The October issue of the Insider Colour Supplement is out now. The stories include:
• Cracking the acorn theory - do large clients grow out of small clients?
• How Norton Rose transformed its knowledge management infrastructure
• Different approaches to law firm workflow strategies
• Workshare reports on its latest global security threat report
• Money laundering compliance – manual versus online methods
The next issue will be published on Monday 26th November
|
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
The Insider Colour Supplement
 Legal Inc Advertisement
 Advertisement:
 Categories
Search
This Month
Month Archive
Year Archive
|
Monday, October 29
Insider Colour Supplement #3 - October issue out now
by
Charles Christian
on Mon 29 Oct 2007 05:55 PM GMT
Issue #3... Cracking the Acorn Theory – do small clients grow up to be big clients
by
Charles Christian
on Mon 29 Oct 2007 05:48 PM GMT
Ron Paquette writes... Many law firms have a theory. Winning a small amount of work from a desirable client can be a good way to bring that client into the firm’s fold and begin a new relationship. Over time, the theory goes, if this client is nurtured properly, it can be coaxed to provide increasing amounts of work and eventually become a major client.
It’s called the acorn theory – from a tiny seed of work in one legal area can grow a mature oak of a client, which provides work across many practices. Nice theory. But how often does it happen in practice? At our organization, we thought this theory was largely a myth. Our professionals have long assisted leading law and other professional services firms in undergoing sophisticated business analysis. We’ve observed that regardless of the firm involved, most large clients appeared to have retained the firm for significant matters from the start of the relationship. Planting the Acorn at One Firm While we had observed this trend on an anecdotal basis, we wondered whether the acorn theory would be supported by a quantitative study. Our researchers decided to conduct analysis on one firm to see what they’d find, and spark wider conversation on the topic. Because we wanted to look at how client relationships developed over time, we needed a firm that was able – and willing – to provide statistics on clients for several decades. Because many firms have changed internal platforms and merged with other firms several times in recent years, this was no easy task. We identified an AmLaw 100 firm that could provide us with information concerning clients that stemmed back 23 years. The firm is an international law firm with multiple offices and approximately 700 lawyers. We have decided not to name the firm to protect client relationships, since the study involved tracking these relationships. We focused on the top 5 percent of the firm’s current clients, based on billable hours provided. We then eliminated the clients from that group that had a relationship with the firm that dated back further than 23 years, because this was the longest period of time for which the firm could provide detail. We also eliminated clients for which there had been a two-year gap or more in the work they provided the firm, because it would be hard to judge whether to treat them as new or old clients when they resumed retaining the firm. Hence, we began with a universe of 183 clients, eliminated 24 clients for which there were gaps in work and 10 more because their relationships with the firm were longer than 23 years. This left 149 clients to analyze. Even given our hypothesis, we were stunned with the analytic results. More than 50 percent of the clients that currently ranked in the top 5 percent of the firm’s clients started out in the top 5 percent in the year when they initially retained the firm. And more than 90 percent of these clients started their relationship with the firm in the top 20 percent of clients. Planting the Acorn at a Smaller Firm While we’d demonstrated that the oak trees of a large firm had not started at that firm as acorns, we wondered if this would hold up for a smaller firm. We decided to look at the current clients of a firm outside of the AmLaw 200. That firm has one primary office, and more than half its work is concentrated in one practice area. In that firm there were 76 clients contributing to the top 5 percent of the firm’s billable hours that met our criteria of having their complete history available in the firm’s billing system and of not having significant gaps in work provided to the firm. Of these 76 clients, 84 percent started their relationship with the firm in the top 20 percent of clients. Same answer. All of this reinforces that firms should be highly selective with regard to small clients. It is commonly held that small clients are on average less profitable than large clients. If your firm’s growth strategy depends at all on growing small clients into larger and more profitable clients, think hard about the likelihood that this will happen. More importantly, our analysis emphasizes the importance of protecting large client relationships, whether they were large to begin with or were grown successfully from a smaller relationship. The Flip Side An important take-away from this analysis is that firms should reexamine their approach to bringing in small clients. While the percentage is low, some small clients do grow to become major firm clients. So firms need not avoid the intake of small clients altogether. Competitive intelligence can help identify which clients have the best chance of becoming major clients, as well as improve the likelihood that such clients will be retained in the crucial, early years of the client relationship. (According to our research on client attrition, attrition rates fall by 50 percent for clients that stick with a firm for more than three years.) Client intake should begin with a careful analysis of the potential relationship presented by a new client. Those that map well into firm strategy and appear promising should be treated with care. For example, a detailed conflict analysis should be conducted to ensure the firm is not conflicted out of major areas of work. And other relationships should be carefully overseen to provide the client with the maximum potential to take advantage of the firm’s services. Once clients are in the door, the work to grow them from an acorn to an oak has only begun. Firms need to track their progress. Most acorns will not grow to become mighty oaks, but careful relationship management can provide the fertile ground that will maximize the chances that promising small clients will have the best chances to become major clients. • Ron Paquette is an analyst with Redwood Think Tank. A version of this article first appeared in Strategies - The Journal of Law Firm Marketing, published by the Legal Marketing Association.
Issue #3... Norton Rose takes FAST approach to KM
by
Charles Christian
on Mon 29 Oct 2007 05:39 PM GMT
In an organisation of high-earning individuals, time spent searching for information is time wasted. Four years ago, Norton Rose realised that its existing search facilities could be improved. Practitioners had to use many different search systems to find the information they needed, either from within the firm or from external subscription databases.
“Each of the search systems we used had a different interface and a different way of working, which made it hard work looking for information,” says Ann Halpern, director of practice and organisational management at Norton Rose. “We wanted to move to a one-stop shop where a single enquiry could bring back search results from all sources. Our users told us they wanted something that was really simple and intuitive to operate.” Norton Rose received written proposals from seven search engine providers and had live demonstrations from four of them. Ann Halpern preferred to ignore the canned demonstrations that some suppliers offered and invited them to work in the Norton Rose environment. “We wanted to be sure that any solution could do what it claimed to do when it came to testing with our material and in our environment. We were concerned that the demos at the beauty parade might have been orchestrated beyond their real capability,” she says. The live presentations confirmed that most products were unable to fulfill two key criteria - the integration of external sources and the highlighting of keyword fields in search results. The Enterprise Search Platform from FAST performed well in the tests and was selected for its speed of operation, flexibility, ability to work with multiple sources, and its ability to return the most relevant results. Solution The Norton Rose team worked closely with FAST from the start in building the search facility that would be called NavigatoR. They began by doing a proof of concept system that gave them the chance to try out their ideas and build confidence to move forward to a full working system. The proof of concept was then presented to a test group of users throughout the organisation for comment and the full working system was launched in February 2007. One of the main aims was to ensure the system would deliver relevant search results rather than flood the user with useless information. “Our old search engine could only sort the results by date or relevance and it was very poor. Sometimes the results had no obvious relevance at all to the search criteria,” says Ann Halpern. Using the FAST technology, they were able to run searches, examine the results and fine-tune the system to improve the relevance of the results. “It was like turning the dials to get a clear signal on the radio,” says Ann Halpern. “Our users tend to want the most recent information so date has a heavy influence on relevance for our searches. We were able to quickly and easily tune the systems until we were satisfied with the way the results were produced each time.” The Norton Rose team built the graphical user interface (GUI) for the new system and included a number of filters to allow users to refine their searches. They include: Practice groups, Precedents, Legal updates, Industry, Templates, and Organisations (including clients and organisations that Norton Rose has worked with). In addition, they designed a feature to help people drill down to the exact information they need once they locate a relevant document. When the search brings back a document that fits the search criteria, the GUI displays a single-column summary of the document down the right-hand side of the screen, with every occurrence of each search term shown in a different colour. Most importantly, the system trawls though several sources to perform a single search. These include: Norton Rose’s internally-generated know-how, best practice guidelines and website; Europa (EU website), the Financial Services Authority and PLC web services. Benefits and Results • Saving in time spent searching While the three previous systems were slow and cumbersome to use, NavigatoR is intuitive and fast. Michael Grenfell, a partner with Norton Rose, sums up his experience: “NavigatoR's a really marvellous new research tool. It's been designed in response to the wishes and needs of the lawyers here at Norton Rose. It enables us, at the touch of a button, to access legal know-how that's up to date and relevant very quickly indeed, and that helps us to provide a more effective, up to date and efficient service to our clients.” • More relevant search results The FAST technology has allowed Norton Rose to fine-tune the systems to ensure results are ranked by relevance to the user, while filters allow the search to be further refined. • One-stop search across multiple sources and languages Instead of having to use multiple search engines, users now have one intuitive search tool. Caroline Riddy, an associate with Norton Rose, gives a concrete example: “I found it fantastic when I needed to know about the rules on financial promotions. I was looking for a specific memo that I knew had been produced internally, as well as a PLC article - and found both really easily. It's just so helpful to be able to get your hands on both internal and external know-how with just one search.” The solution also allows staff to search in a range of languages including traditional and simple Chinese where previously they were limited to English. • Document map guides user to information Finding the relevant document is only part of the search, users need to find the relevant reference within the document. The NavigatoR GUI provides a graphic summary alongside the document itself, guiding the user to every occurrence of each of the search terms. Each term is highlighted in a different colour, providing even more assistance. • Little or no training required There has been very little need to provide formal training on how to use the system. The Norton Rose team organised some briefings and distributed a basic two-page guide, but the main tool is the e-learning system accessible from the NavigatoR homepage, which talks users through how it works. The guides have also been translated into various other languages for the firm’s overseas offices. • More know-how to share NavigatoR has also streamlined the collection of information for the Norton Rose system. Because it is simpler and more consistent to use, it has encouraged people to submit more information than before, according Fiona Evans, the firm’s head of knowledge management. “There has been a rush to use and to contribute,” she says. “Certainly the statistics suggest that someone is using it every minute of every day.” • Return on investment - £500,000 annual saving The savings in time spent on searching for information are expected to make significant cost savings for Norton Rose. Amber Rennie, the firm’s Knowledge Manager Development Manager says: “Most of our junior lawyers are engaged in research using both internal and external resources - an average of an hour and a half each day. The introduction of an integrated and intuitive search of both internal and external resources was expected to save time; at least one third of the time previously spent, and thereby save costs to our clients and enable our lawyers to be more productive and efficient. We valued these savings at about half a million annually.” FAST can be found at www.fastsearch.com
Issue #3... Contemporary Law Firm Workflow: Similar Objectives, Diverging Approaches
by
Charles Christian
on Mon 29 Oct 2007 05:31 PM GMT
Bryan Roberts writes... Business process management (BPM), also commonly referred to as workflow, has become increasingly vital to law firms. Seeking operational efficiency and responsiveness, firms have begun to automate a variety of business processes – everything from simple tasks, like approvals, to more complicated multi-step, multi-system workflows like file opening.
Like other business management software providers, ADERANT has worked to ensure that law firms could access workflow from within our applications, primarily accomplished by integrating ADERANT Expert with standalone workflow systems. Over the years, however, we have come to the conclusion that process management should be an inherent, seamless part of any enterprise-wide software system for law firms. ADERANT is taking a different approach to workflow, one that provides law firms with an industry standard workflow tool, not a proprietary technology. Different Approaches to Workflow There are significant differences in how workflow application suppliers and practice management software (PMS) companies are approaching BPM in the legal industry. Which approach is better: stand-alone or embedded? Stand-alone BPM applications were introduced at a time when there were few other choices for law firms. Besides having a limited functional scope, PMS solutions could support only simplistic workflows and required extensive integrations to share information with other applications. If a law firm needed to manage a complex workflow or automate a process involving multiple systems, their only real choice was a dedicated, stand-alone workflow product. Unfortunately, these applications used proprietary workflow engines and cumbersome customisation tools, which made them costly and difficult to implement. Today, BPM has gained in popularity and acceptance, and the need for stand-alone workflow solutions has decreased. One reason is that PMS suppliers are embedding workflow directly within their applications in response to client demand, and to increase the velocity at which matters and other information is managed internally and externally. Software Developer versus Tool Provider Upon re-examining our workflow strategy more than two years ago, we identified two basic options; develop our own proprietary workflow engine (following in the footsteps of the stand-alone workflow and other PMS suppliers) or leverage standard, open technologies. First and foremost, ADERANT is a developer of business software, not a technology tools company. It did not make sense for us – either technically or financially – to reinvent the wheel when it came to workflow. Instead, we looked at how leading technology companies like Microsoft have been addressing workflow. Microsoft, building on more than a decade of BPM experience gained with BizTalk, created a consistent workflow technology base it could use in all of its products, as well as make available to its 600,000 partners worldwide; thus the introduction of the Windows Workflow Foundation. http://msdn2.microsoft.com/en-us/netframework/aa663328.aspx Windows Workflow Foundation Windows Workflow Foundation (WF) is a development technology that is part of .NET Framework 3.0, Microsoft’s managed code component of Windows. Consisting of an activity model, workflow designer, workflow runtime, and a rules engine, WF allows developers to easily embed workflow functionality into any Windows application. WF fundamentally changes how software developers can incorporate workflow functionality into their applications. It transforms workflow from a highly specialised, expensive, and proprietary technology into a standard tool set that can be added to any application, much like radio-button controls or database connectivity. Expert Workflow ADERANT is making workflow part of the core technology architecture of ADERANT Expert, its business management application suite, utilising Windows Workflow Foundation. The beta program for ADERANT’s first WF-enabled application, Expert Workflow, focused on file opening, is currently under way with general availability scheduled for the first half of 2008. Leveraging WF frees us from focusing on the technical aspects of workflow and enables us to concentrate on how the technology can be best used to manage people and processes, which is what business process management, is all about. WF will deliver a variety of benefits to ADERANT clients, including: • Low cost – Since WF is a development technology, not a product, there’s no associated Microsoft server or client licenses to purchase. This will allow ADERANT to deliver workflow capabilities at a far lower price point than other suppliers. • Easy integration – As a core Microsoft technology, WF will be used by other Microsoft applications, such as Microsoft Office, SharePoint, Active Directory, and much more. Since it is part of .NET Framework 3.0, WF will also be exceptionally easy to integrate with other applications. • Easy development – WF workflows can be created or modified through Visual Studio 2005, eliminating the need for expensive resources and making customisations a snap. • Flexibility – WF will give ADERANT clients the flexibility to change ADERANT Expert as their business needs change. WF provides a model where a set of activities can be built in ADERANT Expert, but each law firm can determine the properties of those activities and how they are executed. WF with ADERANT allows law firms to dynamically change and customise their business processes as their needs change and evolve. The end result; law firms are supported by software that can be easily changed to support new business strategies, without costly reimplementation or customisation. Conclusion Law firms now have several distinct choices when it comes to automating workflow via third party means; choose stand-alone products that require extensive integration and customisation to work properly, go with embedded workflow capabilities that use a proprietary workflow engine and development environment, or choose to embed standard workflow capabilities using tools created and backed by Microsoft. ADERANT, based on its experience with how law firms operate, and its extensive partnership with Microsoft, is following the latter approach based on Windows Workflow Foundation, and its promise to deliver the most capabilities and best overall value for law firms. • Bryan Roberts is Vice President, International Sales, for ADERANT, a global provider of business and financial management software for law firms. He is based in the company’s London office and can be reached at bryan.roberts@aderant.com
Issue #3... Workshare Global Security Threat - what you need to know
by
Charles Christian
on Mon 29 Oct 2007 05:17 PM GMT
Brian Spector, the general manager for content protection group Workshare, talks about the company's new Global Security Threat Report...
Data breaches, identity fraud, theft of intellectual property – to hear of these is now commonplace in the media and in conversations between organisations worldwide. Yet firms in every sector are continuing to breach security and allowing their most sensitive and confidential information to be exposed to accidental or malicious damage. Law firms in particular need to protect a wealth of sensitive data – from confidential case files and information on clients, to corporate data and intellectual property. Our Workshare Global Security Threat Report takes into account the key events and industry news within the areas of privacy, intellectual property, mobile working and corporate compliance. These stories and developments corroborate an emerging trend in the sphere of information security – that businesses and organisations tend to fall into two camps when it comes to data protection. On one side of the fence, many still have a worryingly archaic approach to security. Businesses are still allowing employees to leave laptops in cars which contain unencrypted and unprotected information. Banks are throwing away confidential customer data in bins. Employees still think that PDFs are a secure file format. Solicitors can inadvertently send out emails containing information about clients. These firms need to break the mould and educate employees about the risks involved with the information they are handling. Deploy simple security solutions which will make sure that all data within your business is safe and not at risk of being leaked. Businesses are becoming increasingly ‘perimeterless’. Organisations need to safeguard information within the whole network and at every end point before they suffer an embarrassing and damaging breach. The other group contains companies who have noted the wave of security breaches and are taking action by writing stringent security policies to protect their data. Unfortunately, as our Global Security Threat report shows, these policies are still being breached and reputations are still being tarnished. Essentially, policies are not worth the paper they’re printed on unless properly enforced. Organisations need to look at ways to better enforce policy if they want to avoid hefty fines and serious damage to reputation and loss of clients, who are more willing than ever to vote with their feet. Examining the Workshare report in a little more depth, what is the current status within each of the four areas defined as crucial in the information security sector? Privacy Privacy is still a hotly debated area; security breaches which hit the headlines last quarter are now being fully quantified. The well publicised breach suffered by global retailer TJX calculated that losses – which were originally estimated to be around the $25 million mark – have spiralled to $256 million in just three months. The costs include fixing the company's computer system and dealing with lawsuits, investigations, and other claims stemming from the breach, which went on for more than a year before the company discovered the problem in December 2006. Other companies such as Fidelity National Information Services (FIS) that were affected by privacy breaches have also seen the advent of serious lawsuits which could cost millions to settle. In developments to watch, Google is planning to further personalise its service by collecting and storing more information than ever on its online user base. The information will be held in Google's vast network of massive server farms. Concerns have already been raised by the Information Commissioners Office (ICO) and legal experts regarding data protection and information leaks. Intellectual Property Intellectual Property is arguably one of the worst kinds of data a company can lose. As the data protection market matures, individuals and businesses are facing increasing amounts of litigation for breaches suffered in this area. In addition, recent surveys have shown that many employees are happy to take Intellectual Property with them when they leave a firm, and that IT systems are not viewed as obstacles to taking this data. One of the worst IP cases in Europe this year was suffered by a huge German manufacturing company in July, when it discovered that a competitor had copied one of its products. A foreman had sent detailed information about a component to an external design department without telling his IT department or encrypting this information, thus allowing the competitor to get hold of it. In today’s highly competitive environment, companies should keep a close eye on how their Intellectual Property is being edited, distributed and archived. Mobile workforce Businesses and organisations in every sector continue to neglect the end-point when it comes to data security. Accidental loss of laptops and mobile devices cannot be stopped, but companies can encrypt and protect information to limit damage. In addition, when data is lost there is now a need to display ‘data breach best practice’. Recently, the HMRC was applauded for coming clean, apologising and assuring customers that it had efficient security measures in place, as soon as a laptop theft came to light in September. Conversely, pharmaceutical giant Pfizer was criticised for suffering its third data breach in as many months, putting personal information relating to both current and former employees at risk. The three thefts meant that personal information relating to tens of thousands of people was stolen, following the theft of laptops from a car in Boston, and leaked emails. Although the stolen laptops were password-protected, information included employee names and Social Security numbers. It is rumoured that the third breach involved information being leaked by an ‘insider’. Corporate compliance The area of corporate compliance is perhaps of most interest to legal firms, as the regulatory climate continues to change apace. Worldwide, North America still leads the way in data breach legislation. It has been estimated that more than 160 data breaches have been suffered in the US in the last two years. As a result, laws have been passed in 35 states forcing private and public sector organisations to notify their customers if their personal information is lost or compromised. Now, a variety of organisations including the Cyber Security Industry Alliance are pushing for a national standard for data breach notification. It is hoped that such legislation would provide better protection for consumers, and ensure consistency in the law. In the UK, a variety of experts including members of the House of Lords, the media and the ICO have called for a review of current laws relating to data breaches and information loss. The government is being pressured to ensure that businesses improve notification of data breaches and are held accountable for putting at risk any sensitive data they hold. Increasing amounts of legislation mean that individuals and businesses will find themselves at the centre of lengthy and expensive law suits if breaches are not controlled. Customers are increasingly threatening to boycott companies which do not take adequate care of information held on them. This Threat Report proves the potential reach and cost of damage caused by data breaches and shows that organisations of all kinds need to take action before they really get hurt. For a copy of the full Workshare report please visit www.workshare.com/go2/threat1
Issue #3... Money Laundering - Manual v. Online
by
Charles Christian
on Mon 29 Oct 2007 05:09 PM GMT
Tony Klejnow writes... Much has been written in the legal press lately about the linked issues of Money Laundering and Client Identity Verification, and the role of the practicing solicitor in the identification and reporting of suspicious individuals and financial transactions.
Whilst legislation (Money Laundering Regulations Act, Proceeds Of Crime ACT) is in place and the Joint Money Laundering Steering Group (JMLSG) have issued several directives on the subject there are still several grey areas and pitfalls that could trap the unwary and innocent solicitor. Getting it wrong is no longer an option as several solicitors have found out recently. As ever ignorance of the Regulations is no excuse - as at least two members so the profession have found out to their cost (and liberty). The Money Laundering Regulations 2003 stipulates: (3) A must maintain identification procedures which - (a) Require that as soon as is reasonably practicable after contact is first made between A and B: (i) B must produce satisfactory evidence of his identity; or (ii) Such measures specified in the procedures must be taken in order to produce satisfactory evidence of B’s identity; For the purposes of the Regulations ‘satisfactory evidence of identity’ is evidence which is reasonably capable of establishing (and does in fact establish to the satisfaction of the person who obtains it) that the applicant for business is the person he/she claims to be. Solicitors have an obligation to obtain and record ‘satisfactory’ evidence of the identity of the client and to report ‘suspicious circumstances’ but the grey areas arise as neither of these terms is defined accurately and completely within either the legislation or the regulations. In response practices appear to be taking one of two approaches: Traditional Manual Method The photocopying of relevant client documentation, usually a passport and utility bill. Whilst this ‘bare bones’ approach is simple to implement and administer it is labour intensive and does have limitations. It is not particularly convenient for clients (how many of us carry our passports and utility bills with us) and some clients (e.g. those without passports, people working overseas or in the services, clients living or working some distance away) are not well served by this method. Solicitors should remember that it is an offence to carry out work prior to obtaining and recording satisfactory proof of ID, and that submitting an offer of work constitutes carrying out work. Online Identity Verification There are a number of systems available which provide enhanced assistance in the areas of money laundering and client verification. These work best when integrated with the practices in-house practice management system as the process can be completed (in seconds) before accepting the client or the transaction. These online systems search a wide range of databases using base data obtained during the initial client meeting (title, forename, surname, house number and postcode, date of birth, driving licence number, NI number, and passport number). The system checks this data against a wide range of (positive and negative) data sources, including Full Electoral Roll, Royal Mail Postcode Address File, UK Investors, Adverse Public Data and Share financial records. The returned search result contains additional information that, if required, could be used by the solicitor to further verify that the potential client is genuine. Search results are automatically stored against the client record as an audit trail and proof that the solicitor acting has met his/her obligations. In Conclusion With increasing pressure upon solicitors to ‘get it right or face the consequences’ online identity verification must be worth examining. It is quick, simple to use and greatly de-risks the take on of new client business. It is also extremely client-friendly and particularly useful in ideal potential high-risk ‘new client not present’ situations. Online verification is much less time consuming and accordingly less costly than the manual method. Another fact supporting the move to online verification is that compliance and reporting requirements are extremely unlikely to diminish in the future. Indeed the converse seems to be the case. The new Money Laundering Regulations, effective December 15th 2007, contain a requirement to check all prospective clients identified as high risk against the Politically Exposed Persons register. This search is only available online, from a limited number of sources. There is also a new requirement for MLRO’s to report transactions where they suspect funds may include sums of unpaid tax – even if the business producing the profits is legitimately trading (see Court of Appeal judgment in R v. I K (2007) EWCA Crim 491). Whichever route is taken (manual, online or a combination thereof) the logging and auditing of returned results within the practice management system is vital. It ensures the practices ‘beleaguered’ MLRO can speedily and easily monitor regulatory compliance across the whole practice, and report accordingly. Pro-active monitoring and control is essential to ensure practices acting in good faith do not unwittingly fall foul of changing regulations. • Tony Klejnow, Managing Director, Linetime Limited |
RSS Newsfeeds
Main Page RSS
Recent Comments
Recent Photos
Recent Articles
|
||||||||||||||||||||||||||||||||||||||||||||||
