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Law firms are starting to spend on technology again, focusing on projects that will help the enterprise run more smoothly and efficiently. Not that many years ago, before the economic downturn, firms were toying with Web-based systems to manage client relationships and other newfangled ideas. In the lean years, those projects fell by the wayside, and firms show no signs of reviving them anytime soon. The central theme of the ninth annual survey conducted by AmLaw Tech, a sister publication of The National Law Journal, is simple: Firms are making roof repairs rather than remodeling the kitchen. This year, AmLaw Tech received responses from 173 of the 200 highest-grossing U.S. firms. Those responses provide a profile of the technological priorities and goals of the leading U.S. firms. Today, 55% of the firms report increases in operating budgets, and 83% report increases in capital budgets. When the survey asked the question last year, the increases were 40% and 46%, respectively. With these replenished technology budgets, firms are looking inward to upgrade their existing systems, ensuring that lawyers have the tools to practice efficiently. And they’re seeking cost savings in areas as diverse as Internet telephony and back-office financial software. “We always ask with each piece of new software, ‘How many accountants can we fire?’ ” quipped Stuart Freeman, director of administration at Edwards & Angell. Remote access is one of the key areas where firms are devoting money. Lawyers now demand more than just basic connections to e-mail and Word documents when they’re out of the office. They have embraced electronic address books, document-management systems and deal rooms, and are reluctant to sacrifice those tools when working on-site with a client or when away on vacation. Plus, Sept. 11, 2001, the 2003 blackout and the recent political conventions have highlighted the need for lawyers to access firm systems when stranded outside the office walls. “Communications and mobility are major themes [this year],” said Michael Mills, director of professional services and systems at Davis Polk & Wardwell. The New York-based firm recently created a Web portal that allows lawyers to log onto the firm’s internal network from any device with a browser. It could be a computer or one of those airport kiosks providing online access. The portal gives attorneys another access option in addition to the firm’s traditional Citrix systems, Mills said. Citrix is a brand of network software that allows lawyers to connect laptops to the firm’s servers. One downside: Lawyers must be working on computers loaded with Citrix software. “Today there is a constantly growing need for lawyers to be able to work with all of their tools from anywhere,” Mills said. “And we’re figuring out how to make that easy.” Similarly, Sidley Austin Brown & Wood installed an upgraded, secure virtual private network that gives lawyers an alternative to the firm’s traditional high-speed access through Citrix. Nancy Karen, the firm’s chief information officer, said that Sidley’s new virtual private network enables access to a broader suite of applications. It is also easier for lawyers to use than previous remote-access systems. Sidley lawyers can now send faxes from their laptops. (They couldn’t before.) This is helpful to lawyers who worry about prying eyes at hotel business centers or those who don’t pack a portable printer. The virtual network also allows lawyers to synchronize their laptop and office e-mail. Of course, the ubiquitous BlackBerry is still a key weapon in the mobile lawyer’s arsenal. BlackBerry and other wireless e-mail units grew in popularity among the 200 highest-grossing firms. This year, 77% of firms said that they supply lawyers with wireless e-mail units, compared with 73% in 2003 and 51% in 2002. Nearly all firms that supply them hand them out to all lawyers, not just partners. Lawyers’ love affair with wireless has boundaries. Firms haven’t been as easily convinced as Starbucks and Barnes & Noble that WiFi hot spots make sense. Sixty percent have wireless networks installed in at least one location, compared with 47% in last year’s survey. But 61% of those firms are installing them just in conference rooms, and only 16% are installing them in entire offices. Many firms are taking a measured approach to wireless networks�ensuring that security is adequate and that the investment enhances lawyer productivity. San Francisco’s Morrison & Foerster has only begun to outfit conference rooms. “We were not on the forefront of wireless because we didn’t want to provide access to everyone who walked by. I didn’t want to see a chalked [WiFi] mark outside our office,” explained technology head Jo Haraf. Haraf expects to complete one-third of the conference rooms by the end of 2004 and the rest by 2005. The firm’s annual computer security test will focus this year on probing the wireless security as an additional safeguard. Others aren’t convinced that the risks are worth the effort. Skadden, Arps, Slate, Meagher & Flom of New York and Wilmer Cutler Pickering Hale and Dorr have rejected WiFi for now, citing security concerns. Still, the technology is especially attractive for larger law offices where individuals are more likely to move around, said Orrick, Herrington & Sutcliffe’s chief information officer, Patrick Tisdale. Orrick has installed wireless networks throughout the office in its new San Francisco headquarters for that reason. Larger upgrades Technology upgrades, like the economy, are cyclical. Every two to four years, a firm’s equipment, processing power and software become obsolete. But this year, several firms seemed to be making larger upgrades, inspired by recent technological innovation and heftier budgets. “There has been a little bit of a loosening of the purse strings,” explained Eva Steiner, director of information technology at New York’s Dewey Ballantine. The technology department at New York’s Shearman & Sterling has benefited from a 20% to 30% annual increase in its budget over the past two years after limiting its expenditures during the economic downturn. Technology chief Tony Cordeiro said that in the past year the firm has upgraded its back-end systems, including its wide-area network and internal cable infrastructure. Next, Cordeiro wants to ensure that each practice group has the right set of applications. The firm has solicited a request for proposals from electronic evidence vendors for its litigation group. Feedback from lawyers suggested that the firm had too many software packages and not enough features. “We’re trying to narrow our list [of vendors] while making sure that our requirements for the products are being met,” he explained. “The driving force [this year] was to be more internally efficient and productive,” agreed Steven Agnoli, chief information officer at Kirkpatrick & Lockhart. The firm recently installed Hummingbird’s latest document-management software, which allows lawyers to easily transfer e-mails into the firm’s document-management system. K&L also upgraded its Thomson Elite Enterprise financial and billing systems to an easier-to-use browser-based version. “Knowledge management” was a post-millennial buzzword that developed a nasty reputation. Some technology chiefs loved the concept of aggregating and organizing the firm’s most important information. But others equated the term with costly, ambitious technology projects that had small or negative returns. “The knowledge management tools offered to the industry for several years are just now in a state where they deliver [what they had promised],” said Orrick’s Tisdale. Chief technology officers are seeking clear, searchable systems to hold and organize best-practices documents and firm files. But there’s no agreement on a standard. The leading product in the AmLaw Tech survey was West km, at 19%. In contrast, 43% answered “other,” which included custom in-house solutions. Pillsbury Winthrop, for example, has developed a knowledge-management system based primarily on the firm’s e-mail system. The lawyers’ unwillingness to learn new systems was the biggest barrier to successful knowledge management, said director of information technology Warren Jones. And if lawyers aren’t consistently contributing their documents, the collection becomes outdated and useless. Pillsbury’s technology department, which disbanded its original knowledge-management group in 2002, had a eureka moment in 2003, when it realized it could build a system around e-mail, Jones said. The system allows lawyers to drag and drop their files and e-mails into a firm database quickly in the same way that one moves messages to a personal Outlook folder. Many other firms, such as Skadden and Kirkpatrick & Lockhart, are also working on in-house solutions. K&L is using the firm’s existing software, including its Hummingbird document-management system, to reorganize existing information databases by practice group. Most lawyers don’t picture the telephone when thinking about new technology. It’s hard to blame them. Only 34% of firms surveyed use a voice-over Internet protocol (VOIP) for telephone traffic. Many information technology chiefs, however, say usage is likely to increase significantly. Firms that have jumped on the VOIP bandwagon have often cut phone costs. For example, Latham & Watkins’ chief information officer, Kenneth Heaps, estimates that the firm is saving more than $4 million a year in phone capital and operating costs. More important for lawyers, however, are the potential time-savers, such as dialing clients by clicking a telephone number listed in a document or e-mail. Lawyers “care about their own productivity. They would love to be able to go into their inbox and return a call by clicking,” explained Sidley’s Karen. Sidley is currently evaluating VOIP for the firm’s new Chicago office, slated to open in November 2005. Latham & Watkins is the farthest ahead of the pack. It has completely converted to VOIP, with the exception of three offices in Asia. Latham’s Heaps said that lawyer productivity as much as cost savings drove the conversion. Partner Kevin Boyle raves about the results. When clients leave a voice mail, the message and a number appear via e-mail on his Treo 600 PDA and phone. Boyle is then able to click on the number, dialing the client back only seconds later. “It’s a huge advance from having to check voice mail [continually],” he said. So while repairing the roof isn’t as sexy as remodeling the kitchen, this was a standout year for technology chiefs. Because in the end, it’s all about making the lawyer’s life a little easier.

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