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As the legal industry is approaching the close of the second year following what has become known as the worst global recession in decades, most firms have completed several rounds of operating cost-reduction initiatives including, but not limited to, the following: • a review and reduction in support service headcount • a review of rates and pricing for procurement performed either by in-house staff or by an independent consulting organization • service contract renewals • facilities management for mail, fax, reproduction and legal records departments • office lease renegotiation to lower current occupancy expense • a renegotiation of professional services fees (audit, tax, pension actuaries) Certain firms have chosen to outsource noncritical support services to independent, offshore service firms located in India, the Philippines or Australia, while other firms have chosen to in-source services from independent, domestic service providers. Other firms have relocated their own employees to lower-cost locations either close to their current office or in another state, such as West Virginia or Dayton, Ohio. Each of the aforementioned alternatives focuses either on lowering the price for purchased products/services or lowering the cost for space and people, which in toto, can account for in excess of 50 percent of a law firm’s operating expense. As clients and general counsel continue to apply pressure for lower fees and/or alternative fees, law firms continue to face the challenge of finding new opportunities to lower their cost of operations. While technology has provided benefits to law firms with traditional applications such as email, word processing and document management systems, law firms have only scratched the surface in harnessing the full potential that technology can provide insofar as the level and quality of information produced by a firm and the cost related to accessing and managing the information. While some of the following technologies may appear a bit aggressive for a traditional law firm to consider, each is currently in use by one or more well-established law firms. Full digitization of incoming mail As the volume of paper (a.k.a. “snail”) mail continues to dwindle, it is becoming more practical to scan mail into a work flow system that integrates with a firm’s email and document management system, which provides attorneys with an automated notification of the mail, an opportunity to review the document(s) and to retain the document in the firm’s DMS (document management system). This technology brings efficiencies to mail distribution while supporting remote access and hoteling. Implementation of “hoteling concept” for certain practice groups As office space represents a substantial portion of operating expense and as remote access to a firm’s technology systems has become more reliable, law firms have started to follow what CPA firms achieved a decade ago by evaluating which practice groups may be appropriate for hoteling. This has become popular, especially as certain firms are at the point of determining their space requirements for their lease renewal/office relocation. E-billing for law firm vendors This innovation presents an opportunity for law firms to ensure timely identification of all advanced client costs incurred by a law firm by applying workflow automation to vendor registration, invoice submission and processing/payment status inquiries by vendors. This SaaS solution can also reduce the headcount required for processing vendor invoices. Work flow automation for billing adjustments and A/R write-offs Law firms incur a substantial processing expense for attorneys who issue requests for billing adjustments and accounts receivable write-offs. These requests typically require an approval based on a pre-established set of rules, which ends up in either an email or a standard form being routed to one or more individuals. Current technology can replace the manual system and bring efficiencies to the process with a rules-based work flow system. This translates into cost savings by substantially reducing the time it takes to request, approve and process a fee or cost adjustment/write-off. Automated notification for threshold reporting for AFA matters As AFAs have gained popularity as an alternative to standard rates, certain firms have found it prudent to monitor the inventory as an integral part of their financial performance analysis. As some firms typically issue aged inventory reports, it is necessary for attorneys and practice group leaders to manually review these reports. Current technology can provide trigger-based reporting, which can automatically provide attorneys with an alert notification for any one or more matters that exceed a pre-established threshold of time incurred. Automated exception reporting replaces the past approach to manually generating and distributing reports which are manually reviewed for matters that may require attention. Software powered unified communication to improve communication while lowering telecommunications costs — communications, collaboration and a messaging infrastructure (i.e., Microsoft Lync) The cost for entry into the VOIP world of communication can be substantial. There are technological alternatives for firms to take in improving collaboration and communication while providing an improved messaging infrastructure. One such opportunity is a software-based solution offered by Microsoft’s Lync product. This software provides an innovative approach to expanding VOIP and unified capabilities on an enterprise basis. A firm no longer needs to replace their phone system to gain the benefits of current communications technology. This technology also provides transparent communications capabilities for attorneys who are remote/hoteling or are on the road for business-related travel. Social media application for law school — law firm communication for associate recruitment Social media applications such as Facebook are being embraced as a critical tool for law schools to communicate with law firms regarding associate recruitment, as well as by firms to use in communicating with their summer associates. With the proper security, structure and policies in place, this application can be an efficient means by which to communicate with associates rather than the traditional paper-based memoranda or emails. Work flow-enabled transaction experience system One of the most valuable sources of information for a law firm is their past experience. This information is invaluable as it is typically required in preparing a response to RFP’s and the preparation of a pitch. The past approach to this data mining has been one that has traditionally involved people manually scanning new matter reports and/or contacting partners and associates to inquire about one or more matters. With today’s technology, law firms are now able to integrate a transaction data mining system to automatically capture detailed information from their new business intake system that eliminates the need to manually gather base information about transactions for a law firm. The base information about transactions can be work flow enabled to automatically route to attorneys assigned to each respective matter for additional relevant data to be posted to the system. Powerful search engines can provide access to this critical data which can easily be filtered and extracted for future use. Data mining for alternative fee arrangement pricing Law firms have been challenged with developing pricing for alternative fee arrangement transactions. As each transaction presents certain nuances, the risk associated with ensuring an acceptable level of profit has increased over time. Some firms take a back-of-the-envelope approach to approving AFAs while other firms have developed proprietary software applications to address this information requirement. The risk associated with pricing AFA matters can be significantly reduced by implementing an off-of-the-shelf solution for data mining financial information for past transactions. This tool provides law firms with historical information with which they can establish reliable pricing for AFAs. The nine aforementioned innovative applications of technology are but a sampling of what lies ahead for law firms that embrace technology as a tool with which they can bring improved performance and cost efficiencies to their operation. The demand for delivering exceptional legal services at competitive rates will continue to drive new applications of technology for law firms. Hal M. Stewart is Chief Operating Officer of Chadbourne & Parke. He is reachable at 212-408-5501 or [email protected].

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