In 2005, commercial litigation partner Kamal Aggarwal had a vision. He wanted to create a new kind of law office – from scratch – in the Thames Gateway area. Entering any new market is hard enough – and even more so for a law firm. An innovative approach was required.

Working with his marketing director and a consultant, Kamal’s team developed a thought leadership campaign. It required a small team of lawyers to be trained in market research and a telemarketing campaign to secure them interviews with the owners of 50 local SME (Small and Medium Sized Enterprises).

The idea was to combine their market positioning as “Listening lawyers” with a real-life demonstration of their ability to engage with businesses on the real commercial issues that they faced. The exercise also enabled the lawyers to get up close and personal to a number of target client organisations and initiate a business relationship. Without a hard sell.

In advance of launching the research exercise, Kamal spent many hours talking to the various quasi-Government organisations leading the area’s regeneration and professional intermediaries – generating awareness and support for the research. He also used these discussions to gain commitment from external speakers for the subsequent series of business seminars he planned.

Kamal comments: “It felt as if every day was filled with meeting people – networking became my modus operandi. Sometimes I worried what my fellow partners would think about such a significant investment of time with no concrete, short term results. As it happens, we were all extremely satisfied with the results”.

In October 2006, the research report was published and although it didn’t receive as much media coverage as was hoped, the firm was delighted with the high turnout at a variety of seminars tackling the issues whether these related to infrastructure, the skills shortage or business finance.

Kamal and his team worked tirelessly to address one of the main concerns – the perceived lack of communication from the patchwork of bodies driving the regeneration and the need for more opportunities for local business to get together to discuss common issues.

Two specialist groups were quickly established – one for those focused on property and construction and another for human resource professionals – as well as TSP Plus which is a forum for larger companies, local authorities, charities and other quasi-public organisations to debate and discuss issues that came out of the research projects and continue to be relevant to the region. These events are round tables of six to seven people with a Thomson Snell & Passmore lawyer facilitating discussion after a guest speaker’s presentation.

In 2009, the research exercise was repeated using telemarketing support and an updated set of results were published. Another phase of the campaign unfolded. Kamal added “We continued to operate the various networking clubs for the local community. All lawyers that joined the team underwent an intensive training programme to ensure that they understood our strategy and had the necessary skills to engage with businesses the right way. Meanwhile, our marketing team continued to send out a range of focused e-newsletters and roll out events that met the needs of the local companies. We were surprised that whilst we originally targeted SMEs we found a number of large national and international clients also came to us – they were impressed with how we had embedded ourselves in the business community. They too were attracted by our straight-talking, pragmatic and sensibly priced services delivered by highly rated legal experts who really understood the commercial imperative”.

The new office generated significant instructions and the initial financial forecasts were exceeded by a substantial figure – and it now accounts for just over 30% of the commercial group’s fee income. Kamal’s rota team of staff was gradually replaced with full time lawyers across all the commercial disciplines. The firm is now investing heavily in new premises at Crossways Business Park which will be custom fitted to meet the needs of the firm and its clients. It is a brave step in the current climate and demonstrates the confidence of the firm in the region.

The campaign – whilst it has evolved substantially – continues to this day. And Kamal and his team of lawyers – whether old hands or “newbies” – still invest a huge amount of time networking. On the local business community’s agenda. It has become a way of life…

* Kim Tasso is a management consultant specialising in the professions, a freelance journalist and author www.kimtasso.com/blog2  Twitter: RedStarKim

Quite at the beginning of my professional career as a lawyer, I was fortunate to work in a law firm, it was a subsidiary of a larger corporate structure where management was performed following business criteria: among other things, we had an annual sales budget, a marketing plan, monthly budget deviation was analyzed, etc…

There also was a CRM system with integrated management business functionalities, including case management, billing and an extranet for clients. That application had been developed internally by the company.

I spent nearly ten years working in the business of legal service delivery (as a lawyer first and then as a manager) in a technologically advanced environment, and for that reason, when I started my career as a marketing and management consultant for law firms I was surprised for what I found.

Many firms did their invoicing using spreadsheets, had no client data bases, had oficces with tons of papers on their shelves, did not have an electronic file management system, and in most cases, files where identified with a number, wich was recorded in a spreadsheet along with the client name and a brief description of the case. Clients contact details were only found in the lawyer’s personal agenda, or the secretary’s.

 It’s been just six years since this, but a some things have changed.

It would not be fair to say that all law firms were in that situation, some, usually the largest, had implemented internal file and client management systems, document and knowledge management, document automation systems, but they were only a minority. For the vast majority of small and medium size law firms, the adoption of communication, management and information technologies, was far from this. Neither the Spanish market was offering good products customized to the needs of this huge segment. There were few suppliers and a very limited offer, as Infolex, Diana, Sage or Sudespacho.net (one of the first cloud-based systems).

Lastly, small and medium size law firms, have been gradually becoming aware of the need to incorporate technology into their daily lives. A study made by the General Council of Spanish Lawyers (CGAE) states that 98% of lawyers believe that new technologies are important to their practice, and 76% believe that their Bar association is devoting sufficient resources to modernize and promote their use.

 The technologies used by law firms in Spain are, in order of importance  internet access and email (98%), and at a far distance, the use of mobile devices to check email. Access to case law databases in their online versions, is the following (78%), and case management programs, responding to a critical need of the firm to manage their daily work is the fourth technology to be deployed (54%).

This is statistical data of 2008, when the last “Sector Barometer” was issued. It has not been published an update of this study, but everything points that this percentage would be greatly increased.

This situation facilitated the appearance of new products as Nubbius, Gedex, ED/Management, Netfincas, etc… Their main features are:

- File management system.
- Calendar 
- Billing 
- Document Management 
- Sending emails 
- Extranet for customers to grant access to their files and documents – Multi-user system

Quite a lot law firms have a file management system and some of them are using an extranet for clients to increase the added value of their services. Another matter is weather this technology is being used to analyze the firm’s situation: budgeting, objectives, customer base analysis, customer profitability, segmentation and cross-selling, etc… Many of these programs permit these options, but generally, are largely unknown by its users.

But the crisis environment has accelerated the need for lawyers to manage their businesses and to conduct sales and marketing actions, and it is precisely here that the technology available in Spain for the legal sector is not capable of fullflling these needs: medium-sized offices can’t find attractive solutions. Firms willing to do marketing activities and to obtain information of their results in terms of quality and effectiveness, have to adopt not legal oriented technological solutions with the consequent extra effort of customizations needed.

E-mail marketing software is one of the tools beginning to be used by the legal sector in Spain: it is seen as a useful tool to analyze the feedback you have when sending emails to clients and prospects. The most used platforms are Mailchimp, ConstantContact, NewsletterSoft and ClickMail. Their user friendly interface, usability and affordability, makes them the perfect option to start with online marketing campaigns.

The implementation of CRM systems for medium law firms is also something complicated that is waiting for a solution. Actually, medium law firms (30-100 lawyers) are hiring CRM software companies to develop a customized application to integrates contact and customer management, file management, invoicing and an extranet for clients. They are willing to unify all of their technological resources in a single platform.

These developments are made by companies who do not know the legal sector: this causes high customization costs and is really a time consuming work. An alternative way would be hiring a solution developed in other countries specially for the legal sector, but this option almost always ends up being discarded because of the lack of translation into Spanish.

Besides, these foreign applications are not adapted to the Spanish market, among other things, they do not include the territorial distribution, legal system (courts and tribunals), Spanish legal terminology, government official calendar, Spanish tax system, etc …

For smaller firms (10-30 attorneys) this option is not economically viable. Instead, they use CRM platforms designed for small and medium enterprises, very effective, economical, intuitive and relatively easy to customize, as for example WebCRM, but they are not designed for the legal sector. The problem there is they can not integrate their client files into these applications: they end up with at least two management applications, and linking them both is a tedious process with uncertain results.

Document automation  for the legal sector is another thing that can not be found in Spain. Software provided by companies such as DirectLaw or ContractExpress to create automated documents are too complex to use for a small law firm, with limited time and human resources. I have been asked several times for this product: this is something small law firms would be interested in as a new product and delivery system to offer to their clients.

On the other hand, lawyers search portals and price comparators are experiencing a great success. Platforms as Abogae, Abogalista, Legal Portico, Promolex or the latest Legal Prestigia, Unoabogados and Lawyeah! are becoming more and more popular whithin the legal community. They are seen as opportunities to improve online visibility and incrase work volume whenever you are rigorous and share quality information. In this sense, these companies are doing a lot to educate law firms about the need to do marketing, and thus, to organize and manage their law firms properly.

While it is true that Spanish law sector, in its segment of small and medium law firms, is just beginning the road of technology adoption, the change of mentality is taking an agile way. It may be because of the need to grow, the trend towards internationalization,  the frequent alliances and partnerships with other law firms, or because of the greater access to information facilitates to look to other jurisdictions which years above us.

According to a study conducted in Spain in 2011, the number of law firms is about 90,000, which is a lot, especially if we consider that of these, 89% have only 1, 2 or 3 partners. It is really a small and mid-sized law firms market, a particular market with its particular needs.

The introduction into the Spanish market of a comprehensive technological solution (CRM + file management + Email marketing + billing + document management) that could be implemented by modules to provide gradual adoption and a moderate economic impact, adapted to the Spanish legal market and designed for this segment (taking into account both the language and the price) would be a boost for the industry and an opportunity for the provider that develops it.

At the LawTechFutures 2013 event in London I saw some great options, talked with some providers and software companies. Is any of them going to take the chance?

 * Eva Bruch is a legal marketing consultant with MoreThanLaw www.morethanlaw.es and adds that she apologises for her English – don’t worry, it’s far, far better than our Spanish.

by George Beaton*

Three are at least three reasons why law firms need to use more research in making decisions. In this context research refers to fact gathering, analysis and interpretation of law firms’ markets, clients, competitors and staff.

Strategy  The first reason firms need more research is to inform the decisions that constitute their business strategy.

Countless hours go into innumerable pages of analysis to support discussions at partnership planning conferences. To what end? Decisions will be made – but that’s the easy part. The saying that strategy is 10% inspiration (i.e. formulation) and 90% perspiration (i.e. implementation) is apt for partnership-based cultures, the problem is firms are all too frequently not very good at the first, formulation, or the second, implementation.

Why? In no particular order, partners tend to collude and thereby avoid tough issues; they are excessively internally focused; they are characterised by hubris and unwarranted confidence (because they usually lack strategic benchmarks); they too often plan wwith the lowest common denominator (i.e. the weakest link) in mind; they have an aversion to saying no; they tend to follow the herd (believing it’s safer and conveniently ignoring the fate of lemmings); they have a bias for intuition rather than factual evidence; and they focus on the short term.

So what do savvy firms do to overcome these blockers? One of the solutions is to use hard evidence. Professional people are rational thinkers. Facts persuade, especially when they are independently sourced and on point.

Clients The second reason firms need more research is to understand their clients more deeply.

Listening to a recent presentation by an esteemed colleague reminded me just how wrong the conventional way of thinking about what clients really value can be. Tristan Forrester was quoting extensive Beaton research conducted with thousands of clients of law firms.

Our research shows clients unequivocally regard price and value as positively related. That is, higher fees signal higher quality. Price is social proof of a firm’s market position and quality. Yet this doesn’t mean a firm can charge as much as it likes; there is another factor in the mix.

A firm and its practitioners will be rated well on cost consciousness if clients believe their money is being spent, in Tristan’s words, “as though it was the firm’s own”.

Yet our research consistently shows the weakest link in managing clients’ perceptions of value is poor cost consciousness. This applies to all types of client, all professions and all work types.

Trends And the third reason firms need more research is to understand trends in the environment that pose both threats and opportunities.

Many forces are transforming clients’ buying behaviour, service delivery and the competitive landscape. And most of these forces are adverse for conventional law firms. What will be left for these firms to deliver in their traditional ways? It will be work of a trusted adviser nature, constituting probably no more than 20-30 per cent of work they currently perform. The result is traditional equity partner profits will fall as online service delivery innovation takes hold.

Scanning and sensing the environment–both are forms of research–prepares firms for the beneficial and adverse changes before they strike with full force. Surviving a tsunami requires preparation, early warning and determined action. It’s no different for law firms. Preparation and early warning require sound intelligence and informed interpretation–exactly what good research delivers.

Readers may also find these posts related to the topic of interest:

+ Strategy season, but retreating won’t provide the answers

+ Cost Consciousness – how law firms fail

+ Law firms are worrying about the wrong things

+ PPEP levels are doomed without re-invention

* Dr George Beaton is Executive Chairman of Beaton Research + Consulting and a Partner in Beaton Capital, firms committed to professional services.

Felix Salmon, a well-known blogger recently asked “Must investors be on Twitter?” Felix floated the question after the Twitter stock market shock of April 23 2013. A day when Twitter roiled US and global markets after a bogus tweet said “Obama-injured”.

What the episode showed was how intimately Twitter is coupled with the business world; and how viscerally Twitter can move minds and rock the ticker. As Gillian Tett said in the FT “Wake up to the #Twitter effect on markets”. But Twitter has big effects on the real economy and the real world itself. It is the “pulse of the planet” and the first source for breaking news and debate.

But what about law practice? For years Twitter and social media were a niche interest among lawyers. Now the idea of law firms tweeting is mainstream. The Guardian wrote on the subject recently; as did the Washington Post and new posts appear daily.

Nowadays there’s a lot of noise as people talk up the wonderment of lawyers and law firms going social. Frankly there’s a lot of huff and puff and it can be difficult to make sense of it all. The reality is that Twitter is no silver bullet. It will not revolutionise your practice. Though it can play a significant role in marketing and business development; but even that is hard to quantify. Therefore, using the Felix Salmon analysis, I want to ask: must lawyers be on Twitter?

Felix began his analysis by sketching out the habits of the modern investor as well as the old school money handler. Similar to the law profession, the youngsters are active Twitterphiles while the old guard investors are avoiding it.

Felix then took a look at some analysis on the issue by Izabella Kaminska and Joe Weisenthal. Izabella noted that the old guard investor class is at “a huge disadvantage” and have in fact “missed major trends” by operating on 1990s information terms. Legal practice isn’t and doesn’t need to be tapped into the global newswire the way investors do – so I don’t think we could draw a direct parallel here.

But I do think it’s fair to say that the older lawyer is at a disadvantage informationally. Coming back to Felix he went on to make a deal of the very random, flittering nature of the medium. But he then countered that critique by saying that Twitter is a wonderful “serendipity machine”.

I agree on this point and could share a lot of wonderful anecdotes that have come about through chance meetings and wonderfully informative tweets that I otherwise wouldn’t have seen. He went on to talk about the ability of investors and investment analysts to parse information from the firehose of information. He then drew things to a close with some insightful remarks which apply just as readily to the legal community.

He said: “I’m sure there are many investors out there who would be lost without Twitter, there are surely just as many for whom it would be little more than an unhelpful and noisy distraction… The great thing about Twitter is that the value and the conversation take place among people who want to be there. Telling people that they have to be there, or else they’re missing out, is actually not helpful. Because the one thing we can probably all agree on is that people who feel obliged to be on Twitter are very unlikely to either contribute or receive much of value at all.”

I think this is a very important distinction. Twitter is no zenith. What we’ve heard online recently has been the message that lawyers and law firms must tweet. That isn’t necessarily true and certainly isn’t helpful. Lawyers have a lot to worry about: including big cost pressures, changing client demands, alternative business structures and massive tech disruption.

Like I said earlier, Twitter is no silver bullet. But for the lawyer and law firm that does it genuinely, sincerely and because they want to there is value in good tweeting. I respect the views of the older legal community who want to keep practice the way it is; but I preach a school of thought that says we need to reimagine the way law firms operate and legal services are delivered.

My thinking takes a lot of cues from the arts, tech and creative industries. In particular, the Chief Technology Officer of the Obama 2012 campaign, Harper Reed. What Harper did for Obama 2012 was to realise that electoral politics is never going to change. The basics of knocking on doors will always exist. But what social media can do is to act as a ‘force multiplier’; thereby drive efficiencies and tighten up the practice of politics.

The same applies to law. The bread and butter affairs will always exist. But what Twitter can do is drive informational, networking, marketing and BD efficiencies that would otherwise suck hours out of the modern lawyer and law firm’s schedule.

So yes Twitter is great. It is a wonderful ‘serendipity machine’. But it will not tackle the cost pressures or the alternative business structures. What Twitter can do is help you make new business contacts, reach new clients, market your firm and expertise; but only if you do it because you want to do it.

Original Felix Salmon blog on Reuters: http://blogs.reuters.com/felix-salmon/2013/03/18/must-investors-be-on-twitter/

Gillian Tett commentary on Twitter on the FT: http://www.ft.com/cms/s/0/0aacf78c-a801-11e2-b031-00144feabdc0.html

Guardian commentary on social media use by lawyers: http://www.guardian.co.uk/law/2012/oct/26/lawyers-social-media

Washington Post commentary: http://articles.washingtonpost.com/2012-03-11/business/35446230_1_social-media-social-networks-law-firms

 * You can find out more about Brian John Spencer here http://about.me/BrianJohnSpencer and here http://www.legalwire.co.uk/

I received an email today from a legal IT vendor saying they were attaching a copy of a letter they had just sent out to all their customers denying rumours that they were about to close down.

What?

As it happens I had not heard the rumour but there again I hadn’t heard very much from them recently, period. However, as the company in question is a niche UK player and not one that crosses my radar screen very often, this lack of communications would not normally ring any alarm bells. (It remains a source of fascination at Insider Towers as to just how bad many legal IT vendors are when it comes to communicating their messages.) But… to issue a statement denying they are in trouble…

Are they mad? Have they never heard the phrase “there is no smoke without fire” ? Now, not only me but also all their customers have been alerted to the fact that something must be happening or else why would rumours be spreading.

This is corporate communications #101 – never actively draw attention to bad news about yourself (unless it is totally unavoidable) and certainly not rumours, as it only serves to publicise them and give them credence.

Your customers will typically be far less interested in industry gossip than you are and will more than likely be unaware of the rumours. In fact most law firm staff (other than within the IT department) will be unaware of what specific software applications they are using.

So, to quote the old song, if you are the subject of rumours (unfounded or otherwise) don’t dwell on them. Eliminate the negative and accentuate the positive. Come out with some good news stories about your activities instead.

While AFAs aren’t exactly a new concept to the legal industry (personal legal services have offered them for years), they are becoming more prevalent in new practice areas, such as corporate law and litigation work. In fact, 95% of law firms now have some kind of alternative fee arrangement in place.

It’s a major shift for a profession that has historically been married to the billable hour. The billable hour has long been the preferred method of billing, first recommended by the American Bar Association in 1958. But with increasing competition and more budget conscious clients, law firms are adapting to the change, and there has been a reported 62% increase in using AFAs.

Alternative fee arrangements can encompass many different offerings – fixed fee, phased fee, collared fee, value fee, holdback, blended rate, contingent fee – for just about any type of legal service. There are also a wide range of technologies that have been developed to support the implementation of AFAs.

We’ve brought together a list of the best tools, technologies and processes that can support the successful adoption of alternative fee arrangements in your legal practice:

1.    Project Management Tools
Ensuring the efficiency, productivity, and profitability of every firm activity is of primary importance to implementing AFAs. Project Management tools that support resource allocation, scheduling, budget and time control can all help. There is a plethora of legal software available with programs customized to your needs. Have your IT Department educate you on your options.

2.    Workflows
A connection of all the workflows that impact matter management is integral to optimizing AFAs. Information must flow seamlessly from one section, or department, to the next. With better workflows, lawyers can be more economical with their time, without having to research, be presented with conflicting information, guess, or re-input information. From a project management perspective, this will also make it obvious where in the process you are. The days of a lawyer sitting at their computer approving a process are long gone.

3.    Document Assembly
When document assembly emerged more than 20 years ago, lawyers saw it as having a negative impact on their billable hours. However, with AFAs, being able to assemble a complex document or a set of documents in a shorter time period has a positive impact. However, there needs to be vigilance on how the system will be maintained and updated.

4.    Cloud Computing
Cloud computing is changing the process of accessing information, and enhancing collaboration with clients. It also provides significant cost savings to firms by not having to invest in their own infrastructure or support. However, when choosing a cloud service provider, lawyers should ensure they ask the right questions. For example, what is the vendor’s response to subpoenas and government requests? And when the time is right, what is your exit strategy for getting your information out?

* This article was supplied by Firmex who are now publishing a regular series of articles on law firm trends on their Firmex Blog at www.firmex.com/blog

Firmex is a cloud-based virtual data room solution that facilitates secure document sharing across corporate firewalls. Its data rooms are used for highly confidential transactions seen with M&A, Corporate Finance, and Procurement, as well as Regulatory Compliance and Governance processes. To learn more about the security benefits of a virtual data room, visit www.firmex.com

The future of business driven collaboration is something that is taking place every day within consumer usage of social media, search and the resulting collaboration analytics run in the background. Examples of this range from using Google Search, Facebook, Twitter and Instagram Hashtags, or the Bing integrated searches within the Windows 8 operating system on the Surface Pro and Google’s search integration within the Chrome Pixel. What’s driving these changes within these companies beyond competition between each other? The key lies within data analytics and their usage by these companies in generating targeted ad revenue based off our consumer behavior. For our purposes, what are some legal industry integrated workflow analytics that will be affected by these unfolding elements within consumer social media?

Integration & Collaboration

Social workflow integration examples are… the way communication takes place through the news feed in Facebook and Skype, or through Circles in G+, or through G+ streams recorded with interactive commentary, or through the hashtag mediums in Twitter and Instagram. These workflow innovations allow communication, collaboration, and marketing messaging to hit a broader audience, a more targeted audience, and relevant audience faster, better and more cohesive that at any time in recorded human history. In a way these are steps towards a more singular consciousness in collaboration, though still a far cry from Ray Kursweil’s singularity. This collaborative move towards a singular consciousness is only going to continue, and while this path forward has integrated within the legal community to an extent, it seems to be resonating the most through the knowledge management, marketing & competitive strategy groups.

This makes sense from the consumer search and social media standpoint. What innovations in Knowledge and Information Management are better led than by the aforementioned consumer giants that drive our consumer behavior forward while organizing the world’s information? How do we derive competitive strategy from consumer led social media and collaboration workflow integration as industry side vendors adapt, or the very same consumer led vendors integrate platforms and systems of their own into business systems and workflow?

Data Analytics & Data Mining

The answer lies in the data analytics these consumer systems use. How Facebook, Twitter, Bing, and Google successfully target their search/email and consumer knowledge management platforms for ad revenue. By targeted analytics geared to track consumer preferences and user behavior, this is an integration future that is developing rapidly, and will only continue to do so. With predictive coding and artificial intelligence gaining prominence, these trends continue to gain presence and focus which the legal industry is only starting to truly capitalize on.

By merging big data analytics into legal workflow through social media and search collaboration, legal is looking at a major shift in client service, client interaction, and workflow innovation. This leads towards the potential for workflow, alternative staffing, innovations in collaboration, client touch, and alternative business models.

Client Service, Workflow & Velocity Billing

In client service, we have the ability to generate new business models based off multiple collaboration points through real time data. There is an example brought out of the insurance industry I’ve heard coined Velocity Insurance. The concept lies within the ability for insurance companies to track us while we drive, and essentially build reports based off real time analytics while adjusting our insurance rates accordingly. Examples being; if we drive too fast, drive too slow, drive just right – our insurance billing rate based off projected risk could potentially deviate from hour to hour, day to day. Due to a relatively shocking invasion of privacy (but not so much by today’s standards), this may not be not be the immediate biggest hit with consumers at the moment.

However, when applied to legal, I prefer to coin the term Velocity Billing. In this instance we open a level of transparency for the client, where the client is able to run analytics based off previous case history, litigation, settlement, hours worked, success rate, etc… based off related attorney, practice specifics, practice areas, research applied, etc… to estimate project scope, estimated success rate, relative risk, and billable interaction at any time during the billable process.

Internally, the firm is able to run a broader scope of analytics on the resources applied, project teams and resources in place, with a much more detailed history per attorney and practice group relative to multiple client sets.

What emerges from the firm’s standpoint is a moving narrative of attorney strength, litigation history, and where project teams best fit within the organization relative to client. What emerges from the client perspective is a nuanced personalized touch best fit to their litigation & settlement needs, time invested in services, projected cost ratios, and projected payout expectations. What emerges for both client and law firm is a new business and profit model built off multiple collaboration points and resulting targeted analytics. This is applied the same way these targeted social systems deliver their services to generate maximum ad revenue based off our learned behavior, and tracked search and social preferences.

Moving Forward

As we move forward, the innovation potentials led by artificial intelligence, big data analytics and predictive coding continue to fuel innovations in social media and consumer search in learned behavior. These in turn will only continue to put us in closer touch and collaboration than we’ve experienced before; as consumers, clients, customers and business leaders. How we capitalize on these trends as an industry will take movement on the law firm side, the client side and the integrating vendors side. The driving business reasons behind social media and consumer search is leading the way. Our clients and integrating vendors are already adapting. The question the legal industry faces is just how quickly we will choose to adapt and integrate within our evolving business models as time moves forward.

* Eric Hunter is the Director of Knowledge, Innovation & Technology Strategies at Bradford & Barthel LLP and Executive Director of Spherical Models LLC. Over the past three years, Eric has integrated a social media, knowledge and collaboration environment within the firm and is constantly looking to leverage innovation solutions to enhance client service interaction while driving business optimization solutions internally. Eric leads the Spherical Models team focusing on spherical business models through innovations in big data, social and collaborative cloud solutions. Eric speaks and writes on competitive strategy, evolving business models, big data and collaborative cloud solutions globally and will be attending next week’s LawTech Futures event in London. Follow Eric on Twitter @thelihunter. www.sphericalmodels.com

Opinions differ as to exactly who first said that ‘failing to plan is planning to fail’. Might have been Franklin, might have been Churchill. Maybe even someone else. We’ll all be pretty sure from here on in, however, that the Jackson reforms gave this truism some real super powers in the world of corporate legal. Disclosure is more about planning than it has ever been before and it doesn’t just affect legal practitioners. New disclosure rules place stringent demands on clients too, expecting them to be fully prepared at the first case management conference (CMC) on every aspect of disclosure; what they’re going to produce, how, and what the costs will be. Turning up at that meeting unprepared will be just like walking into the dock with no clothes on.

The Jackson reforms to the Civil Procedure Rules in England and Wales have kicked off this month and they require all parties involved to agree at the first CMC the method and approach to disclosure. They are required to consider a menu of disclosure options, from no disclosure, to disclosure by issue, to the wider disclosure invariably necessitated in fraud cases. They are also expected to produce fairly accurately estimated budgets for the process to make sure that cases are dealt with justly. In this respect, firms will be spending money that is proportionate to the objective of the litigation, narrowing the scope of what is expected from them, and respectively save them time and money.

Manual disclosure is no longer a viable option for law firms as they will find that costs will spiral out of control, and time constraints will leave them at a disadvantage at the CMC. It is vital that both the lawyers and the judiciary are educated about the different technologies that are available and how they can be used in the disclosure of information.

Enter intelligent technologies that leverage data from complex and mostly unstructured data sources. Legal firms and their corporate clients have to understand in real depth what the disclosure items are, or are likely to be, well ahead of time; certainly from the get-go of the legal process. Preparing never to fail will also trigger extensive diligence in all file management processes so that any key document, pivotal email, pertinent call transcript, or any one of dozens of other data sources (using ‘data’ in the true ‘big data’ sense of the word – any information about anything, held in any format, anywhere, and as far as possible…ever) can never, henceforth, get lost in the archives.

Lord Justice Jackson recognised that ineffective case and information management were the main causes of excessive costs. In order to reduce these cost so that they are proportionate to the case, Practice Direction 31B promotes the use of technology and states that the use of proposed keyword searches and other types of automated search should be discussed with a view to reducing the burden and cost of disclosure.

It is widely understood that those who use technology will have a stronger case when providing a budget that falls within the range of reasonable and proportionate costs. Those who do not use technology are more likely to produce a budget which falls outside of this range. This could lead them having to adhere to a set budget proposed at the CMC. Failure to do so would leave them at risk of not being able to recover costs.

Legal firms and their clients should recognise the new rules as an opportunity to refine some existing practices, such as storage and retrieval of relevant items for disclosure. Effective and diligent management of data, in any form, reduces costs, improves quality and results in a robust and defensible process. Mark Surguy, a partner at global law firm Eversheds, says: “The costs of disclosureowes a great deal to the data explosion and the consequent need to manage electronically stored information by working closely, from an early stage, with technology partners.  This approach assists hugely in estimating the disclosure costs effectively.  There are lots of helpful technology tools for measuring data and review speed which make the budgeting process considerably more precise than has been the case in the past.”

Technology assisted review is vital in reducing the costs of disclosure, and also ensuring a timely practice by which relevant documents are found. Some 70% of the cost of disclosure is said to arise from legal firms searching for information. It makes disclosure an expensive process. When as much of the disclosure process as possible is automated, however, it becomes easier to find what you’re looking for. Automation reduces the expense and speeds everything up so that lawyers can find what they need quicker than ever before.

Predictive coding, a form of technology assisted review and analysis, provides a unique ability to analyse, prioritise and code all documents in a collection as part of litigation or regulatory investigation. It invites the involvement of Senior Lawyers at a much earlier stage of disclosure, against the general rule that you apply Junior Lawyers to plough through documents before filtering them upwards; a timely and expensive process. Predictive coding technology does the first stage for you, and encourages input from Senior Lawyers or subject matter experts at the top of the process, enabling them to prioritise the most relevant documents at an earlier stage. This arms the lawyers with actionable information so they can focus on case strategy rather than focussing on finding their way round huge volumes of data.

However, courts in the UK are currently not open to Predictive Coding, whilst the US is taking the lead in the use of this technology. Due to the Jackson Reforms, it will only be a matter of time before the law firms and the judiciary realise that Predictive Coding will have a stronger case when providing a budget that falls within the range of reasonable and proportionate costs.

It is clear that technology, communication and the identification of relevant documents is going to be critical in litigation cases moving forwards. From preservation and collection, to early data and early case assessment, through review and analysis, an integrated approach to file management equips firms with the capabilities to meet the Jackson reform requirements and a lot more besides. With a strategic approach to electronic disclosure, legal departments and their law firms can find and analyse key documents faster, allowing them to make fully educated decisions from the very outset of an event, resulting in lower, more predictable costs and better outcomes. The result is a far deeper level of understanding from the start of the review process (successful planning) and a far more efficient, accurate and cost effective review (planning for success).

Context
The KPMG General Counsel Survey (http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/general-counsel-survey-2012v2.pdf) investigated the views of 320 General Counsel (GC) around the world, on the issues of risk, regulation and disputes.  When asked what issue most concerned them, regulation was clearly top of mind.  In contrast, risks around cloud and social media ranked the lowest with nearly a third of general counsel seeing little or no risk to their organisations from these pervasive technology trends.

Data protection did come higher on the list, but a clear takeaway from the study is that GC are less familiar with or concerned about the challenges that new technologies bring to the business: how cloud and social media, for example, contribute to risk and what are the technologies that govern and manage this.  Asked which functions in their organisations they would need to work closely with to manage future risks, not one GC mentioned IT.

We find this astonishing and worrying, especially given the trend in data loss incidents, which increased strongly in 2011 and 2012 with a jump of over 40% in publicly disclosed cases (http://www.kpmg.com/EE/et/IssuesAndInsights/ArticlesPublications/Documents/Data-Loss-Barometer.pdf).  Our view is that GC have a key role to play in helping organisations manage risks and this responsibility should encompass technology risks too.

Six discussion points for General Counsel on data risk
Of course, they should not be expected to shoulder this burden alone.  The following are some of the key areas of risk that should be on the radar of the GC, and actively under discussion with the CFO or Chief Risk Officer as well as the CIO.

1.    What is your data?
Defining what corporate data is can be more challenging than ever before.  It is no longer defined by location, as data frequently leaves company premises on legitimate grounds, for example to the supply chain or to third-party service providers like printing or marketing firms.  Even when still under direct control, as cloud services become more pervasive, data is likely to be hosted off-site.  It already often leaves the premises at the end of each day on employee laptops and tablets, which increasingly no longer belong to the company.

As it becomes harder to protect all data, it becomes essential to classify company data and to decide what level of protection is appropriate to each type, from relatively immaterial information to personal data, price sensitive information and trade secrets.  This is a pre-condition for a successful take up of cloud services and is an area where GCs can add considerable value.

2.    Where is your data?
Probably the most ubiquitous trend in enterprise IT today is the move to cloud systems, giving IT services a very different profile in pursuit of extreme efficiency. Cloud services and cloud infrastructure may be on-premise, delivered from within an organisation’s real-estate, or off-premise, hosted in other locations on behalf of the company.  In both cases the data may sit in one or many places, and it may move.

Location matters therefore.  GCs need to be clear on the legal implications of where data is stored, even if fleetingly, especially if this is in another territory and/or legal jurisdiction and so involves cross-border movement of, for example, personal data, and especially in a public cloud.  Where data is stored may bring a company into another regulatory regime, for data privacy or financial regulation for example, or put it in breach of local laws.

It is also key to understand in whose hands your corporate data lies.  The recent demise of outsourcer 2e2 (http://www.bbc.co.uk/news/uk-england-berkshire-21241708) caused some of its customers real problems as they struggled to retain access to business critical information, to recover it in an orderly fashion and to make sure it had been demonstrably removed from 2e2’s infrastructure.  This was a contractual and legal risk as much as a technical challenge.

3.    How and where is key data protected?
Protecting data stored on or accessed from tablets, smartphones and USB memory sticks, as well as via traditional computing devices, is a fast-shifting challenge. Protecting data here involves two things. First, ensuring it is secured against malicious attack and accidental loss. Second, delivering resilience and recovery in the event of an incident. In both cases there are contractual and regulatory implications.

The regulatory context depends on the industry you are in. The financial services industry, for example, faces additional requirements because of its economic importance and systemic risk.  Other parts of the critical national infrastructure will have their own constraints.  There was particular concern, for example, amongst NHS trusts which used 2e2 in case data loss or access restrictions might have had consequences for patient care.

The contractual position depends on your own agreements with customers – companies that lose data or are unable to provide access to data or services may be in breach of contract. As GCs will be acutely aware, however, the court of public opinion is often a more pressing forum than the law courts.

Assessing these risks and choosing the right mitigation path – redundancy, resilience, recovery – needs inputs from the business, backed up with legal insight to enable the CIO to justify investment in security and backup and recovery technologies.

4.    How is data stored?
The rise of compact, high capacity data storage devices and the growth of cloud storage services creates the risk of “guerrilla IT” – where employees circumvent technical restrictions either to drive productivity or to deliberately and maliciously gain access to data. This routinely results in confidential data moving beyond the corporate firewall, violating corporate governance as well as, potentially, regulation and local law.  Educating employees on the personal and corporate risks that may flow from this is a compliance role which should fall to the legal function, in consultation with IT for technical controls around prevention and detection.

5.    What Big data do we have?
Big data, from one perspective, is the integration of multiple data sets to create new insights.  These data sets may be innocuous separately – and properly created or obtained – but in combination they may allow “net-new” data to be developed which is unexpected and sensitive.  For example, careful analysis of social media activity might provide information that an insurer might consider relevant in offering a customer or group of customers a life assurance product. The legal position of this sort of activity is not always clear and GC need to keep an eye on how this area of law develops, as big data will play an increasing role in how businesses strive for growth in future.

6.    Are organisations equipped to meet e-disclosure requirements in all markets?
Cloud changes the context for e-disclosure, in other words the production of information to an opponent and a court in the course of a dispute. Discovery and disclosure laws vary across different countries, and the location of your data could have significant implications: for example, if your email traffic routes through the US, all electronic communications could potentially be discoverable in US actions – even if you have no other point of contact in the US.

Recommendations
As technology continues to evolve and disrupt traditional ways of doing business, GC will need to have and maintain closer links with IT, the CFO and Chief Risk Officer to ensure businesses have a holistic view of their exposure to different categories of risk. This could have implications on everything from IT to overall business strategy and policy, govern interaction with or access to specific markets, and have implications for customer and employee contracts.

Key to keeping at the forefront of this, GC need to include cross-departmental collaboration (particularly with IT), sourcing external advice where necessary and evaluating IT risk in terms of exposure to a variety of geographies, and legal and regulatory jurisdictions. In turn, these will inform the warranties and obligations you give to your customers, and the implications for your own supply chain.

With a better understanding of the technology issues at play, General Counsel will be in a good position to help their organisations manage the risks more effectively.