Six Steps for Coping in a Price-Driven Market: For Law Firms, Document Generation Is the Key
Commoditization and the Practice of Law
For years, small law firms have faced the commoditization of legal services. Quasi-legal companies have bombarded primetime television with advertisements aimed at convincing consumers that just any old document will do, so long as it’s cheap. Operating in an inelastic market for legal documents (just because wills are going for $99 doesn’t mean consumers will buy more wills), small law firms have taken it on the chin, leaving many to scramble for additional sources of income.
Large Firms Get Hit
But commoditization of legal services didn’t stop with small firms, or even medium-sized firms. Of late, even Am Law firms are feeling the pinch. In 2012, Dewey & LeBoeuf, a fabled firm with roots going back more than 100 years, filed for bankruptcy and liquidated assets. In June 2013, Weil, Gotshal (the firm that led Lehman Brothers through the biggest Chapter 11 filing in history) announced deep cutbacks, a combination of layoffs and restructuring of partnership compensation. The reality is that large firms across the board are facing the same economic challenges, a “new normal” as Barry Wolf, Executive Partner at Weil, calls it, where traditional customers of premium legal services are demanding a deal.
Dan DiPietro, chairman of the law firm group atCitiPrivate Bank, says that he “hear[s] continually from law firms about the unrelenting pricing pressures from clients” (“Citi’s 3rd Quarter Law Firm Results: Pricing Pressures”.Pricing pressure, according to DiPietro, frequently results in “alternative fee arrangements,” a term which is often code for fixed-fee pricing. Herein lays the biggest problem for law firms, which are much more comfortable with the open-ended, hourly billing model. As DiPetro puts it, “how can [law firms] ensure that the work will be completed within the agreed scope and to budget [?]”
Doing More with Less
The best answer for organizations looking to trim costs while maintaining quality, in many cases, is business process automation—transforming common, repetitive processes into automated workflows. For law firms, large and small, as well as in-house counsel, the best type of process automation is often document generation, which predictably yields tremendous ROI, both in terms of time and money savings but, paradoxically, also in terms of better work product. Put another way, you’ll be able to generate transactional legal documents way faster, way cheaper, and with way fewer mistakes stemming from human error.
As you embark on a document generation project, here are six steps to success that you should keep in mind.
1. Leverage the Expertise of Senior Partners
When people hear the term document assembly, they may immediately think template, a light weight approach for generating simple documents, such as firm correspondence—a few variables, some simple business logic, a little quicker and a little better than doing it by hand.
Contrast templates with process applications designed to generate complex, transactional legal documents. A process application consists of two parts: a template and an interview. In this context, a process app template could be a word processing document or PDF form having potentially thousands of variables and uber-sophisticated business logic.
Process app templates are the domain of elite document generation systems, and here’s the important part: because such elite systems are capable of handling any level of complexity, you can actually build the expertise of your most experienced practitioners right into the template business logic.
You then design a custom interview—a wizard-like sequence of data-gathering forms—that walks junior staff carefully through the process of generating the same document that a senior lawyer would generate. This approach is faster, less expensive, and ultimately, less prone to human error.
In a price-driven market, where you simply have to do more with less, leveraging the experience of senior practitioners may be more than a technological luxury; it could be a tenant of solvency.
2. Reduce Staff Interaction
In a price-driven market, you may very well need to reduce staff, a reality that will force you to find ways to do more with less. Elite document generation systems contribute to the solution by enabling you to design document generation interviews so that your clients can enter much of the information themselves. Not only will this approach minimize your expense, but it will generally result in better documents. (A client is less likely to misspell its own name than your own staff might be.)
For example, with HotDocs, a best-of-breed document generation platform, you enable clients to fill out their own interviews two ways: By emailing a link to the interview to the client, complete with login credentials, or by embedding the interview into your firm’s own website or portal, protected, of course, by a login procedure.
Again, this approach is likely faster, better, and less expensive than however you’re doing it now.
3. Codify Best Practices
There are right ways and wrong ways to complete hundreds of different processes within your firm. Doing things the right way saves time and money. But if you’re facing staff reductions, possibly replacing expensive employees with less expensive (and less skilled) employees, the likelihood that best practices may be replaced with less efficient methods is a reality. When it comes to the generation of legal documents, though, neglecting best practices could be more than expensive; it could be dangerous.
With enterprise-grade document generation platforms, you can build best practices for generating a document right into the interview, providing guidelines and safeguards on a field-by-field basis. Using this approach, you can ensure that staff members—even new, less skilled and trained staff members—follow internal policies and guidelines to the letter of the law.
4. Mitigate risk
Generating and executing complex legal documents is risky enough under the best of circumstances—even with your best, brightest, and most skilled staff calling the shots. But if you’re faced with scaling back, you could, by necessity, end up relying on less experienced, less skilled staff members.
As was explained in the previous steps, you can minimize the risk of human error compromising the integrity of an important legal instrument by building the experience of your best practitioners into the business logic of the underlying process app template and then ensuring staff members follow best practices as they enter transactional data into the interview.
Using your old approach, metadata from a past case or transaction can make its way into a circulated, executed document. With HotDocs, only designated personnel can edit process apps. This approach keeps documents from degrading over time, and insures that each new transaction results in fresh, clean documents, without any hidden metadata traps that can come back to haunt you.
5. Shoot for Transaction Ready
Obviously, not all legal documents are highly structured and rule-based. Some documents are custom negotiated, top to bottom, with a little boiler plate scattered throughout. With such documents, a process app may be used to generate a good first draft, which will save some time, etc.
But other types of documents—estate planning or corporate formations, for example—may lend themselves to complete automation. Again, you’ll need an elite platform and the oversight of your best practitioners, but in the end, you’ll get the highest quality documents at a tiny fraction of the overall expense of doing it the old way, and you’ll get them right off the printer, ready to negotiate.
Sound naïve? Well, it’s a practice that the largest enterprises in the world—banks, insurance companies, etc., organizations with just as much at stake as you might have—have been engaging in millions of times a day for decades.
6. Speed up Document Production
Document generation, when done the right way (see the above five steps) isn’t just a little faster and a little less expensive than an old-school, search-and-replace, cut-and-paste approach. It’s radically faster and dramatically less expensive.
One of the world’s largest banks trimmed its loan origination process, including the generation of all collateral documentation, from three days to under an hour. A sprawling government agency that regularly produces an ultra-complex contract involving multiple government agencies, contractors, sub-contracts, and materials providers slashed the contract-generation process from three months to half a day.
You can save serious time and money by making a firm-wide commitment to document generation. Beyond reductions in time and spend, though, if you ask the global bank and government agency mentioned above, they’ll tell you that the best thing about their document generation systems is that they get better documents, and better documents equate to less risk, less litigation, and increased profitability.