by Neil Cameron of the Neil Cameron Consulting Group

Well the ABS race is on. In just a fortnight we have had Silverbeck Rymer and Russell Jones & Walker start on the road to become ABSs. Neither is doing it for themselves; they are both subject to takeover - one domestic, and one foreign. Silverbeck Rymer is being taken over by Quindell Portfolio in an £20m example or vertical market integration, and RJW by Australian market pioneers Slater & Gordon in a horizontal integration move worth £54m.

In The Times newspaper Tina Williams of Fox Williams is quoted as saying “This deal is a real wake-up call to law firms that expected to have years to adapt to a changing market”. I could not agree more.

Over the past few years firms UK general have had one of three reactions to the Legal Services Act and the creation of the ABS:
• they have ignored the whole phenomenon hoping it might go away;
• they have half-heartedly flirted with the concept;
• they have determinedly examined the options, and readied themselves for a move – like Irwin Mitchell and Duncan Lewis.

But there are many routes to forming an ABS; one is by an established law firm on its own initiative, one is a new start-up with new capital, and one is the investment of external capital in an established law firm. For a more detailed examination of the consequences of these options see our ‘Flirting with Floating’ article.

Quietly, in the background capital-rich organisations have been circling around the market like lions drawn to fresh young meat. Some in a blaze of self-publicity – such as Lyceum Capital – and others more stealthily like Investec. Other established enterprises that believe they can expand into this market have also been examining their options – like the Co-Op.

No-one could have predicted which way this was going to pan out, or predict accurately what will happen next – the law of unintended consequences makes sure of that. But now all bets are off, and I think we are going to be amazed at how quickly things move – especially in the high-volume consumer law areas such as personal injury and similar work.

Like all the girls at the teen-age dance, even if you don’t really want to dance neither do you want to be the last left standing at the end of the evening with the other no-hopers with no-one to partner up with. Make no mistake, Slater & Gordon is mopping up the Australian market for their target work – buying up firms and building a brand that attracts potential clients at the expense of other competitors. That is exactly what they want to do here – and who is going to stop them?

Any law firm reliant upon any degree of such business must now determine what it will do to counter the threat. They must either:

• launch a highly attractive and competitive service to the new sleek enterprises – which will require a heavy investment in marketing and systems. Few firms can afford to do this;

• undertake their own IPO and hope that the market will find them attractive enough, and then use the capital raised to invest in marketing and systems. This will take time;

• throw themselves under the feet of one of the new entrants – the estimated RJW partner bung of £2m will be attractive here, although that sum per partner will continually reduce as less attractive firms come forward desperately competing for involvement;

• find a new business partner with which to form an ABS – again, this will end up being a cut-throat beauty parade – and quicker than any of us think;

• wind up the firm and retire.

Best of luck guys…

Over here in New York, one of the technology trends that can no longer be ignored is the rise and rise of the Apple platform. In one of the conference sessions at this year's LegalTech, the sentiment from the floor was that the Apple iPad was now the device of choice for attorneys of all ages. Elsewhere, we could see the growing interest in the iPhone as an alternative to the digital recorder. And we encountered ediscovery vendors who are now developing a niche line of business dealing with data collections from Apple Macs.

Echoing these sentiments, Forrester Research is now predicting that "Windows dominance is at an end." To back up this prediction, Forrester has released figures showing that the number of companies in North America and Europe issuing Apple Macs running OSX increased from 30% in 2009 to 46% in 2011. Other key facts include...

* in a survey of 10,000 employees worldwide, 8% were using Macs, 9% were using iPads and 11% were using iPhones

* 30% of businesses support Macs, 27% support iPads and 37% support iPhones

* Apple users are likely to be younger or higher up the corporate ladder than Windows users: 41% of Apple users are directors, 43% earn more than $150,000 a year and 28% were between 18 and 24.

Peppermint Technology has just announced the appointment of David Thorpe as Director of Business Development, he starts work there on Monday.

Arlene Adams, Peppermint Technology CEO, comments: "David brings a wealth of market experience and knowledge to Peppermint. His appointment reflects the influx of demand we are seeing for the Peppermint Platform. A highly experienced player in the UK Legal market, David was quick to recognise the unique value of the Peppermint Platform that brings together applications, content, collaborative working and transactions in one single system."

Thorpe comments "I have spent the last 30 years helping law firms become more efficient. Arguably, law firms today face a bigger challenge now than at any time over that 30 year period: There is a global recession; there is more competition for business; there are ABSs entering the market and more and more clients are demanding Alternative Fee Arrangements (AFAs) and other billing variants from their law firms.

“Traditional legal software products are designed to focus on the back office. While this is important and is something that the Peppermint Platform delivers very well, the real value of Peppermint is how it enables legal providers to transform the client experience.  The Platform recognises the power of data and connects together data, applications, people and process in one system centred round a single client profile. The result is transformational. By using the Platform legal providers can start to offer clients an ‘Amazon-like’ experience in legal services.  

"This is the first platform I've ever seen with this focus and it's revelatory. Of course efficiency and cost cutting is important but that will inevitably lead to a dead end; someone somewhere will always find a way to provide the work at a lower cost. By adding value to the experience of the client, law firms using the Peppermint Platform have a USP which doesn't depend on forever finding cheaper delivery options. It's been a long time since I was as excited by a software proposition as I am about Peppermint. I am really looking forward to taking the message to the market and working with the outstanding team at Peppermint."

Comment: Thorpe told us a few minutes ago that the Peppermint Platform was the most exciting legal IT system he had seen since Elite in 1993. He added that people forget how back then Elite – now the firmly entrenched market leader – was also seen as a novelty and not regarded as serious competition to the likes of the Miles 33, John Hemmings and Digital Kienzle (later Axxia) systems that then dominated the larger firms market.

Adams added that David's experience in the larger firms sector was also an attractive proposition for Peppermint as they were now attracting the interest of 500+ user firms.

So, Thorpe has joined Peppermint. All those vendors who have been trying to ignore the potential threat represented by Peppermint may need to reassess their ideas now.

• Arlene Adams will be speaking at the LawTech Futures event in London in March www.lawtechfutures.com

The January (issue #249) of the Legal Technology Insider newsletter has gone out now – print copies should be arriving in the post while the digital edition has just been sent using our new NewZapp edistribution service.

Top stories include...
• IRIS Legal to focus on three inhouse centres of excellence
• Weightmans 'exploring' LexisNexis ERP offering
• BLM iManage order upsets Sharepoint fans
• Scottish & English Law Societies offer guidance on social media & cloud technology
• Total buys K-Cloud
• There's a new chef in the Workshare kitchen who can cook !

Our next issue is out on 23rd February (probably!)

Here's an interesting case study featuring Michael Priestley is Head of Building Services at the London law firm Withers LLP in which he explains how the firm has saved £570,000 by using the CAFM Explorer system from facilities management specialists CAFM.

He identifies three main savings...

 1. By tracking our costs -v- budget in parallel to our finance team we saved over £200,000 ($350,000).
 
2. By operating a streamlined cost effective management team, some by 40% below benchmarked levels we saved £250,000 ($400,000). 
 
3. By closely tracking our building management and contractor’s performance we were able to renegotiate £120,000 ($200,000) of savings from their charges.
 
And adds "Year on year we achieve similar reductions in our fiscal spend and this year has been no exception with over 1/2 million pounds (just under $1 million dollars) savings for a comparable minor investment."

You can read the full case study here http://www.cafmexplorer.com/withers-llp/ and we have a video link here...

Time for another Asia Pacific news round-up – and don't forget that late February we'll be publishing a new PDF newsletter Asia Pacific Legal Technology Insider (to register for your free copy just email news@legaltechnology.com and put APAC Subscribe in the subject line). Advertising enquiries should be sent to our business development manager Philip Woolley at philip.woolley@innovatorsinlaw.com And now on with the news...

• Freehills has awarded Phoenix Business Solutions a contract to support over 1500 users of Autonomy iManage WorkSite. This project forms part of a comprehensive partnership between Freehills and Phoenix, a leading global provider of software solutions and IT & business consultancy for professional service firms. Phoenix have been working extensively with Freehills to advise the leading law firm in emerging technologies such as: mobile, time capture/recording, document assembly and business process automation amongst others. Freehills are currently in the process of working with Phoenix to introduce some of these emerging technologies into the firm.

• Iridium Technology, a consulting firm that is 100% focused on business intelligence (BI) for law firms – is pleased to announce that they have opened an office in the Albany suburb of Auckland, New Zealand. This office will be the center of Iridium's global consulting and client support operations.
 
“As our client base and staff has expanded, we need to expand our infrastructure,” said Tom Jones, President of Iridium Technology. “The new Auckland office will provide us with a centralized location as we continue to grow our BI consulting staff, as well as a solid infrastructure to support our rapidly expanding client base. The office is also well positioned to support the increasing number of firms in Australia and New Zealand that are looking to Iridium Technology to handle their mission-critical BI implementations.
 
"Opening the New Zealand office is a logical extension of our goal to provide world-class implementations of BI solutions for law firms in all regions. By consolidating our consulting resources in one facility we will get increased synergy: more great ideas, more powerful and intuitive dashboards, and more SSRS content built on top of the ADERANT ClearView Performance and Practice products."
www.iridium-technology.com

• BigHand has announced South Australian law firm Bartel & Hall has replaced its legacy dictation system with BigHand’s latest v4.2 Voice Productivity technology for iPhone and Android. Kym Bartel, partner at Bartel & Hall, assessed a variety of systems in the firm’s efforts to replace its aging tape system, which it had used since it was founded in 1979. BigHand was the winner following a product comparison and also was recommended by another similar firm in the region.

Said Bartel "Using BigHand is far more efficient than using tapes, with much greater control and accuracy. Work from our three branch offices is sent back to our main office via the Smartphones. No time is wasted physically coming back to the office with tapes. This enables our lawyers to record and capture more chargeable time than they could ever have done with tapes. We opted for Smartphones as a dictation device rather than new digital recorders as the option to work anytime, anywhere, and have dictations delivered immediately to support staff was very attractive to our lawyers, who now say they can’t live without this technology. The win-win is that it is also more cost effective, as the firm is not paying for multiple devices."

by Tom O’Connor and Gavin W Manes of Avansic

Introduction
In 2011, a strong movement established momentum and gave rise to a great deal of discussion about altering the Federal Rules on e-discovery to directly address preservation. The debate on the topic has been lively and heated at times. The strongest proponents for the changes have been corporate counsels, best exemplified by Thomas Hill, associate general counsel at General Electric, who testified before Congress last fall that the current Federal Rules of Civil Procedure (FRCP) result in companies wasting billions of dollars on unnecessary document preservation and production. He indicated that part of the problem is that companies must preserve documents before a lawsuit is filed, therefore they often preserve even when no lawsuit is ever filed. Hill cited occasions where GE spent more in preservation than the money at stake in the litigation.

The proposed changes are still being reviewed by the Committee on Rules and Practice and Procedure of the Judicial Conference of the United States and will likely be a hot issue at LegalTech in New York next week. But do the Federal Rules really need to change regarding preservation? We feel strongly that we do not need to change the rules, and so do other several other prominent observers (see Opinions from the Field below).

The crux of the preservation problem does not lie in the inadequacy of the FRCP guidelines but rather in corporations being unprepared for litigation, particularly for the rigors of e-discovery. Fixing the major issues in data preservation will require true preparedness, with companies being proactive and forward-thinking in storing their data with an eye towards future e-discovery needs. Although rule changes might provide further impetus or incentive for corporations to move in a proactive direction, what is really needed is a fundamental attitude shift in the legal and corporate worldview to adhere to the rules as they are today.
 
Refuting the Three Proposed Approaches To the Rule Change
A set of three proposed alternative changes to the rules was circulated at several Rules Advisory Committee and Subcommittee meetings at Duke University in Spring 2011 and Dallas in September 2011. The Category 1 approach provides a higher degree of specificity including a fairly detailed explanation of the duty to preserve evidence (Rule 26.1(a)) and details possible triggers (26.1(b)), the scope of the duty to preserve (26.1(c)), and sanctions (Rule 37). Category 2 proposes a more general preservation rule, while Category 3 only addresses sanctions as a tool for influencing behavior. The three categories are discussed in more detail below.

Category 1: Specific Rule
This draft includes many different examples of how difficult it is to draft a single rule to cover all the possible problems. For example, this draft contains a long list of trigger events for preservation as well as a list of types of ESI that would be “presumptively excluded” from the preservation duty, including deleted data residing on hard drives and physically damaged media.

Why Category 1 won’t work: The problem with this category is that IT would be presented with an enormous checklist of possible options to wade through for each case that came across their desk. A significant knowledge gap would continue to exist between IT and legal as to whether trigger events have happened, so preservation still may not be performed in a timely and comprehensive manner.  

Category 2: General Rule
The Category 2 proposal also suggests lists for alternative approaches but is less detailed. For example, one proposal for preservation occurs when a “reasonable person” would expect to be a party to an action. However, since no definition of reasonableness is provided, the onus would be on IT to define and defend what is reasonable.

Why Category 2 won’t work: IT is not counsel – they are not generally in a position to know what reasonable is, or what a judge will think is reasonable.  

Category 3: Sanctions-Based Rule
The Category 3 approach differs from the first two in that it focuses only on sanctions and would act like more of a “back-end” rule. In other words, the rule would not contain any specific directives about preservation, rather it would provide direction in the areas of when and how sanctions might be applied. Absent special circumstances, the court would be prohibited from imposing any of the sanctions listed in Rule 37(b)(2) or from giving an adverse-inference instruction. This option would seem to shift the responsibility more from IT to the Court, although it would still require IT to defend their actions.

Why Category 3 won’t work: It focuses only on sanctions and not solutions. Providing a roadmap for preservation is very important to moving forward, and merely indicating the punishment for failure to follow rules does not accomplish that goal. For a more detailed discussion of these three categories, see 1st September 2011 post Jumping the Gun? Three Approaches to Drafting New Federal Discovery Rules by Matt Nelson on the E-Discovery 2.0 blog. http://www.clearwellsystems.com/e-discovery-blog/2011/09/01/jumping-the-gun-three-approaches-to-drafting-new-federal-discovery-rules/

Reviewing Opinions from the Leaders in the Field
Other eDiscovery experts agree that the rules do not need to be changed. Former U.S. Magistrate Judge Ron Hedges, who is now an eDiscovery special master and Georgetown Law Center adjunct professor, has been very vocal with the opinion that the rules have not been in effect long enough to measure their true impact. And noted e-discovery commentator Ralph Losey feels that the answer lies in more education about e-discovery, a view shared by attorney and consultant Michael Arkfeld, who maintains that 95% of all attorneys don’t know enough about what to do with e-discovery.

Corporate Preparedness
So if rule changes aren’t necessary or if new rules would not lower the cost of e-discovery, then how can costs be reduced? Corporations being proactive and affirmative in preparing for e-discovery may well be the answer.

There are a number of components to preparedness, but it is critical to understand that every single decision made by IT has an impact on the cost of e-discovery. For example, if an IT administrator only allows employees to store their email on the main server instead of in .pst files on their local computers, then only the server’s stored data would be required during e-discovery. This not only dramatically reduces the number of data stores that will need to be preserved, collected and processed; it also reduces the potential for spoliation and collecting duplicate documents.

Other IT decisions that affect e-discovery include encryption settings, asset tracking, disposition of old computers, and backup procedures and formats. Asset tracking is one of the easiest ways to reduce litigation costs (and help with general business practice).  Often, many hours are spent trying to track down the computers of target custodians. Knowing where that information resides can save time and corporate productivity. Backup procedures are another area where traditional IT “best practices” may actually hurt during litigation: keeping years of electronic information may mean having to go back through all of that data. Of course, this is a sensitive issue that requires input from legal, IT, and management since there may be litigation holds to adhere to, as well as solid business reasons to keep such information.

Another large step towards reducing litigation’s impact is to prevent the creation of large data sets in the first place. It is difficult to imagine the amount of data that any given user has created since digital waste is not as tangible as paper. Prevention can be accomplished by cataloging current documents and their storage locations, investigating and revising overbroad backup procedures, and identifying the types of electronic information that exist (i.e., emails, Word documents, CAD drawings, etc). When considered in relation to potential e-discovery requests, this thorough evaluation of a company’s electronic footprint will reveal areas of potential data reduction.  

A balance can be achieved between the efficiency of a company’s IT department and the cost of e-discovery only when addressed before the onset of litigation. It is critical to include IT personnel, corporate management and legal counsel in all of these discussions. Some companies have found success by having the legal department use a portion of its own budget for any IT changes that would benefit the company during litigation. Analysis should take into consideration the particular challenges of each company’s industry, the documents they create, and the lawsuits they are most likely to face.

Conclusion
Although the issue of rule changes related to data preservation has been widely discussed and changes have even been proposed, there is no clear path forward. Opinions on the subject vary widely and we propose that even if the rules change, the issues of preservation cost, burden, and sanctions may not be resolved. The only clear way to reduce the probability of sanctions is for companies to work within their IT departments, management, and with their counsel to be careful and thorough with their e-discovery preparations far in advance of a lawsuit.

Performing an E-Discovery Readiness Assessment (http://bit.ly/A24XrB) helps to determine the level of litigation preparedness, and the results of that assessment provide a business with simple and affordable practices to maintain control over their documents.

The ED Readiness Assessment takes into consideration the potential litigation challenges of each company’s specific industry and the documents they create. Companies can see a direct cost benefit by implementing the recommendations of the assessment. This e-discovery preparedness eventually saves both time and money should litigation arise.

The rules may or not change but the preservation obligation exists today, whether companies choose to acknowledge or not. Only a comprehensive examination of their ESI content can prepare a corporation for litigation, regardless of what the rules say. Changing the rules won’t save litigants money; only knowledge and readiness will do that.

About the authors...

Gavin W. Manes PhD, President & CEO, Avansic
Gavin Manes is a nationally recognized expert in e-discovery and digital forensics who is currently the President and CEO of Avansic, a Tulsa-based company that provides ESI processing, e-discovery, and digital forensics services to law firms and companies across the nation. Having published over 50 papers on computer security and digital forensics, Manes holds a doctorate in computer science from the University of Tulsa. He has also briefed the White House, Department of the Interior, the National Security Council, and the Pentagon on computer security and forensics issues. gavin.manes@avansic.com

Tom O’Connor, Director of Professional Services, Avansic
A nationally known lawyer and eDiscovery expert, Tom O’Connor is Director of Professional Services at Avansic. Based in New Orleans, Tom is best known for his work in e-discovery, which includes assisting firms and corporate counsel in matters of retention policies, litigation holds, and document exchange protocols. He has worked on a number of high-profile cases including asbestos litigation, the Keating case, California class actions against crematoriums, tobacco litigation on behalf of the Attorney General of Texas, and various phases of the Enron and BP litigation. tom.oconnor@avansic.com

by Dee Caporali, director for Access, specialist in providing HR software to the legal sector

With the Solicitors Regulation Authority (SRA) now a licensed regulator for alternative business structures (ABS), this month marks the start of it accepting applications from legal firms. As one would expect, Chief Executive Antony Townsend welcomed the news, stating on their website: “It means the public can have confidence that ABS providing reserved legal activities will be regulated according to the same rigorous professional standards as traditional law firms." If all goes to plan, the SRA should announce its first successful applicant early this year.

It will certainly be interesting to see how things materialise. All firms, regardless of whether or not they go the ABS route, will have to be more competitive and innovative in their approach. Undoubtedly some tough decisions need to be made in this new deregulated environment which will see the commoditisation of legal services.

Technology will play a part in helping firms strengthen their position, whether this is through streamlining business processes and cutting costs, improving customer experience, or managing human capital more effectively. In terms of the latter, with more competition for the best lawyers it will be vital that firms look after their most valuable asset. A cliché perhaps but crucial to future success and firms are increasingly focusing their attention on HR technology.

The introduction of ABS would mean a huge shift in how firms operate, from the individuals they employ to the training they receive as well as succession planning. There is a strong likelihood that firms will be a mix of legal and non-legal professionals as was highlighted in research commissioned by Access to mark its 20th anniversary, titled The Future of Technology: transforming mid-market business operations*. A growing belief that multi-disciplinary practices (MDP) are the future business structures of legal professional services organisations will bring solicitors together with accountants, independent financial advisers, estate agents, surveyors, and other professional services providers, all under one roof. Clients will be able to obtain advice on conveyancing, tax and financial planning, personal injury and wills, from a single firm. Given the potential varied scope of professional services offerings, firms need to consider technology that is wider in scope than the traditional practice and case management systems used up until now, integrating the different areas of the business as well as managing the diversity of talent.

HR systems will help to smooth the process from identifying the need for new skills, to meeting staffing requirements and ensuring that professionals with the right expertise are allocated to clients – this is especially important given the SRA’s move towards a more qualitative style of measuring professional conduct and service delivery to customers. Succession planning is another area of rising concern for firms, given they are turning away from the traditional route of promoting partners within the organisation. This means they will need to carefully review the incentives they have in place if they are to avoid haemorrhaging the brightest talent with the increase in competition for their services.

The bottom line is that technology is an enabler that can help firms more efficiently manage their business; for the HR director in particular it helps them to automate as many of the day-to-day administrative tasks as possible, alongside supporting recruitment drives, CPD, personal development/training programmes and self-service – and crucially providing the business intelligence needed for HR teams to play a strategic role in the firm’s direction, and ultimately their success.

* http://www.theaccessgroup.com/ft

You'll be able to see this product at LegalTech New York next week however Aderant has today announced that Aderant Expert Release 8.0, the company’s flagship practice and financial management system for law and professional services firms, is now available. As the most extensive update of ADERANT Expert delivered in several years, this release gives firms a best-in-class software platform to run their businesses and drive greater productivity, revenues, and profits. New features include:

•    A new Expert Time Management module was designed from the ground up to be the best in the industry. It provides innovative capabilities that greatly simplify entering, reviewing, and editing time. Numerous methods for time capture support multiple user behaviors and preferences, giving timekeepers unprecedented flexibility, speed, and accuracy that will maximize billable time throughout the firm.

•    Significant new functionality has been added to more effectively manage complex and ever-changing fee rate structures. With a streamlined user experience for handling rates and enhanced reporting, firms can improve the overall administration of their various rates structures.

•    Paperless Billing speeds a firm’s capture to cash cycle with streamlined, electronic prebill review and editing. Expert 8.0 further streamlines the review, editing, and now also the approval processes. Additional information and calculations are available to improve awareness while editing and increase accuracy.

•    Scheduling, managing, and monitoring alternative fee arrangement matters and matter portfolios is easy with the new features, including workflow, added to Expert Matter Planning, ensuring that all engagements meet the firm’s profit targets.

“We are excited about the Expert 8.0 release. The rates management and time entry enhancements show Aderant’s continued commitment to the Expert product line,” stated Swen Nielsen, financial systems manager for early adopters Squire Sanders (US) LLP. “As a global law firm, one of the key reasons that we have partnered with ADERANT for so many years is their continued focus on addressing the often complex requirements of firms like ours.”

There's no hiding place from Orange Rag editor Charles Christian, who today has the first of his new monthly legal IT opinion columns go live on the Legal IT Professionals webzine. Here's the link – enjoy and feel free to disagree...

http://www.legalitprofessionals.com/Charles-Christian/fifteen-years-after-they-didnt-get-it-then-they-still-dont-get-it-now.html