Articles Posted in Technology

An e-mail correspondent alerted me to a vendor I had not heard of, Lecorpio. I looked at the company’s website. It listed a number of distringuished clients, including Autodesk, Analog Devices, IDT, LexMark, Merrimack Pharmaceuticals, Palm, Symantec, Thoratec, and Tyco International. It also listed three software applications that I have not heard of for law departments, for invention disclosures, for IP deals, and for open source software. Using the site’s descriptions, let me give a quick summary.

Invention Disclosure Management provides a web based portal for inventors to collaborate and to submit new disclosures electronically. The workflow automatically routes the disclosures to subject matter experts and patent committees for virtual review or committee meetings.

IP Transactions Management supports patent and trademark teams licensing in or out. It helps them track investigations, oppositions, assertions, defensive actions and enforcement activities.

The blog of Lecorpio has post on Jan. 1, 2011 that talks about the hidden costs of software, those costs a law department incurs over and above the license fee. As backup they refer to but do not cite to a government study. “The U.S. Department of Commerce study shows that software purchase expenditures account for only approximately 30 percent of the total. The biggest hidden cost is represented by labor expenditures ranging from 37 percent for support and 33 percent related to software getting the software up and running. The numbers translate to a ratio of 1:2, software license to management/labor costs; and 1:1 license fee to implementation.”

The original text comes from a 2003 paper by Tim Chou. On page 2 Chou writes “In addressing total software related spending, JP Morgan Chase technology analyst Chuck Phillips cites a recent U.S. Department of Commerce study” and the exact quote of Lecorpio follows.

I don’t doubt that the total cost of software for a law department goes far beyond the initial license fee. Still, to cite a study done at least eight years before, years during which the bee hive of software has been buzzing furiously, leaves me wondering about the old research’s current accuracy.

Nero AG’s law department, headquartered in Germany and with legal offices in the US and Asia, set up a wiki three years ago. As Frank Fletcher, the General Counsel of Nero, explains in ACC Docket, April 2011 at 16,, “a wiki is software that allows you to make a site of internally linked webpages that can be easily edited.” ffletcher@nero.com

Fletcher writes that his wiki is easy to use – a one-page tutorial is all that is needed – and that IT does not need to be involved – unlike intranet sites, which in my experience usually require some technical support. The law department has posted photos of its members, listed areas of responsibility, provided template agreements, and done much more. He notes that they have put on the wiki “directions on how to work effectively with legal,” for example, as well as lists of trademarks and how to use them correctly.

Almost anything that helps clients and members of the law department locate and use resources could be fodder for the wiki (See my post of Sept. 1, 2008: wikis with 8 references; and Dec. 31, 2007: Wikipedia and law department management.)

A piece in Met. Corp. Counsel, April 2011 at 13, brought to my awareness a new consideration: matter management systems that allow law firms to access them directly. Most typically, law firms log on to upload their invoices.

Mark Poag of Datacert warns that “Although collaboration is imperative, it should not come at the expense of security.” He warns against competitor’s SaaS (software as an online service) solutions that rely on only their internal permissions and precautions to prevent data security breaches. Passport, from Datacert, “supplies a secure pipeline and leverages advanced security technologies” for the interchanges between a law department and its firms on the matter management system.

I take no position on this issue (and don’t know what a pipeline is). It is good to let law firms make use of a matter management system; it is not good to put sensitive information on the system at risk. I wrote this post to raise awareness and perhaps to elicit comments.

A law department I know has adopted a remarkable range of software for its specialized corporate needs. It uses EDGARizer (EDGARfilings, part of Thomson Reuters) and EDGARlink (SEC) for Edgar filings and EMMA (MSRB – Municipal Securities Rulemaking Board) for 529 filings. It has also licensed BlueWin (Bank of New York Mellon) for blue sky filings, and Comfiler (Bowne) for NSAR filings. Plans were afoot to use Clarity FSR (IBM, Clarity Systems) for meeting XBRL requirements. These packages are not familiar to me, nor are the competitors to them that must be out there. I welcome more information from readers.

I have noted other software available for corporate secretarial and related functions (See my post of June 7, 2010: two European packages for corporate secretary functions; Sept. 2, 2009: software for corporate secretaries with 11 references.).

A case study prepared by Bridgeway describes the past five years of Rockwell Automation’s implementation of matter management systems. In addition to a chronology of a successful project, the study offers a few specific points I would like to emphasize. If you would like to see the seven-page paper, write me.

Doug Hagerman, the company’s General Counsel, aspired at the start to create an “information-enabled department.” A nice phrase, that, with a more practical sense than “knowledge management.” Effective matter management software became a central pillar.

A second point gives historical perspective on how far we’ve come. As long ago as 2006 the law department told almost 150 law firms to submit electronic bills and “only one firm refused.” Those days are long past when a US law firm can decline to invoice a client electronically.

The March 2011 Issues & Insights from Corporation Service Company discusses contract management systems. One of the capabilities of a good one, and presumably part of what CSC’s software offers, is the automatic integration of e-mails to the contract in the system the e-mail refers to. This must entail a way to tag e-mails, whether manually by the in-house lawyer who sends the message or in the background by software, so that the system puts together the contract or a pointer to it in the contract management system and the e-mail.

As I read that I imagined matter codes embedded in all emails so that their contracts are stored appropriately. Filters in G-Mail allow me to do some of that and I suspect Outlook and other systems can do the same. The flow to the contract management system follows logically. To read more or take a look at Issues & Insights, write Jen Mailander at CSC.

In the 50 law departments of companies with the most revenue that have responded to the 2011 General Counsel Metrics benchmark survey, 36 of them report a matter management system. It dismays me that 14 of them (28%) did not report a system, but that may be because the person who completed the survey did not know it, did not care enough to find out, rushed by the question, or did not want to disclose something they consider a proprietary advantage.

Of the same group of 50, the smallest being $4.7 billion of revenue last year, three reported that they have a customized system developed in-house. I am surprised that those legacy efforts survive from back in the day when internal IT shops said they could write a better system and keep it up.

This early sample may not be representative of the universe of large law departments. Stay tuned for findings from hundreds more law departments. Even so, this modest finding does make one wonder about a market where perhaps a third of the potential licensees of matter management software have not done so (or not reported they have done so).

I wonder about the ratio of spend on software for matter management to spend on external counsel. Call that MMS-spend-to-total legal spend, such as $100,000 per year for the software and $10 million on average paid outside vendors, a ratio of 0.1 percent.

Similarly, what is the ratio between what law departments pay for maintenance and upkeep of intellectual property databases (See my post of Jan. 23, 2011: metapost on patent software.) and what they pay for annual IP expenditures of patent preparation and prosecution, annuities, patent agents and filing fees? Call that IP-database-to-IP spend.

Commonly, maintenance for such specialized software runs 15-18 percent of the initial license fee. Costs of customization, training, report creation, upgrades, and other expenses of the software add some more, but for both matter management and IP management the ongoing costs should be but a fraction of the actual expenses tracked. Nowhere have I seen any data on either of the ratios.

One of the questions asked by the Third Annual Law Department Operations Survey was for respondents to “rank the top three challenges of managing law department operations.” Coming in near the bottom, 7th out of 10, was “Stay abreast of law department technology.” With only 15 total points, very few of the respondents placed that challenge in their first three (where 3 points went to the top challenge, 2 points to a second, and 1 to third.).

It might be that for most administrators, investments in technology happen only now and then so between those active periods why bother to keep pace with new developments. Or it could be that the restrictive adjective “law department” leaves other, broader technologies to stay on top of. For example, social networks, clouds, search methods, and Internet calls are not limited to law departments. Then, finally, among the tough tasks that heads of law department operations face, technology awareness simply rates low on the list.