Cloud Computing and Law Firms

I was sharply critical of the Law Firm CIO 100 panel for being dismissive of using Enterprise 2.0 tools. [See: Web 2.0 – What is Means to Law Firms] The Law Firm CIO 100 had a presentation on Google Apps and were impressed with the functionality and cost savings.  Apparently they were impressed with cloud computing approach of Google Apps, not the collaboration approach.

As Dave Rigali commented on that post:

“In the end, it was the economics of something like Google Apps that caught the CIOs attention. Isn’t this where their focus should be?”

Cloud computing can show a tangible cast savings and return on investment.  The same is not true for enterprise 2.0 for law firms.  The benefits of the knowledge sharing and platform communications are difficult to measure at law firms. Law firm revenue is tied to hourly billing. Most enterprise 2.0 and knowledge management tools lead to efficiency, which is a reduction in hours for a task, and a direct reduction in revenue. You need to make the leap that those gains in efficiency will lead to better client satisfaction, increased realization, stronger client relationships and improved attorney satisfaction.

Cloud computing offers lots of possibilities.  I first became interested in the possibility after listening to Rishi Chandra, Product Manager, Google Enterprise, give a brief presentation on cloud computing at the Enterprise 2.0 Conference: Working in the Cloud: How Cloud Computing is Reshaping Enterprise Technology.

Anita Campbell posts on the {App}GapCloud Computing – Get Used to the Term.  The term “cloud computing” did not spring up as significant Google search term until October, 2007. Anita offers a few definitions of cloud computing.

Over the past weekend, I saw Dennis McDonald post on his Lesson Learned From Using Google Docs. Like the Law Firm CIO 100, he thinks the product needs a lot of improvements but sees much value:

“In summary, Google Docs is impressive. The fact it is available free and can be configured to run locally are additional reasons to consider it for serious applications. Still, I can see how introducing its use into an organization accustomed to more traditional tools might take some time.”

I have used Google Docs to write a few of my print articles. See: Wiki While You Work and Wikis and Document Management Systems at Law Firms. I find it a great way to collaborate with co-authors and editors. I really like that I had quick and easy access to edit the articles whenever I had internet access.

It is clear that the tools need some improvement before they will be adopted by large law firms. But the cost savings and ease of maintenance make for a compelling reason to consider cloud computing.  

7 thoughts on “Cloud Computing and Law Firms”

  1. The assertion that efficiency leads to lower fees BECAUSE of the tie to fees based on hours put in demonstrates the bankruptcy of what is a Marxist theory of labor value. Your correspondent is opening the door to all sorts of questions being raised about time taken on client work instead of concentrating on the value delivered and therefore the potential for HIGHER fees.

  2. @Dennis

    You are pointing out the problems with the billable hour as the revenue model.

    Lawyers want to be efficient and deliver value. It is just hard to measure and prove that efficiency. At large law firms, the work is varied enough that is difficult to compare the time and work spent on one case to another case. We lawyers are looking at the issue, as are clients.

    One of the reason my firm established a knowledge management program was because they recognized the need to be efficient and deliver ever increasing value to the firm’s clients. The firm understands the value. But they determine the value anecdotedly, instead of through any measureable return.

  3. Doug,

    This might be a little “meta,” but let me suggest that it might be cool to do a roundtable article on this topic using Google Docs to create the article.

    Great to see you and get the chance to visit with you at ILTA. Your live blogging was fantastic.

    Dennis

  4. @Doug – efficiency is the wrong form of measure. Effectiveness is what clients pay for. Did we get a result? Was it cost effective? Are we resourced correctly? These are very easy measures to adopt and allow the firm to leverage the knowledge it acquires. Put simply: if I have developed a framework for managing a specific type of problem that I can show is effective then apart from tweaking for different client circumstances, I *should* be able to leverage that knowledge and make a higher return but without losing the individual elements that contribute to each case and which themselves have a definable value.

    Ultimately it is about recognizing what clients pay for – it sure as heck isn’t time – at least when viewed from their perspective.

  5. @ Dennis H –

    Efficiency and effectiveness are difficult to measure in legal practice. A loss at trial can be won on appeal. A loss can still be a victory if the damages are less than the client hoped for. The preferred outcome for many legal matters at big law firms can vary widely from matter to matter.

    Most legal matters at big law firms involve a multitude of types of problems. I have tried mapping out the process for one of the common types of matters I work on and I ended up with enough paper to cover a wall in my office. Some matters have a very straight-line through the process. Others go through a complex zig-zag.

    Yes, so of this is just making up excuses. The legal field needs to be more focused on effectiveness and better project management.

    As I posted in the killable hour clients and lawyers are looking at ways to change. Law firms recognize that the billable is also a cap on revenue and profits. After all, there are only so many hours in the day.

    Changes are coming.

  6. Having more people collaborate in order to focus their thinking on a given problem will not automatically reduce the total number of hours required to solve a problem. Someone might actually suggest a new or innovative idea that, to implement, might actually increase the number of hours to solve the problem.

  7. There are other significant aspects to computing in the cloud – many of these offer all kinds of benefits that are much more complex than just whether fees go down because of increases in efficiency. Take for example the cloud computing that IVDesk (www.ivdesk.com) offers – the solution allows firms to run all of the software they use in the cloud. All of the advanced tools that a firm uses can be run from anywhere without installing any software or buying anything – the same as Google. This leads to a number of benefits for a firm that go far beyond whether hours decrease because of increases in efficiency. Some thoughts that come to mind are the ability to expand to new geographies quickly, or a decrease in turnover because management can be more flexible with staff attorneys (letting them work at home more, etc.). Maybe one that is even more significant is the increased security that solutions like this offer – losing a client because a company laptop is stolen or because you cannot pass a data security audit would be far more costly than any loss in revenue created by increases in efficiency.

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