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Trial Runs

Trial Runs

Law firms are not generally renowned for their embrace of new technology as a lever for change. Blake Dawson Waldron (BDW) is breaking that mould because it believes that its success this century will depend on the smart application of information technology to reform its practice and practices. BDW's very first attempt at applying technology to a legal matter was way back in 1987 when the firm was retained by the federal government to act in a Royal Commission examining the conviction of Michael and Lindy Chamberlain. BDW created a structured database for documents and a full text searching system for the transcript. Over the years, the systems developed have become ever more sophisticated, culminating recently in the series of Blake Dawson Waldron-branded Virtual Lawyers, which harness expert system technology to help clients with legal compliance issues.

Exploring how technology can be used to improve the delivery of services and to reform the firm is the charter of the newest practice group in the firm, the Legal Technology Group (LTG). This is basically a group of staff, of lawyers, many of whom, but not all, have hybrid degrees, says Liz Broderick, BDW's partner in legal technology and the group's head.

Initially, the LTG (see "E-Legal Activities") focused on internal applications, often developed in cahoots with the firm's IT division. Along the way, it won a series of state and national awards, including the best business application of IT for its eDiscover system in the 1999 AIIA National Award for Excellence Through IT contest.

The dawn of the Internet age, however, has meant a rethink on the role of the LTG, shifting somewhat from its initial focus on developing legal tools and hoisting it into a much more central position in the firm. It has become a core group charged with finding how the firm's strategy needs to be massaged in order to capitalise on the opportunities which technology throws up, and to overcome the challenges which are similarly erected by new technology.

[The Internet] is what has substantially changed our area, in that technology is now accessible to everyone where it wasn't initially," says Broderick. "We had to develop different offerings for different types of clients - so some people had Lotus Notes, some had Word, WordPerfect; it was a nightmare. And it is really in the last three to four years that we have had a new lease of life"And what a lease of life it has proved.

The Sweet Smell of Success

Early in 2000, BDW's board decided to set free Liz Broderick, Gerard Neiditsch, the director of IT, and the firm's director of marketing and strategy Mark Paddison to create a skunk works that would take a blank canvas and attempt to draft the form that successful legal practices might take on in the 21st century. The skunk works was given three months to do its dreaming.

To ensure that the group was not hijacked by the day-to-day requirements of their conventional roles, BDW forked out the readies for a unit in Sydney's Surry Hills. Although only a bus hop from the Harbourside splendour of BDW's headquarters, it was a world away in terms of culture. Here the threesome had to rub shoulders with start-up firms that had homed in on the suburb known for its cheap real estate and vibrant urban culture.

The canvas the threesome had to work with was, of course, not entirely blank. It was framed by Blake Dawson Waldron's reputation and scale. Established more than 150 years ago, the firm is made up of 180 partners and 1600 staff. In all, the firm employs around 750 lawyers. Operating as a single firm rather than a series of state firms in concert, BDW has offices in Sydney, Melbourne, Canberra, Brisbane and Perth. It has international offices in Shanghai, Port Moresby and London, and professional relationships with firms in Jakarta and Hong Kong.

Broderick says that at core the ambition of the skunk works project was to determine "the effects of the Internet on our business". Although the firm had been participating in the Internet economy for some time through the LTG and the IT Group, Broderick reports that the board said "instead of just participating in a limited sense, we need to understand the full impact and have a well-coordinated strategy of how we are going to re-engineer ourselves.

The board directed we take three months out," says Broderick "The idea was to remove ourselves from the culture of the firm and immerse ourselves in the culture of the Internet. The skunk works operated out of a small rental unit, with a central shared space and room enough so that each of the three could go off and work on their own. After getting the green light for the project in April, the three finally gave up the lease on the Surry Hills unit in September.

Creating the artificial culture, however, did not mean that the threesome could entirely shed their day jobs. Neiditsch confirms that initially the prospect was "quite scary, and admits some relief that he no longer has to work two jobs: his skunk works day job and the evening shift of fixing outstanding issues at BDW. He also admits that the first day in Surry Hills was tough. The three realised straight away that they would have to be able to crystallise whatever they dreamed up while removed from the real world in such a way as to be able to convince the board at BDW of the merit of their proposals.

They divided the initial work among themselves to determine what clients wanted and expected by interviewing many existing and prospective clients, to research what was already happening in the Internet space, and to look at which business models in the Internet space would sustain themselves. Each day the team would then brainstorm one business model - some apparently quite wacky, such as the notion of a legal version of priceline.com. Priceline.com allows net consumers to buy services or goods just before they reach an expiry date at knock-down prices (for example, discount air tickets). The skunk works team explored the scenario where a law firm's billable hours were the perishable goods up for a knock-down sale.

We conceptualised a business model where all firms would sell their excess capacity into a grid and in a reverse auction, corporate counsel could buy forward on billable hours. [We looked into] things which on the face of it didn't look relevant to the legal industry, but, when you looked down a bit more, might be," Broderick says.

Having dreamed up the scheme, they then had to see whether it might be a proposal that could make money. Not surprisingly, most of the daily business models were shot down in flames during the threesome's brainstorming sessions. However, a handful did survive and made it into the final report to the board at the end of August. Further work is now being conducted to see if those surviving models can be made to fly" Now we are taking one of these business models and starting to flesh it out and set it up as a viable business, Broderick says.

Out with the Old

That the legal profession needs to make changes is a fact, Broderick maintains. In a speech made at the Legal Tech conference in New York earlier this year, she explored many of the challenges facing law firms as they entered the new millennium. These challenges included a growing trend towards globalised legal services which did not fit neatly into the traditional partnership structure of the law firm. There was also the requirement that law firms embrace legal technologies and appropriately reward those lawyers or executives who provided those services which would form the foundation for the practice in the future. No longer would the older partners be able to command the highest salaries; younger lawyers with new economy skills would have to be appropriately rewarded.

In addition, firms needed to consider how they would operate in the new economy, and whether they would be prepared to take equity stakes in emerging companies rather than fees. They also needed to consider the nascent e-lance market where freelance lawyers come together to work on a matter, forming an expert team which can be disbanded at the conclusion of the case.

Speaking in New York, Broderick noted that: "In the last couple of years there is evolving an understanding that the Internet is radically changing the way in which legal services are delivered." Although the Legal Technology Group is an important catalyst towards achieving that change at BDW, according to Broderick, "the number-one determinant of how effective a law firm or department will be in reinventing itself is the lawyer-IT interface.

The close relationship between Broderick and Neiditsch has been instrumental in ensuring that the LTG's vision of how technology can be applied to a legal practice is realised and does lead to a reworking of that interface. Again the Internet is the agent of change, Neiditsch says.

In the last six to 12 months, there has been a change in the focus of what the Internet does: from a pure research environment into initially a simple e-commerce environment and now a collaborative commerce environment," he says. "The focus of what our groups do is changing. I am actually at the moment backfilling the operations side of what I am doing so I will have little involvement in that other than a strategic part. I am focusing a lot of the attention of what we are doing to support knowledge initiatives, some of which are linked into Liz's group and some into commercial e-ventures that we are looking [at] to realise intellectual property internally, which could be used more widely outside the firm.

Single File

The need for Broderick's and Neiditsch's efforts to mesh so closely is driven by the requirement that BDW presents a single face to its clients and its staff so that they increasingly see a single information systems interface and strategy. That has become more challenging over the last year," Neiditsch admits. "Not just for us but for any professional services firm. We now find that clients expect to get more and more of their services delivered - not just by e-mail but other ways over the Internet"Both Broderick and Neiditsch are keen that the information systems and strategy of the firm is seen as uniquely branded. This will be particularly important in the future as BDW anticipates that over time the people who will be their clients are not necessarily going to be the corporate counsel who currently make up the bulk of the client base.

In the new economy both expect more devolution of authority within clients when it comes to sourcing legal services, such that operations managers will in the future be authorised to seek legal services, particularly online legal services, rather than having to funnel their requests through corporate counsel. During their three-month experiment, the BDW skunk works team went out and also interviewed managers at this level to gauge what sort of legal services they might require and how those services ought to be delivered. They also took into account the growing need for transparency so that clients would know what they were being charged for and how competitive that offering was. "At the moment that is a little bit obscure, Neiditsch confesses.

Broderick says that in the future clients will want more transparency in prices, and also a service level similar to that offered to clients of FedEx, which is able to track a parcel anywhere in the world. Similarly, she believes clients of law firms will want to track their own matters and know how much they can expect to be billed. Large clients have in the past been able to demand this of their law firms with bespoke systems developed connected over private networks. The advent of the Internet, however, means that this sort of process transparency will be demanded by all clients.

Law with Attitude

Besides forcing a change in client attitude, the dawn of the Internet age has forced a seachange in the partners' attitudes towards technology. "If we looked back even three or four years ago, there would still be a relatively poor understanding of technology and how strategic it is to the business; people would still be thinking of word processing and back-office systems, Broderick says.

This year, at the LTG's annual meeting, she recorded significant interest from lawyers across the firm who were keen to discuss e-business and law and what it meant to them in their individual practices as a commercial lawyer or a property lawyer. To a degree, this enthusiasm for technology has been driven by the competition in Australia's legal market. Leading US and British law firms have, according to Broderick, rested on their laurels. Awash with business, these law firms have been "making so much money that to try and talk to them about disruptive technology" would have been impossible, she maintains. The notion that the current model these law firms are working with might ever change has yet to be acknowledged by many of the leading overseas firms, Broderick says.

If you work 2500 billable hours, then your biggest question is when do I get to bed," Neiditsch says. It's not about what innovation can I give to my client.

Whereas here we know technology is integral to our survival," Broderick says. "If we don't innovate, we don't survive.

It is a serious concern and responsible for shifting the focus of lawyers away from the pure technology, and onto what technology allows in the way of a reformed process, Neiditsch says. The innovation is already important to BDW's existing clients; for example, one large international client makes extensive use of the firm's Virtual Lawyers. One company which was seeking to appoint two lawyers internally took instead one lawyer on board plus BDW's Virtual Lawyer.

Through a Looking Glass

In the future the application of technology to the legal process will be even more critical.

In a situation where corporate counsel can access a matter at any time and from any place, you need as a lawyer - as a supplier of the service - to actually live in a technology environment where you are tracked in a number of dimensions probably more than you are now. [This is because] there is incredible transparency: at any time a client can see what tasks are outstanding. That's never been possible before and that is quite significant [to me] as a lawyer, Broderick says.

One of the changes that this will accelerate is the trend by leading law firms to move away from charging systems based on billable hours and more towards charging on activity. Neiditsch also predicts a more gain-share approach to costing of legal services, so that if a law firm can offer a technological solution which can make compliance faster and cheaper then they ought to be rewarded financially for that.

In some instances where the legal service required is based on more creative processes, then there will be less opportunity to use pure technology solutions such as expert legal systems. However, technology would still be available to support the creative legal process. There is no doubt, though, that the Internet drives commoditisation," Broderick says. But there will still be that high personal touch service.

Law and Order

Out of earshot, one of Liz Broderick's colleagues refers to her as the firm's idiot savant. The moniker arises courtesy of Broderick's apparently chaotic schedule, combined with the knack of cutting straight to the key issues and thinking her way around them.

It was in evidence on the day CIO interviewed Broderick, partner in charge of the legal technology group of Blake Dawson Waldron (BDW). It was day five of the Olympics. Broderick had agreed to host a typical Australian barbecue for the Brazilian soccer team. It was 12 noon and she was corralled in an interview room on the 41st floor of a harbourside office tower. The Brazilians were due at 1.30, so Broderick had assigned her husband the challenge of catering for the team and her two young children. She would arrive just as the snags were sizzling.

It's the mark of a woman who knows that things have to be achieved, and not always by the most conventional means.

Broderick started her legal career, conventionally enough, as a litigator. "But quite early on I knew I would be better suited to something other than mainstream. More big picture, creative, that sort of thing," she says. By the end of the 1980s, looking for a new challenge and spurred on by clients who were asking her for computer-based solutions, she recognised that harnessing technology to streamline the delivery of legal services was going to change things significantly for law firms. At that time, BDW took the initiative and established its Legal Technology Group (LTG), headed by Broderick.

Broderick is a past president of the NSW Society for Computers and the Law, editor of that group's journal, and is also a much sought-after speaker on the international legal circuit. Winning the attention of the federal government, she was appointed to the government's expert advisory group on electronic commerce headed by Wizard chairman Mark Bouris. The group this year delivered its report, Building Consumer Sovereignty in Electronic Commerce, to the Treasury. - B HeadE-Legal Activities: A patchwork of skills inside traditional walls "Most of the lawyers who come into my [Legal Technology Group] have practised law, but are looking for something different; they have a hunger for technology and also they are looking for a wider view of legal practice. They are more interested in the way the service is actually delivered," says Liz Broderick, Blake Dawson Waldron's (BDW) partner in legal technology.

The Legal Technology Group (LTG) team is not penalised financially for its decision not to practise law as such within the firm. Broderick was made a partner while within the group and is a full equity partner (albeit part time). The team has a patchwork of highly prized skills which can support the firm's traditional lawyers as they run their matters.

Delivering legal services requires a wide range of skills, so we work on a lot of major transactions and help to structure the transaction in terms of the process. So how are we going to do it and make the information available to the client? It is project management of the transaction. We've got a lot of project managers, business analysts, people with IT, Broderick says.

She describes the LTG as turning BDW into a multidisciplinary practice by stealth. A growing trend in legal circles is for firms to create partnerships formed of accountants, lawyers, management consultants, IT specialists and project managers - the so-called MDPs (multidisciplinary practices) - which can then provide a one-stop services solution for major clients. The jury is out as to whether MDPs will outrun specialist law firms and accountancy firms. BDW is developing many of those broadly ranged skills from within.

The LTG comprises eight lawyers - mostly women - then about eight to 10 project managers, plus a core group of 20 to 80 people within BDW on whom the LTG can call when it is working on a specific project.

One of the things that has worked for us is the establishment of a flexible and supportive working environment, says Broderick. "We have done this by offering part-time and telecommuting work to our key staff. We have also developed a sense of community through the establishment of our working and parenting initiatives to which we invite our clients, such as children's birthday parties, and we are looking at vacation leave programs and other initiatives to support our extended community. I have found this flexibility and freedom generates incredible loyalty from staff, particularly where they are passionate about their work and their working environment.

Touchy-feely it may seem, but it is a model that works. As Broderick notes: This is a fully formed practice group, and we've actually generated revenue and good levels of profitability.

- B Head

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