All posts by Manuel Lamiroy

Legal IT

The Two Faces of Legal Innovation

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When legal innovation is mentioned, we typically think of legal technology and process automation, etc. Most articles on the Internet focus on how the practice of law can be further automated, which then leads to increased productivity and profitability. As such they focus on legal technology and on the legal market. Some articles take a wider view and talk about innovation in law enforcement and in the judiciary. There too, however, the emphasis is on technology, automation and productivity.

But legal innovation is more than that. In an interesting synchronicity, two authors, Carolyn Elefant and Bill Henderson, each published an article on the two types – or faces – of legal innovation, within days of one another. The examples mentioned above all fall in the category of what Elefant calls ‘Innovation of Form’, and what Henderson refers to as ‘Service Delivery Innovation’. There is a different, and equally important, type of legal innovation, which the authors call ‘Innovation of Substance’ and ‘Substantive Law Innovation’ respectively. This type of legal innovation focuses on finding new legal solutions.

Elefant uses the example of Henry Ford to explain the difference. On the one hand, he invented the Model T. On the other hand, he came up with the design for the assembly line. The invention of the Model T is an innovation of substance. The design of the assembly line is an innovation of form. The emphasis in Legal Innovation tends to be on the innovation of form, which probably explains why lawyers often struggle with legal innovation. As Elefant puts it, “‘I went to law school to build a more efficient client intake process….’ said no lawyer ever.” Lawyers are more interested in innovation in substance.

So, how do we define these two types of innovation? Henderson gives the following definitions:

  • Substantive Law Innovation (which he calls Type 0 Innovation) deals with adapting law to fit changing social, political, economic and technological conditions.
  • Service Delivery Innovation (which he calls Type 1 innovation) deals with improving the quality, cost and delivery of existing legal solutions.

Everybody is familiar with Service Delivery (Type 1) Innovation. As Henderson points out, the vast majority of Legal Evolution content is focused on service delivery improvements (data, process, technology, etc.) that aim to increase legal productivity. Let us have a closer look at its counterpart, Substantive Law (Type 0) Innovation.

Society is changing fast, and the law needs to adapt to be able to handle these new conditions. The rise of Artificial Intelligence and the emergence of different new technologies are clear examples that demand an innovation in substantive law. Think, e.g., of cyberbullying, or of Robot Law. Henderson gives the example of synthetic biology, which impacts intellectual property, regulatory law, consumer safety. There are many more such areas: Carolyn Elefant wrote a book on 41 Practice Areas that didn’t exist 15 years ago. (You can find the table of contents here: myshingle.com/wp-content/uploads/2018/08/TOC-from-41PracticeAreas.pdf). She compiled the list to prove the point that new practice niches are growing at an accelerating rate.

In such periods of disruption, “we also need lawyers who can take on the hard work of substantive innovation — devising the kinds of new case theories and arguments and perspectives — that will allow technology to progress while preserving our democracy and our freedom.” (Elefant).

Henderson explains that Substantive Law Innovation “happens organically when a lawyer has the opportunity to immerse herself in the business and legal complexities of a new or changing industry. Although it often produces the same economic benefits as a major R&D initiative, lawyers and law firms seldom frame it that way.  (…) Virtually any lawyer has the intellectual tools to do it.  It requires zero additional training. Yet it’s undertheorized almost to the point of being invisible to practicing lawyers.”

In his article, Henderson refers to a presentation by Patrick McKenna that connected the lifecycle of law firms to the different types of innovation. McKenna explained that successful new law firms typically find the source of their growth in type 0 innovation, i.e. in finding new legal solutions in niche markets. As the law firm matures it starts paying more attention to type 1 innovation. It is however important to continue focusing on type 0 innovation: if the firm doesn’t, it loses its edge because the market it was active in becomes saturated. Henderson gives the examples of securities or debt collection as market segments that are saturated.

Henderson concludes that it is obvious that Type 0 and Type 1 innovation are both distinct and interdependent, and that the legal profession’s tool box needs to include both types of innovation. He advises lawyers and legal professionals to specialize in one or the other, while retaining the ability to effectively collaborative across the two types.

Henderson: “Neither Type 0 nor Type 1 innovation are easy or costless.  Both require continuous learning and an investment of time and resources without a guaranteed financial return.  Yet both add immense value to clients and form the basis for challenging and rewarding careers.  Thus, for both lawyers and legal professionals, the future is bright.”

 

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Legal IT

Office 365 and SharePoint for Lawyers

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The vast majority of lawyers use the Microsoft Office suite. It comes in different versions, and Microsoft encourages everyone to switch to Office 365. If you have not yet switched to Office 365, it may be useful to consider this. For law firms, it is advisable to switch to Office 365 Business Premium because SharePoint is also included. In this article we give some more explanation.

Office 365 is the subscription version of Microsoft’s Office suite. It is marketed as a service (rather than a product) that ensures you always have the most up-to-date modern productivity tools from Microsoft. It includes all the Office desktop apps that CICERO LawPack users are familiar with, like Word, Outlook, PowerPoint, and Excel. It also comes with extra online storage and cloud-connected features that let you collaborate on files in real time. With a subscription, you’ll always have the latest features, fixes, and security updates along with ongoing tech support at no extra cost.

Office 2016 and Office 2019 on the other hand are sold as a one-time purchase. They don’t have the level of cloud integration that offers all the real time collaboration features Office 365 does. When a new version is released, you have to buy the new version, and often that means there are many new features at once to get familiar with. With a subscription version like Office 365, you get smaller updates several times a year that are included in the subscription price. This subscription model clearly appeals to customers: as of October 2018, Office 365 has 155 million active users worldwide, and each month three million more are added.

One of the reasons CICERO LawPack is moving its customers to Office 365 Business Premium is that it comes with SharePoint. SharePoint is a web-based collaborative platform that integrates with Microsoft Office. It was launched in 2001 and is primarily sold as a document management and storage system. It has 190 million users across 200,000 customer organizations. SharePoint offers the following functionalities:

  • Enterprise content and document management: SharePoint allows for storage, retrieval, searching, archiving, tracking, management, and reporting on electronic documents and records. It also provides search and ‘graph’ functionality. SharePoint’s integration with Office 365 allows for collaborative real-time editing and encrypted/information rights managed synchronization.
  • Intranet: A SharePoint intranet (or intranet portal) is a way to centralize access to enterprise information and applications. It is a tool that helps an organization manage its internal communications, applications and information more easily (e.g. via tools such as wikis).
  • Collaborative software: SharePoint contains team collaboration groupware capabilities, including project scheduling (integrated with Outlook and Project), social collaboration, shared mailboxes, and project related document storage and collaboration. Groupware in SharePoint is based around the concept of a “Team Site”.
  • File hosting service (personal cloud): OneDrive for Business allows storage and synchronization of an individual’s personal documents, as well as public/private file sharing of those documents.
  • Custom web applications: SharePoint’s custom development capabilities provide an additional layer of services that allow rapid prototyping of integrated (typically line-of-business) web applications.

To structure and manage content, SharePoint works with:

  • Pages, which are free-form pages that can be edited in a browser.
  • Web parts and app parts are components (also known as portlets) that can be inserted into Pages. They are used to display information from both SharePoint and third-party applications.
  • Lists, libraries, and content: A SharePoint library stores and displays files and folders, while a SharePoint list stores and displays data items. Each item in a library or list is a content item. Content Types are definitions (or types) of items. SharePoint allows you to create your own definitions based on the built-in ones (like, e.g., Contacts, Appointments, Documents, and Folders).
  • Sites: A SharePoint Site is a collection of pages, lists, libraries, apps, configurations, features, content types, and sub-sites. Examples of Site templates in SharePoint include collaboration (team) sites, wikis, blank sites, and publishing sites.

If you use software for your office management, it is probably software based on Cloud technologies. In that case, it is possible that your data and documents are located on two different Cloud platforms: the software for your office management and the corresponding database are on your software provider’s Cloud solution, while all your documents are in a separate SharePoint DB instead of on a normal file server. This means that you can benefit from all the advantages of SharePoint: all documents are searchable; you can share documents instead of having to e-mail them (which is much safer), and once a document is shared you have access to all the real-time collaboration functionalities; it comes with access and version management, etc. The fact that the documents and data are on separate platforms also provides a safer and faster solution.

 

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Legal IT

An Introduction to LinkedIn for Lawyers

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In previous articles, we mentioned how social media have become an essential part of online marketing strategies. A report, published in January 2019 by the Attorney at Work website, reveals that in 2018, 85 percent of responding lawyers use social media as part of their marketing strategy. More than two-thirds, 71 percent, of lawyers say social media contributed to bringing in new clients.

Generally speaking, LinkedIn is the network of choice for lawyers, with 77 percent saying it is their favoured marketing platform. This has to be nuanced, in that larger law firms whose clients mainly consist of companies tend to focus more on LinkedIn, while lawyers who deal with individual clients tend to slightly favour Facebook. In this article, we will give you a first introduction to LinkedIn.

LinkedIn is a professional social network, which is mainly used for professional networking. It is a business and employment-oriented service that operates via websites and mobile apps. It was founded on 28 December 2002, and launched on 5 May 2003. Since December 2016 it has been a wholly owned subsidiary of Microsoft. As of October 2018, LinkedIn had 590 million registered members in 200 countries, of which more than 250 million are active. Signing up to LinkedIn is free, but some premium features are only available with a subscription one has to be pay for.

The main reason people use LinkedIn is to help grow their business or career. It is a tool for networking (which includes a system of introductions), for recruitment (where people can list their skills and experience), for marketing (e.g. to display endorsements and recommendations), advertising, and for research. It also is a publishing platform, and it offers discussion forums, called groups. These can be important to lawyers, as LinkedIn promotes certain authors as influencers (or thought leaders).

LinkedIn offers a package that includes:

  • Profiles
  • Networking Tools / Connections
  • Company Pages
  • Groups
  • Messaging
  • Notifications
  • As well as some other services, some of which can be useful for lawyers.

Let’s go over these in some more detail, knowing that we can only scratch the surface, and that each of them could easily warrant one or more articles by themselves.

Profiles: when one signs up to LinkedIn, the first thing to do is to create your profile. This is a profile for you as an individual. Think of it as a standardized bio or résumé. In it, you can give a summary of who you are, and provide more information about your background: your education, experience, skills, endorsements, accomplishments and interests. For each of these categories of information, LinkedIn offers a separate section in your profile. You can also make posts from your profile, and publish articles. Your profile contains an activity section that lists those. If you want to start a blog on LinkedIn, you can do so from your profile. Profile sections can be added in more than one language.

Networking Tools / Connections: LinkedIn not only allows members to create profiles but also connections to each other in an online social network. These connections may represent real-world professional relationships, but don’t necessarily do so. Members can invite anyone (whether an existing member or not) to become a connection. Members can also ask other members to introduce them to their connections. When looking for someone on LinkedIn, it will show you how many connections you may have in common, and if there are none, how many degrees you are separated from them.

LinkedIn also offers Company Pages, where you can provide information about your law firm. Here the rule is that each company only has one main page, for which a custom URL can be created. It consists of several sections, and each section can be entered in more than one language. Linked to the company pages are showcase pages. If your law firm, e.g., has offices in several locations, each one could get its own showcase page. Showcase pages can also be dedicated to services or products you offer. For showcase pages, too, it is possible to have them in more than one language.

Company pages can post updates, but can’t publish articles. It is therefore not possible to set up a company blog on LinkedIn. It is possible for individuals (profiles) to publish articles, and to provide links to those articles as company updates. Also good to know is that company pages can be linked to a LinkedIn Group.

Groups in essence are discussion forums. Anybody can create a group, and invite people to become members. These groups can either be public (anybody can join) or private (upon invitation or approval). As mentioned above, companies can create a group that will be linked to their company page. Often, these are used, e.g., by the customer care and / or the support department. Interesting for lawyers is that groups can be dedicated to specific topics, and that there are plenty of groups that deal with legal matters (as well as legal technology). Taking part in discussions in such groups can help build your online reputation.

Like other social media, LinkedIn also offers messaging and notification services. For lawyers, LinkedIn also is an important advertising platform (cf. the statistics quoted in the introduction to this article).

Apart from the services mentioned above, LinkedIn also offers a series of other services. These focus on learning and on insights; they allow you to post job offers, etc. In this context (of recruitment) it is worth mentioning a new service that at present is only available in the US and within specific service categories, and is called ProFinder. “LinkedIn ProFinder is LinkedIn’s professional services marketplace that helps you find the best freelance or independent professionals in your area.” It already does include certain legal services, and is expected to include more services, and to become available internationally.

Also worth mentioning is Slideshare. It is a hosting service for professional content including presentations, infographics, documents, and videos. Users can upload files privately or publicly in PowerPoint, Word, PDF, or OpenDocument format. Content can then be viewed on the site itself, on hand held devices or embedded on other sites.

 

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Legal IT

More on Value Pricing

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In a previous article, we talked about flat fees, and how they have become the favourite alternative to billable hours for both lawyers and their clients. There are many benefits to flat fees: they are something clients want and like. They eliminate surprises: clients knows in advance how much they will have to pay, and you know how much you will make. And because flat fees usually are (at least partially) paid up-front, lawyers don’t have to worry about getting paid. Knowing in advance how much something will cost also lowers the threshold for clients to hire a lawyer, which means lawyers get access to more clients.

We also pointed out that fixed fees are not always the ideal solution for the services you offer. A prerequisite is that you can determine in advance what services you’ll offer and estimate how much time those will take. Typically, cases that involve opposing parties (litigation, arbitration, mediation, …) may be less suited for value pricing.

We also discussed how there two ways to calculate flat fees. In both cases, your profits consist of your revenue minus your expenses. So, you always have to calculate your expenses in advance. Where they differ, is in how to calculate your revenue. You either use a cost plus model, or value pricing. In the cost plus model, the price is set by calculating the costs and adding a fair profit margin, which can be based on the average time you anticipate you will spend on the case. With value pricing on the other hand, you determine your price based on what the service you offer is worth to the client.

So, how do you set your price? Mark Wickersham is an accountant who wrote a booklet on “Using value pricing to grow your business” that is available for free online. (It can be downloaded here: quickbooks.intuit.com/uk/accountants/value-pricing/). And while it is written for accountants, much of what he writes is relevant for lawyers, too. Here is his take on it.

Before you can actually set a price, you have to determine what it is that you’ll be putting a price on. In other words you have to determine the scope of services that will be covered by your price. This also means you first have to determine what your clients expectations are. In his book, Wickersham dedicated a chapter to five types of questions you must ask to understand a) the scope of the work and b) what your client values. These questions deal with:

  1. Scope
  2. Tangible Preferences
  3. Intangible Preferences
  4. Outcome Preferences
  5. Enhancement Questions

Scope questions have to do with what your client needs or wants from you, and with what the client values. Scope questions help us understand the client’s circumstances, which in turn helps us to estimate the amount of work we will need to do. Scope questions also help to establish what the client values. As you get more proficient with value pricing you’ll get better at asking great questions that help to uncover what a client really values.

Tangible Preferences have to do with the list of services you could offer your client that he might want or value. Basically, you offer a menu of services that you go over with the client, and that are relevant to his or her situation. When clients say “Yes” to these things, they indicate they would value them. So you add them into your price, even if the time to deliver these extra things is zero.

Intangible Preferences have to do with the user experience of the client. These are questions that help establish the modalities of cooperation, and look at how to best work together. These include questions, e.g., like “who is contact point?”, “what are the preferred modes and preferred frequency of communication (when does the client want a phone call, a mail, a letter or a meeting)?” Does the client want any evaluation meetings during or after, etc?

Outcome preferences focus on what outcome the client wants. This is where we look at the end result. We discuss desired as well as possible alternative outcomes and how to respond.

Enhancement Questions deal with how we can further enhance the client’s experience. This is an advanced and optional step that focuses on additional services that are not necessary but which the client may value.

Once we have the answers to these questions, we can start determining our optimal price. To do this, Wickersham says that we must forget the timesheet. Instead, we must focus on four factors or benefits that help determine what our services are worth to the client. These factors are:

  1. The direct financial gains for the client, which typically means increased wealth or income.
  2. Reduced risks
  3. Decreased liabilities
  4. Enhanced reputation

Wickersham: “By effectively communicating these forms of value to your clients, you can maximize your prices, while still creating a win-win scenario where your clients are able to profit from the relationship as well. And that is the key to both satisfied clients, and a healthy business. (…) Once you understand what they value (the pain they are trying to avoid and the gain they are trying to achieve) you present a high price, not because you expect them to say ‘Yes’ (if they do, you’re too cheap!), but to create a reference price. This is called anchoring.”

Wickersham also offers additional suggestions. He advises to present the client with options to choose from. “When your first price is too high, this is where all those preference questions come in. When you give clients choices they often say ‘Yes’ because they haven’t yet seen the price. If the price is too high, you can now ask the client the following: ‘The reason this is the price is because you’ve said you want all of these things. Looking at this list of things you’ve said you’d like, are there any here that on reflection you don’t really need (value)?’ ”

In short, value pricing optimizes profits, but it is not easy. Some call it an art, and with practice, one becomes more proficient at finding the correct win/win price to charge.

 

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Legal IT

Legal Technology Predictions for 2019

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The beginning of a new year is traditionally a time when the experts make their predictions for the year to come. The field of legal technology is no exception. Most of the predictions focus on Artificial Intelligence (AI), blockchain and security, but there also are predictions with regard to the legal market in general, the cloud, and eDiscovery. Let’s have a closer look.

Legal Market

The American Bar Association’s 2018 Legal Technology Report revealed that in 2018 fewer law firms invested in legal technology than in 2017. Because of this, experts expect a stagnation in the amount of law firms who are investing in legal technology. The amount of money being invested by law firms still is increasing, as is the amount of money being invested by legal technology solution providers. The legal technology market itself is therefore expected to keep on expanding.

Experts do not anticipate significant changes in the software and services that the lawyers are using, nor in how law firms are charging their clients. The market of Alternative Legal Services Providers (ALSPs) will keep on growing, and some of these Alternative Legal Services Providers will come into their own as major players.

Artificial Intelligence (AI)

IBM predicts three major breakthroughs in the field of AI which will lead enterprises to increasingly advance, scale, and trust artificial intelligence. These three breakthroughs are:

  1. Causality will increasingly replace correlations: at present Machine Learning algorithms discovers patterns, i.e. correlations, but the nature of those correlations still hasn’t been qualified. The breakthrough will consist in qualifying those correlations and determine what is cause and effect.
  2. Trusted AI will take centre stage: methodologies are being developed for a better cooperation between humans and AI, where humans can trust the output generated by AI systems.
  3. Quantum computing could give AI an assist: technologies like Deep Learning require serious computing power. Quantum computing has the potential to dramatically increase computing power.

The experts that Forbes Magazine consulted make five predictions:

  1. AI increasingly becomes a matter of international politics
  2. A Move Towards “Transparent AI” (i.e. where AI systems can reveal how they draw their conclusions. This ties in with the concept of “trusted AI”, mentioned above).
  3. AI and automation are drilling deeper into every business
  4. More jobs will be created by AI than will be lost to it.
  5. AI assistants will become truly useful

In a separate article, other experts predict a rise in applications that combine video, voice and AI to improve human interactions, sales, customer service, and meetings.

More specific to the field of Legal AI, experts predict an increase in smart contracts, as well as an increased use of blockchain based solutions. Law firms are becoming smarter in what technologies to use, which leads to a higher adoption of legal AI: AI will augment existing solutions. AI is also expected to play a more important role in the design of legal software and its interfaces. One expert predicts that the increased usage of AI will lead to lower fees, thus facilitating access to justice. One of the fields that is expected to grow is legal analytics (including judicial analytics). As a result of this the roles of Chief Analytics Officer (CAO) or Chief Data Officer (CDO) will become more prevalent in law firms.

Cybersecurity

A lot of the predictions have to do with cybersecurity. Law firms have a lot of valuable data and are prime targets for cybercriminals.

One of the world’s foremost experts in building AI systems to detect malware points out that cybercriminals have started using what he calls “offensive AI”, i.e. AI systems that are specifically designed to attack computer systems. As a result, malware, e.g., gets smarter and better at evading protection against it. In turn, cybersecurity companies are increasingly using AI as well to ward off cyberattacks and to detect those technologies that are aimed at evading protection.

All experts anticipate cybercrime will rise in 2019. They expect increases in:

  • Data breaches and data leaks, with an emphasis on the latter
  • Browser crypto-mining, or crypto-jacking, i.e. where your browser is hijacked to mine cryptocurrencies
  • Web skimmers: just like you have hardware to illegally clone credit cards, web skimmers use websites to illegally get your credit card details
  • Expert specifically expect an increase in botnets that use “Internet of Things” devices
  • Dedicated Denial of Service (DDos) Attacks
  • Ransomware
  • Financial crime, i.e. cyberattacks on banks and other financial institutions
  • Email social engineering attacks, also known as BECs, or Business Email Compromises
  • Exploit kits, i.e. web-based applications that redirect users to malicious sites where they attempt to exploit a browser vulnerability to infect the user with malware.

Cloud servers, too, are in trouble in 2019. Cloud servers have slowly become the favourite target of cryptocurrency mining trojans.

As more and more hacking tools are becoming available, experts foresee an increase in underground communities of hackers and cybercriminals.

Malvertising will continue to gain sophistication in 2019.

Cloud

Over the last years, law firms have increasingly started using cloud technologies. That growth is expected to continue, as law firms have largely overcome their hesitance to use cloud-based solutions.

eDiscovery

The GDPR has had a great impact on legal eDiscovery. As more and more countries (and States within the US) are implementing similar legislation, experts believe we are reaching a tipping point for the protection of personal data privacy in legal discovery.

2019 will also see new ways to exploit the power of analytics across the entire e-discovery workflow. ‘Active learning’ will be used as a supplemental tool to support traditional reviews. And as eDiscovery requires data transfers to service providers, those transfers will increasingly become targets for hackers and cybercriminals.

We are also witnessing an increasingly globalized eDiscovery, and as a result there will be an increase in demand for translations.

Blockchain

In 2019, we will approach Blockchain more realistically. Many fantastic visions of 2017 and 2018 were a little ahead of schedule, and many projects have failed to deliver. With a more realistic approach, Blockchain will finally move past the hype into reality and Blockchain adoption is expected to spike across sectors, and to start converging with the Internet of Things (IoT).

Security experts anticipate that Blockchain will help prevent unauthorized access. They also see advancements in privacy-preserving techniques for blockchain: these techniques combined with blockchain can enable new decentralized applications that protect data while providing users with transparency and control over how data is used.

To address the issue of energy consumption costs, which are skyrocketing because of the computing power needed, in 2019 we will also see hardware-based acceleration of cryptographic techniques.

 

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Legal IT

On flat fees and value pricing

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The market of legal services is changing, and so is the legal business model. Largely upon the request of their clients, law firms are shifting from billable hours to alternative fee arrangements (AFAs). The most commonly used alternative fee arrangement is charging flat fees. In this article we’ll have a closer look at what they are, what types there are, what the benefits and risks are, when and when not to use flat fees, and lastly how to set the price for the flat fees you’ll be charging. That last item will be continued in a follow-up article.

Peggy Gruenke, from www.attorneyatwork.com, defines a flat fee as follows: “A flat fee is simply a prearranged, agreed-on total fee that is paid up-front, or at least a portion of it is, to complete all work required for a particular matter.”

There typically are two kinds of flat fees, which has to do with how the fee is calculated. The first type is referred to as “cost plus” pricing, where the price is set by calculating the costs and adding a fair profit margin. For law firms, if they have certain types of cases that they do on a regular basis, they could, e.g., calculate the average time and cost of previous cases, and use that. The alternative is referred to as value pricing where you set the price based on what the service you offer is worth for the client. We’ll come back to how to set the price for flat fees later on.

There are both benefits and risks to using flat fees. The benefits include:

  • Flat fees are something clients want and like.
  • Flat fees eliminate surprises: clients knows in advance how much they will have to pay, and you know how much you will make.
  • Knowing in advance how much something will cost lowers the threshold for clients to hire a lawyer, which means you get access to more clients.
  • Since flat fees usually are (at least partially) paid up-front, you have no problems getting paid: you just don’t start work until you get paid.
  • Using value pricing to set your fee, where the fees is calculated on the value your services bring to the client, typically results in a higher profit margin for the lawyer.

There also are risks:

  • It can be hard to calculate the total fee beforehand, especially when opposing parties are involved. (See below).
  • If additional hours are incurred, those may be passed on to the lawyer.
  • There’s a potential for reduced profit margins or even losses, if the matter takes substantially more time than expected.

What these risks show is that flat fees have limited uses. They aren’t suited for all cases or all law firms. You’ll have to determine when and when not to charge flat fees. Flat fees are not advised when it’s hard to estimate in advance how much time and effort will be needed. Ruth Carter, e.g., avoids using flat feels in cases where there is an opposing party, like settlements or litigation, because you usually cannot anticipate what all they will come up with. There are exceptions of course in scenarios that are common and/or simple like, e.g., handling traffic fines. Typically, flat fees are well suited when the time that is needed is predictable. It works well, e.g., for transactions like copyrights, trademarks, and contract drafting and reviews.

Sometimes, lawyers charge a hybrid fee (or a “flat fee plus”, as Ruth Carter calls them) where flat fees and hourly billing are combined. This usually involves charging a flat fee for a project with a limited scope and then charging the client your hourly rate for any work performed beyond that. Billie Tarascio, e.g., a divorce lawyer, uses a hybrid model of hourly fees for certain work and combines those with flat fee charges for predictable items like drafting pleadings, attending hearings, etc.

So, before you start charging flat fees, there are some questions you have to ask yourself. The first questions is whether your clients are asking for flat-fee options. If they’re not, do you have a good reason to switch? When introducing your flat fees to your clients, have you clearly defined expectations, fees and scope? Have you thought about your overhead? How many flat-fee cases do you need per month to cover expenses and pay yourself?

Once those questions are answered, you can determine how to set your flat fees. As mentioned above, you can use either value pricing or “cost plus” pricing. If you want to charge flat fees for a service you have already been offering for a while, the “cost plus” model is fairly easy to implement as you already have all the necessary information with regard to scope, time needed, costs involved, etc. (If you are using law firm management software, it is easy retrieve all of this information).

Most authors, however, suggest using value pricing instead because it is better suited for optimizing your profit margins. Now, and especially when you are new to it, value pricing is not easy, since you have to know how to measure value and identify the factors that determine what brings value to your clients. Mark Wickersham, who wrote a book on “Using value pricing to grow your business” (that is available for free online), rightfully points out that value pricing is hard because of three reasons: 1) Value is subjective; it can’t be touched, felt or measured. 2) Everybody values things differently. And 3) because every client has unique requirements.

In a follow-up article we’ll go into how to set your price when using value pricing.

 

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Legal IT

What did 2018 bring on the Legal Technology front?

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As we are taking our first steps into 2019, it may be useful to evaluate what 2018 brought us on the Legal Technology front. Robert Ambrogi, from lawsitesblog.com, published an article on the 20 most important Legal Technology developments in 2018. And, as usual, the American Bar Association (ABA) also published its annual Legal Technology Survey Report in December 2018, which offers great insights as well. Let us start with the latter.

The Full ABA Legal Techology Survey Report consists of six volumes:

  1. Technology Basics and Security
  2. Law Office Technology
  3. Online Research
  4. Marketing and Communication Technology
  5. Litigation Technology and E-Discovery
  6. Mobile Lawyers

These six volumes can be bought either separately, or combined, here. A summary of the survey in five separate reports can be read online for free here. These reports deal with:

  1. Budgeting and planning
  2. Solo and small firm
  3. Practice management
  4. Technology Training
  5. Litigation and TAR (Technology Assisted Review)

Here are the highlights.

One of the most surprising findings of the report is that the percentage of firms that budget for technology has undergone a slight decrease compared to last year. Where in 2017, 60 percent of law firms had a legal tech budget, that number is down to 57% in 2018. As was the case in the past, the percentage of law firms that have a technology budget increases with the firm’s size. The report found that 34 percent of solo respondents, 53 percent of firms of two to nine attorneys, 77 percent of firms of 10 to 49 attorneys, 83 percent of firms with 100 to 499 attorneys, and 87 percent of firms of 500 or more attorneys had technology budgets.

Another surprising finding is that while telecommuting or remote working overall is on the rise (as expected), it has decreased in larger firms. Among solo practitioners and law firms with 2-9 attorneys, the percentage of people who telecommute has gone up from 38% in 2015 to 46% in 2018, and from 58% in 2015 to 68% in 2018, respectively. In larger firms, however, the percentage has dropped from a high of 87% in 2015 to a low of 79% in 2018 in firms with 10-49 attorneys, and from a high of 94% in 2016 to a low of 88% in 2018 for the bigger ones.

Attorneys continue to use practice management software at a steady rate at firms of all sizes. The functionality of the software that is available to them hasn’t really changed in that managing clients and conflicts still is at the core of all of them. The amount of law firms using practice management software has remained steady over the last years (with the exception of some spikes in 2016).

Most attorneys are satisfied with the practice management software they use, as 32% reported “very satisfied” with the features and functions therein and 61% reporting “somewhat satisfied,” for a total of 93% that were somewhat or more satisfied.

Not much has changed with regard to the software law firms are using, and there is still plenty of room for improvement, especially when it comes to integration with other applications.

The GDPR has had an important impact which resulted in the removal of quite a lot of metadata. The usage of software that focuses on the removal of metadata is rising, which benefits privacy and confidentiality.

Another finding of the report is that the line between tablets and laptops is blurring. In solo and small law firms, the percentage of tablet users dropped from 57% in 2016 to 47% in 2018. In larger firms, however, the number of tablet users has increased: in firms with 100-499 attorneys, the percentage has increased from 32% in 2015 to 53% in 2018. In firms with more than 500 attorneys, 39% of attorneys use tablets.

There is virtually no change in how lawyers charged in 2018, compared to 2017. Hourly fees remain the most popular (at 69%), followed by fixed fees (15%), contingency fees (11%, which depend on the result achieved), retainer fees (4%, where the client pays an advance on a regular basis, typically monthly), and other (1%).

In his article on The 20 Most Important Legal Technology Developments Of 2018, Robert Ambrogi mentions several developments that are relevant worldwide:

 

  • Analytics become essential: in 2018 more and more law firms started analysing the data they collect.
  • Legal tech goes global: until recently legal tech largely consisted of national playing fields, but now we are seeing more and more legal technology services that are being offered internationally.
  • Because of AI, Legal research gets smarter and more comprehensive.
  • Investment are increasing. In the US alone, $1 billion USD was invested in legal technology.
  • The cloud no longer looms ominous. More and more law firms have dropped their reservations and are now effectively using cloud services.
  • Tech competence gets real.
  • AI gets an MBA.
  • Startups continue to proliferate.

In conclusion: the legal technology market keeps evolving, but the use of legal technology in law firms has not taken any large steps in recent years.

 

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Legal IT

The 2018 Social Law Firm Index

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Every year, towards the end of the year, Good2bSocial (www.good2bsocial.com) publishes a ‘Social Law Firm Index’. It is a study of digital marketing adoption, use, and best practices in the legal industry. The report aims to determine the effectiveness of law firms’ efforts and includes reviews and rankings of the US top law firms.  It assesses the firms’ publicly available thought leadership content, and measures social media reach, engagement, and marketing performance on specific social platforms, such as Twitter, LinkedIn, Facebook, and Instagram. Here are some of the highlights of the 2018 Social Law Firm Index.

Let’s start with some general observations on trends:

  • There still is an ongoing rapid increase in the use of digital technology and social media among law firms.
  • There also is a noticeable surge in video adoption. (See below).
  • Firms are maximizing the potential of interactive content:Interactive content is one of the best ways for law firms to facilitate engagement across digital channels like email and social media. In 2018, there was a trend towards interactive content such as free tools, polls, and surveys.
  • When it comes to the actual content, more firms are crafting client-centric thought leadership and social media content that aims to address client desires rather than simply touting a firm’s bona fides. (On Twitter, especially, there was a major increase in high-quality, non-promotional firm content.)
  • Compared to 2017, we can notice shifting priorities and shifting channels:Law firms are getting smarter about setting aside social platforms that don’t reach their target audiences or provide a return on investment. Facebook, which was hit by several scandals in the last year, in particular saw a major decline in use amongst firms.
  • There’s an increasing need for paid social. (See Below).

The study closely examines how firms are using digital platforms to communicate and amplify thought leadership. Good2bSocial believes that a law firm’s most valuable resource is its intellectual assets. They therefore define thought leadership as material that, for the purposes of business development, communicates to potential clients and others information about those assets. These communications can take the form of articles, client alerts, tool kits, videos, podcasts, and blogs.

The report also looked for what characterizes the best and worst performers. The best performing firms are demonstrating the greatest comprehensive adoption, integration, and use of social media and content marketing to market and grow their practices. Their messaging is coherent, consistent, and current across platforms, and best practices are evident at all stages of execution. They displayed the following characteristics, some of which were mentioned above in the general trends:

  • Video Takes Over: In 2017, 26% of law firms used it; in 2018, 36% does. Take content like testimonials, case studies, and blog posts, and turn them into videos for a more engaging way to connect with your target audience.
  • Interactive Content is Key: Use interactive content like polls, surveys, and free assessment tools to understand your clients and provide them with future content that you know they’ll find valuable.
  • Thinking like a Client: Use surveys and polls to inform your content strategy. You can’t write the right content if you don’t know what your clients or prospects care about.
  • Quality over Quantity: Aim for at least 70 percent of your social media messages to be original, non-promotional content like blog posts and client alerts.
  • Shifting Priorities and Shifting Channels: Analyse and measure which social networks are the most effective for your law firm. Then, prioritize the ones that bring you the highest ROI. While Facebook is still effective for law firms trying to reach consumers, corporate law firms are finding that they’re better off using LinkedIn and Twitter.
  • Rise of Paid Social: Thirty percent of law firms surveyed reported using paid social in order to enhance the reach of their social media messages. Facebook and LinkedIn are equally popular choices when it comes to firms investing in sponsored content on social.

The characteristics of the worst performers, on the other hand, fall in two categories. First, there are the abandoned profiles, i.e. profiles on social media that are no longer updated. Secondly, there are all the missed engagement opportunities. The following best social media engagements practices were not observed:

  • Sharing blog content on social media channels: it’s not enough to publish a blog article. Let the world know about it on social media. This not only applies to new articles but also to older ones that are still relevant.
  • Employee Advocacy: Employee advocacy has the power to exponentially increase the reach of your law firm’s thought leadership content.
  • Engage / interact with others: like, retweet, comment, mention key influencers and thought leaders. Following social media best practices like influencer marketing, using hashtags, and posting content multiple times are too often forgotten and lead to missed opportunities for law firms to generate awareness and clients.

 

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Legal IT

Introduction to Legal Design

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An exciting new field of activity within Legal Technology is Legal Design. The underlying idea is simple: how can we apply principles of design (in the broad sense, including software design, graphic design, functional design) to the law in order to improve the user experience of all stakeholders? It is a vast field, to which books and courses are dedicated. So in this article, we will only be able to scratch the surface. If you are interested in Legal Design, and want to find out more, have a look at the websites of Margaret Hagan, www.lawbydesign.co, and of the Legal Design Lab of Stanford Law School and d. School, www.legaltechdesign.com.

How can Legal Design be defined? It is the application of human-centered design-thinking principles to the practice of law, to make legal systems, products, services and processes more useful, useable, understandable and engaging for all. “Legal Design is a way of assessing and creating legal services, with a focus on how usable, useful, and engaging these services are. It is an approach with three main sets of resources — process, mindsets, and mechanics — for legal professionals to use. These three resources can help us conceive, build, and test better ways of doing things in law, that will engage and empower both lay people and legal professionals. ” (Margaret Hagan)

Legal Design can be very useful. Virtually every aspect of our lives is regulated in some way or another. Unfortunately, there is a serious disconnect between the law and the legal consumers: contracts are made by lawyers and sometimes only understood by lawyers. The court system often is an incomprehensible maze that appears to be more interested in creating obstacles than in offering solutions for legal issues. Every product you buy or every service you use has terms and conditions that typically need to be studied in detail before you can understand them, etc.

With Legal Design, we can reduce that disconnect by focusing on a “human-centered approach in which the users’ needs, wants and desires are first identified and then used as a basis to design and develop solutions. The result is legal information and services that are transparent, accessible, visually clearer and as mentioned above, useable, understandable, useful and engaging. When applied in a strategic manner, legal design can improve performance, innovation, brand perception, audience engagement, conversion rates and many other metrics” (Meera Sivanathan).

As such, Legal Design aims to deliver legal services and products that are (1) usable, (2) useful, and (3) engaging. Legal Design therefore has three orders of goals:

  1. Helping the lay person and the legal professional;
  2. Creating a better front-end to the legal system and a better back-end;
  3. Working for incremental short-term improvements and breakthrough long-term change.

Some examples: somebody’s will or a contract or a regulation can be made more comprehensible if it is shown in a chart of infographic. Legal chatbots and robots like DoNotPay make taking legal action as easy as filling out online forms. Legal education, training and practice benefit from improved (typically visual) communication tools, etc.

Legal Design is already being applied in the following areas:

  • Legal Design Process (which typically deals with analysing processes and systems in order to streamline them and create a better user experience),
  • Visual Law and a Visual Law Library,
  • Access to Justice,
  • Legal Education & Practice,
  • Justice Innovation,
  • A better Legal Internet,
  • New Models of Legal Organizations,
  • Legal Communication Design, for which Smart Legal Tools (Communication) are being developed. Have a look, e.g., at the Legal Design Toolbox: legaltechdesign.com/LegalDesignToolbox/

In her online book, Law by Design, Margaret Hagan explains that Legal Design offers the following benefits:

  1. Improved Problem Solving: To be more forward-thinking and creative in generating solutions for problems.
  2. Client-centered Services: To put the focus on the client, and win clients in better ways, deliver them better services tailored to their explicit (and buried) needs — and to communicate information to them in clearer, more compelling, and more usable ways.
  3. Better Communication: To communicate information — particularly complex legal information — in a clearer, more compelling, and more usable way.
  4. Richer Legal Profession: To build a new set of professional paths and opportunities for lawyers, with new kinds of jobs and competencies.
  5. Better Legal Organizations & Worklife: To develop new ways of collaborating, improving processes and decision-making, and build stronger communities inside of legal workplaces.
  6. New Products & Services: To generate ideas of how to serve clients, lawyers, and the general public in new ways — through technology or otherwise, and to build ideas into viable products and businesses.

 

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Legal IT

An introduction to smart contracts

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In a previous article, we have written about Artificial Intelligence (AI) and contracts. AI is having an impact in three areas when it comes to contracts: 1. contract review, 2. contract management and automation, and 3. smart contracts. While smart contracts are automated contracts, what sets them apart from other automated contracts is the usage of Blockchain technology.

What are smart contracts? We’ll combine elements from the definitions Tech Republic and the Investopedia to explain: A smart contract is a software-based contract between a buyer and a seller. The software automates the business processes and the conditions of fulfilment contained within the contract. The code programmed into the contract actually makes the contract self-executing so that it takes action whenever a specific condition is triggered within the contract. The code and the agreements contained therein exist across a distributed, decentralized Blockchain network. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. They render transactions traceable, transparent, and irreversible. Because the smart contract is software capable of automating business processes and contract fulfilment automatically, it eliminates the need for managers and middlemen supervision.

Let’s give an example: A is a supplier of products for B. Every month, B places an order with A. It makes sense to automate this process. The smart contract is a piece of software that, e.g., would contain the code that says if an order is received by A from B, and B is not in arrears, then that order must be executed. Now, with smart contracts these transactions are typically registered in a distributed, decentralized Blockchain network of ledgers. In a previous article we explained that Blockchain is a technology that registers transactions in a ledger, where everybody in the network has a copy of that ledger. Transactions are secured by using a verification code that is calculated based on all previous transactions in the ledger. In essence, to forge a transaction, one would therefore have to forge all registrations of all transactions in all ledgers.

The benefits of smart contracts are clear: the whole process of transactions between parties can be automated, and by using Blockchain technology one has virtually irrefutable proof of the transactions. Add to that that programming code tends to be less ambiguous than the generic legalese of traditional contracts, so the chances of disputes about the interpretation of smart contracts are smaller.

The usage of smart contracts is expected to grow fast. A survey published in Forbes Magazine predicts that by 2022, 25% of all companies will be using them. Basically in any market where Blockchain technology is useful, one can expect smart contracts to be useful, too.  Smart contracts can also be the perfect complement to E.D.I. At present, smart contract applications are already being used in – or developed for – supply chains and logistics, in finance and securities, real estate, management and operations, healthcare, insurance, etc.

Still, one has to be aware of the limitations of smart contracts, as there are a number of legal issues to take into account. The name ‘smart contracts’ is misleading in that they aren’t really contracts but software. As such, there are legal concerns with regard to:

  • Offer and acceptance: is there even a binding contract, if there is no human interaction or supervision, and the transaction is completely executed automatically?
  • The evidentiary value: smart contracts are not written evidence of agreed rights and obligations because they encapsulate only a portion of any rights and obligations that is related to contractual performance
  • Jurisdiction: is the area of jurisdiction clearly defined in case of a conflict or dispute?
  • Dispute Resolution: are there any dispute resolution mechanisms in place?

When considering working with smart contracts, it is therefore a good idea to first come to a framework agreement in which these issues are addressed. And those will preferably still be written by lawyers.

 

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