Legal Technology Journal

Are specialist legal IT systems really necessary for law firms, or can they get what they need from the office packages they already use? Although this article was written before ‘The Future of Legal Practice’ (the LSSA Conference 2006), research carried out for that conference emphasised several themes which have echoed throughout recent years:

There is an overwhelming need to make more of the technology that is already available…’

‘Overall, there is plenty of technology available – it is just not being used effectively…’

‘Very small practices need to consolidate or collaborate to be assured of a future.’

‘[U]se the technology tools already available to improve communications and cut costs.’1

The context in which we now find ourselves, ie post-Clementi report and subsequent government white paper,2 would suggest that these themes are now more pressing than ever. Their reiteration, combined with the following recent query made of law firms, created the impetus for the investigation of this article.

That query took the form of a survey question posed in a recent edition of the Legal Technology Insider:

‘… if Microsoft was to move into the small business systems market and offer applications such as accounts, CRM and document management that were suitable for law firms, would you (a) still continue buying specialist legal systems or (b) switch to the Microsoft products?’3

To me, the question suggested that specialist legal systems might not really be essential for certain functions in certain firms, it being possible for ‘generic’ software from Microsoft or others to perform them.

Conflating the essence of the LSSA researchers’ themes and the incidental conjecture that the Insider’s question sparked in me produced the inquiry that is this article, ie: how can firms get the most from IT, particularly the smaller ones, which receive little attention in this regard? The intention is to eschew dedicated legal software applications, on which much information is already available, and instead to look at what might be termed ‘general purpose’ or ‘generic’ IT. By this I do not mean that a particular piece of IT might not be performing a specific business function, but rather that it is not IT designed specifically for the legal sector. Particular consideration will be given to Microsoft, as it is that company’s offerings with which most firms are familiar.

The justification, if one is needed, for restricting the scope of investigation as noted is simple: cost. In the post-Clementi legal services world the government is now shaping, most law firms will need to be even more efficient than before. (See above-noted comment on the possible fate of the smaller ones.) Technology has been repeatedly advocated as the means to achieve this streamlining. However, the following has also been observed:

‘… there is certainly no shortage of good quality legal software available out there, providing you can afford it – unfortunately the pressures and precariousness of modern legal practice mean most small practitioners just cannot afford it …’4

Windows-based products

Accounts, PMS, CRM

It has been evident for a while that simple book-balancing and other basic accounting operations can be adequately undertaken using such tools as Microsoft’s Excel and Access, or general purpose accounts software from the likes of Sage.5

There are now examples of more sophisticated systems for managing the finances of a business, practice management systems (PMS), being built using a relatively new offering in the area of financial management systems, Microsoft’s Great Plains. Two firms that are using it are Battens,6 and Mourant du Feu & Jeune.7

Microsoft’s recent activities concerning Great Plains provide an example of its desire to raise its profile in the small business market. It has rebranded Great Plains, with other programs including Microsoft CRM (customer relationship management), under the ‘Dynamics’ title, and is aiming them specifically at the SME market.8 Such a strategy is good news for the smaller firm wishing to enhance its financial management beyond basic accounting into such areas as performance monitoring.

As regards the CRM part of the Dynamics portfolio, its potential in the legal sector has already been appreciated by legal software developers, if not yet the firms themselves, as they start to build their own products on top of and around Dynamics.9

Business intelligence (BI)

Until lately business intelligence (BI),10 if considered at all, was regarded by most companies as a peripheral matter. However, the increasing regulatory compliance pressures of recent years have required companies to know exactly what is happening throughout their organisations. The collateral benefit of putting in place such previously unnecessary software is that once there it can provide previously hidden insights into the business and thereby genuinely help improve performance.11

Most BI products include scorecards for measuring performance against key targets; analytic tools to enable managers to drill into problem areas; and reporting tools to enable the dissemination of vital statistics.12 To this end Microsoft offers Office Business Scorecard Manager 2005.13

Analyst Ovum makes two observations, which have obvious relevance for law firms, on Microsoft’s BI moves. One is that integration with Microsoft Office systems could prove a key differentiator when compared with products from traditional BI vendors such as Cognos, Hyperion Solutions and Business Objects; the other is simply that what Microsoft offers is cheaper that the tools of the BI specialists.14 Already, at least one law firm, Deacons in Australia, seems to be reaping the benefits of deploying Microsoft’s BI product.15 Some of these are as follows.

For the firm, scorecards can reveal whether a lawyer is on or off target for the hours worked, per day, week or month. They can reveal the trend of billable hours, for example on a monthly basis, to show whether those hours are on target to meet the firm’s business objectives and the client’s expectations regarding billing. They might also be used to view the revenue received and collected.

The potential benefits for a client are that, by means of an extranet/portal, they can see relevant financial data pertaining to their matter, for example the percentage of hours individual lawyers have put into the matter and their charging rates.

This transparency makes for a good client/customer relationship. Clients can see whether what they were quoted is going to be achieved, and if not the reasons can be traced and discussed. In this way there are no unpleasant surprises at the end of a matter, with the client being billed more than they had been quoted.

Managing documents

Many lawyers spend the bulk of their working hours dealing with documents that are increasingly, and often only, in electronic form. As the volume of potentially relevant material continues to spiral upwards, the task of actually retrieving the relevant information from a mass of unstructured data becomes ever more onerous.

In this regard Microsoft’s latest version of its database management product, SQL Server 2005, sounds promising. It is claimed that:

‘Microsoft SQL Server 2005 introduces a wealth of new data mining features… [which give] businesses the power to transform the volumes of unstructured data that they acquire into structured information that can be analysed.’16

If this potential can be realised it could be a vital tool in the document management struggle.

However, there is now being advanced a fundamentally different approach to coping with unstructured data. Rather than attempting to artificially impose structure through technology, technology is being used to overcome the obstacle that the lack of structure seems to present; specifically, search technology. Some may regard this idea as fanciful, but the potential for search tools to remove the need for costly integration projects to create unified, uniform data stores continues to gain credibility.17

Free and cheap desktop and enterprise search products abound, from the likes of Google, Yahoo! and Copernic, not to mention Microsoft. These companies are continually expanding the types of material in which they can search, and there is much evidence from the US that the cheap, general-purpose search products from the web search companies and others are satisfying the retrieval needs of a great many firms.18

Microsoft SharePoint offers another approach to document management, as well as offering the potential for other functions that firms have, over recent years, been urged to embrace. SharePoint can index and search approximately 20 million documents, both local and external, in many data formats, eg on file servers, e-mail repositories, databases and websites. Its tight integration with the Microsoft Office suite will enhance its appeal to those, like law firms, already heavily using Microsoft products. For example, searching a SharePoint-based document library is possible directly from Word 2003.19

Moreover, in addition to its indexing and searching capabilities, SharePoint’s native taxonomy support means that some firms are using it as the basis for an implementation of what is often regarded as the logical next step from document management, ie knowledge management (KM).20

Finally (on SharePoint and document management), tools and add-ons for SharePoint are continually being released. Of particular note, given the stream of stories over the past year about the near impossible task for companies of complying with increasingly onerous regulations on data retention, is the recent release of freely downloadable tools for this purpose.21

External collaboration – portals and extranets

Document management and KM might be perceived primarily as internal operations. However, as was implicitly noted above in the context of BI, to remain competitive it will become increasingly necessary to make material in internal systems (restrictively) available to third parties.

SharePoint enables users to create, manage and build their own collaborative workspaces and make them available throughout and beyond the organisation. Small firms could never have afforded the vast sums spent by the City firms over the past five years or so in developing, in conjunction with legal software houses, bespoke portal and virtual dealroom-type facilities. Now, with SharePoint, they have an affordable, off-the-shelf product to allow them to collaborate with other law firms, government bodies, estate agents and other third parties, as well as to provide their clients with the on-line service they are increasingly expecting.

Alternative approaches to IT – web services

While using Microsoft applications, where possible, in preference to specialised legal software might provide savings, the fact is that Microsoft products, installed throughout on desktops, laptops and servers, can themselves be an onerous burden, particularly for smaller firms. This is so for obvious reasons: the cost of the Microsoft licences; the cost of purchasing, maintaining, running, etc the hardware; the cost of IT expertise (whether in-house staff or contracted); and the upgrade cycle. It is probably the case that for many firms a certain amount of Microsoft software on some machines is unavoidable, but it may not be necessary for every user or every function.

An alternative to running your own machines and comprehensively installing, licensing and maintaining software on them could be to use on-line programs hosted by a ‘service provider’. This approach allows a firm to avoid the cost of, and to benefit from the provider’s investment in, hardware, infrastructure, security, backup, IT staff/expertise, etc. It is described using such terms as ‘software as a service’, ‘application service provider’ (ASP) and, particularly nowadays, ‘web services’.

However, there are those who want to remain in complete control of the applications they use. For such firms, the cost-effective alternative to Microsoft installations, which companies large and small, and governments local and national, are now using, is open source software (OSS). It is arguably more secure, robust, efficient and less demanding of hardware than MS software, not to mention cheaper. It is looked at later.

A number of years ago the ‘web services’ approach engendered great excitement. It was envisaged as an ideal way for businesses to have effective IT, while avoiding many of its capital and recurrent costs. However, with a few exceptions, it failed to fulfil its promise. There is now renewed interest and faith in the model.22

Recent initiatives in the legal software world include Osprey.TM case and practice management system, delivered as a hosted service and, in the case of the small office edition at least, available on a monthly subscription basis. Osprey’s sales director, Martin Siddle, believes that, as it avoids the need for servers, database licences and high-specification PCs (unlike competitor systems), it will save firms up to 35% on their annual IT costs.23

The obvious question to be answered is, of course, why should this ‘hosted’ or ‘web’ services approach be more likely to succeed now than it did in the past?

One of the major reasons suggested for why this model should be more successful this time around is the widespread availability of reliable, cheap broadband. Another is that the technologies which constitute the incipient ‘Web 2.0’24 make ‘applications available over the web in a form that closely resembles traditional software installed on a hard drive’.25 Couple this with the advances that software producers have made in designing products to efficiently and effectively work over the Internet, and one can see why this model might be more successful now. These are the technical reasons.

However there are other, arguably more compelling reasons, and these are of a business and competition, rather than technical nature, ie factors which explain why big players, like Microsoft and Google, would want to make IT services available over the Internet.

Google wants to expand its operations beyond web search, which it currently dominates. It understands the web (arguably better than any other company) and therefore providing more services over it would seem the logical path for it in trying to increase its revenue. If it can do this employing a business model that undermines the company for which it is fast becoming the main rival, Microsoft, all the better.

There are two mechanisms for generating income employed by providers of web services: those that are funded by advertising, and thus free to use, and those paid for through subscriptions. Google’s present activities, covering its burgeoning collection of free tools, use the first mechanism, and this approach is regarded by many as indicative of what is to come:

‘Google’s programs are free, funded through advertising and syndication. This is a prescient move. I foresee a world in which even enterprise applications like financials, ERP (enterprise resource planning), and supply chain software will be advertising-funded.’ George Colony, CEO of Forrester Research.26

This could ‘directly attack Microsoft’s core software business’.27

Microsoft is arguably the last company that would wish to see alternative models arise for using, and paying for, business software, given the huge income it generates from licensing its operating systems and Office (productivity) suites. Microsoft’s Office products generate one-quarter of its revenue.28 But now it needs to defend itself against new types of rival. Therefore, even it is exploring and promoting the new model.

Two main web services are being developed and heavily hyped by Microsoft at present: Windows Live and Office Live (the former is aimed more at consumers and the latter at small businesses).29 Both are currently in the beta stage of development, ie not commercially available. Both will have basic, free services driven by advertising revenue, as well as subscription-based services.30

There has been much criticism of what these services currently entail, which is not what their names imply:

‘… Office Live is not Word for the Web or E-Excel, but rather a set of business templates.’31

‘… Office Live will be a set of free services for small businesses, such as Web hosting, e-mail, and collaboration tools. And Windows Live is in essence a personalised home page, much like Yahoo! and Google now offer.’32

There has also been comment on whether these services, at least in the incarnation currently being promised, are really sufficient to counteract potential competitors in this area:

‘By themselves, Windows Live and Office Live aren’t enough to fend off Google… if Google can really find a way to offer Open Office for free over the Web, Microsoft will have to come up with something else to fight the search giant.’33

This is a valid point, but Microsoft is obviously not going to destabilise its Office ‘cash cow’ more than is necessary. However, if competing services do start to eat into its market it will no doubt develop new offerings and enhance its existing ones in response.

Already there is evidence of how Microsoft might enhance the appeal of its Live service (and no doubt tighten its grip on its customers) should competition make it necessary to do so. For example, on Microsoft’s Office Live beta site is the promise (maybe with lawyers in mind?) of document management tools, as well as other ‘business management applications’.34

There are other tantalising musings on what it might do for business:

‘The software integrates collaborative services, such as document sharing, with CRM and other business-analysis services for small businesses. With its CRM component, Office Live potentially will compete with the hosted CRM service provided by Salesforce.com Inc.’35

However, as noted, Office Live is currently a beta project, and even once released will probably develop over time in response to customers’ demands and competitive pressures.

In the meantime there are already start-ups offering services that Office Live is unlikely to provide, at least in its early incarnation, which price-conscious firms wishing to avoid heavy IT costs and investments might wish to investigate. Specifically, Office suite applications over the web, such as word processor and spreadsheet programs, eg gOFFICE, Writely, NumSum.36 The question is whether these will start to be used by some firms in preference to the MS Office applications. This may sound unlikely to some readers, but in response two points can be made.

First, even if such on-line services do not provide as much as a traditional desktop product installed from a CD, they might offer enough, for some, if not all, staff. It is well known that the vast majority of Microsoft Office’s users use only a fraction of its features.

Secondly, at least one of the above noted services, namely Writely, is already being advocated as an ideal collaboration tool for lawyers by a leading US legal technology commentator:

‘Web 2.0 applications like Writely let you easily collaborate on documents without the need to install hardware or software at your firm. Think of them as free (or low-cost) lightweight ASP alternatives for specific purposes.’37

Microsoft’s ‘Live’ initiative has, unsurprisingly, been met with negative commentary, cynical attitudes and general scepticism. However, one should note the following. Allison Watson, vice president of Microsoft’s worldwide partner and small business group believes that ‘… Office Live will jump-start business for a variety of solution providers targeting very small businesses’. She claims that it will, ‘for the first time, widely open up a segment of the market that has been underserved by technology… about 5.2 million businesses that are currently PC-based, not server-based’.38 Although one might expect such talk from Microsoft, it is undoubtedly in a strong position to ‘encourage’ its partners to develop additional, complementary, quality, affordable IT services and products. Therefore small businesses/firms might really benefit from the ‘Live’ push.

Moreover, one should consider Watson’s forecasts in the context of the current state of IT in small firms, remembering that they make up the bulk of firms in the UK.39 Specifically, the fact that small firms already struggle to manage and effectively use IT,40 that no one has yet come up with a practical solution to their problems (that’s not to say that there has not been plenty of advice) and that they will need to achieve greater efficiency through IT to survive in the post-Clementi world. So let us hope that she will be proved right.

Finally, one should not underplay what Office Live will include from the outset. As has been repeatedly emphasised throughout this article, the ability to work collaboratively on-line, with outsiders, is going to become increasingly important, particularly for smaller firms, and ‘Office Live will offer free online collaboration tools à la Groove Networks’.41 This is important for two reasons. First, because the Groove Networks peer-to-peer collaboration system is recognised as a quality product – it was bought by Microsoft last year, and the man who created it, Ray Ozzie, is now one of the company’s leading figures. Secondly, because the potential of Groove for lawyers has been recognised for some time, for example as an alternative to conventional virtual dealrooms, or for use in e-conveyancing.42 These two factors mean that the collaboration technology within Office Live should both be of high quality and of real use to lawyers.

No one yet knows where Office Live and other (competing) web services will lead, how useful and convenient they will be for businesses, or for what size of firm they will prove more expedient, for all or some purposes, than running software in-house. But given all the elements just mentioned, it would be wise for small firms to keep abreast of developments in web services. They might provide some amelioration for the deficiency of small-firm IT, which many have observed but none has yet addressed.

Alternative approaches to IT – OSS

The Apache web server, the Linux operating system, the Firefox web browser, not to mention the Open Office and Star Office ‘productivity’ suites, are all proven OSS alternatives to Microsoft products. They are supported, and in some cases further developed by, IT giants (and Microsoft competitors) such as IBM, Sun and Novell. They are no longer just for ‘geeks’ but are used alongside and in place of Microsoft programs, in the public and private sectors, and by consumers.

Critics of OSS have, in the past, noted the lack of application programs written for open source operating systems, particularly Linux, which is by far the most popular and best known. However, that argument holds little weight now: OSS versions of most of the standard desktop tools that you would expect on a corporate PC are now available, as well as server programs for the sort of corporate functions discussed earlier; functions which are now regarded as being as important for law firms as for any other business. Moreover many of these programs run on the Windows operating system as well as on open source operating systems.

Proponents of OSS extol its greater innate security when compared to Microsoft software. Microsoft counters that the only reason that its security is compromised more than OSS’s is because its popularity makes it far more likely to be targeted for attack. This security debate and that over the total cost of ‘ownership’ over the lifetime of software is incessant, with each side always able to find an argument, report or interpretation of the data/‘facts’ to support its case.

Operating systems (Linux) and office suites

Most of the debate on the use of OSS in businesses focuses on such matters as the (debated) cheapness of a copy of Linux relative to Windows needing to be weighed against the (debated) cost of the extra technical expertise needed to install and maintain it, or on the compatibility of Star Office or Open Office with Microsoft Office.

These are valid issues and illustrations of the fact that there is no hard and fast rule for deciding whether, or how much, OSS to install in a firm. Each firm has to consider the competing Windows v OSS arguments in the light of its own particular circumstances. However, operating systems and office suites are just a part of the OSS picture that firms should be considering. I will discuss one other.

Wikis – collaboration, document management and KM

The legal world today is one in which lawyers have to work electronically with others, both within and outside the firm.

At present, the product receiving most attention in the legal IT world, for both internal and external collaboration, is Microsoft’s SharePoint. However, more and more businesses, and some legal IT pundits, are realising the potential (as an alternative to Microsoft collaborative working technologies) of the ‘wiki’,43 an open source, on-line collaboration tool which has been around for a decade. Wikis allow non-technical users to quickly and easily (without special software) create and edit content on simple web pages from any browser. The archetype to data is Wikipedia, a collaboratively written on-line encyclopaedia.44

Wikis provide an approach to both document management and knowledge sharing:

‘… wikis continue to be taken up by enterprises for a variety of purposes, including document management, project management and as an enterprise knowledge base, working best when recording ephemeral knowledge.’45

That last phrase is, of course, significant, as it is exactly that kind of know-how that proves so elusive for current attempts at knowledge capture and management.

Wikis include particular features that law firms would expect of document collaboration tools: access control lists (to determine who can access what and with what privileges); revision control (to allow access to any previous version of each page), roll-back to older versions of documents; and the ability to track changes. They would thus seem an ideal tool that firms small and large could use for collaborative working.

However, if the open source path does not appeal to you, but the basic idea of what wikis can offer does, you can be sure that Microsoft has already anticipated your sentiment (recognising a good idea when it sees one) and that it will soon provide its own version. ‘Research group Gartner observes… that the commercialisation of wiki products has now begun,’ and it predicts that ‘… by early 2006, one-third of collaboration tools vendors, including IBM and Microsoft, will have begun to incorporate wiki-like functions into existing content management systems and workgroup software.’46 So we may soon have a wiki-like tool within a ‘comfortable’ Microsoft interface but possibly at the expense of the ‘affordability’ aspect.

Conclusions

This article has explored the theme of making the most of IT (which the research cited at the start has observed is not presently happening, even though the need for it is overwhelming) by examining the possible ways in which standard (as in non-legal-specific) IT can serve firms.

Two of the approaches examined, that of a firm using generic software on its Windows-based systems and the OSS route, will require a degree of IT input to implement. This requirement in itself means that, for the very smallest firms, these approaches are probably not viable. Such firms simply do not have the resources (time, money, inclination) to provide that IT input. This is an aspect of the small-firm IT crisis alluded to above.

Thus one must conclude that maximising their use of web services is what holds the greatest prospect of survival for many of the smallest practices. In this regard, one must hope that competition between Microsoft, Google and others really does intensify so that they drive each other to offer more, better and cheaper services. Such sustained competition will hopefully also ensure that Microsoft’s ‘Live’ initiative does not prove to be just a short-lived token gesture to web services which it abandons in favour of the more lucrative model they jeopardise.

Currently, its commitment in this sphere seems genuine, spurred on no doubt by the threat it and others perceive in Google, by which it recently suffered a major defeat (over AOL) and which some now view as having the potential to replace Microsoft as the dominant IT company.47 Consequently, we are now starting to see the rhetoric of Microsoft’s conversion to web services take substantive form with the creation of two new research labs, ‘Live Labs’ and ‘Search Labs’, both of which will focus on services and products.48

So the prospect for web services seems good and therefore, particularly if you are a small firm, it is worth starting to investigate now what they might do for your office. 

Alastair Morrison works in IT at Strathclyde University, Glasgow. In 2002 he was awarded the University’s LLM in Information Technology & Telecommunications Law.