Three ways to add value in a downturn

28
Dec
2008

Joanna Goodman

December’s news focused on the credit crunch and an obsession with shoppers’ footprints in London’s West End as early sales finally tempted Christmas shoppers. While some features pages focused on thrift, others asked whether we could really spend our way out of a recession. This doesn’t seem a sensible approach. I doubt that many individuals or families will be throwing caution to the wind in an attempt to save the UK economy and the Prime Minister’s reputation. And it definitely won’t be the case when it comes to law firms’ expenditure. Since my last column – and I know that it has been a while – I have spoken with a number of law firms in the UK and Europe, and certainly all the sensible ones acknowledge that the economic situation is transforming the nature of their work, which has focused on reorganisation, restructuring and insolvency as well as distressed transactions. Law firms are necessarily involved in the rescue deals that are hitting the headlines, so they are only too well aware of the impact on business.

Although some of the biggest firms report excellent half-yearly figures, the big picture in the legal sector is blurred by the fact that many are undertaking work that is driven by the financial crisis and the economic downturn –  insolvency and litigation departments are particularly busy. Notwithstanding this, the slowdown in transactional and real estate work has led to many firms announcing redundancies. The imminent danger is the possibility of a gap between the end of the ‘clean up’ and the market picking up again. Firms that do not consider their medium to long-term strategy risk falling into that gap. Law firms, like other businesses, are looking harder than ever at their own spending.

Value to the business

Where does that leave the IT department? Technology is critical to all modern businesses so ‘value add’ needs to focus on providing reliable and responsive systems and support as any downtime is expensive, wasteful and frustrating. Speed and user-friendliness are top priorities in order to make the best use of lawyers’ expensive time. In a cost-conscious business environment, it is more important than ever for IT directors to work closely with the business and demonstrate the return on investing in systems and applications that fit and support the business in terms of hard savings achieved through efficiency improvements and reduced manpower. As you are no doubt aware, there have been a number of high-profile redundancy announcements in law firm support departments too. Although it makes sense to outsource some services, this critical strategic element represents the core value of IT directors and their in-house teams.

Some of those shortlisted in the upcoming Legal Technology Awards highlight how they are using existing technology to improve access to knowledge and information, improving the productivity and job satisfaction of lawyers. Norton Rose’s Cascade is a good example, with the ‘no-search’ search saving lawyers – and the firm – time and money. And as we all know, for lawyers, time is money!

Value of innovation

Creativity is a key way of adding value. One noticeable benefit of increased caution when it comes to law firm spending has been the recent boost in creativity among knowledge managers. At the moment, the knowledge management (KM) Holy Grail is to combine creativity with leveraging existing technology and resources. Last month I interviewed David Fitch, knowledge director at Simmons & Simmons, for a feature in the forthcoming issue of Legal Technology Journal. He is justifiably proud of having created a multimedia training resource that cost less than the price of a good lunch in the good old days!

Value of values

Ethical value remains an important consideration notwithstanding the credit crunch. For some time business pitches have included questions about corporate social responsibility (CSR). Client organisations want to use suppliers that share their values and attitudes as they know that this is a key selling point in a competitive market. So firms that have to include their CSR policies in pitches are increasingly taking a similar approach when it comes to choosing their own suppliers and products and incorporate ethical considerations into purchasing policies and supplier RFPs for IT and infrastructure projects.

The Green IT show at the Barbican in November featured suppliers who are acutely aware of the importance that many large companies and law firms attach to green procurement and offer products and services that combine cost savings with ethical considerations. Examples include virtualisation technology, which has been a hot topic in legal IT for some time, but is now highlighting its green credentials. For example, IBM uses virtual worlds to demonstrate physical technology. You can tour their virtual data room on Second Life, whereas a physical data room tour would be impractical to say the least.

The value of CSR is recognised throughout legal IT: among others, the British Legal Awards, FT Innovative Lawyers and, in 2009, the Legal Technology Awards recognise the business value of an environmentally friendly approach. On a day-to-day basis, the Legal Sector Alliance (LSA), established in 2007, comprises a number of well-known law firms that are committed to tackling climate change by reducing their carbon footprint and adopting environmentally sustainable practices. Meeting these commitments will require participating firms to scrutinise – and sometimes adapt – their IT procurement policies and IT practices.

And what of all these various awards and events – is it worth bothering with them? Well, there are varying opinions in the public domain about that, but in a challenging business environment which is likely to become tougher and more competitive in all markets around legal IT, it can’t be a bad thing to start the New Year in a positive mood. I realise that in these difficult times it’s not always possible to participate in everything, but we can afford to leave behind ‘bah humbug’ – after all, sour grapes led to a bleak Christmas future for Scrooge – and instead celebrate achievement and innovation, learn from others’ experiences and get out there and have some fun. I look forward to meeting many of you at the LTAs and other Legal IT events in London. I wish you all a Happy New Year and a fabulous, successful 2009.