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Legal technology generally proceeds at its own pace largely independent of trends in the rest of the world. Law firms were early adopters of word processors and electronic research but late to the Web. They stuck with WordPerfect long after the rest of the world went to Word. When other businesses had already made e-mail via the Internet a standard work tool, law firms held back, paralyzed by security fears. In the past year, however, the technology needs of large law firms and their clients have become remarkably similar. That is a central finding of our seventh annual AmLaw Techsurvey. ( See the survey results.) Before Sept. 11, IT America had begun to focus on concrete projects with immediate payoffs. And so had law firms. After Sept. 11, IT America made sure that their computer systems were ready to withstand disaster. And so did law firms. Later last year, during the Enron-Arthur Andersen debacle, corporate America and lawyers alike learned that shredding paper documents without erasing the corresponding electronic files is an act of folly. These are austere times. According to the survey, technology spending on a per-lawyer basis is declining. Firms have budgeted about 5 percent less per lawyer for both capital and operating expenses. Nearly two-thirds of the firms we surveyed said that they would spend the same or less on capital items in 2002 than they did in 2001. For the first time, we expanded the survey to The Am Law 200, The American Lawyer‘s list of the 200 top-grossing U.S. firms. We received 130 responses, a 65 percent rate. Previously, we limited our inquiry to the top 100 firms. In expanding the survey, we found that vendors’ market share did not fluctuate dramatically, suggesting that the second 100 firms tended to have the same technology issues and buy the same software as their larger competitors. Even so, the year-to-year comparisons in the accompanying charts should be taken with a grain of silicon. Also for the first time, we asked firms which electronic evidence vendor they use to retrieve and organize computer files turned over in discovery. The winner: Ontrack Data International Inc. When firms do spend money, it tends to be for projects that will stabilize their systems or make lawyers more productive. Pittsburgh’s Kirkpatrick & Lockhart, for example, has cut back on buying Handspring Treo phone-organizer units, but has gone ahead with a roll out of PeopleSoft, software that is supposed to help enterprises run more efficiently. Several firms reported delaying their introduction of Windows XP, upgrading computers, buying flat-screen monitors and the like. They were mostly steering clear of optional purchases, like application service providers (companies that offer services or software over the Web). “We haven’t seen anything very useful” beyond Intralinks, an online deal room, says Greta Ostrovitz, the IT director at New York’s Cadwalader, Wickersham & Taft. “We’re all concerned about the economy,” says Chip Goodman, the IT director at Chicago’s Winston & Strawn. “We have cut back a few projects that we felt were nice to have, but [did] not need to have.” IT directors found novel ways to save some money. Washington, D.C.’s Wilmer, Cutler & Pickering bought backup servers that were available in a near-empty office park. “They had technology we thought we could never afford,” says Wilmer’s chief technology officer Edward MacNamara. Minneapolis’ Dorsey & Whitney upgraded its wide area network at a great price. “With all the telecom carriers going bankrupt, we’ve been able to find more cost-effective ways to do that,” says chief information officer Curt Meltzer. Sept. 11 focused firms on the need for disaster planning, making sure that lawyers can access data under worst-case scenarios. And no wonder. Four major law firms — Drinker Biddle & Reath; Harris Beach; Sidley Austin Brown & Wood; and Thacher Proffitt & Wood — were housed in the World Trade Center, and many more were temporarily displaced from their downtown offices. “During the budget process, [disaster planning] was one thing that wouldn’t be cut back,” says Nicole Picciotta, the chief information officer at Washington, D.C.’s Shaw Pittman. BlackBerrys, handheld wireless e-mail devices, are one fringe benefit that firms are not abandoning. Half of the firms reported buying BlackBerrys. Lawyers like BlackBerrys because the devices have tiny keyboards that are easy to use, and they hook up directly with e-mail at the office. (They also worked in New York City on 9/11 when the phone networks often did not.) Palm, Inc., has been unable to compete with BlackBerry in the legal market. Lawyers apparently like mobile e-mail more than handheld organizers. Of firms that supply handheld units to lawyers, only 5 percent buy Palms, down from 15 percent in 2001. Until a new service is launched later this year, Palm users must go through a third-party system to access their e-mail. “From a security perspective we don’t want to do that,” says Judith Flournoy, the IT director at New York’s Kelley Drye & Warren, a BlackBerry shop. In document management, the AmLaw Techsurvey found that Hummingbird Ltd. and iManage Inc. continued to battle. Hummingbird is still the dominant application, but iManage has been catching up. iManage’s market share rose to 38 percent from 32 percent on the strength of some major new clients, including Cleveland’s Jones, Day, Reavis & Pogue, and San Francisco’s Heller Ehrman White & McAuliffe. Jones Day is hoping to use iManage’s worksite collaboration program as part of its overall knowledge management initiative. In these lean times, knowledge management showed surprising strength. Slightly fewer than half of the responding firms said they had a knowledge management program. (We didn’t poll firms about knowledge management last year.) Perhaps firms have decided to use slow times to build for the future. At Boston’s Ropes & Gray, Howard Glazer, a corporate partner, volunteered to work full time on creating and managing precedent documents. “If it were two years ago, and I was working 2,600 hours on client matters, I wouldn’t be doing this,” Glazer admits. He spent about eight months finding and annotating best-of-breed documents. Some firms are trying to make knowledge management work without the active involvement of lawyers to organize, edit and create documents. Houston’s Vinson & Elkins is relying on Autonomy, a search tool that culls through various programs, including document management systems and e-mail, to find key concepts and materials. This has kept the firm from making “a huge investment in building taxonomies,” says chief information officer Tim Armstrong. But knowledge management isn’t for every firm. “It’s a really difficult thing. You have to proactively go out there and build best-of-class work product, and you’re trying to fit that into a culture that’s hourly billing,” says the IT director of a large New York firm. Knowledge management is a choice; dealing with electronic evidence is a necessity at firms. The sheer volume of electronic files produced in complex litigation has forced firms to turn to outside vendors. These companies collect, organize and print out electronic files, like e-mail messages, Word documents, and Excel spreadsheets. About 75 percent of responding firms said they’d used an electronic discovery vendor during the last year. “Most cases I am involved in have some form of electronic discovery,” says Edward Magarian, a litigation partner at Dorsey & Whitney. “It has been a gradual transition, not only in quantity but quality [of services].” The business is dominated by five players: Applied Discovery Inc., Daticon Inc., Electronic Evidence Discovery Inc., Fios Inc. and Ontrack. Most of these are small, startup companies. But they do big work: Applied Discovery, for example, is handling electronic documents for Enron Corp. in its bankruptcy. Ontrack worked on the Hewlett-Packard Co. and Compaq Computer Corp. merger. Accounting and consulting firms, like Deloitte & Touche, also provide these services. So does CaseCentral Inc., which has traditionally stored large volumes of electronic documents in litigations. CaseCentral launched the discovery service about a year ago; it is now “a core piece of our business,” says chief executive Chris Kruse. Some firms, however, would rather build than buy. “The pricing is so outrageous that we prefer to do it in-house,” says Bradley Christmas, chief information officer at Akin, Gump, Strauss, Hauer & Feld. The firm turns to outside vendors only for the largest and most complex cases. Austerity rules. THE SURVEY RESULTS Tools Lawyers Use: Organized by Firm The Basics Applications Software Intranets, Extranets and Portals Communication Running the IT Department Financial Stats Knowledge Management

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