Posts Tagged ‘ROI’

KRONOS – Evaluation Criteria for Software and RocketMatter

Friday, 06 February, 2009 22:24 Written by Seth
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I recently engaged in a long conversation with Larry Port of Rocket Matter about the state of software design, and the common disconnect between programmers, marketeers and end users.  It turns out Larry was a specialist in “usability studies” – the new buzz word in software design. He pointed me to TED.  At that time I recalled a series of ABA Techshow and other presentations I made back in 2001 on how legal software should be evaluated. I reproduce my unedited article from 2001 below, with the caveat it is not Web 2.0 aware …. But will in the future revisit some of theses ideas, particularly in a forthcoming review in Technolawyer of RocketMatter.

In evaluating technology, I look for inspiration to the Greeks, and in particular the father of the gods on Mt. Olympus, none other than KRONOS.  I use the following criteria in evaluating all technology:

• Keystroke Count. The tool must be easy to use.  A subjective judgment on ease of use can be reduced to an empirical keystroke count.  In comparing similar tools, count the number of keystrokes (or mouse clicks) require to accomplish regular tasks.  The fewer the keystrokes, the better designed the software, and the more likely it will be used properly.

• Return on Investment. The tool must pay for itself in increased productivity, improved work product, greater client satisfaction, or more efficient organization and information retention.  Don’t just look at price per seat.  Look at the “total cost of ownership” (equipment requirements, training, support and customization) and compare it to the expected return on investment.

• Opulence and Intuitiveness. The tool must be “good looking”.  An ugly interface is often a proxy for poorly designed and thrown together software.  If the developer did not take the time to build an elegant and appealing interface, the developer may also not have taken the time to fully test and debug the software.  Also, if the icons, menus, and screens are not intuitive, you may find yourself spending a fortune on training, and your users may never fully utilize the potential of the software.

• Networkability and Integration. The days of stand-alone PC’s are over.  The tool must function in a networked environment, and allow multiple users to access the system simultaneously.  And the tool should be able to communicate with other programs, sharing or exchanging data.

• Options and Customization. It should be easy to install software, with a single CD-ROM and a menu of options to allow you to configure the software installation for the requirements of your network/PC.  A good software designer recognizes that each IP practice is unique, and should allow for some degree of customization, whether the addition of custom fields or the ability to modify or add new templates.

• Suitability for the Task. The tool must be designed for or configurable for the specific use desired by the practitioner.  A general purpose case manager is a poor substitute for an IP portfolio database.

TechnoFeature: A Systemic Approach to Legal Document Automation (2): Defining the ROI

Wednesday, 14 January, 2009 19:34 Written by Seth
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AS PUBLISHED IN TECHNOLAWYER: With the recent state of the economy, many companies are tightening their belt — and law firms are no exception. But sometimes you have to spend money to make money. According to legal technology consultant Seth Rowland, now is the time to redouble legal document automation initiatives. In this comprehensive two-part series, Seth explores document automation, first from a technology perspective, and then from a business case perspective. Published on November 25, 2008, Part 1 explained how to get started. Today in Part 2, Seth returns to discuss the Return on Investment (“ROI”) for document automation initiatives. This article contains 1,929 words.

INTRODUCTION

Wouldn’t you like to gain 30 minutes a day?

I am not selling you a “Time-Turner” of the kind used by Hermione in “Harry Potter and the Prisoner of Azkaban” to “do over” parts of her day. This is not the world of flesh-and-blood wizards. Rather, I am talking about how electronic wizards (aka software-based automation systems) can enable you to accomplish more in the limited time allotted for work each day.

What is 30 minutes a day worth? Let me run the math for the average timekeeper:

  • 30 minutes * 5 days = 150 minutes per week.
  • 150 minutes * 48 weeks = 120 hours per year.
  • 120 hours * $200 per hour = $24,000 for each timekeeper.

So a gain of 30 minutes per day equates to $24,000 a year for each timekeeper. In reality, the amount of savings from a well-implemented document automation system could be as much as one or two FTE (Full-Time-Equivalent) staff members, a value of $150,000 to 300,000 per year.

So what are you waiting for?

This article examines the return on investment or ROI for investment in document automation. By ROI, I mean for you to quantify whether and how quickly the time and money spent on development of an automated process will be repaid in your particular situation. The ROI will differ depending on the nature of the process being automated, the value of the improved efficiencies, and the amount of time and money spent on automating the process.

A DOCUMENT ASSEMBLY PRIMER

“Document assembly” is the practice of law writ large, using a combination of automated and manual processes. All documents created by a law practice are assembled. Such documents are the product of a discrete set of questions and answers, which are used to guide the appropriate language for the creation of the document. What document assembly does differently from the manual document creation process is: (1) codify the questions, (2) structure the answers, and (3) rationalize the outputs.

The more comprehensive the questions in the automated system, the more structured and logical the answers, the more thought out the branches of the decisions tree, the better the outcome. In the world of document assembly, the quality of a system is measured by how close the “first draft” coming out of the system is to the ultimate final draft submitted by attorney to client. In a well-developed system, with a comprehensive interview, the “automated draft” should be the final draft.

Document assembly, properly understood, is a means to systematize the practice of law. Under such a system, you could achieve the same results, or better results, in a fraction of the time.

WHAT IF YOU COULD … ?

In determining the ROI, begin by defining a goal. Ask yourself the question: “What if you could …?” Clearly define the process you wish to automate.

Below I’ve listed some processes worth automating. What if you could …

  • Generate engagement letters at the initial client meeting.
  • Put together a complete estate plan in a day.
  • Prepare a complete set of loan documents, including the closing statement, the same day you receive client instructions.
  • File a complete set of responsive pleadings, discovery requests, and pleadings in an afternoon.
  • Prepare a demand letter and complaint, along with specific prayers for relief in under an hour.
  • Meet with a client in a virtual meeting, such as that provided by GoToMeeting or Webex, hammer out the terms of a lease, and produce a comprehensive term sheet at the end of the meeting.
  • Prepare the operating agreement for 20 special purpose LLCs and all supporting formation papers overnight.

WHETHER YOU SHOULD … ?

Just because you can, doesn’t mean you should. Some projects lack sufficient “bang for the buck.” A word of caution! Document assembly is NOT cheap. Building an automated system is NOT easy. The design process will force you to rethink how you draft documents. And PARTNERS will have to spend REAL time.

That said, you should think seriously about document automation under the following circumstances:

• Before a major marketing push. If you plan to release a television commercial featuring your firm as specializing in Elder Law planning, get your document assembly processes in order first so you can handle the increased work volume.

• Before the dog and pony show. If you plan to make a presentation to a regional bank director about handling transactional work (or get referral estate planning business), you should figure how you can cost-effectively deliver the work to this new client at prices below that of your competitors.

• Before you hire a new associate or paralegal. If you are considering hiring new staff to handle your workload, consider first whether your current staff can be made more productive. By productive, I don’t mean working more hours (the traditional approach), but rather the ability to handle more transactions in the same time.

RISK MANAGEMENT IN A LAW FIRM

Risk management has been typically applied in a business context. While lawyers specialize in advising their clients on “risks,” few law firms actual consider their own risk. In a law firm, risk is often measured solely in terms of possible malpractice suits.

Properly measured, however, a law firm also faces (1) risk of non-payment from dissatisfied clients; (2) risk of short payment from clients who balk at large fees; (3) risk of lost referrals from clients who fail to speak highly of your law firm to their colleagues; (4) risk of actual loss to your clients from errors in your documents; (5) risk of non-repeat business from clients who do not return; and (6) risk of lost potential business from clients who are turned away because you are either too busy or deem their work insufficiently profitable given your current fee structure.

Document assembly is a means to reduce these quantifiable risks. Properly implemented, document assembly will improve baseline work product; better forms mean better first drafts, period. When you move from “merge templates” to automated forms that contain real business logic and decision trees, you will reduce risk because you have addressed similar issues consistently with the same text across multiple clients and multiple transactions.

Further, when you work with templates, as opposed to the document you did for another client, confidential client-specific metadata never gets into the document. If you have any concerns, HotDocs 2008 has a feature that strips the metadata, if any, from the template during assembly. Such automation systems can be developed centrally and then made available to multiple offices using Windows Terminal Server; smaller offices can dedicate a PC and make it available using Windows Remote Desktop, GoToMyPC, or LogMeIn.

Finally, automation reduces the risk of non-completion — the decision of a law firm to abandon a project half-way through because it has become too costly. In fact, systems free up time for more document review and client-facing consultations.

WHERE IS THE ROI?

Before you can sell a $50,000 to $100,000 project to your partners, you need to make a business case for automation that suits your practice.

1. Identify Potential Points of Growth. Law is a business. Where can your business grow? There are opportunities to get more work from existing clients. There is an opportunity to handle existing business (particularly fixed fee business) more efficiently. Perhaps, you can bring more “contingency” cases if the cost of initiating each action is reduced. Certain types of actions have fee-shifting provisions, but the typical fees are too low, unless you automate.

2. Evaluate Risk of Inaction. If you do NOTHING, there are risks, a number of which were enumerated above. If your competitors stand still and do nothing, you will be OK. If you automate and eliminate the “risks” you will be more profitable.

3. Consider Client Perceptions. What could you do if you had “more time?” Spend more time with each client, turn around documents faster, provide more cost-effective services, and you will bring more value to your existing clients and get new clients.

DETERMINE YOUR BASELINE

So what should go into your calculator? Start with baseline measurements.

1. Define the Market and the Deliverable. The product of a law firm is not “time.” Any ROI calculation requires you to define a set of deliverables. What are you actually producing: an estate plan, a closing, a loan package, or a corporate formation? That is what your clients are shopping for. Identify what the market will pay for those “deliverables.”

2. Drafting Time. Currently, how much does drafting the documents you intend to automate cost? Be sure to factor in the cost of the initial draft by a junior attorney or paralegal, the secretarial time, the review time by partners, and the cost of revisions and redrafts.

3. Turnaround Time. The time from assignment to delivery is often overlooked by attorneys, but not clients. Clients expect to receive documents shortly after they meet with the attorney. Measure, by document type, the current time it takes from client meeting to delivery of completed documents.

4. Work to Collection Ratio. Measure the time that is: (a) not billed, (b) written off, and (c) not collected. If you can “eliminate” this time, it frees up time for clients who will pay full-freight.

DETERMINE THE COST OF DEVELOPMENT

Now that you have decided to “automate” a defined set of documents, you need to look at the costs of developments. The initial choice is whether to buy or build. Buying has the advantage of a fixed cost. There are several automated form systems marketed by LexisNexis, Westlaw, and independent developers. If you buy a system, you need to determine whether the documents produced by the system meet your needs and match your drafting style.

If you don’t buy, you can purchase a document assembly platform, such as HotDocs, qShift, Exari, Pathagoras, or DealBuilder, and build it yourself or retain a consultant to work with you on designing a custom system. You need to factor in the subject matter expertise of the consultant, as well as the cost of your time and your staff in the development process. Do not look just at the “dollar cost” of the engagement. Consider that while the consultant is working on the system, you can focus on getting new clients or do client work.

When engaging a consultant, don’t just look at the hourly rate. Some consultants are more productive than others. You are better served to define a set of documents and send them to the consultant for a project quotation and time estimate. If you choose to build it yourself, and even if you work with a consultant, be prepared to spend substantial non-billable time and money.

CONCLUSION: BALANCING THE EQUATION

When all is said and done, you should not commence a project unless the ROI for the entire project is returned in profits within six months of delivery. If you can’t conceive of getting all your money back within six months, you have either chosen the wrong processes to automate, or the wrong people to do the automation.

There is a strong business case for document automation. Don’t let “gee wiz” and “can do” rule the day. You must dispassionately review the ROI for your particular project, and determine that on-balance you will be better off, more profitable, and carry less risk if you automate than if you stick with the status quo.

Copyright 2009 Seth Rowland. All rights reserved.

TechnoFeature: A Systemic Approach to Legal Document Automation (1): Building Technology Bridges

Sunday, 04 January, 2009 19:51 Written by Seth
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AS PUBLISHED IN TECHNOLAWYER : With the recent state of the economy, many companies are tightening their belt — and law firms are no exception. But sometimes you have to spend money to make money. According to legal technology consultant Seth Rowland, now is the time to redouble legal document automation initiatives. In this comprehensive two-part series, Seth explores document automation, first from a technology perspective, and then from a business case perspective. This week, Seth explains how to get started, constructing a bridge between mere templates to a full automation system. This article contains 1,684 words.

INTRODUCTION

The economy is in a tailspin; profits per partner are down; and the New York Times is reporting layoffs in the legal market. Is now the time to cut corners and stop innovating?

No!

Now is the best time for lawyers to redouble their automation initiatives. Document automation is the art of doing more with less (more work in less time) — with the potential of leveraging higher profits out of a shrinking staff. The best cost-cutting initiative is an investment in document automation.

The chairman of the Association of Corporate Counsel, Ivan K. Fong, was recently quoted in the New York Times, saying: “Rather than having hourly rates, we are increasingly negotiating flat fees or fixed fees, or success fees” (Law Firms Feel Strain of Layoffs and Cutbacks, NY Times, 11/11/2008). This is great news for lawyers who invest in automation.

Legal competition on the basis of fixed fees for “deliverables” rather than hourly rates, a practice which has been prevalent in the solo and small firm market, is reaching up to the AmLaw 100. These new client expectations challenge the business model of “elite firms” that leverage the hourly labors of talented lawyers.

For over a decade, I have preached that with document automation, firms can leverage legal talent with multiples that far exceed that of hourly billing. Many of you have taken up the challenge, some with mixed success. The failure to achieve the nirvana of automation often comes from choosing the wrong documents and assigning the wrong people to automate them. More often, this result comes from taking a piecemeal approach: approaching documents in isolation from each other, in isolation from the potential sources of information used to create these documents, and in isolation from the workflow of servicing clients.

In the first part of this two-part series, I focus on a systemic approach to building an automation system. In the second part, I will make the business case for automation and demonstrate how automation can increase both the quality and the quantity of legal services delivered, resulting in lower costs and higher profits.

THE SYSTEMIC APPROACH TO DOCUMENT AUTOMATION

“No man is an island, entire of itself,” writes John Donne. No document exists in isolation. The document is part of a “system” whether it is automated, semi-automated, or non-automated. The “legal document,” in particular, emerges out of a client interaction wherein information is supplied, an assessment is made by the lawyer, and that client data, along with a legal judgment is used to create “a document” or “several documents” that serve the needs of the client and implement the judgment of the lawyer.

In too many cases, lawyers rely on several “islands of data.” Email and voicemail systems like Outlook, Thunderbird, and Webmail capture client requests and communications. Case Management systems like Time Matters, PracticeMaster, Amicus Attorney, and AbacusLaw profile facts about the client and the “matter” as well as notes about the file. Template systems like HotDocs, DealBuilder, Q-Shift, Pathagoras, and Exari capture details in “interview questions” about individual documents.

These islands of data should overlap. Redundant and often inconsistent information may be entered into these islands resulting in “lost time” on data entry and on data-checking. Even within the “document assembly” island, there are islands. Templates are often developed one at a time and even assigned to different attorneys who take different approaches to the interview and automation. To produce a single “set of documents,” one often has to go through several interviews, answering the same questions.

The solution is to build bridges to enable the data to flow between the islands. And for each bridge, you need a “road” or path for the data to flow in each island, lest you risk building a “bridge to nowhere.”

BUILDING BRIDGES

The software is out there. Automating a template has never been easier. Tools like Pathagoras enable you to put favorite clauses in a folder hierarchy and square-bracket notation to denote variables.

DealBuilder, made by Business Integrity, pioneered the use of a sophisticated relevance engine that reads a template, and dynamically builds the interview based on the template markup; no additional coding is required.

HotDocs, made by LexisNexis, recently built an option for the developer to enable the software to determine the relevance of questions based on the coding in the template to be assembled. Its new “Document Modeler” enables that author to dispense completely with the “component file” and build an interview entirely based on document markup.

To build a bridge, you need to identify what information you need and where that information can be found. Follow the basic steps below.

1. Identify Groups of Documents That May Be Created as a Set.

In litigation, one might produce a summons with a complaint, and affidavits of service; or a motion, notice of motion, brief, supporting affidavits, and affidavits of service. In estate planning, a will might be created along with a trust, power of attorney, and healthcare directive. In banking, one might produce a loan, a note, guaranties, and indemnities at the same time.

2. Review the Set of Documents and Identify the “Core Information” Used By All or Many of the Documents in the Set.

Group the information into topics. Use a spreadsheet to map out your variable requirements at this design phase. Excel is a great development tool. MindManager, a visual outliner from Mindjet is helpful with visualizing the workflow and data flow. This review process will often lead to improved documents as you identify inconsistencies in the way you handle the same information.

3. Understand Your Own Decision-Making.

Form a committee to review the documents from a systemic perspective. Bring together teams from multiple offices using Web meeting technology like GoToMeeting. With this technology, you can issue an invitation to several attorneys to join you to review documents on your desktop and dial into a free teleconference number.

4. Build a Core Interview for the System.

Most document assembly software enables the user to develop “Interview Only” templates used to gather information for the case file. Build the core interview. Simply using these core variables in all the templates will speed development time and lead to greater efficiency and quality control. Save and reuse your answer files. When the time comes to “assemble” the documents, you will find that many of the questions are already answered. You can also use the core interview to determine which documents are required. HotDocs and DealBuilder enable you to send multiple documents to an assembly queue from a single interview.

5. Identify Sources of Data That Can Be Used in the Core Interview.

At the very least, contact data (names, addresses, phone, and email) is also found in contact management and practice management software. HotDocs’ answer source integration enables the user to select contact records from Time Matters or Outlook and bring in the data. Your practice management system has a wealth of data about your clients and matters that can be tapped. You may also have custom databases or spreadsheets that contain data that could be used to “feed” the assembly process.

6. Customize Your Practice Management System.

Most practice management systems provide customization of contact and matter forms. Review your “core variables” and identify those which could be added to a client and matter intake process in your practice management system. Time Matters recently added a new customizable record type called “User Defined Records.” Amicus Attorney now has “Custom Records” with unlimited number of fields. PracticeMaster has “Area of Practice” forms.

7. Time to Build the Bridge.

How you build the bridge will depend on the data source and the document assembly engine. Return to your spreadsheet of core variables for document assembly. Add a column for the matching table and variable in your data source. There are two approaches: push and pull. In a “push,” you go to the data source and use its mapping utility to push the data from the database into an answer file and then launch the template(s) for assembly. In the “pull,” you register the database source in your document assembly program. And during the assembly, you select a record or collection of records from the database and the data is pulled into the assembly.

8. Bridge to the Client.

Up to this point, all of the work was internal to the law firm office and staff. The client is your best direct source of information, so bring them into the process.

Start with creating fillable Acrobat PDF files and posting them on your Web site or email them to clients and prospects. With a little more effort, you can host Web-forms on your firm’s Web site that post to an internal database; great for marketing. With more money, interview templates can be hosted on a HotDocs, DealBuilder, or Exari Server built into a law firm Web site and used to gather accurate data directly from the client.

Alternatively, a lawyer could meet with the client on-site, and remotely access his or her computer using Microsoft Remote Desktop or a tool like GoToMyPC. During the meeting the lawyer could run the core interview or enter data directly into the Practice Management system.

CONCLUSION: MEASURING RESULTS

Unlike the famous “Bridge to Nowhere,” the bridges suggested above will produce measurable gains for your law practice. They will result in more productive staff, working together like a team. You will eliminate redundant data entry, and produce quality documents faster. Each template you add to the system will be easier to code since it will build on previous templates.

An ounce of foresight is worth a pound of cure. These efforts require time, thought, and money. And so, the next article will build the business case for document automation.

Copyright 2008 Seth Rowland. All rights reserved.

Lessons from SuperBowl XL – I Can’t Get No Satisfaction

Wednesday, 08 February, 2006 01:48 Written by Seth
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SATISFACTION … 40 YEARS LATER

Superbowl XL was a tour de force, with the largest audience of any show all year.  It is the one football game I watch each year … “I watch for the commercials” and the “half-time” show.  This year, Mick Jagger of ther Rolling Stones performed the half-time show … without a “wardrobe malfunction”.  At the age of 62, Mick Jagger opened with the remark, that it took 40 years from when he burst onto the Rock ‘n Roll scene to make it to the mainstream of the Superbowl XL (“40″).  Dancing around a giant tongue (stuck out at full length, as in a “Brooklyn cheer”) he launched into a rousing rendition of “I can’t get no Satisfication …” and I tried, and I tried, and I tried.

A DECADE LATER

It has now been over a decade since I left my comfortable “New York” litigation practice to enter the area of document assembly consulting.  In the ten years, document assembly has gone from “fringe and novel” to “mainstream”.  For many attorneys it is a central part of their process, whether it be for generating high-volume pleadings, prepare probate applications, or drafting wills and complex tax-sheltering trusts.  This article is a reminsce on the past decade in document assembly.

THE JURASIC PERIOD

When I first started writing on document assembly, in the early days of the commercial internet, I was flamed as a traitor.  I took the position, which I hold now, that the billable hour is a dinosaur.  I argued that unless law firms changed their business model, they would soon find themselves priced out of the legal market by more nimble competitors.  I took the position that law firms who innovated and invested in their intellectual property, would rise to the top in terms of profitability per partner.

TRENDS TOWARD COMMODITIZATION

The response I received, to say the least, was caustic.  How could you “commoditize the law”.  Do people get legal services from “Walmart?” or “Lawyer’s ‘r Us.” The quality of legal services in this country will plummet.  Lawyers are unable to determine the “true cost” of services, and should be rewarded for the hours they labour.  Once you “fix prices”, lawyers will stop innovating and lower the quality of the services they provide.  We are serving as “advisors” to our clients – how can we put a price on that advice.  When I suggested that will value-billing and project-based billing, the effective hourly rate for service could reach into thousands of dollars per hour, I was told that lawyers who charged such fees should be brought before bar association ethics committees and disbarred.

ACTING AS AN ACCOMPLICE

Lucky for me, I was no longer practicing law, but rather “aiding and abbetting” my clients in the commission of these ethics crimes.  I was making it possible for my clients to “fix” the fee for a client for the delivery of a defined service.  The client would get a “cap” on the fee and a fixed expectation of the service to be rendered.  By defining the service with particularity, the law firm then had the incentive to invest in building intellectual property and systems to deliver that service with a minimum of time.  I spent much of my time, urging my clients to consider the R.O.I. on document assembly.  Most of the time, these projects were implemented only for “loss leaders” – services which were not profitable under the hourly model – and thus the investment would “save” the firm from having to write off hours.

TRY TRY TRY

For ten years , I got no satisfaction.  And I tried, and I tried, and I tried.  Yes, I found a number of enterprising attorneys who faced with the choice of hiring additional staff to handle a burgeoning workload, or investing in automation technology and consulting, chose the CHEAPER alternative – automation.  I would spend 30% of my time marketing and doing demos.  Ten years laters, I spend 5% of my time marketing.  These websites bring in several leads every weak … people who had already made a decision to automate.  The only question is whether the cost of our services would fit into their Return on Investment.  Many of our clients are pioneers, pushing the limits of automation.  They have played with HotDocs and Ghostfill, worked with merge fields and done simple automation.

FROM DOCUMENTS TO APPLICATIONS

And now they were ready to go to the next level, and build a custom application to handle a complete practice area.  Those are the inquiries we are now receiving.  Document assembly is no longer just for documents.  Mosts of our systems begin with a Master Information List to gather data and then a switchboard.  We invite you to look videos of our current systems.  Video Tours

DOCUMENT ASSEMBLY SOFTWARE

Over the years, I have worked with a number of Document Assembly Products. For more information on these products, click on links below:

  • HotDocs
  • GhostFill
  • DealBuilder
  • Smartwords
  • MasterDraft
  • PowerTXT
  • ThinkDocs
  • WinDraft
  • Perfectus
  • qShift
  • Microsoft Word
  • Corel WordPerfect