3 steps to sustainable profitability in Part 1 of this series: “Firm and Partner Profitability in 3 Steps: Plan, Monitor, Bill.” Read the article, originally published on JD Supra February 22nd, 2017, here.
What the Doctor Ordered: Procedure-Based Pricing for Law
By Keith Lipman, President and Co-Founder, Prosperoware
This article published in the Legal Management Spring 2017 ALA magazine discusses why law firms need to change their business model from the billable hour. To download and read the article, click here.
Creating and Renewing Client Relationships and Fee Arrangements
ILTA Digital White Paper Fall 2016
Keith Lipman, President and Founder of Prosperoware, is the author of the latest ILTA white paper, “Creating and Renewing Client Relationships and Fee Arrangements,” which discusses the need for a repeatable process that supports healthy client relationships and a healthy bottom line for the firm.
To read the white paper, click here.
The Industrial Revolution of Legal: From Artist to Cog in the Machine
Read Ben Weinberger‘s latest article in the Fall 2016 issue of Peer to Peer Magazine, “The Industrial Revolution of Legal: From Artist to Cog in the Machine.” This article discusses how the practice of law has changed and the economic forces driving changes in the industry.
To view the article, click here.