Thanks to Monica Bay and Kimberly
Fine of ALM Media, I was able to participate as "blogger
in residence" at ALM’s "CIO/CTO Summit 2005," held here at the Hilton Times Square this Wednesday and Thursday.  I am pleased to report
that the presentations, panels, and roundtables were of exceptionally
high-quality (perhaps blessed by a vendor-presentation count at a grand
total of 1), and equally if not more important, I was able to connect
up with old friends and meet new ones including several luminaries
in the CIO/CTO firmament that I have long admired from afar.  Hey,
Monica & Kim!—Let’s do it again next year!

My report follows:

The theme
of the conference:  "It’s
not just legal" or, empowering the CIO.  But
"empowering a CIO" has it backwards; the CIO empowers the organization:

• control costs
• keep attorneys productive wherever they are (office, home, client, hotel)
• keep attorneys informed (Knowledge Management–documents, contacts, etc.)
• and ultimately, driving towards a more profitable mix of clients and matters
  within the firm, which comes from a transparent analysis of financial data.

Dr. Peter Weill, Director of MIT’s Information Systems Research Lab:  IT
Governance

What is IT Governance in a law firm?  Dysfunctional governance
is slow, bureaucratic, creates islands of technology; high-performance IT Governance
creates and supports collaboration. 

Most popular program at MIT Sloan is "IT for the non-IT executive,"
which is a two-day affair that is given three times annually and attracts many
law firm partners.

Result of studying 256 organizations worldwide over three years:  Effective
IT governance means:

• Not silo’ed; linked to corporate governance and the governance of other
  key assets
• Supports demand for IT from all areas of the enterprise
• Recognizes leadership has limited bandwidth (implies that senior management
  cannot and should not be involved in every IT decision)
• A synonym for "hub" is "bottleneck," so some IT governance
  must be distributed.
• Borrow analogies from governance elsewhere in the firm; e.g., the CFO does
  not sign every check, so the CIO should not be down in the weeds either.
• Firms in the top third of IT governance were 20% more profitable; does
  not mean causation, but does mean focused strategies can pay off.
• Conversely, beware situations where"ownership" of IT
  governance is unclear. 
• What percentage of your senior partners can actually describe your IT governance
  model?  Across all enterprises, the average is 38%.  In the top
  third in terms of financial performance, the number is never less than 50%
  and more typically 70-80%.  In the bottom third, it’s 12%, 15%, 18%,
  etc.  In
  professional services, the number is always less by 5-10% across the board.
• Firms in high-growth mode have decentralized IT decision making, close
  to the client.
• Firms that are highly profitable have highly centralized IT governance.
• Firms maximizing asset utilization have a blend.

"IT Governance" essentially boils down to:  "Who has decision
rights and input to key IT decisions?"

"IT Management" is one level below:  What actual decisions
are made.  As usual, one must first ask, what behavior in the enterprise
are we trying to encourage?  Growth?  Cost savings?  Innovation?  Sharing?

Key assets of the firm include:

• human
• financial
• physical
• intellectual property (knowledge)
• information and IT; and
• relationships.

"Management" is simply the policies, procedures, and means for handling each
of these asset classes.  Interesting questions to ask about these six
asset classes:

• which has the most "mature" governance structure? (finance, most likely)
• which is ultimately most important to the firm?  (human, most likely)
• which has the least structured/effective governance? (relationships?)

The five major IT decisions are:

• principles
• architecture
• infrastructure strategies
• business application needs; and
• investment and prioritization

For example (real world truth), one law firm came up with this as the #1 IT
principle:  All knowledge held by each partner is theirs alone and not
to be shared.  Insane, perhaps, but succinct and clear.

Alternative models of decision-making are:

• business monarchy (this is highly efficient but can lead to suboptimal
  IT architecture)
• IT monarchy (leads to superb IT architecture and procedures but
  may not align with business processes)
• federal system (IT, practice groups, office heads, etc., all have
  input–far and away the least efficient and most likely to generate
  the worst overall decisions)
• IT duopoly (business leaders suggest what they need, IT responds
  with what they can provide, and a genuine dialogue occurs:  typically
  a smart choice)
• feudal (every partner gets what he/she wants)
• anarchy

In general, the federal model is the least effective, because the most
time-consuming and bureaucratic.  On the other hand, it’s the most "open"
in terms of input (democratic) and difficult to avoid in a law firm culture.  Common
experience in determining "business application needs" is passive-aggressive
behavior by lawyers:  "I don’t like what you’ve given me, but I’m not
telling you what I need."  Even worse, "almost no partners puts the
firm first; they put their practice area first."  So with 300 partners,
only 10 of whom are senior enough to truly have the interests of the firm at
heart, it’s extremely difficult to get partners to specify their business requirements.

"In the end, it all comes down to incentives."  So if the success
or failure of one’s own practice area is determinative of compensation, don’t
expect different behavior.  One technique to overcome this: Get partners
to visit other law firms and in particular other firms’ clients; can be eye-opening.  For
example, if clients appreciate an "all documents" extranet, that implies a
unified IT infrastructure on the law firm side.

Also, IT needs to try to speak the language of business:  Get out of
your office and speak plain English; orient yourselves towards service and
business reality.

Recognize that tension is inevitable:  Practice groups want to be "special"
and unique; the executive committee wants firm-wide strategies and tactics;
and IT wants a unified infrastructure, security, etc.  The goal of a governance
platform is to "institutionalize this tension," and make it transparent and
exposed to the open air.  Do  NOT cut under-the-table deals, since
they’ll come to light the next day and lead to anarchy.

---

Empowering the CIO/CTO:  Roundtable Discussion

Is there a difference between being a CIO vs. a CTO?  Should the CIO/CTO
be a lawyer?  Essentially, he/she needs to be perceived as a peer by,
e.g., reporting to the managing partner/CEO of the firm.

Regardless of the title, there are three philosophical approaches:  From
a business perspective, from a technology perspective, or from an operational
perspective:

• business-side:  IT is a tool
• technology:  adoption is key
• operational:  asset utilization, maintenance of existing processes
  ("the trains run on time")

Clarity of expectations is tremendously helpful towards success:  the
CIO/CTO needs accountability and responsibility, and a mandate.  The mandate
can be as simple as "a stable platform," or as aspirational as "having the
firm be perceived as a technology leader," but a mandate of some sort is essential.

Elements of strategic technology planning:

• Defining technology strategy;
• Clarifying the process for strategic planning:  Who are the players?
• Developing a budget
• Communicating the value of tech to management

This is all well and good, but when the audience was asked how many of their
firms actually had a firm-wide technology strategic plan, probably only 5%
of hands went up.  Why?  "Attorneys are reactive."  Nevertheless,
having an actual written plan is key, not just for the clarity of thinking
it requires, but for consistency six months later when someone asks why you
are or are not doing X.

Particularly in law firms, there’s the phenomenon of "something for everyone"–can
you just say no?  Sometimes reason will prevail and a partner who wants
gadget X will realize that if all the partners get exceptions made for them,
it will cost real money, but conversely some people will still insist they
need it, at which point "you’re into the politics of the firm," and the managing
partner may have to make the ultimate call.   It’s mostly a matter
of choosing your battles.  For example, if someone wants a full copy of
Adobe Acrobat and not just the reader, for $700, you might want to surrender
without a whimper rather than get into a long debate which would absorb multiples
of that amount of  money in unbilled time, not to mention harsh feelings.

---

"Outsourcing From the Backyard to Bangalore"

Why outsource?

• reduce operating costs:  35%
• focus on core competencies:  36%
• improve processes:  13%

Opportunities to outsource:

• merger/acquisition
• major technology upgrade
• decision to reallocate managerial time to essential functions

Does outsourcing work?  Yes:

• reduces costs typically in a range of 30-40%
• permits introduction of new technology/software
• increases user satisfaction
• focuses resources on strategic initiatives
• gains access to best practices
• reduces exposure to technology/process obsolescence
• initiates change

But aren’t there risks?  Yes, although there are risks in domestic sourcing
as well.  The key to dealing with the risks is strong leadership; given
that, you can address the issues and get past them; without strong leadership,
manageable risks become dealbreakers.

But risks specific to offshore outsourcing include:

• suppliers are having trouble recruiting enough skilled people
• there is high turnover among existing staff in some specialty areas
• risks of salary arbitrage benefits going away:  including, has the
  supplier been overly zealous in pricing to win the work?  could changes
  in taxation make it uneconomic?
• inadequate customer satisfaction (internal and external); be very careful
  with client-facing functions
• legal enforcement rights: speed, reliability of local courts?  If
  you use American courts, typically American subsidiaries are not asset-rich
• data privacy, particularly vis-a-vis client confidentiality
• IP issues; and can they be enforced?
• political risks:  "Benedict Arnold" legislation at the federal and
  state levels; approximately 30 states now have pending legislation.

Service level agreements are critical:

• first understand what the existing service levels actually are
• then tune your expectations to what’s truly suitable:  neither too
  high or too low
• put explicit SLA requirements into RFP
• and don’t compromise

---

Day 2

---

"Views of the Future from Different Pasts:  An Interactive Panel
Focusing on Cutting-Edge Technology and Related Business Issues"

Monica Bay, ALM
Steven Levy, Microsoft

Laura Owen, Cisco
Jonathan Wong, CIO, Gibson-Dunn
Ian Miller, CIO, Weil-Gotshal

Monica Bay:  "I believe very strongly that the profession is in the
midst of a sea change."  In twenty years at AmLaw, she’s seen tremendous
change.  "This sea change is moving the profession from a private club
model where lawyers functioned as the Wizard of Oz and ultimately delivered
a bill ‘For Services Rendered.’"

 The transition is to a corporate/business model.  Laura recently
wrote an article entitled "Change or Die," published in LTN and on law.com,
which got more traffic in the blogosphere than anything Monica’s ever published.  Laura:
"This is all common sense; why tie yourself to a 24-hour clock; that’s so limiting
compared to being able to use technology to deliver legal services through,
e.g., licensing agreements."  "Sit on the beach and make money."

Jonathan:  "When I was at Brobeck, we certainly got the notion
of having to operate more like a business, but sometimes when I talk internally,
even to our IT department, in business terms, sometimes they still don’t
get it."

Ian:  "At the highest level, with firms in excess of $1-billion
in revenue, they’re enormous as law firms but as corporations they’d only
be middle market.  Now
they’re st struggling with ‘too many mechanics under the hood.’  But
law firms could learn a lot from manufacturing and supply chain functionality.  Law
firms deliver documents; being differentiated is not inconsistent with being
efficient."

Steven:  "I’m struggling to teach our inhouse attorneys how to think
like businesspeople.  It’s like the old Russian screw company where the
incentives were based on how much raw material was input, not what was output–so
at the beginning of each month they’d make one humongous screw and drink vodka
for the next 29 days.
"We want to pay for output, not input; it is a sea change for law firms."

Monica:  "I’ve seen law firms fail to do things my mother taught me at
age 8.  Like:  Asking clients how they did and how they could do
better."
"Consider this: ALM Media just completed its latest round of financing (successfully), after which
the investment bankers and venture capitalists took everyone out to dinner
and asked how they did, what they could do better, and made it clear they wanted
a long-term relationship with ALM Media.  And the lawyers?  They sent a
bill."

Steven:  "We’re a black hole to our outside counsel and they’re a black
hole to us.  We don’t share information in the rich way that technology
enables today.  What worries me is that we are driving towards a commodity
business; and if we don’t control that, we’ll end up with Wal-Mart.  You
need to sell it to me for 5% less than last year.
"I fear the default direction is to a commodity business, which is not healthy."

Ian:  "At Weil-Gotshal we have an annual review with each key client
which is a fabulous and revelatory practice.  We can use technology to
understand each other’s needs better. 
"For example, document management is at the heart of what a law firm
does; why wouldn’t it be possible to integrate our DMS with our clients so
that a document doesn’t have to orbit around our system, then break out of
orbit and be emailed to the client where it goes i into orbit there and then
gets emailed back."

Jonathan:  "We’ve had extranets around for a long time, but the law firm
culture doesn’t get it yet. "

Laura:  "I think if law firms don’t change, they’re going to die; everything
from basic customer service–ONE law firm out of the 58 she’s worked with has
ever asked how they’re
doing.  But law firms won’t change on their own;
clients will have to force it.
"Extranets are great but they’re essentially a great big file room; they’re
useful but don’t charge me for it!  That’s bulls***! 
"You can go beyond commodity work; Cisco has partnered with Eversheds to deploy
an e-learning tool which is in a cartoon-like format very appealing to the
user.  Cisco got the content for free, developed the tool, and gave it
back to Eversheds, which now has a new piece of IP to sell to their clients."

Jonathan:  "I often ask partners and associates what I can do to succeed
as Gibson-Dunn’s CIO and one London partner was very blunt with me recently:  He
said, ‘You can come into my office more than once every 5 years, and just listen.’"

Ian:  "A trend I see is the CIO becoming more involved with firm management
and therefore more involved with clients. 
"E-discovery in litigation has changed the ballgame; it used to be limited
by physics, but now it’s not."

Monica:  "I did an article called ‘Fear Factor’ based on an ABA survey
reporting that only 11.7% of respondents used litigation support technology.  Many
may  have been using it (e.g., PowerPoint) but not thinking of it that
way.
"But overwhelmingly, lawyers reported they were scared to death about trying
things, spending money, being able to understand it and actually use it; they
didn’t want to be trained or to learn.
"Let’s all stipulate that we have to use these tools:  But how do
we get there from here?"

Jonathan:  "We can start by just showing up and listening, and find a lingua
franca in the language of business–not the language of law and not
the language of tech or IT."

Ian:  "We acquired a law firm in Paris, which became our Paris office;
we started by standardizing them on our PBX technology, which they were violently
opposed to.
"The issue turned out to be that the speakerphones were half-duplex meaning
only one person can talk at once, which is a complete non-starter in that culture.
"There are corporate lawyers and there are litigators, and they’re like surgeons
and interns; they are two totally different animals. 
"One of the first things I did was watch one of our attorneys try a case, and
he was spell-binding in closing argument.  Over 45 minutes there were 200
slide transitions and he never looked at the screen once; he had memorized every
transition.  When you see a performance like that, you realize how  you
can support these people."

Monica:  "I predict EDD is going to be the driver that will kick all
firms into technology, and there will also be lots of road-kill.   KM
didn’t do it because it was never properly defined and is so broad and encompasses
everything, but EDD is real and it’s here."

Ian:  "Microsoft calls Office its "productivity suite," and I’d call
it the anti-productivity suite.  Excel is great, Word is so-so (you used
to do three revisions and it was fine; now you do 27 and it was still fine
after three), but PowerPoint is definitely anti-productivity.  The world
would be better off without it [applause]."

Steven: "There is no such thing as corporate privacy any more thanks to EDD;
you think the Patriot Act was bad?  IM, Blackberry’s, metadata, voicemail,
data repositories; it will make it impossible to do business with any degree
of privilege."

Laura:  "The people in this room hold the keys to the kingdom; you
can create the tools to overcome the limits of the billable hour.  Let
clients into your KM system; let me use your document assembly system and
charge me a flat fee for access to it.  I’m smart enough to know if
I need to show it to a lawyer or not."

Ian:  "You don’t get a seat at the table by whining that you don’t
have a seat at the table.  Just show up; in my entire career I’ve never
been thrown out of a meeting I wasn’t invited to; I did it just yesterday
when the litigators were meeting and I had something to say to them.
"How do I get into a lawyer’s office to talk about KM? First, I fix his
Blackberry and then we can talk about KM."

Jonathan: "You get a seat at the table, first, by doing your job right,
and getting respect that way."  [One audience member violently
disagreed and said the culture wouldn’t permit it at their firm.]

Monica:  "Lawyers never want to admit they don’t know something, so
speak plain English and build bridges.
"You really have to be on your firm’s websites. All firms who do not put
their C-level execs on the website have lost business.  What if I’m
a client and I need to reach an IT director.
"There’s a similar thread in the blogosphere about cloaking associates, which
is also germane."

Laura:  "Clients are demanding change:  Cisco, DuPont, Microsoft,
GM, Johnson + Johnson, other clients, have formed a consortium to create
change; it’s not about squeezing more out of the billable hour or chopping
your rates 20%.  Firms simply  have to be more efficient, and only
productivity through technology will enable it.  Stop being tied to
the 24/7 clock, and stop throwing associates out the door after 5/6/7 years
of incredibly valuable training; that’s such a waste."

---

Doug Caddell, CIO, Foley & Lardner

Can IT provide a competitive advantage?

Yes!  But how do you get there?  How can a CIO in a law firm even
think about making it a competitive advantage?  In so many law firms,
IT is still viewed as a cost, not an investment. If your firm still feels
that way, "look for employment elsewhere."

If you’re just reading Law Technology News and CIO Magazine, break
out of your box:  Read The American Lawyer and Corporate Counsel,
to be sure, but also Fortune, Business Week, The Wall Street Journal, etc.  Know
what your firm’s clients are reading, as well.

One way to help corporate clients is to recognize that most inhouse law
departments are at the bottom of the technology food chain.  If it’s
a retailing or manufacturing company, their IT staff is focused on either
retailing or manufacturing, and not the law department.  So Foley, e.g.,
can offer some best-of-breed lawyer-related applications that would not be
developed or serviced in-house.  "We have good lawyering, everybody
has good lawyering, but IT can distinguish us:  Give your attorneys
a story to tell."

Foley offers its significant clients "FOLEY:ClientSuite," which among other
things lets a corporation view all its matters being handled by Foley, provides
some access to Foley’s KM system, permits authorized users to update matters
with notes, etc.  Q:  How do you get lawyers to update matters
with notes?  A:  We built it and they came; both clients and Foley
attorneys (albeit not all).  Once clients started using it and expecting
their Foley counterparts to use it, it built from there:  "Small successes,"
not conquering the world.

About six years ago Foley decided to take on a more corporate managerial
model:  "Lawyer led, but professionally managed."  Shaky
for the first couple of years, but now well-established; Doug said he could
go into a senior partner’s office and say, ‘no.’  The goal of the decision
was "to be a player rather than be sucked up." 

Moreover, lawyers are being grouped and organized in many case into client-industry
teams rather than practice groups reflecting internal law firm organization
(tax, real estate, etc.). 

Are the documents tied back into InterAction or the DMS system (iManage)?  No–and
no for a reason.  InterAction:  "Just didn’t want to go there."  iManage?  No
that either; we wanted to build one extranet template and re-deploy it multiple
times.  But when we looked at other extranets we’d built, we realized
almost no documents were initially resident in our DMS:  They were almost
all externally generated.

Since competitive advantage is a moving target and a fleeting thing, the
big question in Doug’s mind is, "Where do we go tomorrow?"  Law
firms have historically been behind the curve technologically, but  now
they have more or less caught up with corporate America.  Unfortunately,
Doug would posit that law firms stopped moving forward about three years
ago and have again fallen behind corporate in "enhancing the customer experience."  Model
cases:  Continental Airlines, Land’s End, BMW, US Bank, FedEx. 

Key ingredients:

• build an exceptional technology team; it’s all about people
• you only have A and B lawyers, not C and D lawyers, so you must only
  have A and B IT people
• if you just want to be average, go be average somewhere else
• emphasize training and rewards; you will get the behavior you reward
  people for

The Holy Grail is earning credibility, both personally
and on behalf of your department.

---

Post-Merger Integration:

Ed Macnamara and Matt Peters, co-CTO’s of Wilmer Cutler Pickering Hale &
Dorr

A merger of equals; revenue was $370-million apiece, both about 500 lawyers
with 150 partners.  Discussions began in June or July 2003; entire partnership
informed in October; zero leaks until one week before formally announced
in May 2004.  Senior administrative managers were also involved early,
reflecting firms’ vision that C-level execs needed to be involved to make
the merger successful.  Ed and Matt started meeting 6-7 months before
the merger.

Day One:  Get the outward-facing basics looking compatible:  email,
voicemail, letterhead, website.

One of the more difficult integration issues  has proven to be the
intranets, as both are quite different from each other and each reflects
the firms’ basic cultures.  Lawyers and staff are used to the way each
works, and full integration of these is still not achieved.

There is also ongoing fear among IT staff about then post-merger fallout;
whereas before each spent maybe 10% of their time on staff issues, they now
spend 50-60% of their time on it.  Another interesting lesson is that
not everything can or should be decided right away; sometimes
waiting longer to make a decision results in a superior decision–particularly
if it  means it’s jointly arrived at and not jammed down one side’s
throat.

Interestingly, the co-CTO’s are the only joint CxO’s in the merged firm.  On
the other hand, senior management of the firm has explicitly declared the
firm will continue to have two headquarters, Boston and Washington, DC.  In
terms of change management, saying something once doesn’t do it:  Communicate,
communicate, communicate.  Interoffice travel is also indispensable;
sticking to emails doesn’t cut it.  People need to get together.

Advantages of the merger:

• far more bargaining power with vendors
• wider range of experience across the staff
• increased staff size (no cutting)

Bottom line:

• more mergers are likely
• embrace change
• take advantage of the opportunities

---

Industry Surveys:  Leading or Misleading?

Charles Lowry, Director of Client Relations, ALM
Sally Gonzalez, Baker-Robbins
Eugene Stein, CTO, White & Case

While 67% of respondents think surveys provide valuable information, only
27% are satisfied with the current survey landscape.

NLJ 250, which ranks firms by FTE lawyer headcount, captured 8.5% of all
lawyers domestically five years ago, >12% today, and all of that growth has
been in firms at the very top.

At White & Case, IT is the third largest expenditure after leaseholds and
salaries, and partners largely don’t understand where the money goes.  Being
able to benchmark the firm’s spending on IT is therefore something attorneys
are very interested in.

Problems with surveys include:

• inconsistent authorship
• unclear directions
• too time-consuming
• too many surveys, period
• inconsistent standards
• most importantly, viewed as third-party marketing tools and not objective

Recommendations to improve surveys:

• collect high-level data only
• standardize on your chart of accounts
• "limit and improve" surveys

One suggestion is to do an annual high-level survey and then monthly slices
(about servers, staffing, lit support, desktop configurations, etc.).  The
Citibank survey came in for some pointed criticism as not in touch with law
firm reality and highly targeted towards the financial side of the firm and
not the tech side. 

There are some functional difficulties that could be improved, such as:

• sending reminders to those who haven’t responded, because people can
  have the best of intentions and forget about it;
• allow people to "pause" in the middle and return;
• provide a multitude of flexible response possibilities so, e.g., instead
  of yes/no, "often, sometimes, rarely…"