The LawBill Blog

In the 1980’s there was a series of Hanes underwear TV commercials featuring the fictional Inspector #12 who ended each commercial with the tag line: “It doesn’t say Hanes until I say it says Hanes.” The message was that there was a final arbiter of what was good underwear.  Imagine if there was a comparable measurement of what constitutes an efficient law firm business.

Today, instead of Inspector #12, we have Andrew Z. Adkins III, Director of the the Legal Technology Institute at the University of Florida, Spessard L. Holland Law Center.  In conjunction with Perfect Practice, LTI recently issued the “Case, Matter, & Practice Management System Study“. Download the Executive Summary here. The study co-sponsors were Client Profiles, LexisNexis, Thomson Reuters, InsideLegal.com, Legal Files Software, Omega Legal Systems, PerfectLaw Software and Synaptec Software.

The study sought to measure the attitudes of a meaningful percentage of the 1.2 million licensed US lawyers towards current law office technology, seeking to uncover the degree of acceptance, implementation or repudiation of specified applications and the reasons for each. While only able to sample from a population of 799,132 lawyers, 27,500 surveys were sent to randomly selected names. The goal was to reach a 95% statistical confidence factor with a +/- 5% error level. In order to reach this goal, the survey needed a total of 384 returned surveys. Only 341 surveys were returned, so the error level increased to -/+5.3%.

Consisting of 75 questions, the answers to the Study were then parsed according to the indicated size of each respondent’s law firm. The sponsors of the Study were seeking answers in these three broad areas:

• What is the market penetration of case, matter, and practice management software? In
other words, what percentage of the legal profession uses case, matter, and practice
management system software?

• What are the barriers to law firms and legal departments implementing these types of systems? In other words, why don’t more people use them?

• Are law firms and legal departments planning on purchasing these types of systems in the near future? In other words, has the legal profession reached a plateau in adopting Case Management System software?

Of the 75 answers, the one that was of particular interest to me was #47:

Q: If your firm/law department does not currently use a Case Management System, how likely is it that your firm/law department would consider a Case Management System in the next 12 months?

A: Very likely = 18.3%

Expressed another way, if this answer correctly describes the attitude of the general law firm business population, almost 72% of law firms without a Case Management System today are not planning to install one in the next year. If that is not a poor business decision, I don’t know what is.

To me, this answer and the others in the Study speak volumes about the need for additional education of the legal business community. While malpractice is a legal term, I prefer miss-practice to describe a 2010 law firm lacking the understanding of how much operating efficiency they miss without a Case Management System and synchronized time, billing and accounting system.

Mr. Adkins’ study has parted the curtain to allow those interested to see how much more work is needed to bring the legal business community into the 21st century. The complete Study can be ordered here. I advise anyone interested in this field to get a copy and read the complete, detailed results.

What do you think about this topic?

On December 18, 2009, the New Jersey Supreme Court adopted Rule 1:42, which sets forth the mandatory continuing legal education requirements for New Jersey attorneys. The new Rule, which took effect on January 1, 2010, requires all attorneys practicing in the State (including judges, law clerks and in-house counsel) to take 24 hours of continuing legal education every two years, including at least four hours on topics related to ethics and professionalism.

Over the last four weeks I had the opportunity to speak with  many lawyers at the NYLegalTech conference and the NJ Association for Justice Continuing Education conference. My takeaway from these conversations was that the level of computer literacy among the legal community ought to be much higher than it currently is.

Granted, with 12 years experience as a legal software consultant my level of understanding ought to be quite high. However, when a name partner of a 30 lawyer firm does not even know if his/her firm is using practice management software, there is a wide education gap which needs to be filled. Some might argue that a senior lawyer at a mid-sized firm needs only to worry about generating new business. I would argue that if no less a business person than Warren Buffett could recite how many cases of Coca Cola and how many Acme Bricks were shipped last week then a law firm partner ought to know how his/her firm tracks appointments and deadlines, stores emails and organizes documents.

So I propose that a new category of lawyer education be promulgated: Continuing Software Education. While not as strenuous as obtaining an MSCA, classes could include: “Email Storage and Tagging”, “Cost Effective Document Management”, “Time, Billing and Accounting Best Practices”, “You and Your Firm’s Calendar”, and “The Mobile Legal Practice”. These sessions should not be limited to the 20-something associates. Attendance should be mandatory for every lawyer, since it is the more senior lawyers who, as partners, are paying for the efficiencies (or inefficiencies) of the law business they own.

Senior lawyers joke about how their grandkids know more about computers than they do. But who is the joke really on? It borders on business malpractice for any law firm in 2010 with more than 5 lawyers to be operating the business with less than full-featured time, billing accounting and practice management software in place and professionally configured. Would anyone continue to use a medical doctor who practiced medicine using techniques and equipment from 50 years ago? The same rule ought to apply to a law firm.

A mandatory Continuing Software Education for lawyers would go a long way to alleviate the existing knowledge gap among today’s legal community.

What do you think?

With the Winter games starting these week, it occurred to me that there is an Olympic-like event in which all lawyers who bill by the hour compete every day. Just as with an Olympic athlete, a lawyer’s effort to convert time into a billable event — i.e., gold — requires the right equipment and the proper training.

Keeping with the Olympic theme, I have observed that there are 4 types of lawyer “athletes”:

Failed to Make the Team: Lawyers for whom time stopped in 1970. For these lawyers a computer is an “electrified” typewriter. They hand-write time entries on a paper Time Sheet. Once a month they organize and review the paper sheets and then “type” a bill in Word® to be mailed to each client. They use a paper check book to write checks for firm and client expenses and to record receipts when payments are received. They pay an accountant to periodically collect the paper bills and check book and to re-create these transactions in the accountant’s accounting software to generate the financial reports needed to analyze the profitability of the law business.

Bronze: Lawyers who believe the year is 1990. On their accountant’s advice they use the Timeslips® and QuickBooks® software combination. They hand-write time entries on a paper Time Sheet and their assistant re-enters them into Timeslips. They follow their accountant’s instructions on how to record checks and payments in QuickBooks. They pay the accountant to periodically make sense of the QuickBooks entries to generate meaningful financial reports.

Silver: For these lawyers, 2000 was a very good year. They learned about time, billing and accounting software like Abacus®, TABS3® and PCLaw™. They keep a Time Sheet entry screen open on their workstations as they sit at their desks and make contemporaneous time entries directly into the software as the day proceeds. If they were out of the office they immediately record their time when they return. Their assistant/office manager uses the software to produce time reports, pre-bills, Invoices and Past Due statements, print checks and perform monthly bank reconciliations. The software generates detailed reports so that their accountants need not spend as much time (or bill them as much money) to create the financial reports.

Gold: These are the lawyers for whom 2010 technology provides the tools which enables them operate their legal business with the greatest efficiency. Every software program they use, whether Word®, Excel®, Outlook® or Internet Explorer® displays a billing program timer directly on the Toolbar. Reading each business email is a .2 hr billable event. Telephone calls are immediately recorded, timed and billed through their Practice Management software such as Amicus Attorney®, Practice Master® or Time Matters®. They are never more than 2 mouse clicks away from creating a billable event. When they are out of the office their “smartphone” permits them to record time entries which will synchronize with their billing program. In short, they bill for every working hour.

With the correct software and training every lawyer can earn on place on Legal Team Gold.

What are you waiting for?

The ever thoughtful John Heckman has asked: What is a Consultant, Anyway?

Here are my comments:

There seems to be an rift developing between those consultants who cringe at the new pricing models and those who justify it as necessary for the future of the software companies.

In my opinion, a consultant should not be an advocate for their client-law firms versus the vendors whose software products they support. A consultant’s opinion of the pricing of software, hardware or a vendor’s business model should never be part of a conversation with clients. Whether an annual fee quoted by the software vendor is 25% or 70% of the original purchase price is irrelevant. (Is $499 too much or too little for an iPad?) It is what it is.

It matters not what the consultant believes is too expensive, too cheap or just right. The legal marketplace will ultimately determine the correct price. The senior managers/owners at these vendors will succeed (get promotions, bonuses and profits) or fail (lose money or their jobs) based on the path they choose for their company to follow.

It is true that a bad choice by these vendors can result in a negative financial impact for the consultant supporting a product which is abandoned by the marketplace. However, the decision to support a particular product rests solely with the consultant. No consultant, as far as I know, was ever forced to invest their time and money to support any product. A successful consultant will be sensitive to the marketplace and adjust their business accordingly.

So, to answer the posted question, a legal software consultant provides an added value to the efficient operation of a legal business. While most of the consultant’s income is derived directly from the law firm a (much) smaller portion comes from sales commissions from the software vendor. I do not believe it is the consultant’s job to advocate on behalf of the law firm to the software vendor.

A software vendor bestows upon non-employees the privilege to represent themselves as a “consultant” for that vendor. A consultant’s job description does not include telling vendors what the vendor is doing wrong. Nor does it include raising objections to the vendor about pricing on behalf of law firm clients. I like it that way.

What do you think? Let’s get a dialog going.

The best feature of FiOS video service from Verizon, in my opinion, is the free DVR. It permits automated recording of TV shows and the Jump button will skip over the commercials. For the last several weeks I have been storing original “Twilight Zone” episodes. A 30-minute show only lasts 22 minutes without the commercials. The same themes are repeated: the Western Morality Play, the Space Exploration Fear, The Downtrodden Office Worker.

The last type is of particular interest because it portrays contemporary office life, circa 1960. Inevitably, the protagonist works at a desk at which he fills out large paper ledger sheets, line by line, with an ink pen. “How quaint that 50 years ago an office worker’s job was the same as it had been 100 years before that, sans electric lighting and air conditioning”, I would observe as I watched the story unfold.

Last week I spoke at the NJ State Bar Association Solo and Small Firm Section on the topic of “Case Management and Billing Software – How to Choose What’s Right for You”. As I was preparing the obligatory PowerPoint® I wanted to illustrate the “old” way of office automation compared to using LexisNexis PCLaw™, Time Matters® or Intuit QuickBooks®, so I searched the Web and found an image of the original One Write Check Ledger. There were quite a few chuckles from the Bar Association audience at such an “antiquated system.”

Fast forward 36 hours and I am in the office of a prospective consulting client law firm. It was my first visit. The office manager had invited me to discuss how she could improve productivity in the office. She had told me in advance that they already used Time Matters and QuickBooks, but “Not as efficiently” as they believed the programs could be used. This is a very busy office with 5 assistants and two lawyers.

After reviewing their Time Matters usage (which was limited to only the ‘Contacts’ function) I asked to observe the procedure used to enter a New Matter. They pulled out a large double-sided ledger book onto which each new matter was added by hand and the accompanying 3″ x 5″ index card onto which they wrote the same information a second time for ‘quick alphabetical lookups’. I merely shook my head in disbelief.

I was then ushered over to the bookkeeper’s desk. I froze in astonishment: there on the desk was a still used One Write Check Ledger! I stifled the urge to look at the date on my cell phone, for fear it would read 1960. When I recovered my composure I told them that we had “a lot of work to do”.

As I returned to my office the voice of Rod Serling, the “Twilight Zone” creator echoed in my head: “The lesson for this week is that if a law firm owns practice management and accounting software and yet is operating its law business as if it was 1960, you might be in the “Twilight Zone.”

Is your firm operating in the “Twilight Zone”?

What do you think? Let’s get a dialog going.

The journey to a paperless office should not begin with the same old paper New Matter Intake Form.
The buzzword of the last few years, “paperless”, has finally trickled down to the small and mid-sized law firms which comprise our client base. Over the last 18 months the topic of “going paperless” has been discussed at almost every presentation we make to a prospective new practice management system client.

Some law firms’ clients require electronic billing or emailed PDF-formatted bills. Some partners have read about “paperless” and have concluded that spending less money on copy paper and photocopy charges is an economic and environmentally-friendly pursuit. Still others understand that if every outgoing and incoming document was systematically scanned and saved to the firm’s networked server, staff efficiency would increase as nothing could be misplaced and would be readily available to the entire firm.

Yet, despite these noble intentions, upon closer examination, every one of these firms initiate a New Matter in the same old way using a manually-filled-out paper intake form. Even firms which operate an otherwise very robust and sophisticated practice management system begin the process on paper. Recommendations to change this most basic step typically are received as heresy.

The use of a paper form typically is followed by these steps:

- One staff member is tasked to generate a Retainer Agreement;
- One staff member is tasked to record and store the signed Retainer agreement;
- One staff member is tasked to create the physical paper file and store the paper Intake form;
- One staff member is tasked to enter the client/matter information into the firm’s Billing system.

If the pertinent New Prospect information is entered directly into a correctly-configured practice management system:

The PMS Automatic Document Management system will generate the Retainer Agreement from the Intake Form info and store it in the system.

Upon receipt of the signed Retainer Agreement the PMS will:
- create a new firm Client and new firm Matter,
- notify the file room to create a paper storage file,
- assign a new Matter number, and
- transmit all Client and Matter info to the firm’s bookkeeping system.

The executed Retainer Agreement itself is then scanned into the PMS and attached to the Matter as a related document.

In many types of legal practices accident narratives, employment and medical history, union membership, family status and insurance information are collected during an initial consultation. By entering this directly into the PMS New Prospect screen form, it can be propagated throughout the database into the appropriate location automatically.

Enter Once, Use Many Times.

A firm seeking a true paperless practice needs to start the journey correctly. An electronic Intake Form is that first step.

The start of a new calendar year is a good time to revisit the issue of Matter numbers in law firms. Despite what Shakespeare wrote about a rose, there is significant consequence in how a firm should number a Matter (Case) and a Client in the law firm business. Each of the time, billing, accounting and practice management software programs found in most small and medium sized law firms [Amicus Attorney, PCLaw®, Time Matters™, QuickBooks, Timeslips, Tabs3, Abacus] provide a facility for assigning a Matter number and a Client number for each new Matter.

However most firms attribute little importance to the precise numbering system they use and thus devalue what otherwise is a powerful function of the management of their law business. At the creation of a new law firm, the founding partner(s) typically adopt whatever Matter numbering system was in place at the law firm they left. They fail to review 1) whether that old system was dependent upon a different time, billing, accounting or practice management software program than the brand-new firm will be using and 2) whether that system was even the most efficient one for the old firm. The types of numbering protocols we have seen most often are:

1) Firm-based system, where each successive Matter is assigned the next consecutive number [1001, 1002, 1003],

2) Client-based system, where a Matter number contains all or a portion of the reciprocal Client Number [100.001, 100.002, 100.003, where 100 is the Client number],

3) Date-based system, where the last two digits of the calendar indicate the year when the Matter was opened [10-001, 10-002, where 10 stands for 2010],

4) Name-based system [Smith01, Smith02, Smith03, where Smith is the name of the Client],

5) Code-based system, where a prefix or suffix indicates what type of Matter it is or who is the Responsible Attorney [PI-001-RSB, where PI stands for Personal Injury and RSB stands for Robert S. Brown, the attorney]

Regardless of which software program your firm uses, the last two systems should never be used. Ever. All law firm software programs are databases with pretty screens on which the end-user (you) clicks to manage the information stored in the database. Most of the newest versions of these programs, like Amicus Attorney, PCLaw® and Time Matters™ will actually share a common database structure called SQL, which facilitates the exchange of information between the separate databases. As a result of this designed sharing capability, the software designers anticipated that only numbers would be assigned to Matters and Clients in order to expedite the creation of new Matters and Clients.

The de facto format is all-digital. A system with combined letters and numbers disables the programmed capability to increment to the next sequential Matter or Client number. It is like putting snow tires on a Ferrari. The car was never intended to drive through snow, so the suspension and braking system was not designed to work at maximum efficiency with snow tires installed.

Operating a profitable law business requires that each facet of the business be examined and reexamined to confirm it is being used to maximum efficiency. Selecting the correct Matter numbering system is a necessary start.

Yoda, the great Jedi teacher from a galaxy far, far away, taught: “Do or do not. There is no try.” The 52 pristine weeks of 2010 stretching out to the horizon today provide each of us in the legal community, whether as an end-user of or a consultant for practice management software, the opportunity to improve our productivity.

Regardless of what assemblage of software a law practice uses, it is very likely that only 40-50% of its intended functionality is being utilized by the firm. In many cases we have observed after the fact, the failure to use the software to its maximum value is a result of an initial failure to receive adequate training. It is human nature to tear open the shrink wrap of a new toy and to start pressing the buttons, before we have read the Users Guide on its proper operation. In a new law firm business, it is typically a matter of financial necessity to get ‘up and running’ as quickly as possible so bills can get out the door.

In an existing law firm business the problem is a result of ingrained inertia: “This is how we have always done it” or “This is how I was taught by my predecessor in this position.” The pressure to simply get the job done the old inefficient way outweighs the more logical choice of taking a few hours to review the current process and to start doing things more efficiently and productively.

It is a source of continuing amazement that the lawyer whose name appears on the front door of the law business would spend hours or days carefully researching the next flat screen TV purchase or automobile to lease, but glibly outsources the decisions of how their law business is operated to a salaried employee who has no incentive other than to produce ‘just enough’ to keep the boss happy.

Today, not tomorrow, not next week, is the perfect time to spend an hour with your key employees and to ask them how confident they are that the practice management software the firm is using: Amicus Attorney, PCLaw, Time Matters, Outlook, Timeslips or Quickbooks, is being used by them to its maximum efficiency. If the answers are in the affirmative, congratulations, you are a one-in-a-hundred law business.

However, if your law business is like most, you will get an earful of observations of what processes do not work and what functions they do not know how to perform with the software. This is valuable feedback because you, law business owner, can use it to make your business more productive and efficient. Your goal is to look back one year on January 1, 2011, and smile at how much better your law business operated over the prior 12 months.

There is no such thing as ‘trying’ to make your law business better. It can be done. You can start today. As Yoda was paraphrased by Nike: “Just Do It.”