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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 in reviving them anytime soon. The central theme of our ninth annual AmLaw Tech Survey is simple: Firms are making roof repairs rather than remodeling the kitchen. This year we received responses from 149 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, 54 percent of the firms report increases in operating budgets, and 55 percent report increases in capital budgets. When we asked the question last year, the increases were 40 percent and 46 percent, 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?’” quips Stuart Freeman, director of administration at New York’s Edwards & Angell. Remote access is one of the key areas where firms are devoting money. Lawyers may not have been the early adopters of computer technology. But they now demand more than just basic connections to e-mail and Word documents when they’re out of the office. Lawyers 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 on the beach during a vacation. Plus, 9/11, the 2003 New York 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],” says 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 on to 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 says. 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 says. “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. Chief information officer Nancy Karen says that Sidley’s new VPN 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 Am Law 200 firms. This year 77 percent of firms said that they supply lawyers with wireless e-mail units, compared with 73 percent in 2003 and 51 percent in 2002. Once a perk largely for partners, wireless e-mail units are now in the hands of associates too. Nearly all firms that supply them hand them out to all lawyers. Lawyers’ love affair with wireless has boundaries. Firms haven’t been as easily convinced as Starbucks and Barnes & Noble bookstores that WiFi hot spots make sense. Sixty-one percent of firms have wireless networks installed in at least one location, compared with 47 percent in last year’s survey. But 60 percent of those firms are installing them just in conference rooms, and 16 percent 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,” explains technology head Jo Haraf. Haraf expects to complete one-third of the conference rooms by year-end 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 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, says 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. 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,” explains Eva Steiner, director of information technology at Dewey Ballantine. The technology department at New York’s Shearman & Sterling has benefited from a 20-30 percent annual increase in its budget over the past two years after limiting its expenditures during the economic downturn. Technology chief Tony Cordeiro says that in the past year the firm has upgraded its back-end systems, including its wide-area network and internal cable infrastructure. “Our pipes were rusty and too small,” he explains. 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,” agrees Steven Agnoli, chief information office at Pittsburgh’s 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 a browser-based version that makes time entry easier. “Knowledge management” was a postmillennial 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],” says 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 our survey was West km, at 25 percent. In contrast, 31 percent answered “other,” while 18 percent had custom in-house solutions. San Francisco’s 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, says 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 says. The system allows lawyers to quickly drag and drop their files and e-mails into a firm database in the same way that one moves messages to a personal Outlook folder. “It took lawyers a long time to learn Outlook — why ask them to leave that environment [for knowledge management]?” he says. 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. “If you think you’re going to spend $1 million on new software and solve all of your problems, all you will have is a $1 million piece of software,” laughs Agnoli. Most lawyers don’t picture the telephone when thinking about new technology. It’s hard to blame them. Only 34 percent of firms surveyed move a portion of their telephone traffic across the Internet via VOIP. Many IT 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’s 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 don’t care [about VOIP], but they do care about their own productivity. They would love to be able to go into their inbox and return a call by clicking,” explains 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 says that lawyer productivity as much as cost savings drove the conversion. Partner Kevin Boyle raves about the results. When clients leave a voicemail, 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 voicemail [constantly],” he says. 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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