Chrissy Burns, Blake Dawson Waldron
email: chrissy.burns@bdw.com.au, ph9258 6617

Christine Burns is a Senior Associate at Blake Dawson Waldron
A version of this article was published in the Law Society Journal, July 2000

 eBusiness is not a management fad. Our daily papers and business journals have special sections devoted to it and countless businesses have changed work practices to accommodate it. In fact, over time it will impact on almost every facet of our day to day lives - shopping (eg www.woolworths.com.au, www.greengrocer.com.au , or www.amazon.com), banking (www.bankbid.com.au), looking up the flight timetable (www.qantas.com.au), leisure (www.travel.com.au). Increasingly, the "e" part goes without saying. All business is becoming eBusiness.

 The legal industry is no exception. Lawyers increasingly use e-mail to communicate with their colleagues and clients. Major litigation and due diligence investigations depend upon sophisticated database and imaging technology. Powerful online based knowledgebases enhance research. Firms are implementing increasingly sophisticated practice management systems. And of course, no firm would be without word processing and spreadsheet software.

In the last couple of years there is evolving an understanding that the internet is radically changing the way in which legal services are delivered.Electronic legal "products" have begun to alter the way in which lawyers market themselves and deliver services. These products are designed to complement and, in some instances, replace "traditional" legal services. The new eServices address a range of training, advisory, investigative and compliance needs.Examples include internet delivered expert systems known as "virtual lawyers" - computer software that carries out work traditionally done by lawyers. Major global companies are using "Virtual Advisers" in place of lawyers. Another very recent development is the advent of virtual deal rooms[1].. The radical changes which the Internet has brought in other disciplines suggests that lawyers who ignore this trend do so at their own risk. This article explores this recent development.

 1. What are eServices

 eServices are simply services which have a significant electronic component. Increasingly they are offered over the Internet. In the legal arena, they range from targeted legal content that is packaged in a computerised format to solve a particular legal problem to software that streamlines or replaces work traditionally carried out by lawyers. Legal eServices have been developed for the past eight years in both Australia and overseas. They are probably best explained by examining some current examples.

 1.1 Legal Products available in Australia

 A number of Australian firms have begun to develop eServices. An examination of the "Innovative Specialist Products" section of the current "Legal Profiles"[2] demonstrates this. For example, several firms now offer computer based training in Trade Practices. Phillips Fox has developed an Insurance training program called Skilpak. Blake Dawson Waldron has developed a suite of electronic products, its latest offering is a legal expert system called the "Virtual Lawyer."[3] and a forensic e-mail discovery service called eDiscover®.

 1.2 Developments Overseas

 Similar developments have taken place in the US and UK legal markets. Some of the most interesting recent developments have been the legal advice products marketed by major UK law firms.

 For example, Linklaters & Alliance has developed several significant electronic compliance and advice products for their investment banking clients.[4]www.linklaters.com: Blue Flag Regulatory provides detailed regulatory compliance advice to financial institutions over the Internet. The information is accessed in relation to specific industries and specific commercial scenarios. It uses hyperlinks to enable comparison of the rules in different countries and uses interactive decision trees to explain complex legal ideas. The content covers Europe, the UK, Asia - Pacific (including Australia) and Latin America.

Linklaters other advice products are: Blue Flag Funds, which deals with regulatory information for mutual funds managers; Blue Flag Custody, which covers the regimes under which local custodians operate for over 60 countries; Blue Flag Share Disclosure, which deals with share disclosure requirements and Blue Flag ESP, a guide to implementing international employee share plans. In addition to the advice products Linklaters also market Blue Flag Confirms. This is a product that allows clients to generate documentation for the confirmation of derivatives.

 Clifford Chance has also begun to develop online legal advice products. For example, NextLaw provides guidance on the impact of data protection and related regulations in 30 jurisdictions[5]. There are a number of other large UK firms who are currently developing legal eServices.

 In the US, David Polk & Wardwell, is one of the most prominent firms in the eServices area. It provides some specialised services to clients over a secure extranet. It has also been working to develop knowledge bases for expert systems. An example is its Global Collateral Project that assists clients with cross-border financings[6]

 The eService initiative which has been making headlines lately, is the development of online deal rooms and document drafting services. In late January Allen & Overy launched its online deal room and document drafting service called Newchange. Clifford Chance, Linklaters, Slaughter & May and Freshfields have also indicated that they plan to roll out similar services [7].. In Australia, Blake Dawson Waldron, Malleson Stephen Jaques and others have used on-line deal rooms based on Ringtail Solutions' Casebook software[8].

 2. Can electronic products and services replace lawyers?

 Not all law firms who have investigated the feasibility of electronic products and services have gone on to embrace them enthusiastically. This is not surprising - the development of legal software products is an activity that is significantly different from traditional legal service delivery, and represents an extension of (some might argue a divergence from) a firm's core business.

There are two main objections that lawyers have to legal eServices. Some argue that these electronic products cannot replace the judgment and skill or the physical presence of an experienced lawyer. Paradoxically, the other objection is that increased reliance on legal software products reduces opportunities for lawyers, because clients have less need for direct consultation. These arguments raise interesting issues.

 2.1 "Commoditising" legal services

 The argument that eServices cannot replace the expert personal service of a skilled practitioner overlooks the real nature of much legal work. Although a great deal of any lawyer's daily work involves considerable professional judgement, much time is also expended in repetitive or "process" tasks. Clients are well aware of this, and are becoming increasingly reluctant to pay hefty legal fees for these services. In seeking to meet clients' needs in the most effective and efficient manner possible, the legal profession will be increasingly forced to explore alternative ways of performing standardised work. In fact, in many instances these types of services can be provided to clients very cost effectively online.[9]

A good example are the recent initiatives to replace many aspects of conveyancing with electronic services[10]. Another example is the automation of the process of discovery for Email messages[11]. In addition, over the last two years a number of online services have been set up to enable clients to draft documents such as wills, prenuptial agreements, joint ventures and other less complex documents online[12]

 The implications for lawyers of this "commoditisation" is undoubtedly threatening. And the most uncomfortable question is what proportion of standard legal work falls into this category. Is it only the high volume low margin work - or does it extend further? Yet the outlook is not all grim. There is a strong argument to be made that commoditising repetitive "process" tasks frees lawyers to devote time to more complex and interesting legal work[13]. In addition, these new services can open up a new source of revenue, as the next section highlights.

 2.2 The "latent legal market"

 Many lawyers are concerned about the potential for legal eServices to impact on (decimate even?) their traditional sources of revenue. Some refer to it as the "cannibalisation" of the business. It is important to recognise that while these services may well replace some traditional areas of legal practice, legal software products also offer a wealth of possibilities to develop and enhance client relationships and to open up new revenue streams. In fact, one of the leading thinkers about the impact of technology on law, Richard Susskind, has identified a major new market to which legal technology can be applied. He calls this the latent legal market.

Susskind notes that there are many areas of commercial activity in which non lawyers would benefit from legal advice but don't attempt to seek it out. The reason they don't is that obtaining advice via traditional means is too expensive, time consuming or difficult. Legal technology products can be designed to provide cost effective legal input for this previously untapped market[14]

A good illustration of this is the new commercial legal expert systems. Expert systems work like an electronic decision tree. A user answers a series of questions posed by the system. The answer given to one question determines the next question asked. At the end of the process, the computer prepares a report of its conclusions.

 One example is Blake Dawson Waldron's Virtual Lawyer - Advertising. This system asks users questions about proposed advertising copy and indicates whether the copy would breach trade practices or other relevant legislation. The systems conclusions and the advertising copy are then emailed to a nominated person, who might be in-house counsel or an external lawyer. Previously it was necessary for copy writers to draft copy, submit it to in-house counsel, redraft on counsel's recommendations then resubmit the revised copy (or perhaps even send it to print without any legal checks at all). The Virtual Lawyer - Advertising delivers legal input much earlier in the process, which saves time and effort for both the marketer and in house lawyer 15.

 2.3 Where lawyers are required

 It goes without saying that some legal work will always require the judgement and skill of an experienced practitioner[16]. Yet even this element of legal practice can be "streamlined and optimised through information technology, using ever more powerful communications and information systems".[17] There are also elements of legal practice which will always require human contact. In such cases a computer will never be able to replace a lawyer[18].

3. Factors influencing the legal firm eServices market

 The precise direction which online legal products and services take will unfold over the next few years. Demand from clients is likely to be the key drivers of change. Clients are increasingly incorporating technology into their day-to-day business practices. The ability to "build" legal advice into their operations will be attractive. Also, clients are rightly concerned with preventative lawyering. Electronic legal products make legal information available in situations where this was previously impractical.

 The rapid adoption of the Internet by large and small businesses worldwide is a further factor that makes eServices an attractive and viable proposition. The Internet permits the delivery of legal advice to anywhere in the world 24 hours a day, 7 days per week. This leads to the provision of "anytime, anywhere" legal advice.

 The significant benefits for legal firms providing online services will also fuel the drive to legal product development. Products help to cement a firm's relationship with existing clients who purchase the products. They also give you a reason to contact a large number of companies many of whom will be your competitors clients. While products often cover routine legal issues, they encourage referrals of more complex issues. They also demonstrate to clients a firm's commitment to provide cost effective and innovative service.

 There are other forces that inhibit change. The reluctance to alter the status quo is by no means the least of these!

 4. Conclusion

 It is impossible to predict the ultimate impact of online products and services on legal practice. They are still in their infancy. They are unlikely to completely replace lawyers, yet the business possibilities they open up are such that lawyers cannot afford to overlook them.

Most legal internet sites are still heavily focused upon serving lawyers, rather than their clients. To succeed in this new online environment the profession must shift to true client focus. They must move from brochureware sites to designing web-based systems which are essential to their clients. Ultimately, this shift will occur, as the practice of law is largely a referrals based business based upon compelling client experiences. By delivering sophisticated eServices, a firm can remove many of the service and quality nightmares in the legal service delivery system, as well as delivering a dramatically more effective and involving client experience. And finally, the real issue is that if the online experience is designed appropriately, it will allow the profession to build true dynamic learning relationships with its client base. This is the goal of virtually every other service business on the web and I see no reason why the legal profession should be spared.

 Indeed, in considering investment in eServices initiatives, the legal profession may well find that there is a great deal of practical wisdom in the old saying - "eat your own children before someone else does!!"

[19][1] "Deal Room Mania Hits City", Legal Technology Insider, Issue 94, 2000;www.newchange.com

[2] Warneke, A., Legal Profiles , 1998, Profiles Publishing, Sydney, Australia, pp.5-6

[3] Nicholas, K., "Computerised Lawyers to give Virtual Advice", Sydney Morning Herald, 18 August 1999, p.29

[4] see

[5] see www.nextlaw.com

[6] Cohen, A., "Legal Advice Without the Lawyers", New York Law Journal, 1 December 1999

[7] "Deal Room Mania Hits City", Legal Technology Insider, Issue 94, 2000;www.newchange.com

[8] see www.ringtail.com.au

[9] Susskind,R., "The Future of Legal Practice", Managing Partner, Vol 1 Issue 1, May - June 1988, pp. 9 - 12 at p.10

[10] see for example, Flint, J., "HomeSide goes looking for a home of its own", Financial Review, 30 March 1999.

[11] Blake Dawson Waldron has developed software to automate many aspects of the discovery of email messages

[12] see for example Schmitt, R.B., "A Growing Number of Sites Dispense Legal Advice Online", Wall Street Journal, 2 August 1999 and www.desktoplawyer.net

[13] "Linklaters moves the goalposts again", Legal Week, 6 May 1999

[14] Susskind,R., "The Future of Legal Practice", Managing Partner, Vol 1 Issue 1, May - June 1988, pp. 9 - 12 at p.10.

15see for example, Nicholas, K., "Computerised lawyers to give virtual advice", Sydney Morning Herald, 18 August 1999 and Leibowitz, W.R., "Future law tech visions", The National Law Journal, Monday, September 13, 1999, p.A20.

[16] Susskind,R., "The Future of Legal Practice", Managing Partner, Vol 1 Issue 1, May - June 1988, pp. 9 - 12 at p.9

[17] Susskind, R., "Professions are likely to fly by wire", Financial Times, 19 March 1999.

[18] Susskind,R., "The Future of Legal Practice", Managing Partner, Vol 1 Issue 1, May - June 1988, pp. 9 - 12 at p.11