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Faced with the tidal wave of online legal services launched this year by the magic circle firms, an observer might conclude that the rest of the sector is being left behind as the industry-leading giants make good their advantage.But some of the most innovative development work is being carried out quietly, behind the scenes, by some of the City’s other large corporate firms. Lovells is one such player as evidenced by a three-year extranet development project to rival those of industry leaders such as Linklaters and Allen & Overy (A&O).One of Lovells’ largest, most lucrative and longest-standing clients is the Prudential Assurance Company. Lovells carries out a great deal of banking transactions for the company and handles more than half the property work generated by the mighty Pru – the country’s biggest landowner, which alone constitutes 3% of the London Stock Exchange.Back in 1997, Lovells developed its intranet using a new development package called SilverStream. The intranet so impressed property partner Robert Kidby that he started thinking of ways to use web-based technology to lock large, lucrative clients, such as the Prudential, into a relationship with the firm.Kidby set about researching possible ways of using IT applications to streamline the relationship. He admits that at the time, the firm was lavishing far more attention on pitching for new clients than on keeping valuable, established relationships sweet.So at the beginning of 1998, Kidby arrived at the Prudential’s head offices armed with what he describes as “a basketful of e-goodies”. Foremost among these were plans for a comprehensive client extranet service.According to Kidby, the company was initially doubtful about the idea. He says the Prudential was not easily persuaded that a client extranet would add value to its business and save it money, while increasing the firm’s profits.He explained that technology lent itself to property law, much of which could be easily commoditised, streamlined and automated. City firms faced stiff competition from regional firms with lower overheads and staff salaries, which were driving down costs for property work. It was difficult for Lovells to justify its fees for work that could be carried out more economically – and just as reliably – elsewhere. But with the help of technology the firm could differentiate itself from the competition and deliver its services at a competitive price.Kidby admits that the firm had another agenda for developing the extranet. There was a great pressure on junior fee earners to reduce the time taken to complete the dull, repetitive process of drafting standard documents, and the factory-chain nature of the work was causing motivational problems. He was convinced automation would lead to more creative, less mechanical working conditions.He says the firm had considered, but discounted, setting up a dedicated unit in a low-rent area, staffed by paralegals and a handful of lawyers, to drive down costs. According to Kidby, the technology option was far more appealing because the firm valued its centralised command chain and appreciated the “value of togetherness”.Once he had the client on board, Kidby went back to Lovells’ IT department with instructions to make a working prototype of the system, with case-searching and reporting facilities. Kidby brought on board a SilverStream-trained web developer and a technologist specialising in the Elite billing and time-recording system, to complement the experience of his fellow visionary, development manager Tanya Collett.The development team decided to start with the most mundane functions of all – licence applications. Kidby says Lovells receives thousands of requests for licence drafting each month – routine work, but with a high degree of associated liability. He set up a dedicated licence unit, staffed by four paralegals and three part-time lawyers. Using document-generation software from HotDocs, the unit was soon churning out licences at a rate of two per minute.“Instead of losing a couple of hundred pounds per licence, we now make a small profit,” Kidby says.The Prudential’s main requirement from the extranet service was a simple reporting service to handle the thousands of cases on which Lovells was acting for it. Kidby and his development team decided to offer the client access to all time recordings, kept in context by a ‘narrative’ – a phrase explaining the nature of the work billed for – which was added every six minutes. While this may seem like overkill for low-margin property transactions, Kidby explains that the dividing line between the firm’s property and corporate departments has become increasingly blurred during the past two years.The extranet went live in November 1999, at a cost to Lovells of about £40,000, plus the price of a new server. Kirby says the vast majority of the outlay went on the developers’ salaries.To protect against hackers, the extranet uses 40-bit encryption, but the firm is set to upgrade this to 128-bit by the end of the year, bringing the site in line with benchmark systems such as A&O’s NewChange and Linklaters’ client extranet, in terms of security.The reporting system enables the Prudential to enter a case code, or click on a link from the home page to monitor progress on a matter and examine the productivity of an individual fee earner. There is, however, a 24-hour time lag between lawyers entering billing information complete with narratives, into a program known as ‘carpe diem’, which feeds the data into the Elite billing system, and the information appearing on the extranet.The extranet can be set to recognise individual client users and to take them to a version of the home page that enables them to access and cross-reference all matters for which they are responsible.“It is very low-maintenance,” says Tanya Collett, the development manager for the project. “Now that we have given the Prudential control of access privileges, we need just one person to run it part-time.” Following a request by the Prudential, Lovells gave surveyors and property management agencies who worked for the company access to the extranet.As well as giving the client access to dynamic, internal information, the extranet contains blank specimen copies of Lovells’ standard property forms for transactions such as property leases, in PDF format. These documents are for reference only because, according to Kidby, the Pru – which disbanded the UK’s biggest in-house legal department before engaging Lovells – was not keen on taking responsibility for filling out forms.The site also features comprehensive contact information, a current awareness update service, which is sent to many of the firm’s clients, and hosts a bulletin board for the client organisation’s social events and internal news service. When new features are added to the system, users are notified by a scrolling animation in one corner of the screen.Since a member of the Prudential’s IT department was involved in the development process and knew the system inside out before the rollout, after an initial joint training session the company decided to set up an internal help desk. Collett says the Pru deals with 90% of enquiries and problems itself.“The system was a success because technically we brought ourselves very close to the client,” she says. “Now the development work is mostly done, we can set up a dealroom in two days. We will have a prototype for another client relationship site ready to go in two weeks’ time.” Kidby says Lovells does not offer the same functionality to its other clients because they do not want it. He claims the firm will build a personalised extranet site for any client, as long as it will add value to the firm-client relationship. But the extranet was not the only idea up Kidby’s sleeve. In 1998 he also offered the Pru a fast-track instructions system for leases and licences. The forms are filled out by applicants, drafted automatically using a HotDocs template and are sent directly to the relevant solicitor, who simply has to read, think and click his or her approval and the document is sent out automatically with a standard letter for each party. “This system cuts the transaction time to grant a lease by up to a month, which means an extra month’s rent for the Pru,” Kidby says. Another idea, which Lovells is about to start developing, aims to further streamline the licence application process. Kidby explains: “Why wait for tenants to apply for the form?” he says. “Put the form on the extranet for the tenants to fill in, adding a list of supporting details.” Lovells would police the system, it would require no effort on the part of the client, surveyors would approve the licence without having to refer to Lovells and the firm’s lawyers would not have to waste time on unprofitable, low-margin work.Looking to the future, Collett sees XML mark-up language as an important tool for further innovation. She says she is considering joining the legal XML working group to contribute to setting XML standards for the legal sector. The group aims to enable much closer integration of different systems, which would prove invaluable in the event of a merger and may pave the way for more collaborative working between firms in the future.

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