FRAMINGHAM (10/03/2003) - Losing a client is one of the costliest mistakes a law firm can make. So a growing number of them are using extranets as a collaborative tool to offer their best clients the best service and keep them in the fold.
This is a big change in the world of law firms, which have tended to be low-tech and secretive. But now legal staffs and clients that are dispersed across the U.S. and overseas can work together by accessing documents on extranet-based knowledge management systems. Such extranets give clients a window into billing, transactions, calendaring, depositions and pleadings, for example.
Sutherland Asbill & Brennan LLP, an Atlanta-based firm with 350 lawyers, has built about 60 extranets, or data rooms, for 10 major corporations. "We just get so much enhanced value from the relationship with our clients' that Sutherland doesn't charge them for setting up and maintaining the extranet," says Kim Perret, director of marketing and communications. The firm saves money, too, because it doesn't have to rent space to store boxes of documents or bear the expense of sending people to oversee a document review or due diligence. There are also savings in travel costs, travel time and meals.
Now, a client traveling in a remote country needs only his laptop to view a document. "When he sends an e-mail that says, 'Love that extranet!' it's priceless," Perret says.
Big clients today want to be more involved in their cases than ever before. At the same time, cases are becoming more complex and require teams of lawyers from multiple disciplines, from intellectual property to litigation.
"Firms that are more team-oriented are doing very well, and that plays to what clients are looking for," says Michael Rynowecer, president of BTI Consulting Group Inc. in Boston.
Extranets are especially helpful when people from the business side, such as the employee-benefits team or the chief financial officer, are involved in a merger or an acquisition. With extranets, there's no need to search through boxes of documents; information can be found using Boolean, keyword or text searches.
San Francisco-based Pillsbury Winthrop LLC set up an extranet for the Los Angeles Unified School District to share documents and manage specific cases. The extranet runs on FirmConnect from Hubbard One in Chicago and is tied into Pillsbury's billing, CRM and docketing systems, as well as its document management system.
The school district pays 29 law firms US$28 million in outside counsel fees for cases involving discrimination, civil rights, eminent domain and construction, says Harold Kwalwasser, former general counsel for the school district. It's a complex operation because of the amount of people, documents and correspondence involved. The value of extranets, he says, is that the district doesn't have to replicate the archived files; they can be copied onto CD-ROMs.
"We have one source to go to get literally thousands and thousands of documents," says Kwalwasser. "It's a very efficient system."
Who Owns It?
The only problem with this "virtual world," Kwalwasser says, is the question of who keeps the hardware and software that stores the archives and runs the extranets. Law firms own the systems, "but these are documents I've already paid for," he says. "So if I say, 'Give me a copy,' I'll get a copy."
But what happens when the client wants to take charge and run the extranet? Kwalwasser, whose contract with the school district ended in June, says he had been looking into building a reverse extranet next year for the district's outside counsel to access. "We have collected this electronic [documents] file," he says, "and we wanted to cut our costs by not having people do research that we just paid some other firm to do."
Another way to approach the issue is to have the extranet and document repository hosted at a neutral site. "If we're working with a client on a case that has multiple parties, we outsource the extranets to a hosted facility," says Terry Crum, chief knowledge officer at Jones, Day, Reavis & Pogue, a Cleveland-based law firm that has more than 1,600 attorneys worldwide. For the time being, "we've decided to host those rather than put them on our internal network and invite people inside," he says. "It's simply a security issue."
Despite the benefits, legal extranets aren't widespread or automatically successful. According to a recent report from BTI Consulting, only 14 percent of 215 large corporations surveyed are using extranets provided by outside counsel. Those clients see extranets as a way to improve their own performance and for law firms to share the information they hold. But the report says that if the systems aren't robust or fail to meet clients' needs, clients won't see them as a collaborative win.
Of course, it's possible to have too much of a good thing. With so many legal extranets proliferating, just logging onto numerous portals for different cases can be a daunting challenge every morning.
The use of extranets as a tool to collaborate with clients is flourishing at some law firms, says Terry Crum, chief knowledge officer at Jones Day. "But in other law firms, we're seeing a kicking back from that, and [firms] saying, 'Wait a minute, if I've got 15 matters going on ... that means every day I've got to go to 15 places to look at information.' "
Crum says that when he was at Chicago-based Baker & McKenzie, "we went from zero to 500 extranets overnight," which created the problem of managing the growth.
So Crum says some firms are shying away from extranet mania and recognizing that they can respond to clients and work efficiently by using e-mail folders and keeping documents handy. However, that only exacerbates the legal community's existing storage problem with document-heavy e-mail systems, and it doesn't help clients manage their own data or see what the law firm is up to.
Ideally, there would be some standard way to view numerous extranets at once, but the technology doesn't exist yet. "The administrative capability of dealing with multiple extranets needs to be improved," Crum says.