Technology: How firms’ tech choices affect you

Corporate legal departments should ask how they're using technology to control costs.

Since I started practicing in 1993, technology has gone from a back-office topic to a common subject of discussion among lawyers. To date, however, it has not been a point of discussion with a potential client.

That may change soon.

The 2008 financial crisis only brought to the surface a shakeup that had long been coming. Legal costs had been steadily on the rise, and clients had understandably been looking for opportunities to cut those costs.

Cutting legal costs, however, is very difficult to do because, when it comes down to it, law is a labor-intensive service business. Worse, the factors that affect the cost of handling a matter are very difficult to predict at the outset, particularly in litigation.

While the market can demand—and has demanded—that lawyers get paid less, there are limits to how little lawyers will accept to perform the work. There are other strategies for fixing the problem, such as alternative-fee arrangements. These may ultimately drive greater efficiencies as well, although how much these arrangements will lower the cost of legal services in the aggregate remains to be seen.

That is where technology steps in. Here is why the way law firms use technology likely will be of greater interest to you.

Long term, the market will provide you with firms that have been structured to avoid using large or even medium-sized staffs to provide their services. The non-billable staff of a law firm has traditionally come, at its core, from document preparation (secretaries) and filing/management (secretaries and office services departments). That staff requires additional staff to manage it (office manager, human resources manager).

You pay these costs, even if not directly. They are built into the fees firms charge.

Software and hardware improvements from the past two decades are now changing how lawyers work. Now, lawyers type, edit and even finalize documents for filing and sending. Lawyers can even print briefs and motions to PDF format and upload them to electronic filing sites, at least in federal cases, such that filing and service have become automated.

With case management software, lawyers can even handle internal filing of documents in potentially very little time. Retrieval is a matter of a good search, not a phone call to a secretary or paralegal.

You may not yet have seen a significant reduction in your legal costs. Established firms invested in staff and office structure designed to do things a more traditional way. It is not realistic to expect a firm to retool its entire business overnight.

But there are cracks in the dam. The market shakeup left clients more cost-conscious than ever, and partners from traditional firms are seeing opportunity. They are starting to venture out on their own, but this time starting with small-footprint offices and lean staffs. Their money is going into technology rather than space and staff. Their hourly rates are lower.

Not all matters are appropriate for small, ultra-lean firms. In-house counsel must figure out what work should go where. But these days, you have more options to reduce costs while employing the same lawyers you have hired in the past. Smaller firms that are taking this path can benefit if they are able to build long-term relationships, cutting their costs further.

When you interview firms, consider asking them how they use technology to control costs.


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Todd Flaming

Todd Flaming is a founding partner of KrausFlaming LLC in Chicago.

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