Extranets Cut Costs In Law Departments

Online Exclusive: Security Concerns.

With all the discussion concerning alternative fee arrangements, other ways for in-house counsel to collaborate with their law firms to reduce spend are sometimes overlooked. One such method is the use of private, shared web sites known as extranets, which facilitate communication and collaboration between law departments and their law firms. Some experts say the resulting efficiencies can help reduce outside counsel costs.

An extranet is a secured system extended to authorized users outside a company or firm to share information. Sometimes known as portals, e-rooms and sharerooms, most extranets are designed to allow users to read documents or access applications from anywhere in the world using a private login ID and password.

Extranets are most commonly used for litigation and transactional matters, according to Rachelle Rennagel, chief knowledge officer at Sheppard Mullin. In litigation, an extranet is set up as a central repository for documents such as pleadings, matter deadlines and small databases. They also are commonly used for due diligence in transactional matters or for storing deal-related documents.

"Extranets offer companies a cost effective process for managing their legal matters," says Ken Jones, COO of service provider Xerdict Group, a subsidiary of Sedgwick, Detert, Moran & Arnold.

An extranet promotes efficiency because anyone viewing a document or schedule can be assured of looking at the most recent version. Current case management data can also be posted online, eliminating the need for law firms to produce weekly or monthly reports. Multiple firms working on one case can stay updated without time-consuming conference calls or meetings.

To review the status of a matter, "Clients don't have to make a call to their [outside] lawyers. They can take a look at their matter or portfolio online," says Matt Kesner, chief technology officer at Fenwick & West.

Jones refers to this use of extranets as a "self-service model," which helps in-house counsel reduce outside counsel fees by providing them with the ability to review and examine litigation data without involving their outside lawyers.


Added Benefits

Posting tasks and research related to a matter on an extranet also can reduce the amount of duplicative work done by local counsel on a nationwide set of related litigations. For example, lead counsel can share vetted research about a case topic or a particular plaintiff with all local counsel, says Jones.

Additional functionality features can provide added benefits. A matter dashboard can include all documents, contacts, calendaring, status updates, daily digests and billing information for each case the law firm is handling.

"Law departments can track the workflow of outside counsel assigned to manage each matter, the budget and spend for each matter, information on the plaintiffs in the matters, key dates associated with the claim or litigation, post items on a bulletin board to share among in-house and outside counsel, and generate one-click litigation reports," says Jones.

Extranets also can be used for simultaneous document review and editing online by two or more attorneys. But that capability is rarely used, according to Kesner. "Clients and lawyers don't want to waste time online preparing together a next draft word by word. Lawyers prefer to assign one group or party to make the next round of revisions and publish these to the sharerooms," says Kesner.

Some of the emerging requirements in the market, says Jones, include adding functionality to push case updates and calendar status reports out to smart phones and other mobile devices, which will help lawyers keep current in their matters.

Building Choices

Legal departments have three extranet choices: They can use extranets created by their outside law firms, they can build their own extranets, or they can contract with a service provider.

The law firm model is a common form. Fenwick & West currently supports more than 20,000 extranets to collaborate with law departments and other clients as well as internally, says Michael Sands, partner and co-chair of its electronic information management group. Fenwick establishes a new shareroom for each matter, providing online access to documents, calendars and other files.

"This is something that we essentially pioneered a decade ago. Sharerooms are an integral and critical part of our practice and delivery of client service," says Sands. Fenwick provides legal departments with extranets for 20 percent of what it would cost to hire an outside vendor to build an extranet, Kesner adds. Rennagel says her firm offers extranets as a value-added service and absorbs the cost.

While extranets can promote communication and collaboration between a firm and its legal department clients, says Rennagel, law departments sometimes decline to use the firm's extranets for a variety of reasons--they may have their own extranet or just prefer sending files by e-mail.


Complex Solutions

Some consultants have predicted that most law departments with good internal IT support will eventually create their own extranets, like DuPont did, to increase efficiencies and maintain better control and reporting of its relationships with firms.

"My guess is that nearly all will do so, either in-house or with a SaaS provider, since companies want to maintain control," says Scott Giordano, corporate technology counsel at service provider Mitratech. "Firms come and go, so it makes sense for law departments to have their own place for hosting documents and tracking matters,"

Both Jones and Giordano say they can help companies address situations requiring more complex solutions than those offered in a basic extranet.

"Often times we are asked to build systems with specific fields and reports to track thousands (or more) of claims with customized reports," says Jones. "Usually one cannot specifically configure [standard extranets] to handle sophisticated tracking needs, at least not without significant programming driving up the costs."

Giordano says his company's "extraprise collaboration software" provides companies security and accountability, such as the ability to track "who has done what with whom or what document."

For companies that want their own extranet, Rees Morrison, president of Rees Morrison Associates, suggests contracting with a service provider. "You don't have to design, host and maintain your own extranets," he says. "Service providers will let you contract to use their extranet capabilities ... and make the step easier to take."

Morrison cites the example of a legal department that has one-year agreements with a provider, allowing the department to quickly set up an extranet, load documents, and give passwords to law firms and others for access. "When the investigation, discovery effort or due diligence ends, the department can shut down the online shared-access site and get back its documents burned to a CD," he says. "The savings in time, effort and money can be significant."

Contributing Author

Michael Kozubek

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