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eDiscovery Technology Adoption Lifecycle: Lawyers vs. Technologists

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Monday, March 1, 2010

eDiscovery Technology Adoption Lifecycle: Lawyers vs. Technologists

I have been in the business of introducing new technology into the Global 5000 for over twenty five (25) years. However, I can't remember having ever witnessed such an antagonistic atmosphere as the one that exists today in eDiscovery as technologists attempt to introduce new technology and lawyers desperately try to avoid the use of this new technology. I have been wrong a few times in the past about markets that are going through paradigm shifts and technology adoption lifecycles (e.g. voice recognition). However, I really don't believe that there is an invasion of eDiscovery technologists from "deep space" or that anyone is trying to "snatch anyone's body".

As a long time student and follower of the technology adoption lifecyle as described in "Crossing the Chasm" by Geoffrey A. Moore, I am very well aware of the concepts of "early adopters", "mainstream buyers" and "lagers". And, as indicated by Mr. Moore, buyers and/or adopters fit into one of the technology adoption lifecycle categories and then move, into the next based upon a normal progression of events such as maturation of the technology, solid references, overwhelming evidence and facts like literally everyone else in the industry has moved (i.e. the very late lagers). The process is not unlike watching the migration of the wildebeests. However, is some very rare instances, this natural progression is dramatically accelerated due to factors that are very much beyond the control of the adopters. And, when this happens, the adopters are forced way outside their comfort zones and therefore have a tendency to act irrationally. It is my opinion that we are witnessing this phenomenon in eDiscovery.

The accelerating increase in the volume of Electronically Stored Information (ESI) along with the subsequent and associated changes to the Federal Rules of Civil Procedure (FRCP) and many state and local rules of civil procedure have created a "text book" environment for "early adopters" to utilize new technology to propel their personal agenda's, careers and abilities to support their clients to extraordinary new levels of success. However, this same set of circumstances as "foreced" late lagers on the opposite end of the technology adoption lifecycle to at least consider becoming more mainstream adopers or even early adopters. Unfortunately, with yellow pads in hand, this is a very foriegn and uncomfortable situation for many in the legal community. Add to this the conunderum of a poor economey that has created an environment of fewer resouces (i.e. due to layoffs), lower revenues and lower margins and you have a situation which is almost the "perfect storm" for having to rely upon new technology to even survive.

On February 23, 2010, Donna Seyle, Esq. wrote an excellent article on the Law & Social Networking site, entitled, "Lawyers and Innovation: An Uneasy Alliance." Ms. Seyle writes, "Much has been written and discussed about the reticence with which lawyers approach the massive restructure of doing business as they knew it. Law school trains us to make legal arguments by following precedent, to rely on what has been decided before. Almost all lawyers have gone to work at law firms after passing the bar, and learn from an established institution how “things are done”. While this is true of other professions as well (i.e., the medical profession, and look at the mess they’re in), there is not one profession that is more risk-adverse than law. And since change involves risk, well. . .you get my point. And right now, lawyers have a lot of change on the table." And although this article does not specifically discuss the changes in eDiscovery technology, it does do an excellent job of pointing out that lawyers have an change and especially change the require new technology.

In another excellent article on this topic titled, "Innovate Now?", Michael J. Anderson states, "We all know that the only constant in the legal industry today is change. Firms that don't recognize that are doomed, firms that change with the times will survive and firms that innovate will prosper. What kind of firm do you want to be?"

Once again, the article by Mr. Anderson does not deal exclusively with the topic of eDiscovery technology. However, he lays out an excellent roadmap for internal self assessment for becomming more innovative. And, this roadmap could very easily be used in the context of adopting new technology.

I should be unbiased in this discussion and conclude that I am not sure where all of this is headed. However, I am not unbiased and I do know where all of this headed. Very much in line with Mr. Anderson, I believe that those indidivuals and their firms and legal departments that do not recognize the paradigm shift that has occured and therefore quickly embrase and adopt new eDiscovery technology, will find it very hard to compete and eventually almost impossible to continue to practice.

The full text of Ms. Seyle article is as follows:

Much has been written and discussed about the reticence with which lawyers approach the massive restructure of doing business as they knew it. Law school trains us to make legal arguments by following precedent, to rely on what has been decided before. Almost all lawyers have gone to work at law firms after passing the bar, and learn from an established institution how “things are done”. While this is true of other professions as well (i.e., the medical profession, and look at the mess they’re in), there is not one profession that is more risk-adverse than law. And since change involves risk, well. . .you get my point. And right now, lawyers have alot of change on the table.

In “Innovate Now?“, Michael J. Anderson writes: ”

"When law firms finally realize that they are falling behind (minimal or non-existent profit growth, lower margins and/or declining market share), the first knee jerk reaction is to reduce costs and start to restructure. In law firms that usually means laying off associates and staff. The sad thinking seems to be that since there is little chance that we can increase the total number of billable hours, we had better share those hours among fewer people and those people should be the owners. For some strange reason we choose to keep the people who cost us the most and let go those who cost less and who will provide a better long term and short term future for the firm.”

That kind of response to today’s economic tsunami is both shortsighted and ineffective. Clients are straight-up refusing to pay ludicrous hourly fees, so law firms are now faced with finding a different, or “alternative” billing model. This process involves a thorough review of the amount and nature of legal work necessary, the value this work will bring to the client, and complete accountability for and transparency of the work performed.

In order to implement this model, changes need to be made not in a knee-jerk reaction, but in a formalized review of the firm’s practice management that will reduce the risk economic loss in value-priced package. You must determine: 1) whether the work-flow methodology is the most cost-effective, and 2) whether the skills of each associate or staff member are compatible with the work assigned to produce the greatest efficiency. Is the firm just following the “way it was always done” map? Have you implemented practice management techniques to improve both the quality of work product and of work environment? Do you need to hire a Project Manager to oversee newly established procedures? Asking these questions is the only way lawyers can begin to meaningfully and profitably design billing models other than the billable hour and rest assured they will not go out of business.

Then there is the massively influential rise of social media marketing. Blogging. Networking. Social engagement. Publishing. Webinars. Monitoring the results. Marketing has firmly embedded itself into the strange new world of web 2.0, and most lawyers didn’t even like web 1.0. Let’s just say that if social media where a person, s/he would not be invited to the firm’s Christmas party.

But you cannot afford to allow this aversion to affect your business decisions. If you don’t have the time to do it, hire someone who can. If you say you can’t afford it, ask yourself: can you afford NOT to do it? Think about how much time and research was spent to determine where best to advertise to reach your target market. Well, guess where all those potential clients are now? Online. Go there.

All of this can be accomplished more easily by embracing technology. Technology is your friend. Research virtual law office platforms to find the one that fits best with your firm’s environment and transfer onto it. Check out as many legal tech tools as you can. Used correctly, these tools can streamline your communications, case/document/knowledge management systems, automate your ediscovery compliance efforts and keep you updated, informed and on time for meetings. The time management and cost effectiveness can handily reduce your overhead.

To research the tech tools available, search legal IT sites such as TechnoLawyer.com, LegalITprofessionals.com and Mylegal.com (among many others) to learn more about how you can leverage technology to keep the bottom line intact.

The full text of Mr. Anderson's article is as follows:

When law firms finally realize that they are falling behind (minimal or non-existent profit growth, lower margins and/or declining market share), the first knee jerk reaction is to reduce costs and start to restructure. In law firms that usually means laying off associates and staff.

It wasn't that long ago that solid, major companies like IBM could expect to grow and prosper by simply by maintaining a “steady as she goes” approach because they had proprietary software that kept their clients locked into their hardware. Change occurred very slowly back then in the dark ages. We all know that the last twenty years has seen that incredible change has overtaken every industry. For years change was slow with companies like IBM or TWA or Xerox. Now look at them. What happened was that they were sluggish in realizing that the terrain changed shape faster than they could change their basic concepts, technologies and marketing definitions.

When law firms finally realize that they are falling behind (minimal or non-existent profit growth, lower margins and/or declining market share), the first knee jerk reaction is to reduce costs and start to restructure. In law firms that usually means laying off associates and staff. The sad thinking seems to be that since there is little chance that we can increase the total number of billable hours, we had better share those hours among fewer people and those people should be the owners. For some strange reason we choose to keep the people who cost us the most and let go those who cost less and who will provide a better long term and short term future for the firm.

An inevitable result of this kind of downsizing is a huge loss of employee morale. We keep telling employees, especially new recruits, that they are most valuable asset of our firm but then we treat them as the most expendable instead. That reaction to a downturn makes recovery even harder.

At best, this type of restructuring just buys a little time. It will usually not have any lasting effect on profitability. A study of large US corporations documented in the Wall Street Journal show that restructuring caused share prices to rise at first but, within three years, those same share prices were even further behind their industry growth rates than before they restructured. Some people even believe that when a company announces a restructuring, they should sell the shares rather than the common belief that this is a good time to buy them.

Don't get me wrong. There is a constant need, in good times as well as challenging times, to fine tune the operations of any law firm and small continual restructurings are a way of doing that. It is when restructuring becomes the primary strategy of the firm's management that we have started down the slippery slope to ever worsening profitability. The next step is to start making up all of the excuses as to why your partners will be earning a lot less in the coming year. Of course, the step after that is when your partners change the management group.

The usual second knee jerk response to a downturn in profits is to re-engineer the firm. Cut less profitable work, streamline our systems, improve client satisfaction, deliver greater value and quality and do all of these things in a short time. With re-engineering there is more hope of improvement than with restructuring. In both cases the firm gets smaller but with re-engineering, there is hope that we will also get better.

Again, re-engineering should be part of a constant strategy in both good and tough times. It is necessary to catch up with the industry. However that still won't make you a leader. Reorganizing and restructuring are ultimately dead ends.

It is now time for re-invention, innovation and a revolution in your strategic thinking. It is not “What is everyone else doing?” but rather, “What can we do to set ourselves apart from the market? How will we become the leaders of our industry within our markets and consequently how will we improve our profitability?”

Painters like Picasso, Pollack, Renoir and Warhol used their imaginations to create distinctive and new styles in art. Each also generated a large number of copy cats who, while some of them may have been successful, the copyists never reached the pinnacles that these great artists achieved through their innovation and imagination. In the legal business, what sets leaders apart from laggards is the ability to be uniquely innovative. And the courage to be first.

The competition in the future will be won by those who create and those who dominate emerging opportunities -- stake out the new spaces.

We are at the beginning of a revolution that goes far beyond, but impacts, the legal industry. There will be an environmental revolution, a genetic revolution, a digital revolution, a communications revolution and an information revolution. Each of these areas will offer great opportunities for those firms who are the first movers, the leaders. The existing industries that we now serve like health care, telecommunications, banking and retailing will all be profoundly changed in the very near future. Are you ready?

In the future, most of the industries that we will be serving will be global in nature while many law firms are presently local, regional or national but very few are global. Again, are you ready?

To compete in the future Managing Partners and Executive Committees will have to understand how competition will be different from today's competition. Those who only think in terms of current clients, current practice areas, current manpower, current technology and current competition will be in for a rude awakening when their partner compensation drops dramatically because they didn't keep up, let alone lead.

Question: What do these entities have in common?

Southwest Airlines
Dell Computers
Baker & McKenzie
Charles Schwab
Wal-Mart

Answer: They are all firms that changed their entire industries by being innovators. They all came up with a new way of doing business in their particular sectors and I am sure that you can think of many other companies that could be included in this list.

Discount airlines took on a whole new meaning when Southwest Airlines developed their system for airline passenger travel with no advance seating, no meals, and adding some fun.

Dell was one of the first to develop customized personal computers that could be ordered over the telephone or through the Internet and delivered within days.

Baker & McKenzie was the first real world wide law firm with offices in almost every major country in the world.

Charles Schwab created the phenomenon of discount brokers by doing away with analysts and commissioned salespeople.

Wal-Mart developed discount department stores that were all located outside of major cities.

Because Edge International has dealt with almost 1,000 law firms all over the world, we are often asked, “Given that it is not our training or natural inclination to move very far from precedent and tradition and because we are much more comfortable being risk identifiers than being risk takers, how do we get our lawyers to start thinking in a more innovative way?”

Well, the question is not a simple one and the answer has many facets, but it is safe to say that for a firm to create an innovative atmosphere, the initiative must start at the top. Most long term thinking in law firms must be done by the Managing Partner and/or the Executive Committee because our partners are too busy dealing with the day to day struggles. To determine whether your firm is already innovative, you might start with a series of questions:

•Does the Executive Committee have a clear and broadly shared vision of where the legal industry will be in five or ten years time?

•In our markets, does our firm regularly define new ways of doing business, developing new capabilities, introducing new practice areas and setting new levels of client satisfaction?

•Is the Executive Committee aware of new and unconventional forms of competition on the horizon?


Are we driving change in our legal market or are we only reacting to our competition? Do we lead or do we follow?

After exploring the vision of the Executive Committee, you may well wish to take the pulse of the partners as to their perception of the firm as innovators. A survey would probably go a long way to telling you what your partners really think. And no, you really don't know what they are thinking, you just think that you do.

A survey might include questions like:

•How prominently should innovation rank in our mission statement?

•In our firm, is innovation widely regarded as a critical competitive advantage?

•What percentage of our partners have had any innovation or entrepreneurial training?

•Is innovation recognized and rewarded in our firm?

•How much of our practice group plans deal with innovation?

•Is it unusual for a particular partner to be significantly and financially rewarded for a particular instance of innovation?

•Does the firm have a formal innovation process? Is innovation encouraged? What does an individual do when they have an innovative idea and does the firm fund the experiment in any way?

If your firm is like most that we see, you will probably discover that everyone thinks that innovation is important, that there is very little of it being done and that there is no generally acknowledged process to follow when you have an innovative idea.

A second step would be to ask a series of questions of your partners that will give you a sense of what your capabilities are and which areas need to be addressed. This should probably be done in a retreat setting with generous amounts of time available for discussion. Some examples follow and each question should be answered in two ways, being a.) the relative importance (“needed to play”, “needed to compete” and “needed to win”) and b.) our current status (“worse than our competition”, “as good as our competition” and “better than our competition”)

•Do we really differentiate ourselves from our competition?

•Do we have strong name recognition?

•Are we good at identifying and establishing new areas of law?

•How good are we at identifying and abandoning marginal practice areas?

•Are we aware of trends in the industries that we serve?

•Are we perceived as providing real value to our clients above and beyond what they would have expected?

•Do we constantly ask clients about their future needs?

•Have we developed target lists of both clients and industries that we would like to serve?

•Are we maximizing technology to deliver our legal services?

•Do we have substantive knowledge that could be packaged for clients?

•Are there ancillary businesses that we could create?

•Do we know what our growth options are and are we aggressively pursuing them?

•Are we developing industry and client groups that cross all practice areas?

With the results of questions like those exampled above in hand, break out into small work groups that will then identify several things that we can do right now to improve and several things that should be longer term goals.

Another workshop concept would be to assign industries to each break out group and ask them to report back to the combined group what they would do to be innovators in that industry. An example might be the hotel industry and an innovation might be to rent rooms on a 24 hour basis (i.e. check out time is 24 hours after check in, not arbitrarily noon of the following day - much like the car rental industry).

The second break out session would be to have the same groups then identify actions they can take to get to know these industries better, discuss how to communicate their willingness to be innovators to that industry and to create a target list of potential clients and assign marketing to those clients to individual partners.

In both of these cases, the results should be goals that require the individuals, the group and the firm to “stretch”. A firm's innovation strategy should be an ambition that stretches far beyond the normal or past capabilities of the firm.

A goal for firms that choose to become innovators should be the creation of research and development as a part of the firm culture which identifies who will do what research and how the firm will support them. Some firms have created an “innovation fund” that sets aside a portion of profits to be used solely for continued innovation research and trials. Most industries spend 5 to 10 percent of their gross revenues on research and development and most law firms spend nothing.

Becoming an innovation firm is not easy. It must be done in a step by step basis and the key to moving ahead is to just get started. As our friend David Maister is fond of saying, “Don't look at the entire diet process because it is too daunting. Pick a small first step, complete that and then pick a second step and so on.”

And yes, you will have partners who will be enemies of innovation for many diverse reasons. Some of them are empire builders and see this as a threat to their control, others have narrow minds and a real fear of change and still others will want to concentrate on income before investment (let's just make as much money now with what we know rather than invest in creating an even more profitable firm in the future).

We all know that the only constant in the legal industry today is change. Firms that don't recognize that are doomed, firms that change with the times will survive and firms that innovate will prosper. What kind of firm do you want to be?

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