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In Part 3 of this series we talked about new competitors to law firms and some basic economics of law firms to get deeper in to the intense pressures on firms. Here we peeled back the layers of change driven from new technologies.

The Technology Challenge
Ray Kurzweil predicts that given the current exponential rate of technology growth, by 2048 a single computer will have the computing power of all human brains. Kurzweil’s calculations are based on a thorough analysis of numerous technology trends. But even if you discount his ultimate prediction, you really can’t escape the powerful influence rapid technological innovations are having. Compare that level of change to the technology innovations currently prioritized by lawyers and firms. These can be summed up with one word: Upgrades. With some minor exceptions, most firms and lawyers are investing their technology dollars in projects like newer word processing, document management and email management systems. So while the world is automating forms and legal processes on the Web, lawyers are getting better at paragraph numbering and organizing documents.
Cost-plus thinking. In a cost-plus world, firms react by draining the company of capital every December 31st. This mind-set does not view technology as an investment, but instead as a necessary expense. Worse yet, technology negatively impacts the number of hours and respective revenue generated by them. So why would a firm invest in it?
This model has driven most legal technology vendors to focus on delivering incremental technological innovations to existing applications. So even when a firm actually wants to innovate, they do not have a lot of options.
Running against this grain is the emergence of Legal Project Management (LPM). This concept focuses on applying project management principles to legal matter management. Clients have been driving much of this dialog in their zeal to get efficiencies from their outside firms. Efficiency meaning – do the same work in fewer hours. Firms who have truly embraced this idea (i.e. Seyfarth Shaw) have seen very positive responses from clients. LPM has a ways to go to be fully embedded in the industry. But in the meantime it is driving new technology options.
There are other technology choices that highlight the possibilities and give direction to firms looking to embrace the future. First off, firms should look at the new breed of competitors to see what they are using. LPOs are investing in process automation tools to create standard methods for how tasks are done. This standardization ensures quality and efficiency. It bakes in best-practices for every piece of work. Technology for this is becoming available for lawyers, evidenced by Onit which provides a hosted (SaaS or cloud-based) process automation application for legal departments and law firms.
Vendors like LegalZoom demonstrate the value of providing smart content, online directly to clients. Some large firms have actually deployed similar technology. For example Orrick provides a Start-up Toolkit where clients can generate quality first drafts of the documents needed to form a new company. Both of these examples (process and document automation) are good examples for lawyers and firms to consider.
Part 5 will bring technology further in to focus, highlighting new technologies that perform human functions.