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Ten years ago, Don Murray considered himself a successful trial lawyer. He won more cases than he lost. His reputation was solid. As managing partner of the Seattle office of Portland, Oregon’s Bullivant Houser Bailey, he oversaw the outpost’s rapid expansion in the late 1980s. So when Bullivant hired a local company to analyze its lawyers’ billing records, Murray wasn’t worried. He thought the firm might “erect a monument to me.” Forget the monument. The analysis revealed that Murray was losing money on almost every client. He was shocked. “But the data was crystal clear,” he recalls. “I could either ignore it or do something about it.” Murray chose the latter. “I moved certain clients to junior partners and overhauled the way I deployed my resources,” he says. “Six months later I was making money on every client.” It was an early step in the long courtship between Murray and the hired company, ELF Technologies of Issaquah, Wash. At the time — circa 1992 — ELF was marketing a rudimentary e-mail-based communications platform to help companies and firms swap invoicing information. The idea was that ELF would mine the invoices for useful information about how effectively a firm practiced law and managed cases. By exposing firms’ strengths and weaknesses, ELF would introduce efficiency into a process not known for it. Murray was smitten with the model. He implemented ELF’s system at Bullivant. For the next few years, he counseled ELF on its business strategies. Finally, in late 1995, Murray left Bullivant to become ELF’s vice president of marketing. Now he’s ELF’s CEO and chief visionary. His high-risk vision for ELF is no longer simply to act as a middleman between lawyers and their clients. He wants to radically reshape the profession — eliminating the billable hour and upsetting firm-client relations along the way. His vehicle for this tall task is a Web site called Serengeti (www.serengetius.com), named after the African high plains region that teems with plant and animal life. Murray’s dream is that Serengeti will one day be the same sort of lush environment for law firms — a place they can go to get litigation support, document management, invoicing help, videoconferencing, and a host of other services. In short, Serengeti aspires to be the legal world’s �ber-ASP, or application service provider. ASPs are Web sites where businesses and individuals can rent software and services rather than purchase them outright. And they have been all the rage recently. But that’s not all that Murray has in mind for Serengeti. Once it’s running at full speed, Serengeti will be able to calculate exactly how long it takes an attorney to respond to client e-mails. Or which junior associates review financial documents most efficiently. Or which senior partners are most successful in, say, drafting motions for protective orders in antitrust cases. Or — and this is something insurance companies care about — which firms are best at predicting the total cost of a case. If it works, clients will no longer have to buy services based on brand (“She’s from Kirkland & Ellis; of course she can do it”); connections (“We went to Stanford together”); or heritage (“We’ve always used Milbank”). Instead, they can rely on battle-tested ability. “We think Serengeti can revolutionize the legal industry,” Murray says. “We truly believe it will fundamentally change the way lawyers and clients operate.” Sounds great. How do you sign up? Well, you can’t. ELF has been promising some of these advances for years. And although ELF announced Serengeti last September, there’s not much there yet. All that you can do on Serengeti is what you could already do if you were an ELF customer. There’s an electronic invoicing system, a case management system, and only a limited business intelligence offering. “The expectations for Serengeti are unbelievably high,” says one industry insider. “It’s a question of whether they can execute it. They haven’t done it yet.” Serengeti’s success largely hinges on Matter Vault, the heart of the site. Within Matter Vault, companies will be able to set up extranets — secure, private Web pages — with their law firms. Matter Vault will also serve as the portal through which other third-party services will flow. For instance, realLegal.com will offer trial and deposition transcripts services through Matter Vault. Casecentral.com, an online document repository, will provide litigation support. That is, provided things go according to plan. Even before it launched Serengeti, ELF struggled to find its place in the market. It has yet to hit $10 million in annual revenue. One reason is that its services aren’t cheap. ELF currently charges a company 1 percent of its total legal bill for invoicing, and 2 percent for its case management system. Matter Vault users will choose from two options: an annual “all-you-can-eat” fee or a monthly “pay-for-what-you-ate” fee. Services from third parties will be extra. And at every turn, ELF has labored to find the right technological platforms. “ELF’s hit every finger with a ballpeen hammer, and they’re all sore,” Murray confesses. “But we’re focused on today. We really like talking about the here and now.” And for good reason. ELF has piles of money. The company has raised more than $35 million in the past year and a half, a mountain of cash for a legal technology vendor. Enough to hire 150 employees and move to state-of-the-art offices. Enough to think about going public as early as September or October. If for no other reason, Serengeti is worth paying attention to because it can burn cash while pursuing its field of dreams. By creating a platform for an industry, Serengeti “has become a great example of where the ASP industry is heading,” says Amy Levy of Summit Strategies, a Boston-based consulting firm. “It’s an intelligent, vertical play.” “Don Murray is a visionary,” adds Kevin Gabelein of Fluke Venture Partners, one of Serengeti’s investors. Visionary or pied piper, Murray is the public face of ELF and Serengeti. Tall, slim, and bearded, Murray speaks clearly and convincingly like the trial lawyer he once was. But he’s not just a court jock. He rock climbs. He’s an accomplished guitarist. He’s a veteran open seas sailor and has a brown belt in karate. He even coaches youth soccer. “Don has an enthusiasm for everything he does,” says James Hibbard, the current managing partner of Bullivant’s Portland, Ore., office. A native of Spokane, Wash., Murray earned a law degree from Willamette University in Salem, Ore., in 1975. A year later he took a job as an associate in Bullivant’s home office. For ten years he tried insurance and medical malpractice cases. In 1985 Murray met his wife, Deborah, a clinical psychologist based in Seattle. Rather than leave Bullivant, Murray persuaded the firm to let him open an office up north. Five years later, the Seattle office had 30 lawyers and featured one of the city’s more prominent insurance practices. “Don Murray was instrumental in that office’s success,” says Donald Evans, Bullivant’s current chief executive. By late 1995 Murray was ready to make his next move — to ELF. “It was tough on the firm, but right for him and ELF,” adds Evans. At the time, ELF needed plenty of help. Its founder, Wynton Dunford, was a local entrepreneur who in the 1980s ran the Medirec Company, a medical supplier. As a side project, Dunford developed the technology to connect different computer systems with an elaborate network of “threaded e-mails.” After Dunford sold Medirec, he searched for a way to market his technology. About this time, he hired Bullivant to draft a trust. He met Murray, and the pair hit it off. “I thought Wyn’s technology would work well for insurance companies and their law firms,” Murray says. “So I talked Wyn into bringing the technology to the legal industry.” A year later, in 1990, Dunford launched ELF (initially, the company was called Electronic Labor Force). The goal was to help insurance carriers and their firms streamline their invoicing and auditing processes. Insurers would save money by eliminating the paper trail and reducing transaction costs. The insurance law firm market might have been the right target. After all, large insurance carriers often have legal expenses that approach $1 billion a year and are typically buried in paper invoices from law firms. But ELF made a key mistake. It marketed its e-invoicing product both to insurance companies and to law firms. The firms weren’t eager to pay to change their ingrained time-and-billing methods. “The idea seemed as compelling then as it seems today,” says Murray. “But in retrospect, it was asking the firms to take too big a step too soon.” ELF discovered that linking firms and insurers is not easy. “There are over 80,000 law firms and 100 time-and-billing systems,” Murray says. “ELF was having to develop individual platforms for each firm because there was simply no standardized way to do it.” In 1992 ELF switched to a Lotus Notes platform. Although this simplified the installation of ELF’s products, the company still struggled to convince companies to pay its 1 percent vig. “Ten years ago, ELF was probably asking too much,” says Chad Waite of Olympic Venture Partners, another investor. “Law firms and insurance companies didn’t want to pay for a narrowly focused invoicing system. It was cumbersome and hard to install.” But times have changed. Today the company sells chiefly to corporations. The thinking is that the law firms will follow if they want to keep the client. ELF has about 15 clients: Zurich Financial Services Corp., International Paper Co., and the Dow Chemical Co., to name a few. By the end of this year, it expects to have close to 50 clients, including several Fortune 100 companies. ELF ported its products to the Web last year. The Web is now the common platform between law firms and companies. “The Internet is the solution to ELF’s problems, says Waite. “Everybody’s speaking the same language now.” “The case management system is incredibly intuitive,” says Edward Godin, an attorney at Denver’s 13-lawyer Godin & Baity, which is piloting the system with its client, Royal & SunAlliance Insurance Group. “So far, the platforms have been incredibly well received, both by people here and our outside lawyers,” says Brian Stahl, Royal & SunAlliance’s vice president of liability claims. “We’re already seeing savings larger than we’d anticipated.” Strangely, few users seem concerned with security issues. “We’re not really worried about it,” says Joseph Schellenberg, the business manager at International Paper. “It’s a completely encrypted system, and we have a ton of faith in ELF.” Says Patrick Schlight, ELF’s vice president of sales and marketing: “I think it was Christmas ’98 that changed things. People did a bunch of online purchasing and realized that encryption works. Our encryption really works.” Murray’s hope is that the shift to the Web will, in his own words, “revolutionize ELF’s future.” Murray figures that the revolution will take three years or so to unveil. By then, Serengeti’s business intelligence tools will be fully functional. There is also a network effect at work. As more clients and firms connect and exchange information, the value of that information rises exponentially. A useful statistical snapshot of a lawyer based on ten cases becomes much more insightful once 100 of her cases are put through the Serengeti data mill. Within ten years, Murray predicts that 10 percent of ELF’s value will lie in its platforms, and 90 percent will lie in the information it controls. But the process will likely be slow. ELF will first make available information about a client’s own lawyers and matters. Later, ELF will sell the client, assuming that it is an insurer, nonconfidential information mined from other clients in the insurance industry. Eventually, ELF might sell a “melting pot” of data taken from a cross section of different industries. Murray predicts that the technology will spell doom for billable hours. Hourly billing was first used in multiparty cases that were too big to evaluate up front, according to Murray. But if clients become better able to predict the value of their cases, paying for legal services up front will become possible again. “In the simplest terms, fixed-fee arrangements will make a comeback,” Murray says. Clients won’t be the only beneficiaries, according to ELF. Firms and lawyers will also benefit from knowing what they are good at, much as Murray himself did eight years ago. “This is going to teach law firms how to be more efficient,” says Schlight. “How to have lower overhead, faster delivery, better service, and make more money. It’s that simple.” When smaller firms can use statistics to prove they can produce good work as efficiently as the big firms, they’ll pick up a lot of business. “It’s definitely going to lead to a shakeout in the market,” Murray says. This radical overhaul won’t be the easiest sell. “From what I know of ELF and Serengeti, I’d be hesitant to use them,” says Don Oppenheimer, the chief information and knowledge officer of Boston’s Goodwin, Procter & Hoar. “Why would we want to give away data that might help our competitors?” Folks at ELF like to point out that the choice to give away information rests not with law firms, but with corporations. After all, most information created within an attorney-client relationship is owned by the client. ELF also notes that it has taken steps to protect the attorney-client privilege. Still, ELF has work to do with the law firms. “My reaction to this is, no way, no how, not over my dead body,” says the chief technology officer of a large West Coast law firm. “It’s too much risk for too little gain. Firms that are good at gathering data are often not very good at presenting it in a way that leads to helpful conclusions.” Case in point: Task-based billing codes may have been a good idea, but they often don’t work. For instance, an associate researching an issue for a motion to compel discovery might record her time under “research,” “motions,” or “discovery.” “Even if the right information is collected, I expect it’ll be taken out of context and will only lead to inaccurate conclusions,” the chief technology officer says. “I just don’t see it helping very much.” A tougher sell might be to the lawyers themselves. A fan of both platforms, Christian Henrichsen, an attorney at Phoenix’s Jardine, Baker, Hickman & Houston, imagines “someone searching through data in a dark room,” looking for things to nitpick. “I’m a pretty open-minded person,” he says, “but if someone doesn’t have the foundation to make comments about my practice, I’m not going to listen for long.” Firms might also be reluctant to abandon multimillion-dollar computer and financial systems for Serengeti. “It might make sense at a smaller firm, which doesn’t have a huge IT infrastructure,” says Goodwin, Procter’s Oppenheimer. Many insurance companies are also content using piecemeal software installed in the mid-1990s. “We’re very happy with what we’ve been using for years,” says the law project manager at a Fortune 100 insurance company. “There’s just no compelling reason to change right now.” Most agree, however, that big firms and companies will embrace the ASP concept over time. “Everyone needs to upgrade their systems at some point,” says Oppenheimer. “In the longer term, ASPs may well become a force in the industry.” Answers for Serengeti and ELF will probably come sooner rather than later. “The pressure’s really on ELF,” says the industry insider. “I know of four other companies that are ready to fill the void if Serengeti bombs.” Murray takes it all in stride. He coolly predicts that 6,000 law firms will be using Serengeti by the end of the year, almost ten times the number using it now. They’ll either love it or hate it, but they can’t escape it. With $35 million to burn, Serengeti will be around awhile, perhaps even long enough to change a profession not accustomed to change. Related Chart: The Am Law Tech Survey Related Chart: The Big Picture

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