Two Step's Private Company Equity Management Blog

For years now, law firms have struggled with the all-important question: How exactly does better legal service lead to a better bottom line?

Lawyers historically have been less concerned with "customer service" in the traditional business sense and more focused on billable hours. To some degree, there was a delicate balance between a firm's goal to bill a client more hours and the client's goal to be billed fewer hours. Minimal attention was paid to the customer experience and client satisfaction (other than perhaps delivering fantastic catered lunches in palacious conference rooms).

However, the market has tightened tremendously in the economic downturn. Companies use fewer law firms each year, and as a result, they're being highly selective of who they work with. In light of this, law firms are now honing in on how exceptional client service can translate directly into more profitable legal operations.

The better legal service/better bottom line question was recently examined by Michael Rynowecer of The BTI Consulting Group in a webinar called World-Class Client Feedback: Driving Revenue in a Down Market. Although the session was focused specifically on the client feedback loop, it also articulated - based on BTI's annual research surveying over 1,400 law firm clients - how client satisfaction leads to higher billable rates, increased revenue growth, and even lower business development costs.

This compelling webinar presented the case that out of 505 law firms relied on by Fortune 1000 companies, only 42 firms (or 8.3%) possess what has been described as "client allegiance" or client loyalty. This means that their clients would go back to them for more work and recommend that firm enthusiastically to their peers. Keep in mind that most clients are using 11 law firms for their work - so if you can get more of that work, it really matters.

To boot, BTI's research shows that firms with client allegiance charge a 20% higher billable rate ($409/hour v. $342/hour) and grow 35% faster than other firms (13.4% v. 9.9%). Would that appeal to most law firms? Would the partners at your firm like to charge a 20% premium per hour and grow 35% faster? Absolutely. So, how do you get there?

According to BTI, client satisfaction is the key prerequisite for enjoying these client allegiance benefits. The two key measures that BTI uses to rate client satisfaction are whether the client would:

1. Recommend a firm over other firms; and
2. Rate a firm as providing superior service.

What can a firm do to increase its clients' satisfaction? Well, BTI identifies 4 firm attributes (out of 17) that strongly correlate to favorable client relationships. These are:

1. Demonstrating client focus;
2. Understanding the client's business in-depth;
3. Demonstrating a genuine commitment to help; and
4. Providing more value for every dollar.

The webinar then presented various feedback methods firms can use to determine if they have these characteristics, or if they must take steps to put themselves in a better position.

At Two Step Software, our customers tell us that having immediate access to client information and documents can have a direct impact on 3 of these 4 attributes: client focus, commitment to help, and value for the dollar. When clients experience first-hand a firm that has instant access to entity and ownership records--and are therefore more productive, can make better decisions, and reduce the risk of error--they know they are getting more value for each billable hour. When a law firm has done the legwork to maintain accurate corporate records for its clients, it shows that they are committed to helping clients achieve their goals.

Scott Glickson, a Two Step customer and Co-Chair of the Technology and Business Department at McGuireWoods LLP, sums up his experience nicely: "I can't tell you the number of emails we receive where people request documents and we email the documents right back to them — a copy of their stockholder agreement, a charter, whatever it is — and the number of emails we receive back that just say, 'Wow!' One word — that's it, just 'wow!' — because it's so fast."

So, how does BTI suggest you get started with improving your bottom line? Begin by asking three simple questions:

• How does our firm compare to other firms?
• How do our rates compare with other firms?
• How does our number of client recommendations compare to other firms?

After that, look at the following four financial metrics and evaluate whether the trend at your firm is heading in the right direction:

• Total revenue by client for major clients
• Net effective rate per client
• Net effective rate by practice group
• Client retention rate for top 25-50 clients

If you want to learn more about how greater client satisfaction can lead to premium billable rates and increased revenue growth, check out BTI's research and presentations. If you want to make it a reality, take a look at Corporate Focus to discover how this powerful tool has already improved the client satisfaction scorecards at many firms.

Earlier this year, one of our law firm customers, Andrews Kurth, LLP, came up with the novel idea of adding a fixed-fee "Start-Up Organization Package" to its legal service offerings. According to Alan Bickerstaff, a partner in the firm's technology and emerging companies group, the package provides a comprehensive set of legal services designed for "young entrepreneurs who want to start a new company, typically technology-related." The complete set of services is described at www.andrewskurth.com/startup.

At Two Step, we were pleased to see that some of the services listed in the start-up package relate directly to Corporate Focus - such as tracking entity records, ownership administration, preparation of capitalization tables, and online minute books. In fact, one section of the description notes:

Capitalization Matters

• Entry of all initial capitalization data and corporate records into capitalization tracking software and corporate records database.
• Software provides the capability on an ongoing basis to:
• Track all stock and option issuances and cancellations
• Maintain copies of corporate records and minute books
• Produce a wide variety of capitalization reports
• Provide start-ups access to their capitalization and corporate records via the Internet

The list even mentions direct client access to online corporate records, which seems to be offered by an increasing number of firms today.

Fixed-Fee Package for Start-Ups Offers Capitalization Tracking

If a law firm is to provide such an expansive set of legal services for a fixed fee, they must possess a high degree of confidence in their ability to work efficiently. The key to this confidence is having a centralized, secure platform for managing entity and ownership records, online minute books, and capitalization tables. Such a system ensures not only that all information is accurate and up-to-date, but also that no time is wasted searching for it.

While Andrews Kurth has certainly broken new ground, many other firms are testing the waters in a similar fashion and exploring ways in which they can serve their corporate clients better.

So, is this the dawn of a new trend for law firms serving the emerging company and technology start-up marketplace? It certainly makes sense; after all, this is one of the most important and profitable client segments for any firm, since start-up clients lead to financing, merger and acquisition, and public offering work down the road. As a partner at one of our law firm customers recently said, the broader you cast your net in the start-up sea, the more likely you are to find exciting clients who need high-value transactional work.

Scott Glickson from McGuireWoods, LLP (another client of ours) puts it best: "Corporate Focus streamlines activities so that we create a more favorable impression with the client, which leads to more business, more referrals, and more value all around ... We all have access to the same information, and we can access it at the same time."

As law firms increase their use of productivity tools such as Corporate Focus they are better positioned to offer cost-effective legal services to start-ups that are cash-strapped and trying to prepare for their first round of venture financing. If firms serve them well in the early years, these budding companies are destined to become satisfied clients who will one day require more sophisticated and profitable legal services.

Watch an online demonstration of Corporate Focus if you'd like to learn more about how to make your firm more productive.

Remember that recent GE Medical Records TV advertisement in which a doctor asks his patient, "I wonder if you've ever been checked for cortical spreading depression?" - and then the camera pans out to a team of doctors sitting in the audience, who start confidently shouting out details from the patient's medical history?

Imagine if you had a team like that which could readily supply the answers to all of your entity and ownership questions for every client you work with. When I saw that GE commercial, it made me immediately think of how some of Two Step's law firm customers are enhancing their level of service by utilizing electronic entity and ownership records. Click here to see the GE video.

Perhaps you're on the phone with a client and you need to know whether the company is a Delaware or a Massachusetts corporation. An attorney suddenly yells out: "They're a Delaware S-corp. filed on March 10th, 2007!" Or, if you've ever filed the amendment to the charter to increase the authorized common stock for the growing stock option plan. Imagine a paralegal shouting: "Yes! We increased the common stock pool from 400,000 to 1 million shares on June 2nd, 2008!"

Maybe you're dealing with a complex calculation, such as how many shares are held by a key employee who the company is considering terminating. A young associate does the math in a split second and yells out: "He currently holds 376,286 shares of common stock on an as-converted basis, including shares that have not yet vested, which represents 3.78% of the company on a fully-diluted basis!"

Apply the same scenario to any number of common questions that you're faced with each day, and think about how much more productive you could be. Wouldn't it be great if there was a team of lawyers and paralegals who scurried around looking for the answers you need to satisfy your clients' inquiries or prepare that critical document - and those answers were fast, accurate and free?

Well, that's the reality of electronic entity and ownership records. With Corporate Focus, leading law firms of every size are practicing client-focused legal service and delivering it in ways that increase their bottom line.

For example, Christopher Howard at Pierce Atwood, LLP loves how Corporate Focus allows Pierce Atwood attorneys to access important client information at a moment's notice. As he explains in this user story: "I think the power of Corporate Focus emerges when you're at a critical juncture and you have access to all your corporate records in one place—rather than having to pull out a series of paper records or spreadsheets. The productivity piece really becomes clear when you don't have associates scrambling around trying to reconcile records or find what they need."

Just imagine a day when your clients' entity and ownership records are in one secure place, easily accessed by every attorney, paralegal and even selected clients. And the answers you seek are available to you instantly - much like the doctor in the GE commercial. You could provide your clients with significantly faster response time and lower their legal bills, all leading to increased satisfaction and more business for your firm. In other words, everybody wins.

The fact is that electronic entity and ownership records are already here, and the future of legal efficiency is now. Shouldn't you be a part of it? 

Watch an online demonstration of Corporate Focus if you'd like to learn more.

OK. We can all agree that organizing your files is no fun. In fact, if it doesn’t affect your work, you might want to put it off as long as possible (like cleaning your closet, flossing your teeth, or losing 5 pounds). But if you’ve already determined that getting organized is essential to your success, how do you take that first step - especially when there’s really no end in sight?

The lawyers who use Corporate Focus have not only taken the first step; many now have every minute book document and stock ledger record fully organized in a centralized system - and it’s paying off in greater productivity, better client service and fewer headaches.

If you didn’t spring to action when you heard it was National Organize Your Files Week, let me take this opportunity to give you a little nudge in the right direction. Whether you think of it as the first of 12 steps to recovery - or just choosing an apple instead of chips - here are three simple things a corporate paralegal can do that will start you on the path toward having your minute books and ownership records meticulously organized.

Organize Your Way to Better Productivity - Step 1

Warning: Any one of the following activities may cause you to be more efficient and effective in your legal work.

1) Inventory Your Minute Books: Use a spreadsheet and make a list of the name of every company for which your firm has the minute book. List the name, the date you located it, its location, and who is the primary contact at your firm for the minute book. Also, note (for Item 2 below) whether the stock ledger records are kept in the minute book or kept separate.

Tip: If that seems overwhelming, try to make a list of just 25 minute books. Now that you have the process, another 50. Then, another 50...you get the idea. 2) Inventory Your Stock Ledgers: Same process as above, but this time, make a list of the stock ledgers for each company where the stock ledger records are kept separate from the minute book.

2) Inventory Your Stock Ledgers: Same process as above, but this time, make a list of the stock ledgers for each company where the stock ledger records are kept separate from the minute book.

Tip: Keep in mind that you need to know where a ledger is and who is responsible for it, since you will need to look through the stock ledgers later on and fill in gaps.

3) Inventory Your Capitalization Tables: Same process as above, but this time, make a list of those companies for which your firm maintains a capitalization table in a spreadsheet file. This may be a small percent of those companies for which you have the minute book or stock ledger. Only those companies with more complex ownership records or different classes of stock or options will typically have a cap table.

Once you’ve completed these small tasks, let us at Two Step Software know when you’re ready for Step 2. Getting organized might seem challenging, but it’s just a matter of taking it one step at a time.

Imagine what you might get done before July 4th, when we’re encouraging everyone to stop organizing their files for the entire summer. And how great would it be if you could be more productive, organized and effective when you get back to the office after Labor Day. Before you know it, you’ll be ready to transition to an online system like Corporate Focus. Once you do, you’ll be spending National Organize Your Files Week on vacation.

Watch the Corporate Focus video to learn what it would be like to have all your entity, ownership, minute book and compliance information and documents in a centralized, online repository.

I was at Starbucks the other day, chatting about the unseasonably mild weather with my favorite barista, Mark. Out of pure curiosity, I asked him if the customers seem nicer as the weather improves. After all, who doesn't prefer coming in for a grande ice coffee or Frappucino on a gloriously warm afternoon--as opposed to a hot cup of coffee on a bitterly cold day?

So Mark replied, "Honestly, our customers are just great all the time. It's what makes working here worth it. You kind of get to know them and understand what they're going through."

I might have thought he was just giving me the canned company line, but given that Mark has been at this Starbucks for many years--and cares about every cup of coffee as much as the first one he ever made--it seemed genuine. He went on to tell me that over time, he hears about customers' illnesses, job losses, moves, weddings, new babies and kids going to college. According to Mark, listening to customers tell their stories is all part of a day's work for a Starbucks barista.

As I listened to Mark talk about his fondness for his customers, I couldn't help thinking, "Wow! That's how I feel at Two Step Software, even though our jobs couldn't be more different." I asked him how long he'd been with Starbucks (seems like forever to me) and he told me 14 years. I in turn explained that I'd been at Two Step for 16 years and felt the same way he did about our own customers.

Like my coffeehouse friend, I realized that my sentiment wasn't merely a hackneyed business platitude. We at Two Step are genuinely passionate about putting a smile on people's faces and making their difficult jobs a little bit easier.

I told Mark that as we get to know them over the years and share their ups and downs, the Two Step staff really comes to care about our customers on a personal level. I shared a story about one of our favorites who had been the CIO of a large Boston law firm. Her firm has used Corporate Focus for many years, but she was laid off in the legal downturn of 2008-2009.

This particular customer told us about her job loss this past summer, and that she was looking for a new job in the technology field. About six months later, we were thrilled to hear from her that she had joined a great company in Cambridge, MA. Ironically, this company is not only a customer of Two Step's, but Two Step is also a customer of theirs. They use our software for equity management and reporting, and we use their software for website tracking and reporting.

In my opinion, a job doesn't necessarily feel like "work" if you enjoy the relationships you inevitably build with your customers. And when you consider that we spend 30-40 years of our lives working, that's a very good thing.

At Two Step, we love hearing when our customers are pleased with our solutions--and also when they're not. Every day is an opportunity to overcome a new challenge and deliver the best service we can. It also never hurts to hear a heartfelt "Thanks. You saved the day!", or get a referral from a happy client.

Take it from Mark, the barista: focusing on your customers is simply a good way to do business. It's also the way Two Step Software has been doing things for 16 years--and we have no intention of stopping now.

I'm often asked this question by lawyers interested in using Corporate Focus to improve equity management and corporate compliance tracking for their clients: When is the right time to start? Are we too early? Are we too late? Are we right on time?

To help answer these questions, I'd like to tell you about three very different law firms I met with just this past week.

The Small Firm: The first one is a sole practitioner who just left the largest law firm in the world a few months ago; he had used Corporate Focus for his client tracking for several years. This lawyer only has 5-10 clients to put in the system, but these clients represent the vast majority of his revenues. He wants to give them outstanding value for every dollar billed. And he knows that direct access to their data will impress them--and make them feel like they're still getting the same top-notch service they enjoyed at the mega-firm where he previously worked.

The Big Firm: The second is the largest law firm in one Northeastern state where they have over 1,000 corporate minute books they've been tracking for their clients for years. This firm would love to be more efficient when they do their client work--and they'd like to provide clients with direct access to their information. However, with so many minute books (and about 5-10 people that would be forced to change the way they track their clients' data), the project seems a bit overwhelming. They're not quite sure how to get started. They had looked at getting Corporate Focus a few years ago, but decided to postpone it until a "better time" rolled around. At the same time, this prestigious firm wouldn't like their clients to know that their paralegal goes through a mad scramble to calculate ownership information and even to locate minute book documents.

The Medium Firm: The third firm has about 50 attorneys, is the leading business law firm in an exciting region of the West coast, and tracks about 200 client minute books. One of the paralegals present at my meeting was working on a closing recently and the paralegal on the other side of the table asked her colleague how she printed the 45 stock certificates. After hearing the groan from the first paralegal, the other recommended Corporate Focus and said she can print 45 stock certificates in less than 15 minutes without any errors. The first paralegal brightened instantly and she got approval to get started with Corporate Focus in the next few weeks.

Should You Standardize Now?

Imagine if you were an attorney at any one of these law firms. Do you think you should get Corporate Focus now--or later? What if you were a paralegal working for one of these firms? Or a client?

I frequently talk with lawyers who clearly see the value of Corporate Focus for their work and their clients, but they're just not sure if it's the "right time" to get it up and running. There's no question that moving to a consolidated online system for equity management and corporate compliance tracking will change the way you currently work. But change is often a good thing. Efficiency is critical when you are providing high-value services at high billing rates--and you don't want to waste any time on low-value work.

Take a look at the real-life examples above. Maybe they will help you decide if it makes sense for your firm to use a streamlined, centralized online system to better manage your clients' critical information.

If you're still not sure, ask yourself the question:

What would our clients and staff want us to do?

Over the past 15 years, we've helped hundreds of law firms make the move to a more efficient, accurate and collaborative way of working. We'd love to help yours get there, too.

How Corporate Focus Can Make Your Life Easier: Check out this list of 10 key problems that are quickly solved by Corporate Focus:

http://www.twostep.com/CFsolveproblems

Let me ask you a question: Do you brush your teeth every day? Or just the week before a dental check up? 

Imagine if the only time your teeth were brushed was twice a year at the dentist. It wouldn't be a very pleasant visit (not that they ever are, actually). Well, that's the situation too many law firm clients find themselves in when they’re ready for a corporate event or transaction. Right before a financing or annual meeting, everyone rushes around in a mad dash looking for documents and updating capitalization tables. Why? Because the records haven’t been updated or organized since the last mad dash. 

But if you're a corporate client at Pierce Atwood, LLP in Portland, Maine, the frenzied scene described above is a long-ago memory. I recently sat down with Chris Howard, the head of the firm’s business practice group. He explained to me that with the firm’s centralized client information management system (CIMS), Corporate Focus, the corporate records for all of their business clients are organized, minute book documents scanned, and capitalization tables up-to-date. 

As the largest New England law firm North of Boston, Pierce Atwood has over 1,000 corporate clients who can depend on having their information and documents just one click away when they call. In fact, Chris told me that some of their clients have direct online access to their own information in Corporate Focus on a read-only basis, which eliminates the need for these clients to even contact the firm. This saves the clients legal fees, offers them more flexibility in searching, and of course saves boatloads of time because they can get to their data around the clock. 

As Chris bluntly put it, clients don't usually choose a firm because they practice outstanding “corporate hygiene.” But when an important transaction is pending, these clients notice and appreciate the level of service and risk management that Pierce Atwood provides—whether they need it or not. It's just how the firm does business. And it's the right way to do business.

Chris also noted that it's not really a matter of what technology you have at a law firm, because many firms have implemented state-of-the-art systems and applications in recent years. What’s important is how you use this technology for your clients' benefit. Depending on which client you talk to, those benefits might involve faster turnaround times, lower legal costs, or 24/7 access to legal records. But any way you slice it, when clients see this kind of productivity in action, it doesn’t escape their attention.

In fact, Pierce Atwood’s efforts to help clients help themselves—through a firm-wide CIMS—have enhanced its reputation in the legal marketplace. As Chris explained to me, trust, reputation, and client service are what make a law firm successful—and it’s these qualities that lead to satisfied clients telling other companies about their positive experience. Corporate Focus also makes practicing law easier for Pierce Atwood attorneys, because they can spend more time and energy on legal advice and negotiation and less on administrative requirements. 

Do many law firms use Corporate Focus or have access to systems like Corporate Focus? Of course. Does it take unusual rigor and tenacity to implement a firm-wide client information management system as Pierce Atwood has done? Absolutely. Do their clients appreciate the benefit when they're ready for their next transaction? You bet. Just ask any of them.  

Then ask your corporate practice group: Do you practice corporate hygiene for your clients on a regular basis—or just the week before a major transaction? Ask them which their clients would prefer. Then ask their Board or investors.

Over the past 30 days, I came across four articles that made me sense a shift in the air regarding online access to legal client data. Collectively, these pieces focused on a trend that’s sweeping the corporate landscape: Realizing the tremendous productivity and client service benefits—and the fact that email, laced with inefficiency and security issues, simply isn’t cutting it anymore—lawyers are finally getting comfortable with the idea of their confidential client data being stored somewhere outside the four walls of the firm.

Fortunately, it seems that this comfort level is starting to jive with available technology—and the small current is becoming a wave.

At Two Step Software, where we track online minute book information for over 150,000 client companies, virtually all of our new law firm customers over the past few years have stored their client data at our hosting facility. Why? Because our hosted solution offers better performance, greater security (i.e., biometric checks, 24/7 surveillance, and diesel generators for power outages), and vastly reduced support costs (no upgrades, no in-house servers). The hackneyed phrase "better, faster, cheaper" comes to mind.

As discussed in these articles, the objections of yesteryear regarding online client data no longer carry the day. Imagine when all of your client information is online and available to you and your clients 24/7—whether you're in the office, at a board meeting, or on a"so-called" vacation.

In March, a law firm blog posted the question What about an online minute book? The writer’s comments were:

"Don’t you think it would be nice if you could do corporation minutes online? And keep them in an online minute book? Instead of keeping them in a 3-ring notebook? Well, I do. I dream of it. Minutes in the cloud. I’d type them up, hit the upload button, and watch them magically appear, organized in chronological order, right there on the web page. The online minute book web page. It would have to be secure, of course. Only those with permission could see them. But they’d be there all the time. Whenever you needed to review them, you’d just click and down they would come from the Internet cloud onto your computer screen. Like rain. Minutes would come from the cloud like rain. Ahh. That would be nice."

Later that month, the International Legal Technology Association (ILTA) published their March 2009 White Paper issue, which included an article I wrote entitled: Client Intelligence: Answering the Call for Greater Productivity. It discusses the numerous productivity benefits—for both lawyers and their clients—of a centralized information repository for client information and documents.

A week later, Brett Burney wrote the article "Storing Your Firm's Data in the Cloud" in the Legal Technology section of Law.com. In it, he acknowledges lawyers’ past reluctance to store client data outside of the firm, while stating that today's online storage usually involves "a server-class machine, probably in an ultra-safe bunker." Burney notes the common acceptance of "deal room" data centers such as those offered by Intralinks, DataSite or Firmex, which have proven their superior security compared to traditional conference rooms.

A few days later, in the blog Compliance Building, Doug Cornelius wrote a post entitled "Extranets for Law Firm and Client Collaboration - Moving Beyond Email" where he discusses some of the challenges of deciding on the right extranet platform. Cornelius made the point that email no longer counts as "collaboration" in the Sharepoint, Web 2.0 world.

These are just a sampling of the growing number of articles that are discussing the topic of moving client data “to the cloud.” Where does your firm stand on the issue? If you're not doing it yet, maybe it's time to explore the brave new world—and the big benefits—of online client data ... one cap table, one minute book, one client at a time. 

Over the past year, a perfect storm of events has brought legal fees under scrutiny like never before, affecting both law firms with skyrocketing new associate salaries (some reaching $160,000 per year) and clients facing hourly attorney rates as high as $1,000. At the same time, in-house counsel are eyeing their legal fees more closely, looking for flat-fee billing options, better case management tools, and more diligent reporting on legal bills. 

And finally, legal work at law firms has decreased substantially over the past 6-12 months. This is a direct result of the economic downturn, led by declining activity in real estate, lending and corporate transactions. The combination of these factors has contributed to the recent spate of attorney and staff layoffs at law firms across the country.

In a Boston Business Journal (BBJ) article entitled “In-House Counsel Pay Closer Attention to the Bottom Line” (Feb. 15, 2008), Fred Krebs, President of the Association of Corporate Counsel (ACC), said: “In-house counsel are taking note of the rise in hourly rates and associate salaries and are holding their outside firms accountable.” The article points out that according to a survey by ACC and Serengeti Law, “half of the respondents terminated a relationship with outside counsel during the prior year for failing to perform according to client expectations, high costs, and poor work product or results.” 

In a follow-up BBJ piece entitled “In-House Counsels Push Back on Large Legal Bills” (July 18, 2008), a number of attorneys noted that in-house counsel are looking for discounted rates, volume discounts, flat fees, and project pricing. Local firms are getting the message: Gerald Hendrick, the partner-in-charge of the Boston office of Edwards Angell Palmer & Dodge LLP, says that his firm now offers some of these options to its clients.

And just as there appears to be greater scrutiny of legal fees, the market falls out for some of the most lucrative legal work: corporate transactions. As noted in the Oct. 3-9, 2008 issue of Mass High Tech, the number of corporate transactions in 2008 is far down, emphasized by the September arrival of the “financial crisis.” The numbers paint a grim picture: in the first half of 2008, seven New England venture capital funds closed funds totaling $1.6 billion, down from 11 firms that raised $2.8 billion in the same period in 2007, according to Dow Jones VentureSource. 

The Good News

So what’s the silver lining to be found in all of this bad news?  It’s the fact that the current marketplace shakeup gives the best law firms—those that emphasize efficiency, productivity and client service— the opportunity to rise above the fray. Clients are generally willing to pay for high-quality legal advice. But to survive in today’s tough economy, law firms must be able to deliver it in the most efficient manner possible and work to drive every dollar of waste out of their systems. 

The ultimate goal, law firms will eventually realize, is to make clients themselves more productive through self-service and collaborative technologies. Why shouldn’t clients also have access to any client information that the attorney would use? Say, for example, that a law firm’s CFO client wanted to know what percentage of stock ownership an employee had in the company. That CFO would be much happier if he could log in at 8pm on a Wednesday night to get the answer, as opposed to e-mailing his attorney and waiting for a response, which he may not get until Thursday morning (if he was lucky).

Likewise, imagine if an attorney’s access to information was like Google so that all client data could be obtained instantaneously. Instead of racking up billable hours searching for records and making calculations, all of that attorney’s time and energy could be devoted to legal analysis, negotiation, and advice. Thus saving the client significant money and improving their satisfaction.

In both scenarios, the client wins. As clients demand increasingly stellar service and more reasonable fees from their legal counsel, law firms must make productivity a top priority. Without a doubt, those that can rise to the occasion will rise to the top.

As if a “recession” on the horizon were not enough, law firms are getting squeezed from both sides with the fall out in the real estate and private equity markets. As a result, the Wall Street Journal reported this week that law firms are laying off associates, shortening the length of their summer programs, and delaying the start date for new associates. With lower headcount and clients inspecting invoices more carefully, lawyer productivity has moved back on to the front burner for law firm management. In tough times, it makes more sense to try to make ten attorneys each just 10% more productive than hire one new attorney for $160,000 plus overhead. For instance, in a 10 hour day, is there a way to save just 1 hour of wasted time so you produce 10 hours of quality billable time instead of 9.  Imagine if you sent an email instead of making that extra phone call? What if you could find the minutes for that board meeting right on your laptop, rather than walking down the hall to the minute book room? What if you didn’t need to proof that capitalization spreadsheet one more time? Isn’t that the type of low value work that can be avoided without having any impact on your real work product?

The panelists at Two Step Software’s most recent webinar, Higher Productivity Increases the Bottom Line at Law Firms, discussed how technology can improve lawyer productivity and offer better client service. Both are critical to long term success in a difficult economy. The discussion was started with an overview thought quoting Ralph Baxter, the Chairman of Orrick, who stated: “Technology is enabling the work to be done differently, so there are fewer and fewer non-timekeepers to timekeepers.” Clearly, over the past decade, we have seen how each lawyer needs less support staff to handle phone calls or send out documents based on the most rudimentary changes such as email, web sites, and voice mail. Doug Cornelius, a senior attorney and member of the KM department at Goodwin Procter LLP, got everyone thinking about the transition that has been experienced in lawyer value from simply selling time and documents to selling legal knowledge. As top billing rates approach the magic $1,000 per hour mark, he asked whether any lawyer can still think it’s better to take an hour to create a new document if you could get it done in 15 minutes. Even with time based billing, which is certainly under attack from many general counsels, is productivity at any less of a premium. Fixed price and project based billing has certainly created a new paradigm for legal services where productivity is at a premium.

The discussion was further focused by Valerie Connell, Product Manager, Legal Content Management at LexisNexis, who raised the context of e-billing as a change that will eventually make it much easier for corporate America to compare prices and productivity across firms. She quoted a 2007 Law Firm Economic Survey which said that corporations “sure are going to think about looking for alternatives to $500 an hour proofreading of boilerplate contracts.” Her tips for tech savvy law firms were based on what she called “prudent technology investments in a recession” and based on a list from the well known legal technology expert, Dennis Kennedy. She stressed the importance of: a) technology that cuts costs; b) technology that makes you indispensable to your clients; and c) technology that helps you get new clients.

In the current difficult economic times that are facing the business of law, every lawyer needs to think about ways to work better, increase efficiency, and provide better client service. A recorded version of the webinar is available on-demand from the Two Step Software web site. For those interested in document automation, it includes an excellent demonstration by Bart Earle from Capstone Practice Systems showing how to use HotDocs to create corporate document packages on-the-fly. Imagine, a document wizard to create a complete set of organization documents in minutes for the next start-up company that walks in your office. Every penny that you save them will go right into their development work creating the next Google or Salesforce.com.