Articles Posted in Technology

A solid matter management system, and I include e-billing systems in that general category, should be able to tell you who changed what information and when. Such an “audit trail” is important if you need to see when a user modified a field – such as a billing rate field or a budget amount. . Audit trails help the legal department show that from a Sarbanes-Oxley perspective they have appropriate financial controls in place (See my post of Aug. 5, 2008: matter management systems with 35 references.).

Having acknowledged the benefits of audit trails, not every field needs to have such a tracking feature, only the important ones. The seed for this modest post was a reference in Met. Corp. Counsel, Vol. 17, May 2009 at 19. I suspect that having very many fields with audit trails adds considerably to system overhead and perhaps the speed of the system, so only important fields having to do with financial information should be candidates.

An earlier post mentioned the variety of litigation-support software a law department might need if it handles significant amounts of discovery within its walls (See my post of May 15, 2009: nine packages at one law department.). This blog has metaposts on e-discovery, internal discovery groups, and search software, but has not arrayed the many posts that specifically mention litigation support (See my post of July 26, 2008: e-discovery with 24 references;

May 3, 2008: internal discovery teams with 8 references; and April 5, 2009: methods software uses to search with 18 references.).

As would be expected, the cost of litigation support garnered some posts (See my post of Aug. 5, 2005: share costs of litigation support; Sept. 10, 2005: costs of litigation support software; and Oct. 24, 2007: progression of litigation support costs.).

Gary Weiner, a consulting lawyer with Liquid Litigation Management, brings to the attention of readers two recent studies (Met. Corp. Counsel, Vol. 17, April 2009 at 42). One is George J. Socha, “Bringing e-Discovery in-house: risks and rewards” (Feb. 2009) and the other Brian Babineau,”Getting Control of Electronic Discovery“, Enterprise Strategy Group (Dec. 2008) (registration required).

In a footnote, Weiner mentions that “Babineau conducted a case study of a large corporation, and listed the nine commercial software packages they had purchased in order to bring all aspects of ESI handling in-house” (See my post of Feb. 9, 2008: law department software with 59 references; May 3, 2008: internal discovery teams with 8 references; and July 26, 2008: e-discovery with 24 references.).

Three disparate pieces of information came together for me and point to a highly competitive, and relatively balanced, market for high-end e-billing/matter management systems. Three companies, in alphabetical order below, dominate this market and I comment on the number of departments that use their systems.

CT TyMetrix. The speaker biography of Matt Denouden, Manager of Strategic Accounts for CT Tymetrix, at InsideCounsel’s SuperConference (at 33) says that TyMetrix “has grown from having around half a dozen clients [in 2002] to more than 200.” Toronto Dominion Bank is mentioned on the website.

DataCert. Consider data provided about a year ago by DataCert in an article (See my post of June 11, 2008: DataCert “has completed more than 130 custom integrations” of its software and has “72 Fortune 500 clients.”). DataCert’s website lists 28 major companies and that statement “6 of the Fortune 10, 8 of the Fortune Global 20 and more than 67% of the Dow Jones Industrials are DataCert customers.”

Another Web 2.0 application that might be tried by an internal legal team can be added to the nine already identified (See my post of Feb. 1, 2009: 9 applications; and March 16, 2008: Web 2.0 applications.). The tenth is an online prediction market (See my post of Feb. 16, 2006: collective prediction markets; Sept. 13, 2005: an early version of a shared prediction market; Dec. 20, 2005: online futures market for litigation; March 17, 2006: internal “markets”; Jan. 23, 2008: aggregate the wisdom of crowds; and May 6, 2009: alternative fee negotiations.). As described in the McKinsey Quarterly, No. 2, 2009 at 67, a prediction markets “harnesses the collective power of the community and generates a collectively derived answer.”

Unknowns law departments face could lend themselves to an anonymous investment system where the “winners” receive either recognition or rewards. One example is the likelihood of a major business reorganization that would pressure the legal team to reconfigure (See my post of June 15, 2008; alignment with clients with 16 references.). Another use of a prediction market, more far-fetched, would be an information pool on which law firm will come out best in the department-wide evaluation process. If done after evaluations are submitted, that output of collective intelligence corroborates the more formal process.

A speaker at a recent conference told the attendees that “at about $5 million in spend on outside counsel, law departments start wanting some technology, like matter management and e-billing.” To be sure, the speaker was hardly disinterested, being an executive from a legal technology company, but the point he made deserves consideration.

At typical benchmarks of approximately $600,000 in outside counsel spend per lawyer, the $5 million threshold puts the department at seven-to-nine lawyers, of which at least half probably manage outside counsel (See my post of Aug. 27, 2005: about one litigation lawyer per ten inside lawyers; and May 21, 2008: surmise that less than half of inside lawyers in medium-size departments manage outside counsel.). The amount spent externally, the pressure to manage to a budget, the desire for metrics, the need to coordinate efforts all create in general counsel a yearning – plausibly around the $5 million mark – to automate analysis and reporting of spend data.

In-house lawyers dislike one-way information flows. That is the reason why timely data entry into matter management systems often goes AWOL; lawyers charged with plugging in data perceive that the data only goes one way, up, and returns no benefit to that lawyer. They already know their own information.

The effort to push up data feels bureaucratic, unappreciated, encrusted with traditions long forgotten, without feedback or any personal return (See my post of March 5, 2005: altruistic information sharing.). True, the discipline of gathering data may help a bit, but that weak defense is at least patronizing, if not completely trumped up.

At bottom, the top lawyers need compiled data so the frontline lawyers need to shovel it in – one way.

Law Technology News honored Vulcan Materials with its 2008 “Most Innovative Use of Technology by an In-House Legal Department.” Vulcan Materials, an S&P 500 company with revenues above $3 billion, is the nation’s largest producer of construction aggregates. The company used to receive 4,000 paper legal invoices each year from its more than 125 outside law firms but in 2007 it installed Bottomline Technology’s Legal eXchange.

A press release by Bottomline, which has 60,000 users and more than 6,000 law firms in its network, offers this explanation of the LTN award: “Since implementing Legal eXchange in 2007, Vulcan’s in-house legal team has been able to transform invoice management processes by establishing a centralized, electronic bill review for all legal invoices. The dramatic reduction in paper invoice volume has not only accelerated approval cycles but provided greater insight into overall legal spend. By building some of its billing guidelines into the process, Vulcan has been able to ensure greater compliance with pre-determined billing guidelines.”

To install an e-billing system is to join the crowd, Vulcan may have six to ten lawyers, and it doesn’t appear to have used the system innovatively, so this seems an odd choice on which to bestow a “best-of-technology” award.

According to surveys by the General Counsel Roundtable among its member legal departments, “use of electronic billing technology” rose from 2001 (25%) to 2006 (41%). Therefore, during the five years, the adoption of e-billing posted a cumulative annual growth rate of 10.4 percent (See my post of Nov. 26, 2006: CAGR and its formula, here ((0.41/0.25)^(1/5))-1.).

Sounds impressive, but we do not know what “use of” means, as it could be for some departments that only a fraction of the incoming bills are processed electronically. Nor do we know whether “electronic billing technology” means robust rules, currency conversion, international taxation and other features or merely receipt of invoices by PDF. We cannot even be sure from the data whether some law departments abandoned e-billing during the time period. Then too, the first year had 59 participants and 2006 had 130, so the populations changed. My final comment on methodology is that members of the GCRT, sufficiently interested in management to pay the annual membership fees, may be more inclined to invest in management tools than the average law department, so the calculated growth rate does not extrapolate to the law department world at large.

Nelda Young, the Contracts and Litigation Manager at Celerity, Inc., recently posted a comment on my LinkedIn group, Law Department Management. It deserves wider circulation.

“I’ve created a true “tool” for my Legal Department. It is a customized Microsoft Access database that combines the working data and documents for all functions of the department with a user-friendly dashboard that the General Counsel can easily utilize. It features intuitive drill-down through main tabs for legal functions including Contracts, Corporate Records, Outside Counsel, Intellectual Property, Research, Budgeting, Forms, Legal Dept Admin, and more.”

That is quite an application. Some matter management stirred in with document management and a dose of knowledge management. On top of that the drill down function and dashboard. It sounds impressive.