And th other Managing Unstructured Documents to Increase Productivity and Your Firm’s Bottom Line Bruce Lewis, Payne Consulting Group Ross Kodner, MicroLaw, Inc. November 2004 A Strategic White Paper from Microsoft for Legal Professionals Managing Unstructured Documents to Increase Productivity and Your Firm’s Bottom Line The technological landscape for attorneys working in midsized law firms and in-house legal departments has shifted dramatically over the course of the past decade. The proliferation of e-mail, document, knowledge- and case-management systems, along with many other types of collaborative technologies, has permanently changed the way legal professionals practice law. Communication with clients, co-counsel, and even opposing parties has become practically instantaneous. Handheld wireless devices, tablet PCs, and other technology tools have become so ubiquitous that it is hard for most attorneys to remember what life was like before they were so readily available. High-speed video conferencing has made it possible for members of a practice group in Chicago to have real-time meetings with their counterparts in London. Attorneys in Hong Kong, New York and San Francisco can access, edit and review the same set of documents through the use of centralized document management software. But despite the investments firms have made in collaborative technology, gaps still exist. Many of the products that law firms use to promote collaboration between attorneys, offices, and clients operate autonomously—like small unconnected islands floating in a sea of information. In many firms, client files are saved in network folders or in proprietary document management systems while e-mail, notes, and other items related to the files are stored elsewhere. Contact information used to track and identify clients, expert witnesses, and other key persons is tucked away on individual Palm Pilots or stored in relational databases. Litigation support and case management software runs from individual desktops. The technologies designed to automate processes and promote collaboration often create redundancies between disparate sets of applications and systems. Implementation, training and maintenance costs can be staggering. Perhaps the biggest gap in collaboration results from the never-ending paper trail of notes, documents, memos, letters and other similar files that end up piled high on desks, stuffed in boxes or stuck to keyboards and monitors. Understanding the Role of Knowledge Management in a Legal Environment The term “knowledge management” often takes on different meanings in various contexts. Defined in a way that is relevant to law firms, it is the “systematic management and use of the knowledge in an organization;” or, to put it in more technical terms, “the leveraging of collective wisdom to increase responsiveness and innovation.” In today’s highly fluid and competitive legal environment, knowledge management plays a critical role in helping firms improve internal communication and productivity while strengthening client relationships through increased responsiveness. As trial teams prepare for court, they must be able to easily communicate with one another and quickly access a wide range of documents including depositions, complaints and trial notes. Furthermore, they require the ability to quickly recall expert witness information and other critical components related to the case on a 2 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS moment’s notice both before and during trial. They rely on knowledge management to accomplish these goals and build the strongest possible case for their client. In order for attorneys to effectively leverage the collective store of physical and intellectual capital that exists within their firms, they must possess the technological tools that enable them to work more efficiently and cohesively. What Are the Costs of Unstructured Knowledge Management? Unstructured knowledge management can be loosely defined as “intellectual and physical capital that is unaccounted for and spread throughout an organization in a disconnected or unorganized fashion.” In other words, it represents lost opportunities to leverage the collective wisdom of a firm to increase responsiveness and innovation. Imagine the following scene: The busy litigator has spent the last two hours in a heated negotiation with opposing counsel in a case involving “bet the company” litigation. The lawyer reviews her notes—a legal pad filled with various comments, concerns, thoughts, ideas, suggestions and a few nervous doodles for good measure. In short, these notes represent the substance of a key discussion which may lead to settlement for her client. She thinks, “I barely had time for this meeting that was supposed to take 15 minutes—how am I ever going to find the time to rewrite all these notes back at the office?” Precious billable time will be spent and lost as this and other similar scenarios are re-enacted in law firms every day. Reduced to the base economic level, consider this question: How many other billable hours are being wasted just looking for case-critical information that can only be found somewhere on a scrap of paper? What is the cumulative cost of subsidizing a paper-centric law practice? Getting a Handle on Unstructured Knowledge Management: A Case In Point In an effort to reduce the costs associated with unstructured knowledge management, the law firm of Hughes Hubbard Reed deployed a firm-wide collaborative solution specifically designed to improve productivity, streamline internal workflow processes and strengthen client relationships. After using the new system for approximately two months, they retained the services of an independent consulting firm to analyze and quantify any resulting reduction in costs. The results of the study found that: • The amount of time spent taking, sorting and rearranging notes decreased by 54%. • Attorneys and secretaries reported a 15% improvement in information and document retrieval time. • The firm realized a significant reduction in printed paper usage. • Attorneys were able to complete short projects 27% faster. • The firm would realize a net savings of U.S. $2,458 per-user, per-year, projected over a three-year period. 3 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS The Myth of the Paperless Office The promise and the ideal of the “paperless office” still remains an elusive and distant goal. While many of the inefficiencies associated with the paper-based office have been eliminated, attorneys continue to struggle to keep afloat amidst an unending sea of paper. Piles proliferate, threatening to spill over under their own weight into waves of paper-confusion on our desktops. Is it a lost cause or can technology come to the rescue with a practical remedy for this paper-clogged insanity? In the past, attempts have been made to provide products to help firms reduce the amount of paper. Microfiche was supposed to be the answer, at least at one point. But microfiche just really isn’t used very often in law firms because of the general inability to access the material from the PCs we use to do our work. Scanning was the next great answer. But up to this point scanning has generally been perceived as an unsatisfactory solution. Since the dawn of document scanning, the term “scanning” has been synonymous with “OCR” (Optical Character Recognition). In other words, most people equate scanning with trying to use software to identify the characters on a page and turn it into an editable word processing document. A good idea conceptually, but in practice, even with the latest, greatest technology available, this process does not create the operational efficiencies once imagined. Digital Note-Taking Gains a Foothold in the Legal Environment Recently, a series of innovations have quietly been transforming the march to digital paper beyond what scanning can accomplish. Handheld and keyboard input devices combined with improvements in handwriting and voice recognition technology have profoundly changed the way attorneys take notes, draft documents and record other critical information as they finalize mergers, prepare for trial and communicate with clients and co-counsel. Each of these technologies, along with the latest audio and video recording software, have in their own way helped to facilitate the acceptance and growth of digital note-taking in the legal environment. The concept of handwriting recognition combines the oldest of human methods for recording information―handwriting with a pen―and the newest office technology― personal computers. The ability to take notes in handwritten form and then convert them reliably and accurately to electronic text represents a step in the evolution of law practice management and technology akin to the invention of the light bulb—it’s that dramatic. Attorneys have also used audio and video recording devices for years in depositions, as part of trial presentations and often to record their own thoughts for later review and analysis. Advances in PC-compatible audio and video technology have made it possible for an attorney in Los Angeles to digitally record the testimony of a key 4 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS witness during deposition and quickly send the file back to a trial team in New York using the Internet or firm VPN as a conduit. That same file can be easily dragged and dropped—just like a document—directly from the audio device directly into a local network or shared folder as part of a larger project. Digital Paper—the Paperless Solution One of the key benefits to emerge from the digital note-taking revolution is the fact that “digital paper” takes up no physical space and is manipulated easily by software on PC systems. In the process of digital note-taking, it IS the piece of paper—just one made of electrons rather than processed wood pulp. When you take notes digitally, you no longer have to worry about later tracking down the physical file. All the time spent searching for physical documents costs money—economic dollars wasted, whether it is lawyer time or staff time. Digital Note-Taking Facilitates Knowledge Management Our own notes often hold the keys to our cases. Imagine for a moment if you had the ability to digitally “write” your trial notes and transfer them directly into a centrally located Web server for the rest of your team to access just minutes later―regardless of where they are located on the planet. Or what if you could put your thoughts down on digital paper as you brainstorm ideas for an upcoming merger and acquisition and immediately make them available to your corporate finance group. Digital note-taking like this is the only logical step—the next progressive in the quest for knowledge management and “thought processing.” Any digital note-taking-aware applications represent a new class of software that has not previously existed for lawyers—“thought processors.” In other words, just get your thoughts down on “digital paper” and focus on practicing law, not manipulating a computer. The naturalness of the concept and the simplicity of it are instantly appealing. Digital note-taking represents perhaps the best chance for attorneys and law firms to get a handle on the inefficiencies and hidden costs caused by unstructured knowledge management. It provides attorneys with the opportunity to take off the pocket protectors and propeller hats required to use far too much of modern legal technology, and instead, just practice law. How much time do you or your secretary spend deciphering and transcribing notes scribbled hastily on a wrinkled yellow legal pad from a phone conversation that took place more than a week ago? With digital note-taking, you can jot down notes in real time while meeting with a key witness during deposition, or while consulting with a CPA on the merger and acquisition matter that is coming to a close, with no need to later transcribe them into electronic format. 5 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS Digital Note-Taking Is a Practical Necessity Digital note-taking should not be considered any type of “peripheral” technology for the law firm or legal department reviewing its technology usage and systems. Rather, sound law practice management practices should acknowledge digital note- taking as a core, mission-critical function—as basic as the traditional Big Four of legal technology: word processing, e-mail, time and billing, and docketing. Digital note- taking hovers above all of these critical toolsets, offering the potential of offering the most common and best understood human-to-computer interface—the pen. One of the core problems any lawyer will quickly identify about the law firm environment is the fact that information related to a single client or case is often stored in multiple locations. The documents for a trial are typically saved in a document management system while the peripheral components related to the case are stored in separate applications. If you want to view all the correspondence on a client’s file, you have to look in many different places and then you need to track down the paper file and rifle through it to view the externally generated letters and all your scanned note pages. That is, of course, if no one happened to have that particular file in their briefcase at home or sitting on a kitchen table in suburbia. Once your client files become electronic and totally contiguous, they’re all in one place. Additionally, you no longer have to worry about who has access to different sets of notes or files, since they are electronic. You can save them to a central network or Web location and use rights management to control the level of access for each member of a trial team or practice group. Breaking Down the Cost/Benefits The economics of digital note-taking as a facilitator for helping law firms become more collaborative are stunningly compelling. As lawyers, we may have to acknowledge that most of us have come from liberal arts backgrounds. With few law schools providing any significant business education, basic business concepts like a “Return on Investment Analysis” seem foreign to us. But a Return on Legal Technology Investment Analysis, or ROLTI, is just what smart, profit-focused lawyers need to apply. Think about how much time you, your fellow lawyers and your staff waste every single work day looking for your paper client files or information that can only be found in a paper file. What would it mean to you if you never had to waste that time again? Would it mean to your law practice as a business if every lawyer and staffer could generate 15 more billable minutes per day? 30 more billable minutes per day? 60 more minutes some days? The ROLTI approach then takes this data and converts it to something every law firm managing partner or corporate General Counsel understands—dollars. 6 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS Generating 15 extra billable minutes per day for a lawyer billing at $200 an hour is: • An extra $50 per day, per lawyer • An extra $250 per week, per lawyer • An extra $1000 per month, per lawyer • An extra $12,000 per year, per lawyer In a 40-lawyer firm, that is as much as $480,000 of “found” money yearly. In a 75- lawyer firm, it can be as much as $900,000. In a 150-lawyer firm, it could reach $1,800,000! And this doesn’t even begin to take into account the recovered staff time that can often be billed or most certainly focused on far more productive client work. Just think of the effect this would have on reducing levels of stress from the managing partner down to the overworked paralegal. ROLTI aside, this added benefit alone would be reason enough to move towards a paperless environment. Tying It All Together and Filling the Collaboration Gap From a functional and collaborative perspective, digital note-taking is the practical alternative to the frustrating search for the elusive and mythical paperless office. Digital note-taking can and should become entirely ubiquitous. Notes, documents, recordings and other critical information can be stored, searched and retrieved from centralized locations, allowing members of your firm to more easily leverage the collective wisdom of the group. Adopting digital note-taking as a uniform practice will allow your firm to realize a far greater degree of collaboration than is presently possible—which will result in measurable benefits, including: • The reduction of inefficiencies and hidden costs caused by unstructured knowledge management. • Improved internal communication, workflow processes and productivity. • Strengthened client relationships through increased responsiveness. • Real savings in billable time resulting in a noticeable increase to your firm’s bottom line. 7 MICROSOFT WHITE PAPER FOR LEGAL PROFESSIONALS About the Authors Bruce Lewis, Payne Consulting Group Bruce Lewis is Vice President of Publishing for Payne Consulting Group. Payne Consulting Group is a software training and development company headquartered in Seattle, Washington. Payne has authored eleven books on Microsoft products including Word 2003, Word 2002, Word 2000, and Word 97 for Law Firms. The company also specializes in developing software that includes the Metadata, Forms and Numbering Assistants. Payne also offers high end and end-user training, courseware, project management, and custom development. Ross Kodner Ross Kodner is an attorney, having graduated from Marquette University Law School in Milwaukee, Wisconsin in 1986. He founded Milwaukee, Wisconsin’s MicroLaw, Inc. (www.microlaw.com) in 1985, an international legal technology consulting firm and legal-exclusive training company, having served over 700 law firms and legal departments across the U.S., Canada and the Caribbean. Ross is a frequent speaker and author internationally on a broad range of legal technology topics, having conducted over 1200 CLE sessions since the late 80’s. Ross is serving as the Chair of the Milwaukee Bar Association’s Technology Committee and Chairs the Wisconsin Law & Technology Conference - a regional legal technology conference that attracts more than 300 attendees every every year. He also is the founder and Chair of “The Annual Consultants & Technologists Dinner” held every year in Chicago during ABA - an event which brings together the top personalities in the legal technology world. He served an unprecedented four years in the ABA as Chair of the ABA Law Practice Management Section’s Computer & Technology Division. He was also a member of the ABA TECHSHOW Executive Board for five years, held every March in Chicago. He has also been the Planning Co-Chair for all U.S. Legaltech events since 1999.