When law firms and corporate law departments
approach technology investments, they typically ask:
"How many staff can I eliminate if I adopt this
technology?" More often the question is framed
"What technology will have the greatest impact on
staffing ratios?"
There are two assumptions in such a question. First,
that technology will lower staffing ratios. And
second, that lowering staffing ratios is a GOOD
thing.
In a law firm, such assumptions translate into a goal
of decreasing the costs of supporting a productive
lawyer in generating income for the firm. Similarly,
in a corporation, such assumption translates into
cutting the overhead in running a legal department
by reducing the amount of "expensive" support staff.
Cut costs, slash the budget, and you will find the
"pot of gold at the end of the rainbow."
This is an attorney-centered approach to attorney
support management. It looks at the cost side of the
equation in generating profits.
I fundamentally disagree with this approach. I
disagree because the multiples achieved from
investment in technology for the purpose of staff
reduction is finite. At best you can achieve a 50%
savings, more likely the savings will be in the 10-15%
range, and after you factor in the cost of
technology, more like 5-10%. Furthermore, drastic
reductions in staffing will result in (1) degradation in
client service and (2) decreased attorney
productivity.
By contrast, I would look at the productivity side of
the equation. Evaluate technology in terms of what
investments will (1) increase the volume of business
that can be handled by each attorney, (2) increase the
profit margin on each transaction/matter handled, (3)
increase the quality of the attorney work-product, or
(4) increase the perception of client service. Only by
looking at the revenue side of the legal business (and
it is a business), can you achieve the multiples of
return on investment in technology. By multiples, I
can see a return on investment in some technology
being fully recovered within months of
implementation, and from then on generating steady
profits. I can see annual multiples of 10 to 100. Such
multiples could never be achieved by use of
technology solely to drive down staff ratios.
The question should not be "How can I decrease my
staff ratio?", but rather "How can I increase the
productivity of my existing staff?" This approach
both increases the bottom line and keeps your staff
happy, healthy and productive. As everyone knows,
a happy law firm is often a healthy law firm.
So, the question is what technology will increase the
productivity of your staff and attorneys. One answer
is investment in document assembly technology,
combined with task-based billing, fixed fees, or
minimum budgets for both transactional work and
litigation. Let me make a disclaimer: As an attorney
who builds expert practice systems using document
assembly technology, I have an evident bias in this
direction. So, let me pose this technology as giving
you the most bang for the buck, the greatest ROI
multiples, etc. But I won't discuss it further.
Instead, let me proffer a number of other business
processes and technologies that will increase the
productivity of your staff:
1. Case Management and Docketing Systems
If you have a litigation practice, you must have a
computerized case management and docketing
systems. Plain and simple. The ability to profile and
manage your docket, with proper advance ticklers,
will free attorney time to work on the actual
handling of the case.
2. Litigation Support Systems
I don't care how big
or how small the litigation matter is. Scan and
abstract every single discovery document. There are
a dozen different programs. Choose one (only one)
and standardize on it. Train every paralegal and
require that all originals be scanned and then
LOCKED in a warehouse never to be used again
until trial (if even then). Thousands of billable hours
are spent on fetch and retrieve tasks, find this
document, give me a chron, get every document that
mentions Bob Jones. Many systems allow you to
run a query, sort and categorize the results, and then
forward the abstracts and the images to an attorney.
For the Luddites, you can hit the print button. And
don't talk to me about "Lost Documents". In a
litigation practice, discovery document management
is the single biggest waste of staff time and attorney
time. Attorneys waste time here in two ways: (1)
missed connections and relationships in the
documents, and (2) time spent waiting for the
paralegal to find the appropriate document or
remember, when it arrives, why you wanted it.
3. Client Information Databases
I don't mean a
client mailing list. What I mean is a repository of
data on regular firm clients that is used time and
again in performing services for that client (e.g.
names of officers and titles, insurance carriers,
banks, notice addresses, EIN's, and standard
positions on issues). Especially in a specialty
practice group, having attorneys call a client to
gather information that has already been given
repeatedly by that client is or should be looked on as
a waste of billable time.
4. Time & Billing Data
Most of the features of
time and billing systems are not used. And lawyers
spend an immense amount of time reconstructing
their time, dictating it, and then billing and
massaging clients to pay the bills. At the very least,
a time and billing system should be able to produce
professional looking invoices with multiple levels of
details and abstraction. A system should also be
able to support task-based categories, and even task-based
billing rates (some hourly, others by
transaction).
But what a firm really needs to know most is how to
price an assignment. The flip side is the firm needs
to know if its bill for a particular matter is out of line
with its historical costs for similar transactions. If
you have the historical data in sufficient detail and
categorization, you can come up will realistic
estimates on costs for services or defenses to client
requests for adjustments. Armed with this data on
real cost you can (1) negotiate with sufficient
margins a fixed cost or minimum budget, and (2)
combine it with efficiency measures to increase your
profit margin for those services. Know your true
costs before you ever make a fixed fee or
minimum/maximum budget deal with a client.
5. E-mail and Database-based Discussion Groups
Create a group for each case or transaction and keep
everyone in one all developments. Just send your e-mails
to the group-list. It saves an immense amount
of time. Consider using Lotus Notes discussion
database features. You could also use other
programs. What they do is allow you to post issues
and have people respond to them at their leisure. It
also creates an archive of issues on a particular
matter or case so you can see what has ALREADY
been done.
6. Adobe Acrobat(r).
Forget about sending Word
and WordPerfect files and worrying about
conversions, readability, linked files, etc. Just get
licenses to the Acrobat program (not the Reader) and
start printing copies of all your files to PDF for
communication to clients, colleagues and others.
With the annotation features, people can mark up
documents, and you can consolidate comments to do
a new markup. Forget about rushing to meet the
FedEx deadline. Get the document out instantly
while you are on the phone.
7. Instant Communication Tools -- Pagers and/or Cell Phones and EFax/HotMail
These devices are
not just for the name partner and some honchos.
These are essential tools. Clients expect to reach
their counsel at all hours of day or night. They want
to be able to send them e-mails that can be obtained
remotely. They want to send faxes that can reach
counsel in hotel rooms. They want a call back...
plain and simple. And, that time spent in the car or
train can now be put to productive use. Happy
satisfied clients pay their bills.
Those are just a few things. All share a common
thread. They make the attorney more productive.
They allow more transactions/matters to be handled
in the same limited amount of time. They remove
time wasted on inefficiencies. They increase the
number of truly billable hours in the day by reducing
the time spent on non-billable activity. They
increase productivity and responsiveness which
makes clients happier and brings back repeat
business.
Download Investment in Technology and Staff Ratios
