LegalTech, Process and the American Way

A look at profitability and process in the US and UK markets

Earlier this year, I ventured to New York’s LegalTech event to see how the current market in the US differs from our own. On my last visit in 2004, I was struck by the focus on litigation tools; it seemed to me that two out of every three suppliers were peddling litigation-based solutions. The emphasis seems less pronounced in 2012, but still reflects a reasonable and entirely understandable bias towards the litigious nature of law in the US.

Aside from the number of old faces I bumped into (it’s easy to forget how small this market really is), the other thing I noticed on walking round the trade show was how many large stands there are now. If there were ever any doubt that we are in the age of supplier consolidation, this was a fair reflection that the bigger suppliers are starting to dominate. As an aside, in my mind this trend is likely to reduce the risk that working with smaller suppliers can bring, but at the cost of the innovation that those less bureaucratic vendors have been able to provide.

A profitability presentation on the first day set some familiar tones. Firms are looking for project management (planning ?) techniques to provide increased profitability, and clients want matter budgets to give them more predictable pricing/timescales and improved communication about progress within matter phases. To this end, Finance teams are assisting their firm’s partners by providing ever better information about matters and, in some cases, meeting with the clients to discuss how such information can best be provided. In one case, a KM team has defined task and sub-task codes which are then mapped to client codes on the bill to help give the granularity of feedback that clients are demanding. This is similar to the American Bar Association’s suggested use of UTBMS codes, which have been designed to provide standardisation for the legal sector.

Another firm’s take on increasing leverage and profitability is simply to push work down to more junior lawyers. However, for others the necessity to apply the right experience to work means giving more thought to this process so that, for example, a senior assistant may be used to get through work more quickly where this is a requirement.

Yet another speaker bemoaned the time it took his firm to understand how profitable its practice actually was, taking a year to reach its conclusions. This, though, was preferable to one firm which embarked on a major change in its emphasis towards high volume, low margin work before understanding (too late) how this affected its profits – the firm didn’t survive.

There was a whole session dedicated to reporting metrics and management information whilst, in another one, an insurance-sector firm told how four different clients had requested it provide data feeds to update their case management systems which has resulted in duplicated effort. The thing that strikes me about all of the speakers I heard was how little they made of process automation. Disappointingly, in one of the last sessions I attended, process automation was covered but only in respect of administrative processes such as client and matter opening. No consideration was given to increasing the efficiency of the legal process which could have a major impact on profitability.

In fairness, the impression I took came from a limited number of sessions. However, should this be representative of the US market, I wonder if it reflects a market with less pressure than we are used to in the UK and which therefore demands less in the way of innovation. So I thought it would be useful to cover this aspect in a little more detail…

… which brings me to the topic of process and, from 3Kites’ perspective, both what we at are seeing in the UK market and the options available to firms for implementing solutions. One significant change over the last few years has been the adoption of a formal approach to matter management 1 for those matters traditionally thought to be niche and therefore beyond the reach of any form of process automation. More recently, however, we have seen a number of firms looking to introduce something akin to case management for some parts of these higher end work-types and, in other firms, the need to combine both case and matter management in a single platform.

This trend seems to mirror the need of UK firms to deal with the depressed margins that they have seen over the last four years. Where law firms once exerted the greatest influence over the method of charging, now clients are often in control of this area and the lawyers have to work with fixed fees or reduced rates. It is against this backdrop that the attitude towards increased efficiency (which may be process automation, but should also include improvements to manual processes) has softened to the point where it is being positively embraced by many.

The product options available to firms (especially in terms of case management) are extensive, so I have provided a brief summary of those products that 3Kites has had exposure to. However, readers should search for other options here as there are a great many alternatives:

LexisNexis

• SolCase. This is a well-established case management solution used in small to medium sized firms and often for standard high volume work-types such as personal injury and road traffic accident. It has not traditionally been used for niche or high end work-types. The product uses a Progress database and does not integrate with tools such as document management (although provides this capability). It is no longer actively developed or marketed by LN, although it is still supported.

• VisualFiles. Like the older SolCase, this is another well-established case management solution based on Progress which was seen as the logical progression from its more mature sibling. However, a number of firms own both products due to the lack of practical code migration tools coupled with the investment in existing work-types. More open than SolCase, this product will integrate with document management tools such as iManage although it too has its own document management capability. VisualFiles is still developed and marketed, although LN would prefer to move firms towards its long term replacement, StreamLine.

• StreamLine. This is LN’s first in-house developed case and matter management solution, and is based on Microsoft’s Windows Workflow Foundation platform so is pretty much open. The company has created a number of plug-ins for some of the standard legal applications. However, it has had limited success with sales thus far, which may be due in part to a delayed case management implementation where much of the code is being created. Should the company successfully complete this development (and buyers should test this point rigorously), StreamLine will offer a compelling option for firms wanting high end, volume and admin workflows in a single product.

Microsoft

• Windows Workflow Foundation. This is the platform that underpins LN’s StreamLine. In its native form, WWF has no notion of clients, matters, legal applications or a case management development environment. Going down this path would involve a firm in more bespoke development than most (including 3Kites) feel is appropriate.

OpenText

• Metastorm. A long standing business process tool, most of its law firm customers use Metastorm for admin (including client and matter opening) and, increasingly, matter management. It has not been used for case management in any meaningful way as this environment has not been developed. It continues to be actively developed in Wimbledon (belying its British roots), even though it has long operated as part of a North American company having been acquired most recently by OpenText.

Thomson Reuters

• FloSuite. Like Metastorm, FloSuite has never made significant inroads into the case management market for lack of a developed environment for this area, although some firms have independently used it to create their own. However, it has been used to automate admin processes and also includes integration for iManage and Sharepoint. It continues to be developed and marketed.

FWBS

• FWBS Matter Centre. Like FloSuite, this is another recent acquisition for Thomson Reuters (albeit by a different operating group), and provides a generic matter management environment that sits halfway between case management and admin process automation. It has its own document management capability, but has also been integrated with iManage (though not without much effort). It continues to be developed and marketed.

We would envisage process automation continuing to make inroads into those (parts of) work-types previously considered beyond it. As such, this is an area where the product development will be of interest as companies struggle to marry the different elements of case, matter and admin workflow into a single platform. If you would like further information about the topics covered in this article and how 3Kites can assist you with them, please contact the author, Paul Longhurst, using the following details:

• Email: paul.longhurst@3kites.com Phone: +44 (0) 7785 254909

Before signing off, I want to return to LegalTech in order to flag up a personal highlight. This was a talk given by Kevin Genirs, who had been the General Counsel at Lehmans and who spoke movingly about the bank’s last week. I found this a fascinating insight into events that we are still reeling from in 2012 and an interesting antidote to the populist view of bankers as villains.

3Kites Consulting – March, 2012

1 Matter management is a framework to guide lawyers through a matter, rather than the more prescriptive case management that controls every step of a high volume work type such as personal injury

© Copyright 3Kites Consulting Limited 2012