Law Firm Articles

Taking on the Costs of Legal Research

For more than a decade now, technology managers in law firms have had a pivotal role in all aspects of law firm operations. They are involved in accounting and complex litigation support, desktop management, online information delivery, case filing and database development. In each arena, managed resources are unique. Resources are either created and owned by the firm or purchased or leased through a vendor. Whether it is software or hardware, access to research or purchase of content, most avenues of acquisition include contract management. And so it is left to the skillful devices of IT leadership to understand the resources and their advantages as well as the convoluted terms of many contracts. How can technology managers learn the ropes without the time and missteps that experience alone might teach?

There has been a strong move among law firms in the last 10 years to use consultants to negotiate the cost of online legal research contracts. As a pioneer in this field, I have watched the number of negotiators grow since the recession. The vendors have tried to fight back. For most consultants, the emphasis has been on the total cost of the contracts. But each firm and each contract is unique. The best approach to saving money is to become familiar with the details and then establish new goals.

Although many cost reducers have entered the arena in recent years to beat down the monthly cost of renting information, several challenges remain to the firm. One is to understand which features and contract terms are the real drivers of costs; the other is to evaluate and then select alternatives. Both of these require analysis that takes knowledge and time. This article and others to follow will help IT management learn what to look for. Then kudos to the IT department that identifies the drivers of high costs and then implements cost reduction.

Analyze First

The IT department is the doctor on duty for most contemporary firms. Taking the pulse of the firm will lead to IT at its heart. It is not enough that managers have long experience or have worked at several firms. What matters is that they are current on every bell and whistle offered, and that they understand the objective of each resource and who will use it. They must get a handle on the products from the users’ point of view, and evaluate the cost of the resources against the cost of maintenance and support — both the cost charged by vendors and their own internal costs.

Objectively, the goal of contract negotiation appears to be cost reduction. But to get the most value from the cost reduction project requires more important goals be established as well. Both the existing contract and the new offer have to be weighed against the firm’s contract history and an analysis of how effective the last contract was for the firm. But needs change over time as do pricing styles, so an analyst cannot merely act on the past. IT leaders will have to work with the law library to drill down into the legal research process and the management of the costs that attach to it.

Wrapping IT Experience around the Law Library

The information age began some time ago now. It is commonplace for IT leadership to have responsibility for operating departments other than IT itself. Document management, word processing, conflicts, docketing and the law library are commonly included among areas of responsibility. Joining hands with the personnel closest to the subject matter relieves the entire firm of error and conflict and gets all players on the same page.

In the area of legal research, the very complexity of the online research contract is off-putting. Law librarians are as baffled as IT managers, but about different elements of the contract. These contracts involve access to and delivery of electronic resources, and usually include terms for print publications and supplements. Analysis should uncover current needs based on practice areas and the hierarchy of those practice areas based on system demand. These should be reflected in the vendors’ offers and become the basis of a new contract. Real needs should be understood before negotiation begins. And before addressing price, the firm should address the relationship between total spend and the exceptional value the firm gets out of it. I use the term exceptional because most of the contract price pays for duplication. The firm needs to identify value it does not already own. This is not easy because the firm’s existing contract may reflect what is good for the vendor and not the needs of a firm, making the cost of customizing the contract more expensive.

Set Goals

Every firm wants to save money. While this is noble, another goal should be to understand how the pricing operates to the firm’s relative advantage or disadvantage by practice group. The point is that price is a small part of the terms at issue. It is common that negotiating only on price gives the firm a lower monthly base contract price but ends with a higher monthly bill. What went wrong? Armed with data and established goals, the negotiation can be better directed to the interests of the firm as well as to the bottom line.

It is very conceivable that the firm is paying too much for duplication or for an out-of-date practice mix. At the same time, it is critical not to reduce service to lawyers. I cannot emphasize enough the importance of bringing them the right resources, and all of the resources, at the time they need them. The heart of legal practice is in current and topical business acumen. There are no practice areas today in which law and regulation are unchanging. It will benefit the firm for IT managers to take time to develop a clear understanding of the firm’s practice groups, how they work, and what they need. First and foremost, IT management has to serve the legal teams with what they use. Get hard evidence and justification. There is a tendency to confuse wants with needs, and this can only lead to increased costs. Thorough understanding can establish discipline and grant the authority to say no when it is in the firm’s best interest to do so.

Open the Discussion Early

To have real advantage in a negotiation, be armed with knowledge of your firm, the terms of the existing, proposed and desired contracts, and take time before expiration to carry on the pursuit of a new contract. I recommend three months.

The first question is not about how much the firm can save, but how much more the firm can achieve to have happy lawyers, well-served clients and, generally, a good reputation. These are all connected and achieving these goals will reflect on the IT department as the managing department. The IT department can create a check and balance with every operating department by inviting a liaison from each to share goals with IT. You will gain exponentially if goals are set. This reinforces the value of the contract and puts the firm in a better position to handle negotiations in the future. Be careful not to be trapped by the sales pitch. Comparing costs to other firms says nothing about the value.

Think about Alternatives

Every negotiation works best in light of alternatives. With online research, a single resource may or may not be abundantly available across different platforms. This is a good place to turn to the law library staff for gathering evidence and support. Alternatives may exist for serving research needs to provide leverage in negotiations.

Determine Your Stake

The thing that matters most is attorney work product. The legal research information vendors have discovered marketing opportunities in managing a firm’s work product. Retrieving the firm’s own documents has been a problem for as long as I can remember, but the systems available for effectively retrieving them are still relatively new. This is in the hands of the IT department, and they should carefully consider which storage cloud is of long-term value to the firm and ultimately who will own the information.

Orient Your Position

IT leadership must address both contract structure and content alike. I have learned to approach questions of cost in terms of value received. While cost is readily available, real value may be hidden from view. The first place to add value is to eliminate any activity or resource that does not directly serve the firm’s lawyers or their clients.

The overall goal of this series is to help each IT manager of information get greater value from savings in time and money. In the next installment, I will illustrate the value to be gained from eliminating unnecessary activity and duplication in resources.

This article originally appeared in the August 2012 issue of LJN’s Legal Tech Newsletter.  It is republished here with permission.

Nina Cunningham, Ph.D., is an affiliate of Altman Weil, Inc., and President and CEO, Quidlibet Research Inc., a global strategic planning and cost management firm.