Hildebrandt baker robbins presentation for coo roundtable 2010 by dave cunningham and nathan bowie may 2010

Using Technology to Reduce the Costs and Hassle of Key Legal Business Issues

Presented by

David CunninghamManaging Director, Strategic Technology and Risk PracticesHildebrandt Baker Robbins

Nathan BowieManaging Director, Alternative Fee Arrangement PracticeHildebrandt Baker Robbins

May 20, 2010

Challenge for Technology

The key challenge for law firms in 2010 and beyond is to “shift gears” from a model premised on growth and

expansion to one premised on the more efficient and cost effective delivery of legal services.

The IT community must take this into consideration in planning and project delivery. You must enable lawyers to become an “enhanced

practitioner” (Susskind) that blend legal skills with deal/project delivery. They need different tools for different times.

Value from Technology

Efficiency

Costs Risks

DataPrivacy

HITECH / HIPAAProtected Health Information (PHI)

Data Privacy Regulations

State Privacy LawsPersonally Identifiable Information (PII)

EU Data Protection Directive /

Safe HarborPersonally Identifiable Information (PII)

Red FlagPersonally Identifiable Information (PII)

ITARClassified Defense Information

Data Privacy

Governing Body Health and Human Services and Federal Trade Commission

Sensitive DataProtected Health Information• Internal HR data• Client data

Compliance Date February 17, 2010

Penalty$100 - $50,000 per incident; $1.5M max per year.Plus potential criminal penalties

Data Privacy








Governing BodyState of Massachusetts (example state)

Sensitive DataPersonal information about a resident of the Commonwealth of Massachusetts

Compliance Date March 1, 2010

Penalty$5,000 per incident plus costs of investigation, litigation and legal fees, plus potential civil penalties

Data Privacy





Safe Harbor



Governing Body US Dept of Commerce / Federal Trade Commission

Sensitive DataPersonal information transferred to or from 27 Members States of the European Union

Compliance DateVoluntary (replaces Data Transfer Agreements)

Penalty Up to $12,000 per day for violations








Data Privacy

Governing Body- Federal Trade Commission via Fair Credit Reporting Act

Sensitive Data

- Require financial institutions and creditors to create a program that provides for the identification, detection, and response to patterns, practices, or specific activities – known as “red flags.” -The purpose of the Red Flags Rules is to help avoid identity theft.

Compliance Date - June 1, 2010 (law firms exempt)

Penalty- $2,500 - $3,500 per violation, then up to $16,000 per violation for continued non-compliance

Data Privacy








Governing Body US Department of State

Sensitive Data“Export of technical data and classified defense articles”, as defined by the US Munitions List

Compliance Date60 days in advance of any intended sale or transfer to a foreign person of ownership or control

PenaltyPer violation, civil fines up to $500K; criminal penalties up to $1M and 10 years imprisonment

Data Privacy








Client Data LeaksClient and Case / Transaction Data

Firm Data LeaksFirm and Partner Confidential Data

Protection of Sensitive Data

Data Privacy











Preservation OrdersLitigation, Subpoena or Client Requests

Confidential Walls - Inclusionary Walls for Privacy and Subpoenas - Exclusionary Walls for Conflicts

Data Privacy











Preservation OrdersLitigation, Subpoena or Client Requests

Confidential Walls - Inclusionary Walls for Privacy and Subpoenas - Exclusionary Walls for Conflicts

Data Standards

ISO 27001Competence in Addressing Data

Confidentiality

Data Privacy Solutions


Efficiency

Costs Risks

E-MailManagement

E-mail Management is Caught Between Competing Forces

Email

Compliance

• Fragmented client file

• Records retention• Client demands

OperationalEffectiveness

• Mushrooming costs• Productivity drain• Forests killed

KnowledgeSharing

• Trapped / Lost knowledge

• Uncertainty

DiscoveryPreparedness

• Waived Privilege• Litigation Holds• Discovery &

Production

Lessons Learned from Successful E-Mail Management

• Success requires an integrated set of policies, procedures, communications and technology extended to electronic files

• Filing by lawyers can be successful with the right conditions.– Lawyers value e-mail search and less filing– Lawyers will delegate e-mail filing once find-ability is decoupled from the

folder location– Secretaries welcome filing lawyer’s email

• Workload lighter with collaborative filing

• Eliminates/reduces printing and filing e-mail

• Involves them more closely in lawyers’ work

– Collaborative filing is key to workload reduction– E-mail behaviors are idiosyncratic; success depends on understanding

personas and tailoring training/configuration accordingly

Email Lifecycle ManagementThis workflow is realistic and easy to implement

File in<= 60 Days

Store in personal folder

or Inbox

Deleted or Sent items

Emailcreated or received

Purged by law firm

>= 6 Months

Life cycle retention managed via

Records Management

System

Non-RecordLimited Usefulness

Convenience MaterialsUseful for some period

Official RecordPreserve

Purged by law firm

>= 2 Years

Move to official client/matter

Correspondence folder (DMS)

1

2

3

17

Auto filing - Decisiv auto files the email based on system applied rankingsOutlook Inbox Context sensitive search

suggestions

Connecting Email Policy to Change


Efficiency

Costs Risks

AlternativeFee

Arrangements

Alternative Fee Arrangements:Overview

• Competencies required

• Defining firm risk tolerance and guidelines

• Margins and proactive planning

• Project management skills and tools

• Alternative pricing deal examples

Alternative Fee Arrangements: Legal Executive Briefing Survey – 150 Firms

• Increases expected in following areas:– Alternative pricing models – 96%– Pre-matter budgets – 89%– Investments to make practices more efficient – 81%– Use of teams to manage matters – 71%

Alternative Fee Arrangements: Our Underlying Approach

• Do not undertake an alternative fee arrangement unless you are fully confident of the expected outcome.

Client Analysis(Relationships, Budget,

Expectations, etc.)

Client/Matter Risk Analysis

Matter Planning for Known Matters

Determine AFA Model (based on above and financial

prerequisites)

Determine AFA Management

Approach and Costs

Knowledge & Process Capability/Readiness

RFP Response Development

Acceptable Margin Analysis

Risk Acceptance Analysis

Cost Analysis

DevelopPredictive Pricing/Profitability Models

Analyze and Develop Target Client List

Firm-wide AFA Guideline

Development

Develop Strategy for Winning Profitable

AFA Work

AnalyzeAFA Strategy and Target

Client Development

StrategizeClient-Specific AFA

Development

Dedicated AFA Administrator

(Billing, Compliance w/AFA, Analysis)

Billing/eBilling

Determine and apply revenue recognition

policies in line w/AFA

Client-FacingFinancial Portal

Client Matter Management System

Interface

Granular Matter Tagging

Matter Planning forNew Matters

(Budget, Staffing, Timing)

Matter Inception Process (client communications and

scope acceptance)

Matter Onboarding

Project Management

Budget/Scope Management

Project and Scope Management

Provide Up-to-Date Financial Measurements

Implement MatterStatus Process

Client Communications

Client Portfolio Review and Analysis

(Proactive Review of Matters/Risks on Behalf of Client)

LeveragingKnowledge Base

Leveraging Staff

Delivering Legal Services

Achieving Client Results

DeliverMeeting Client Expectations and Profitability Goals

AdministerAFA Administration

MeasureMeasuring Results

Analyze profitabilityof total AFA

arrangement to-date(and comparison to standard

billing approach)

Incorporate AFA pricing into published dashboards/reports

Communicatetotal profitability to

partnership/management

(separate frombillable hour view)

Analyze need for adjustments to AFA

structure

After Matter Review / Refinement

Alternative Fee Arrangements: Proactive Planning with Margins

• Craft profitability model that maps to internal goals:– Cost rates: use least argumentative model that encourages desired

staffing mix– Leverage– Rate/pricing deviations

• Goal is matter/portfolio proactive planning – not retroactive practice/timekeeper performance

• Peer margin benchmarks are not important at this stage

Screenshot

Alternative Fee Arrangements:Project Management – Who is the PM?

• Are lawyers project managers?

• Trend in firms hiring internal project managers (at practice level)

• Many firms use other practice management professionals in project manager role

• The project manager role can be billable

Alternative Fee Arrangements:Project Management Tools

• Tools should enable simple, lawyer-centric PM tasks:– Basic planning– Resource assignment – Scope change

• Effective project management provides: – Predictability– Transparency– No surprises

• Project management does NOT provide:– Efficiencies

PM slides

Alternative Fee Arrangements:Example - Eversheds and Tyco

Adobe Acrobat Document


Efficiency

Costs Risks

CloudComputing

Cloud Computing

• A cloud service has three distinct characteristics that differentiate it from traditional hosting:

– It is sold on demand, typically by time, capacity or users

– It is elastic, a user can have as much or as little of a service as they want at any given time

– The service is fully managed by the provider

• A cloud can be public or private.– A public cloud sells services to anyone on

the internet. – A private cloud is a proprietary network or a

data center that supplies hosted services to a limited number of people.

Cloud Computing

• The services of Cloud computing can be divided into three categories

– Infrastructure-as-a-Service (IaaS); like Amazon Web Services provides virtual server instances with unique IP addresses and blocks of storage on demand.

– Platform-as-a-Service (PaaS); in the cloud is defined as a set of software and product development tools hosted on the providers infrastructure.

– Software-as-a-Service (SaaS); the vendor supplies the hardware infrastructure, the software product and interacts with the user through front end portal.

Cloud Computing Comparison

Aspect TraditionalIn-House

Cloud Infrastructure

(IAAS)

CloudSoftware(SAAS)

Hybrid

Cost

Moderate

($4,000/user for infrastructure, $5,000 per user for IT staff)

Moderate Low to High Moderate

Risks

High

(staff, IT design, downtime, disasters,

privacy)

High

(downtime, privacy, WAN)

High

(downtime, privacy, WAN

Moderate

(privacy)

Hassle High Low Low Moderate

Scalability Moderate High High High

Closing Comments

The IT community must plan and delivery projects differently.

You must enable lawyers to become an “enhanced practitioner” (Susskind) that blend legal skills with deal/project

delivery. They need different tools for different times.

David Cunningham

Managing Director, Hildebrandt Baker Robbins

[email protected]

Nathan Bowie

Managing Director, Hildebrandt Baker Robbins

[email protected]

Hildebrandt baker robbins presentation for coo roundtable 2010 by dave cunningham and nathan bowie may 2010

Technology

data privacy hitech

classified defense articles

red flags rules

control compliance date

legal fees

strategic technology

legal skills

years imprisonment penalty