FOR LAW FIRMS, technology is a mixed bag. Law firms struggle to live with it, and they can’t live without it. The firm’s managers are forever working with issues of cost justification, implementation, lawyer buy-in, training, and computer crashes. For all the problems, technology has improved many aspects of law firm operations through improved communications, better client service and lower client costs.

But wait a minute! Where are the rewards for the lawyer? The lawyer is making huge investments of money and will be required to reinvest to upgrade on a regular basis. How does the lawyer recover the costs of that investment? Technology has to be something more than a straight expense item. How is it that the lawyer is going to benefit from improved efficiencies? Shouldn’t the lawyers who take the time and effort to become more efficient and effective be rewarded?

Every firm needs a management strategy designed to allow lawyers to share in the financial rewards of improved technology.

In the law firm setting, who benefits from technology? If the work is billed by the hour, the answer is simple: The clients benefit, but the lawyer receives no direct benefit. Theoretically, additions in overhead should be covered by increased hourly rates. However, in most legal markets, competition will not allow rate adjustments to reflect the additional cost of technology. Many firms have given up and are simply accepting technology as a cost of doing business.

There are two management aspects to technology in the law office. First, technology managers need to evaluate the firm’s use of technology and eliminate wasted time, effort and money. The second step is to de velop an approach to client billing that permits sharing in the rewards of technology.

Let’s start by looking at some preliminary questions that each firm must address.

• What technology does the firm need? Do not buy the wrong technology. Huge amounts of money are spent every year on the wrong technology due to poor decision-making. Make sure that the lawyers are involved in the decision-making and have a stake in the outcome.
• Are the lawyers adequately trained? Proper training takes time, patience and discipline. No firm can afford to spend tens of thousands (or hundreds of thousands) of dollars on technology that the lawyers resist or ignore.
• Are lawyers recording technology-re lated time? So much of the time spent on the computer seems like administrative time. For many lawyers, it is difficult to capture that time and record it on a time sheet as having produced value for the client. As a result, a great number of hours are lost in the course of a year due to e-mails and related technologies.
• To what extent should lawyers do their own keyboarding? Conventional wisdom would tell us that the more the lawyer does and the fewer secretaries, the better. But is it that simple? There is at least one firm whose demise was attributed to excessive cutbacks of secretarial staff and the related reduction in productivity. There must be a proper balance.

The real solution is for firms to move away from hourly rate billing and employ alternative billing methods. Hourly billing has come under attack as being not fair to the client and not fair to the lawyer. More importantly, hourly billing (by design) prevents the lawyer from benefiting from technological improvements. Technology costs become an expense item to be covered by the hourly rate. The only effective way to achieve leverage from technology is to detach billing from time entries. If the fees are set on other grounds, then productivity advances from technology will benefit the lawyers.

If work is billed on flat fees, the lawyer will benefit from improved use of technology. Similarly, lawyers who handle contingency cases can benefit from technology. There are also some combination billing methods that can be offered to clients.

It is true that alternative methods require lawyers to take risks and better predict the amount of time that will be invested in a matter. And, to be realistic, we have to recognize that some matters will continue to be billed by the hour. But there is no reason why the vast majority of legal work should be billed by the hour.

Leveraging with technology becomes a management issue. The practice group leaders should be charged with evaluating the use of technology in each practice group. Ask the right questions. Are the lawyers in the practice group getting maximum benefit from the technology at hand? Are they capturing their time effectively? Has the practice group maximized its leverage by evaluating its billing methods and moving away from hourly billing where possible?

Leveraging with technology is not easy. However, there are significant rewards for the firms that take the initiative to make changes that will allow the lawyers to share with their clients the rewards of using technology.

Arthur G. Greene is a principal in the Bedford office of the consulting firm of Anderson-Boyer Group, and is a partner in the law firm of Dewhurst & Greene, Bedford. He also chairs the NHBA Law Practice Management Section and is the former chair of the ABA Law Practice Management Section. He can be reached at agg@andersonboyer.com.

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