The real task is much bigger: to use Internet-based technologies in fundamentally changing the way a law firm or law department is organized and how it relates not just to its clients (or internal clients, in the case of a law department) but to information suppliers, employees and how it manages its own intellectual assets. I believe the new Internet economy is based on one thing-information. A firm's ability to organize it, disseminate it among its members, price it based on its value to clients and distinguish it from the competition is the only thing that will differentiate one law firm from another in the new marketplace. Similarly, a law department's ability to organize and disseminate corporate "mission critical" information among its members as well as its internal clients, is vital to demonstrating its value-possibly, even its existence-to the company.
Applications Via the Web
In the past, law firms and law departments built expensive, complex networks to deliver applications to employees. It takes an army of consultants and internal IT personnel now to maintain and service this complex infrastructure. Today, however, software applications are available over the Internet. The Web application idea is a simple and seductive one: rather than buying or downloading software and then installing it on your PC, you log on to a website where you use an application that remains on that site's server. At your end, you see either a conventional browser interface or a custom screen. You can enter information, get results, and print or save at your end-but the real computing is accomplished on the server end of the connection.
The user organization pays a monthly, quarterly, or annual fee for the use of the software-or it may be free. Either way, you're always assured of having the current versions, without worrying about upgrading and version incompatibilities.
Web-based software for e-mail (www.Hotmail.com) and Calendars (www.When.com) have been available for years and have been wildly successful. Why are these browser-based alternatives so popular? Certainly part of the appeal is that they're free, but free Windows-based counterparts have been around forever. You cannot discount the power to access your data from any computer anywhere (without having to install anything) as the reason why these programs have been a major draw. And on the back end, there's no need to set up and maintain servers; the service provider is taking care of that for you. So no software to install, no server hardware to install, and access from anywhere.
This may strike you as a solution only for consumer-oriented applications. Could a law firm or law department really deliver all of its mission critical applications via the Internet? You may be surprised. Virtually every major software developer is currently figuring out how it can deliver its applications over the Web. Elite has announced its software will be available over the Net later this year. Microsoft is currently "renting" Office 2000 out via the Internet. Litigation support developers are popping up monthly with fully web-based applications. Document management systems like iManage and PC Docs have been Web-enabled since last year. Network Alternatives, a US-based network integration firm (www.network-alternatives.com) is delivering all of the desktop applications needed by a small to mid-sized law firm (10-80 lawyers) via the Internet today. We anticipate most law firms and law departments will move to this model in some hybrid form initially. Perhaps the "commodity" desktop applications like e-mail will be outsourced first. But as law firms and law departments roll over and upgrade to new platforms, Network Alternatives will prove to be a highly cost-effective and viable approach for all applications, training and help desk support.
The Internet Economy Will Boom
What is the Internet economy? It's Priceline.com, where you name your own price for airline tickets. It's law firms like Latham & Watkins selling environmental advice on laws and regulations via their private intranet site. It's HR Advice.com providing human resources advice via the web. It's eBay auctions, where close to two million items are up for bids. It's Amazon.com, where so far eight million people have shopped for discounted books and music. It's the online brokerages that currently manage $400 billion in assets, and it's your online banking setup.
The Internet is proving so successful at copying and improving on the ways people shop and the ways businesses work that sooner than any expert predicted the Internet economy will be the single biggest part of the global economy's infrastructure. The novelty will wear off, and the online distinction will simply disappear.
The most important change is that you, the customer, will have access to much more information about goods and services than you ever imagined possible. Access to real-time information about prices leads to more efficient marketplaces, where the price you pay better reflects actual demand. Online auctions are, of course, the best example of that phenomenon. If the Internet is good for anything, it's good for managing databases and sharing information.
Legal Auction Websites
Currently being designed are auction websites that are specifically tailored to auction off legal services over the Internet. The largest and most well-established in the U.S. right now is eLawGlobal.com (www.elawglobal. com). For hundreds of years, legal work has been awarded to private law firms based on personal relationships, club memberships and market perceptions about a law firm's legal expertise. All of these artificial rules and barriers to true competition are eliminated when the legal work moves to a digital auction site.
In this scenario, corporations will post blocks of legal work on eLawGlobal.com's website, which will then be bid on by law firms who have been pre-qualified to do their legal work. It's just like ebay.com, but these will be reverse auctions, where the low bidder will win the work! Initially, only commodity-type legal services will be auctioned off in such a fashion, but an Internet-based economy constantly reinvents how the market defines a commodity service. The Web puts enormous amounts of information at the fingertips of the buyer. Purchasers of legal services, including General Counsel, will only become more and more sophisticated and, undoubtedly, an auction setting moves the marketplace even faster towards a fixed-fee arrangement between buyer and seller.
Strengthening Client Relationships
Exchanging documents and e-mail with clients-internal and external-over the Internet is not enough. Client relationships are changing in two fundamental ways: they are becoming more digital or electronic in nature and they are becoming more self-service oriented. No one would argue about relationships becoming digital, but it's the self-service orientation that presents a new opportunity for law firms and law departments. By its very nature, self-service connotes: "what I want, when I want it". Law firms need to begin building websites that create a personalized portfolio for each client as they enter the firm's digital office. The same logic applies to law departments and their internal client departments. Personal in every way including billing information (also necessary in those corporations using charge-backs to user departments), document work production, calendaring, case/matter status data, legal information resources, best practices, preventive lawyering workshops and manuals. Just like Yahoo! enables me to configure my homepage with precisely the type of information I'm interested in viewing through My Yahoo!, law firms and law departments need to configure information kiosks for their clients.
Use the Internet to Interact with Employees
For law firms/departments, the new competitive landscape created by globalization, the Internet and complex technology is making the role that people play in the success of a firm or department more important than ever. In this reality, the term "human capital" has become a financial metaphor that represents a shift away from calculating the cost of employees to recognizing their positive investment value. These new challenges and opportunities are demanding a fundamental rethinking of the human resources function in law firms and corporations.
Historically, human resource personnel at law firms and corporations spend the majority of their time following up on personnel administration change requests, researching employee salary histories and answering frequently asked questions about benefits plans.
A model for human resource service delivery should be built around an intranet application that effectively reduces the demand on the human resource representative, enables faster customer service and addresses most concerns through the least costly channel. The intranet model allows the majority of inquiries and transactions to be addressed through a self-service website, while remaining questions and requests can be referred to an HR representative. Only those issues requiring further attention, such as hands-on planning and policy resolution, need be handled by human resource representatives.
Leverage the Knowledge Capital
In a law firm or a law department, the most valuable asset is intangible, intellectual capital. Intellectual capital consists of two elements: human capital and knowledge capital. Human capital is the individual talents and knowledge gained through the training and experience of firm or department members. Knowledge capital is documented knowledge in forms that are available to people other than the original holder: books, publications, documents, prior research, software, etc. Law firms and law departments leverage this knowledge through networks of individuals who collaborate. When a firm or a department's culture discourages collaboration, these networks can never form.
Leveraging of this intellectual capital begins with people who want to connect and only after that can tools and technology enter to make the connections. When successful, the combination of people and technology leads to networks of people or "worknets". Web-based technologies (intranets) make up the infrastructure for deployment, organization and distribution of this knowledge capital.
Historically, we have always overestimated what will change in the next two years and underestimated the degree of change in the next ten years. Buying and selling legal services on eBay sound absurd? Accessing all of your documents, e-mail and financial accounting data over the Internet sound even more absurd? All the rules are changing. How law firms and law departments are organized and how they communicate with their respective clients will be turned upside down. Internet technologies create new kinds of communities. Law firms must begin to struggle with how to create communities around the services they are selling as key competitive advantages. Law departments too must use technology to integrate law department members with their internal clients in communities based on corporate-wide strategic goals. I think that what today appears to be radical applications of Internet technology, will all be commonplace sooner than any of us believe possible.
David Briscoe is a senior consultant with Altman Weil, Inc., which provides management, marketing and technical consulting services to legal organizations throughout the U.S., Canada and elsewhere in the world. The firm is based in Newtown Square, Pennsylvania, and has offices in the U.S. and U.K.