Quantifying the Benefitsof Legal Tech Investments

TOTAL CASE

ORGANIZATION

A CASEFLEET WHITE PAPER

© March 2017, LAWPRCT, LLC. All rights reserved.

2Total Case Organization: The new TCO for legal tech

IntroductionIn 1987, Gartner Group popularized a new term within the technology industry: “Total Cost of Ownership” (TCO)

TCO analysis aims to determine the complete cost of implementing new technology, including both direct and indirect costs such as training, labor hours, support requirements, telecom fees, etc. TCO analysis provides business leaders and technology professionals a framework to use when deciding to make a new technology purchase. For three decades, technology and business leaders have lived by the mantra of TCO.

But today’s technology has changed dramatically from the world of 1987. Similarly, CaseFleet suggests a dramatic change is needed in terms of TCO analysis in the legal sector — a complete reorientation of the term itself from “Total Cost of Ownership” to Total Case Organization.

Today’s legal professionals face a new reality, a far more complex, competitive and data-intensive landscape than ever faced before. While TCO(cost) helps firms minimize expense, it does nothing to help firms win cases, secure new business, or generate revenue. On the other hand, TCO(organization) focuses on arming attorneys and staff with technology that enables them to drive more business for the firm as better legal professionals.

“Total Cost of Ownership does nothing to help firms win cases,

secure new business, or

generate revenue.”

- Jeff KerrCaseFleet CEO

TOTAL CASE ORGANIZATION - TCO(organization)

A standardized workflow for managing and storing the components of a legal case. Components may include legal claims, facts, witnesses, and documentary evidence. TCO(organization) enables clarity of process, case status, and easy access to case components.

3Total Case Organization: The new TCO for legal tech

TCO(cost)

An antiquated approach

While Gartner developed and promoted TCO(cost) nearly 30 years ago in 1987, the legal industry did not adopt the concept for well over a decade. But other industries quickly discovered that TCO(cost) analysis provided a sophisticated and useful approach toward making economically rational technology purchase decisions. As such, many businesses quickly adopted the practice, as did a number of large law firms with bigger tech budgets.

The calculation of Total Cost of Ownership analysis involves three basic components1:

● Acquisition costs include the direct price of the software, plus any required hardware needed to use the software.

● Operating costs involve any telecom fees, facility requirements, utilities, maintenance, and training.

● Personnel costs include additional headcount or labor hours required by staff to install, operate, and maintain the technology.

Through this analysis, companies typically discover the total cost of ownership is often multiple times greater than the purchase price of the software. Upfront knowledge of this full cost provides management with a clearer picture of the expense implications to the business.

Evaluating all technology purchases using only TCO(cost) analysis can produce detrimental decision making.

- Kaplan, Gillooly, and Hurwitz research

4Total Case Organization: The new TCO for legal tech

Early adopters of the TCO(cost) approach learned that an overemphasis on cost analysis too often resulted in limiting technology investments. It became more difficult to balance the benefits and positive revenue impact of acquiring new technology. In 1998, business researchers presented evidence that using TCO(cost) analysis singularly to support technology decisions actually produced a detrimental effect.

Kaplan2, Gillooly3, and Hurwitz4 demonstrated that following TCO(cost) as the primary IT decision-making tool resulted in:

● Short-sighted perspective● Ignorance of functional and value gains● Loss in competitive performance

In addition, TCO(cost) analysis resulted in the delay of adopting business process technology to aid law firms in practice and case management. Guided by TCO(cost) estimates, firm leaders often concluded the associated indirect costs were too high to support purchasing and implementing new technology.

5Total Case Organization: The new TCO for legal tech

New TCO(organization)

Total Case Organization

Everyone recognizes that the world — including the legal industry — has changed dramatically since 1987. Over the past decade, law firms raced to catch up and implement new technology that would improve practice operations and efficiency.

While technology and business leaders today continue to use TCO(cost) analysis to make technology decisions, they are more likely to temper their analysis with the benefits the technology will give the firm. Effective law firm leaders know that they must think beyond simple cost optimization and instead focus on providing their staff with case organization tools.

Research confirms what law firm leaders have come to understand: technology improves firm operations and profitability. According to a 2015 survey by Thomson Reuters Peer Monitor, firms implementing effective legal technology exhibited stronger financial performance than their competitors — regardless of firm size.5 Thus, technology is clearly creating big opportunities for small and medium-sized firms across all practice areas.

By making smart investments in technology, small firms are increasing efficiency and reducing cost pressures, said Manju Manglani of The Managing Partner Forum.6 "We're seeing more mid-size and small law firms look at technology investments as a means of servicing the needs of their customers better."

6Total Case Organization: The new TCO for legal tech

In an April 2016 article, LegalTech News stated, “Technology is a fundamental part of the practice of law today. Countless well-designed software tools are available to facilitate or automate virtually any work process a legal professional might need. Tasks that once took hours can now be done in minutes by those who know how to use the new tools correctly.”7

However, even in the face of clear research, advice from industry experts, and successful early adopter programs, law firms still lag in adopting technology to better manage cases and their practice. But why?

Here’s what the Altman Weil 2015 “Law Firms in Transition” Flash Survey said:

“In talking to a variety of legal tech startups, it became evident that the primary challenge was not

getting access to technology officers within law firms for demonstrations, but rather getting from

the initial pitch to a sale.”8

One reason that law firms struggle to make that technology decision stems from reliance on the old TCO(cost) analysis with no way to quantifiably counterbalance the costs with the positive benefits the technology would generate for the firm. Hence, law firms need a quantifiable analysis tool, Total Case Organization, TCO(organization).

7Total Case Organization: The new TCO for legal tech

Quantifying TCO(organization)

The formula for Total Case Organization

Essentially, TCO(organization) represents the potential for improved profitability on each case, which can be used to offset the TCO(cost) analysis.

To calculate TCO(organization), a firm must first identify average case profitability, which is simply a calculation of the billable revenue generated for a case minus the costs required to manage the case. Next, firms should estimate the complexity reduction offered by the new tech, considering its value in terms of:

Total Case Organization

Total Cost of Ownership

PurchaseDecision

TOTAL CASE ORGANIZATION - TCO(organization)

A standardized workflow for managing and storing the components of a legal case. Components may include legal claims, facts, witnesses, and documentary evidence. TCO(organization) enables clarity of process, case status, and easy access to case components.

CaseFleet estimates

up to 50% profitability

lift when Total Case

Organization is

implemented in

complex litigation

cases.

● Time saved● Case information accessibility● Improved client experience ● Increased probability of a successful case outcome

If the new technology provides a profitability lift greater than the Total Cost of Ownership, logic dictates that the technology is a worthwhile investment. Conversely, if the case organization value of the new technology is less than the total cost of ownership, it’s likely not a wise purchase decision.

8Total Case Organization: The new TCO for legal tech

A Winning StrategyBeing a litigator means managing an immense amount of information. Witnesses, documents, key dates, and legal issues have to be tracked and managed for each case. Success hinges on your ability to persuade, but you can't persuade without credible evidence proving every element of your claim or defense. Organizing evidence and mapping out how you'll use it becomes paramount.

Imagine you're representing a business that's been sued for breach of contract. The pleadings in the case will establish a whole network of legal issues whose determination will mean victory — or a costly defeat — for your client. The plaintiff must prove the existence of a valid contract, which typically includes the following:

● Offer● Acceptance● Consideration● Mutuality of obligation● Competency and capacity

You thus have an immediate line of attack: finding evidence that contradicts one or more elements necessary to the plaintiff's case. Each piece of evidence — every email, discovery response, and moment of deposition testimony — must be evaluated in this light.

Preparing the case requires you to understand the relationships between each element of the claim and the supporting (or contradictory) evidence. Is there a document that establishes a particular element? If so, you'll need to know not only where to find the document, but also which specific page to reference, as well as how to authenticate the document as a whole.

Organizing Claims and Defenses

New TCO(organization)

9Total Case Organization: The new TCO for legal tech

Organizing Facts

Marshalling the evidence is only half the work — the evidence and facts must be woven into a living, breathing narrative.

Every good lawyer knows winning requires telling a compelling story, including a cast of characters, a plot, and one or more themes. But in court, the story can't be fictional. Even a poorly-told true story is better than a brilliant story that's false. Your narrative must be built on a solid foundation of credible evidence.

Total Case Organization exists when a litigator has a system with the following characteristics:

▶ All litigation team members have access

▶ The system is easy-to-use

▶ Users can designate relationships between facts, witnesses, legal issues, and evidence

▶ Facts can be segmented based on related issues, contacts, and evidence

▶ The data can be exported to a form usable in court

▶ Links show how a particular piece of evidence supports the associated fact (e.g., which

page or paragraph proves the fact)

Each piece of the story — every fact — must have proof. In a case of any complexity, your narrative will consist of many facts. Linking each fact to the corresponding piece of evidence is simply too difficult a task for memory alone. In the past, lawyers have relied on a variety of imperfect methods for managing and organizing facts, such as handwritten notes, Excel spreadsheets, and Word documents, but none of these methods enable a lawyer to achieve Total Case Organization.

10Total Case Organization: The new TCO for legal tech

Benefits of Total Case Organization

In the ideal legal world, firms would win business on the merits of their legal counsel alone, but such is not the reality anymore.

Firms that successfully land new business today must convince clients that they possess the legal skill and the resources to efficiently manage cases.

Efficient case management involves the principles of legal project management but also modern case management technology.

“Power firms use technology to fade

the complex, electronic data ‘noise’ into the

background – leaving their strategic legal skill in the fore.”

- Rakesh MadhavaCEO, Nextpoint

Case management and case organization can be boiled down to data management. Practicing law today involves ever growing volumes of electronic data. The law firms that have successfully grown their practices have largely mastered the collection, filtering, forensic analysis, processing, reviewing, and production of data. This mastery becomes a key competitive advantage, which these firms eagerly promote to clients.

Technology enables growth-oriented firms to organize case information and fade complex data “noise” into the background thereby leaving their strategic legal skill in the fore.8

Law firms often misunderstand how to best promote the competitive advantage implementing technology can provide. The advantage is not the firm’s technology acumen, but rather, possessing advanced case organization technology, which enables their attorneys to focus more time on being an attorney — which means more time helping the client win.

Empowering your litigation machine

11Total Case Organization: The new TCO for legal tech

A simple analogy lies in the auto repair industry. Most professional repair facilities utilize air compression power tools. These tools significantly impact a mechanic’s productivity and enable them to spend more minutes per hour actually deploying their auto repair expertise.

Would you want to hire an auto mechanic that used outdated manual wrenches? Of course not. Similarly, law firms that calculate the TCO(cost) of their legal technology, without factoring in the value of Total Case Organization, are using outdated methods — and potentially missing out on tools that will help them better serve their clients and win more cases.

TCO(organization) quantifies the technology benefits to the law firm across attorney productivity, staff productivity, and firm effectiveness. In short, using technology that creates Total Case Organization reduces the complexity of managing cases. In turn, reducing complexity promotes better attorney work, reduces errors, and increases the likelihood of a successful case outcome. By factoring case success and current case profitability, firms can arrive at a dollar calculation that can be measured against TCO(cost) — letting you compare apples to apples.

Attorney Productivity

Staff Productivity

Firm Effectiveness

The real power of Total Case Organization lies in enabling attorneys to spend more time being attorneys handling legal issues for their clients — in turn, winning more business and more cases.

TOTAL CASE ORGANIZATION

12Total Case Organization: The new TCO for legal tech

Conclusion

Law firm IT managers today are searching for technology that enables and facilitates better case organization for their attorneys. To overcome the lag in tech adoption and reap the benefits offered by innovative legal tech, IT managers must identify which solutions will have the greatest impact on their firm’s profitability.

Total Case Organization provides firms with a more holistic view of the benefits of a specific technology, such as streamlined process, clarity of case status, and ease of access to case components.

Hence, the cost (or benefit) of a new work process technology can be expressed in terms of TCO(organization) – TCO(cost) = Purchase Decision. A positive value indicates the firm would benefit from purchasing the new technology, while a negative value suggests the investment may not be worthwhile.

IT leaders within law firms find themselves in a difficult position

today.

Total Case Organization

Total Cost of Ownership

PurchaseDecision

TCO(cost) will certainly continue as a critical analysis in the decision making process for firms acquiring technology. But by taking Total Case Organization into account, IT managers will be able to better position their firm to win more cases.

13Total Case Organization: The new TCO for legal tech

About CaseFleetAt CaseFleet, we understand the value of an organized case file. By mirroring a lawyer's existing workflows, we’ve built CaseFleet Timelines to connect all case elements into a network of easy-to-follow relationships, enabling litigation teams to achieve Total Case Organization without extra effort.

CaseFleet is a cloud-based, case management solution that gives lawyers an edge in litigation. Intuitive and powerful, CaseFleet organizes case facts, tracks key deadlines, and runs an entire litigation practice. Our unique Timelines feature allows attorneys to visually lay out and tag the facts of each case, mapping out connected dates, issues, contacts, and evidence, so case information can be easily recalled with a single click, without having to search through multiple systems.

Sign up for a free demo or 14-day trial at www.casefleet.com.

Sources

1. Purchasing Procurement Center2. Kaplan J. (1998). “Focus on Its Return.” InformationWeek, 688, 1863. Gillooly, B. (1998). “The Focus is on Value, not Cost.” InformationWeek, 688, 1714. Hurwitz, J. (1998). “Total Cost of Survival.” InformationWeek, 704, 1885. 2015 Thomson Reuters Peer Monitor survey, Oratto.com6. Manglani, Manju. “U.S. law firms see technology as key to increasing profits.” Managing Partner, August 12, 20157. Madhava, Rakesh. “Seven Characteristics of Law Firms Who Are Legal Technology Rockstars.” Nextpoint Blog, January 26, 2015 8. Elizabeth, Lowell, The Current State & Future Prospects for Legal Tech Adoption, Stanford.edu, May 17, 20169. Karwic, Robert. “Law Firms That Prove They Know Technology Have a Better Chance of Survival.” LegalTech News, April 21, 2016