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If you believe the ads, technology products can cure just about every headache that goes along with practicing law. Fed up with tracking down elusive correspondence, pleadings, and discovery documents? Document imaging and document databases promise to keep an entire hard copy case file at your fingertips. Tired of looking in four different places for a case docket, contact information for opposing counsel and court clerks, and witness interview notes? Case management software beckons with a unified environment where every piece of information about a case can be stored, indexed, and printed in tidy little reports to take on a plane or send out to a client. Few technology solutions actually work quite as effortlessly as advertised, though, and some “solutions,” like the proverbial road to hell, are built of good intentions, but lead in a decidedly negative direction. How can a lawyer navigate the ocean of legal technology products and find the ones that make sense for a specific law practice? Further, given competing needs, such as better accounting, document management, and litigation support tools, how does a lawyer prioritize projects and allocate limited funds? One analysis that may help answer these questions is calculating the return on investment that a specific product can bring to a law practice. In this case, “return” means more than just measuring an increase or decrease in revenue; it includes other subjective factors as well. For example, new technology tools may permit a law firm to offer enhanced services to a client. This might increase revenue, but, more importantly, may help strengthen a critical client relationship for long-term benefit. Enhanced service offerings may also permit a lawyer or law firm to target new potential clients or better distinguish its law practice from its competitors. Conversely, measuring return on investment should also include consideration of negative factors. What is the likelihood that a new technology tool will actually be adopted by everyone in the practice who might benefit from it? Does the tool have flexibility to serve more than one specific need? Limited use or rejection of a technology solution reduces the value of the investment. DEFINING NEEDS Almost all of us fantasize about labor-saving devices or services that could make our lives easier. Difficulties arise, however, when the immediate appeal of a gadget doesn’t translate into a function that directly improves the way that work gets done. Firms that reverse this process — defining their existing needs before starting to look for technology solutions — are much more likely to find new products that genuinely improve their practices. Finding and defining needs starts with basic questions. What parts of your legal practice make you frustrated or angry? Are there tasks where time always seems to run out before the job can be “done right”? Why haven’t specific projects been completed on time? Answers to these and other questions can quickly identify areas for further research. For example, a law firm is frustrated that it is consistently late getting its client invoices sent out and thinks that it could solve this problem through increased automation of its time, billing, and accounting systems. Some partners have been impressed with demonstrations of an expensive but splashy new accounting software system. But is this software, which promises to do everything but tap dance, the right choice for the law firm? Closer examination is required before that question can be answered. In this hypothetical, before the law firm can decide whether a specific product is right for them, it must determine its needs — and its existing weaknesses. First, what does the law firm need? At a big-picture level, the firm’s needs are relatively straightforward: a unified system for recording billable time, research and other client-related expenses, and the ability to quickly prepare invoices that aggregate these expenses on a monthly or other basis. However, the firm should also break out the smaller elements that make up these larger needs. For example, must time be entered in different time intervals, such as tenth- or quarter-hour increments? How does the firm track time spent on fixed-fee and contingent-fee cases? Are special task codes required for some or all clients? Do these task codes vary from client to client? On the expense side, are invoices split between multiple matters? Answers to these and many other questions will help flesh out the complete list of the law firm’s billing system needs. Next, the law firm should examine why its existing systems fail to meet its needs. Are invoices getting out late because attorneys are tardy in entering their billable time in the accounting system? This could suggest a social, not a technological, problem. On the other hand, are invoices late because the existing system requires that bills be manually calculated and typed up? That would suggest that new technology could make a significant difference. Once the firm has developed a list of specific needs, it can begin comparing products. For example, the splashy, expensive accounting system with countless features may also include many bells and whistles that will never be used by the firm. It may also lack some unique feature that the firm needs to track its time for an important client. Comparing a product’s features against a list of needs is a great way to quickly identify a potential fit — or lack thereof. Working with an identified list of specific needs also makes it possible to rank competing products to see which comes closest to meeting all of your requirements. Providing such a list to vendors forces them to discuss their products with you in your vocabulary, not their own. This makes it easier for a law firm to understand the strengths and weaknesses of a product, to ask follow-up questions, and to better compare products on a common basis. Defining product needs in advance can also save money. In the legal technology arena, virtually every product has marketplace competitors that offer similar functionality. Sometimes a less expensive product can provide the same — or more suitable — functionality than the well-recognized, expensive alternative with the big advertising budget. There may be valid reasons, such as training and continuing support, to select a more expensive product over a less costly one, but awareness of viable alternatives lets a firm consider multiple solutions — and better negotiate for the product that makes the most sense. CALCULATING THE TRUE COST A product’s purchase price may represent only a fraction of its total cost to a law practice. Many new software products, like case management or accounting systems, may require additional computer hardware to house the programs. New software may also require upgrades of current software to prevent conflicts. Few legal technology software packages are designed to operate “out of the box”; most require some level of configuration and customization. In complex systems (e.g., case management and accounting systems), customization may surpass the cost of buying the basic software. Finally, some products require substantial annual maintenance fees or levy open-ended royalty “click” charges every time the program is used. These two expenses can add up to as much as 25 percent of the initial purchase price and are levied on an annual subscription basis. Beyond the costs directly related to installing new legal technology, a law firm must also consider the “soft costs” of preparing its lawyers and support staff to use a new product. Training staff can be expensive; outside trainers usually run upwards of $1,000 per day to come on-site for group training sessions. Often, trainers must also work with lawyers one-on-one because of attorney scheduling issues. These costs quickly add up. In addition, billable staff cannot perform ordinary work during training — training time during business hours literally replaces billable work. And even after training is over, most firms experience a short-term decrease in efficiency and billable time while staff learns to use new tools in a real-world setting. In the case of complex technology like computerized case management systems, it may take several months for a practice to return to its initial productivity. A third potential cost is that major new technology tools, like case management or accounting systems, will also change the mix of skills — and employees — that a law practice needs. A case management system, for example, may require hiring a relatively expensive database technician to maintain the system. While that salary could possibly be offset by reductions in paralegal staff (fewer people might theoretically be required to maintain the same amount of information), it is more likely that a new position will be added to existing levels of staffing. All too often, budget restrictions permit only one of several appealing projects to advance at a time. Weighing the total cost of a project against the improvements that it will bring is an objective way to prioritize them. For example, computerized case management is generally an expensive and time-consuming project, but it is also likely to have broad application in every part of a law practice — suggesting the possibility of considerable long-term positive impact for everyone at the firm. Conversely, building a complex extranet to service a single small client may cost far less than implementing a case management system, but if it is likely to impact only a small portion of the law practice without the possibility of gaining additional use at the firm, it may well be a less attractive investment than the case management system also under consideration. Proper use of technology in a law firm can help a practice expand while reducing the inevitable growing pains. At the same time, though, buying products without a strong rationale or strategy can prevent — rather than help — a practice from enhancing its services and professional reputation. In the area of legal technology, using objective analysis will help lawyers understand when and why they should be willing to invest in new tools. Conrad Jacoby is general counsel and a senior consultant of the Potomac Consulting Group, a legal technology consulting company based in Arlington, Va. In his consulting capacity, Jacoby focuses on developing effective strategies for collecting and managing electronic discovery and helping clients effectively use technology in their practices. He can be reached at [email protected]; more information about the Potomac Consulting Group can be found at www.potomac.com.

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