Extranets Take Root In Corporate Legal Departments

Like every other overtaxed in-house attorney, Niko Lorentzatos is excited to adopt any technology that can make his job easier. The Web-based extranet has gone a long way toward that end.

Three years ago Lorentzatos, senior litigation attorney at Houston-based Burlington Resources Inc., began collaborating with outside counsel via an extranet hosted by CaseShare Systems Inc., based in Denver. Lorentzatos couldn't be happier with the results.

"You're talking not very much money per month for an enormous convenience," Lorentzatos says. "The beauty is if you're traveling, instead of carrying documents around with you, you can just connect and access all your data over the Internet."

A growing number of in-house lawyers are finding extranets to be the same organizational blessing their law firm brethren discovered years ago. Law firms were the early adopters--embracing the technology as a way to improve customer service by providing clients with secure, 24/7 access to legal documents, case updates and other pertinent information.

Now, corporate law departments are turning that business model inside out. Instead of using outside counsel extranets--which can be impractical if you employ a substantial number of firms--legal departments are creating their own extranets and letting outside counsel come to them.

"It's pure convenience," Lorentzatos says.

Early Adopters

For the uninitiated, an extranet is an online data repository that provides authorized users with secure access to information through a Web browser, typically with some level of control over who gets to view what information.

Law firms began using extranets early on primarily because they were better able to implement the new software-based systems.

"A larger law firm often will have its own IT department, but in a corporation IT belongs to the company," explains Andy Atkins, director of the University of Florida's Legal Technology Institute. "They have to take care of everyone, and the law department is typically a small part of that system. There's expertise on the core system, but nobody has expertise in legal-specific software."

As a result, legal departments were happy to access extranets provided and operated by key outside counsel. And outside firms were just as happy to provide the service since it strengthened the client-firm bond and made the barrier to exit that much higher.

"Right now I have roughly 1,200 files ongoing at a time," says Mark Tamminga, co-author of the book Extranets for Lawyers and partner at Gowling, Lafluer & Henderson in Canada. "In the early 1990s that would have meant calls and overnight packages back and forth. Now all our in-progress work is online. Clients love it, and we love it."

But the economics surrounding extranets have begun to change, says Richard Finkelman, sales director at Chicago-based Navigant Consulting Inc. "Until the past five years or so, few corporations provided (external) portal technology to their internal clients. So the cost of a dedicated extranet was beyond the reach of most corporate law departments," he says.

Now, he says, IT departments are increasingly providing portal technologies to departments within the company--such as engineering, purchasing and global sourcing. "In the healthcare industry, companies are using extranet portals to facilitate FDA approvals," he says. "So, legal and other departments can now piggy-back on the existing infrastructure."

That's why many larger clients are catching on and, in some cases, catching up. While they come in a variety of flavors--most legal extranets are hosted internally by a corporate IT department; by an outside law firm; or by a third-party service provider.

Bringing It Inside

Lorentzatos' application is relatively simple and inexpensive--he uses the extranet on a per-project basis, while his provider, CaseShare, stores his data on its own servers for a monthly fee.

On the other hand, DuPont's legal department uses its extranet to manage and collaborate with its 48 outside law firms. The extranet is built right into the company's IT infrastructure. Sunnyvale, Calif.-based Interwoven Inc. supplied the extranet software program.

"Rather than accessing 48 different extranets, we decided to bring the law firms to us," says Tracey Schreiner, manager of legal information technology at Wilmington, Del.-based DuPont. "All our information is in one central location and it's our location. With the really complex cases, external counsel often request documents from earlier or similar cases. Now it's posted on the extranet so they can go there first. They're already raving about it in terms of trial and deposition preparation."

With some 3,000 cases currently underway, DuPont's in-house litigators were the first to put the system through its paces. Schreiner says patent, M&A and commercial lawyers will soon use the extranet as well.

Like DuPont, Sears Holdings Corp.'s legal department in Chicago is in the process of implementing an extranet that will support everything from ongoing litigation to executing and tracking internal legal hold processes, says Heidi Rudolph, vice president of law, finance and operations. But unlike DuPont, the Sears extranet will be hosted by Navigant.

The project began last year as a one-time application to support a large-scale litigation that's still underway. Users were so happy with the system Sears decided to expand its use. In addition to collaborating with outside counsel, Sears' lawyers also access other externally hosted application service providers already in use, such as Instraspect, Stratify and Tripoint SmartCounsel, through the Navigant extranet portal.

"We wanted to access all our legal tools through the one portal," Rudolph says. "Right now we're using it for the larger litigation cases, but eventually we will use it to manage other matters, including smaller litigation cases, which involve smaller dollars but are higher in number."

The company has other plans afoot as well, including one to use the system to streamline Sears' legal-hold notification process. Once potential legal custodians (sometimes numbering in the hundreds corporatewide) are identified, Rudolph hopes to use the system to notify them (and explain their responsibilities) via e-mail and automatically track each acknowledgement.

"It's an important process and it's increasingly becoming a problem," Rudolph says. "We have to send the notices out ourselves and keep track of all the responses. It's not something we do often but it's going to be a huge time-saver."

A Hybrid Approach

For medium- to small-size law departments, however, there are simpler (and less expensive) alternatives, including the hybrid "peer to peer" approach that Groove Networks offers. Microsoft acquired the Beverly, Mass.-based company in April. Its technology differs from a standard extranet in that all the shared data resides on each party's hard drive, rather than a central server. Users connect through a "relay server" that automatically synchronizes the data on each party's hard drive.

According to Matt Pope, Groove Networks' senior director of marketing, the product is ideal for relatively small, geographically dispersed teams that work together on complex projects.

"It's really more like a virtual office--the software lives on each participant's laptop or desktop and enables them to work together as if they were in the same physical location," Pope says. "And because the software is installed on the user's hard drive, there's no corporate server or IT infrastructure involved."

It's the product's simplicity that attracted Austin O'Flynn, senior counsel with San Francisco, Calif.-based Catholic Healthcare West, one of the nation's largest non-profit healthcare systems. "I used it last year for an urgent litigation matter," O'Flynn explains. "We have 55 attorneys in eight offices in three states, and we had to quickly gather and prepare documents from all three states. I had it up and running myself with no IT support."

The Groove Networks software allowed O'Flynn to create a number of workspaces for a team comprised of 16 in-house attorneys. Once an initial copy of a document is posted to a workspace, document changes are sent to the relay server and each participant gets a notice that the document has been updated.

So Many Choices

While legal departments that created their own extranets seem pleased, this is obviously not a one-size-fits-all solution. As a result, a law department must carefully consider its needs, as well as its corporate IT infrastructure, before making any decisions.

"First, you have to figure out your needs," Finkelman says. "Then you should sit down with someone from the IT department, explain what you want, and find out what the internal capabilities are and what kind of software is already in place. Then, after all that's done, you can start meeting with consultants and vendors to determine where to go from there."

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