Exploring Technology Business Models for Law Firms

Technology can directly improve the bottom line revenue of the firm. Some ways to improve the business of law:

  • Direct – Increase the wealth of partners through the commercialization of technology produced in-house
  • Direct – Increase revenue by profit generating, technology enabled services (examples: litigation support)
  • Indirect – Improve the firm’s attractiveness to legal talent through strategic innovation
  • Indirect – Increase the client spending and loyalty through technology enable services
  • Indirect – improve the margin by dis-placing non-productive activities and increasing efficiency

Mallesons co-developed Recommind’s Decisiv Email product. This is a tool for enforcement of governance rules on collecting the collaboration and correspondence for a matter.

Technology enabled services at least can be set up to be cost neutral, so that the personnel and technology are not cost centers and be revenue-neutral.

Mallesons has a TalentNet system, which is a self-service interview scheduling and reminder with web 2.0 features. It has cut down the recruitment period from 45 days to 21 days. It removes paper from the business process.

Mallesons developed a PeopleFinder system to improve a client’s call-in experience. The problem is the client getting voicemail and having trouble reaching a live person. They weave together online presence, their calendar, whether they are on the phone. 10,000 more calls are being routed to people instead of voicemail. A pessimist called it “Stalkernet.” The audience debated whether this should be exposed externally. Your clients could know when you are available. The audience seemed horrified at the process. But is that all that different from what is happening in Facebook. Facebook users are telling people in their friend network what they are doing.

Elizabeth noted that existing systems dictate against innovation: KPIs, budgets, billable hour requirements, etc. She advocates having a systems to capture and set up a forum for innovative ideas. If someone has an idea for something new and innovative, it should be easy for them to propose the idea to a forum that can evaluate it.

“Fail fast and fail cheap.” That way the failures do not have a huge negative impact and the winners can easily offset the losses.

She raised the issue of a sales force: people who have the skill set to sell a product and close a deal. She has found that lawyers are not good at closing the deal.

Blake has set up a separate legal technology group. They stand on their own two feet, from a revenue generation and distribution method.

One example is Salt, an online Self-Administered Legal Training program. They have programs on:

Marty decided to be provocative. His focus was more on direct wealth creation for the partners, attract the best talent and increase sales of legal services. He lessened the need for displacing non-productive activities and profit generating on-line services. He thinks the technology reality is more focused on reducing non-productive activities than firm strategy.

Is a law firm’s IT a service or a business? It depends on whether the law firm is just trying to survive and hold the infrastructure together. There is a tendency for a law firm wanting to keep the technology so they have a competitive edge.

He proposed some strategies to directly generate revenue:

  • Litigation support
  • EDD
  • Client IT consulting
  • Selling vetted work product
  • Marked up expenses ($10 faxes)

And some strategies for indirectly generating revenue:

  • Extranets
  • Data storage
  • Spin-off developed software

John Alber, of Bryan Cave, sells extranets at some high costs to clients ($200,000!). They have high functionality. It requires some dedicated attorneys to keep it up to date. Attorneys inside the firm also use it as a resource.

IT as a service model methods for generating revenue:

  • Have a sound infrastructure (downtime is not billable time)
  • Organization and reuse of internal knowledge and work product
  • Solid information architecture, so information can be more easily used in decision-making
  • Good training
  • 24/7 access and support (allow attorneys to work more and remotely)

Questions to ask before you take the plunge to sell your IT:

  • Are you in the business to sell legal services or technology?
  • Are you doing the essential?
  • Do you have the expertise?
  • Is the firm willing to commit?
  • Do you understand the market?
  • Do you understand the legal ramifications?
  • How do you keep the lawyers interested?
  • Is your product available elsewhere?

This was a provocative session, but I think we were seeing the exceptions, not a growing trend. I do not see law firms looking to their IT groups to develop revenue. The lawyers want a stable network and a stable desktop so they can work effectively.

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