JULY 2005 – VOLUME 6, NUMBER 2 IN THIS ISSUE

Attorney Professional Development by Cindy Diamond – p. 1

Creative Budgeting of InformationResourcesby Linda Will – p. 4

Managing Law Firm Space Globally: An Interview with Suzanne Heidelberger by Janet Accardo – p. 6

Using Online Services to Host Litigation Documentsby Conrad Jacoby – p. 10

Book Review–The Future of Work: How the New Order of Business WillShape Your Organization, YourManagement Style, and Your Lifeby Thomas W. Malone – p. 13

PracticeInnovations

Managing in a ChangingLegal Environment

Three editions of Practice Innovations are published each year.

July 2005

Communicating best practices and innovations in law firminformation and knowledge management to legalprofessionals.

Editors in Chief

Austin DohertyDirector, Information Resource CenterHogan & Hartson L.L.P.Washington, D.C.

William ScarbroughExecutive DirectorBaker & McKenzieWashington, D.C.

Editorial Board Members

Janet AccardoDirector of Information ServicesSkadden, Arps, Slate, Meagher & Flom L.L.P.New York, NY

Silvia CoulterManaging PartnerCoulter Consulting GroupBoston, MA

Cindy DiamondAssistant Director, Research and ServicesHogan & Hartson L.L.P.Washington, D.C.

Lisa KellarPractice Automation ManagerHunton & Williams, L.L.P.Washington, D.C.

Kingsley MartinSenior Director, West kmThomson EliteChicago, IL

Nina PlattDirector of Library ServicesFaegre & Benson L.L.P.Minneapolis, MN

Al PodboyDirector of LibrariesBaker & Hostetler L.L.P.Cleveland, OH

Linda WillDirector of Information ResourcesDorsey & Whitney L.L.P.Minneapolis, MN

Please direct any comments or questions to either of theeditors in chief:

Editors in ChiefAustin DohertyHogan & Hartson L.L.P.555 13th St. N.W., Rm. 10W100Washington, D.C. 20004202.637.8701 (voice)e-mail: radoherty@hhlaw.com

William ScarbroughBaker & McKenzie815 Connecticut Avenue N.W.Washington, D.C. 20006202.835.1640 (voice)e-mail: william.p.scarbrough@bakernet.com

Managing EditorEileen Gonyeau, J.D.West610 Opperman DriveEagan, MN 55123-1396651.687.5497 (voice)651.687.8722 (fax)e-mail: eileen.gonyeau@thomson.com

The trademarks used herein are the trademarks of their respective owners. West trademarks are owned by West Publishing Corporation.

© 2005 West, a Thomson business. Printed 06/05. Material #40425335L-107884

1

AT A GLANCE: Professional developmentprograms add to lawyers’ satisfaction withtheir firm and advance the firm’s ability torecruit and keep top-quality legal talent.

By Cindy Diamond, Assistant Director, Research andServices, Hogan & Hartson L.L.P., Washington, D.C.

Professional development initiatives are receiving a great deal of attention in law firms becausea robust professional development program can enhance a firm’s profile and provide a com-petitive advantage in the marketplace. Comprehensive professional development programsthat encourage attorneys’ growth at all stages of their careers add to lawyers’ satisfaction lev-el with their firm and further the firm’s ability to recruit and retain top legal talent. Law firmshave realized these advantages and are committing resources to institutionalize wide-rangingprofessional development solutions. An example of this commitment is underway at Hogan& Hartson L.L.P, which has recently implemented an innovative program that places thefocus of professional development on the individual associate.

Professional Development and Associate AttritionAttrition rates of new associate hires in law firms have been declining in recent years. In 1998,the NALP Foundation report Keeping the Keepers: Strategies for Associate Retention inTimes of Attrition revealed alarming data on associate attrition rates, with 43 percent of newassociates departing their initial employers within three years and 64.6 percent departingwithin five years. A subsequent study conducted by NALP in 20001 showed a slight improve-ment in associate attrition rates with 38.3 percent departing within three years and 59.6percent departing within five years. This declining trend has continued as shown by the 2003NALP study, Keeping the Keepers II: Mobility & Management of Associates, where 35.1percent of new associate hires departed within three years and 53.4 percent departed withinfive years. Perhaps more alarming than the numbers of associate departures are the reasonscited by associates as contributing to departure decisions. The 1998 NALP study provided evi-dence that among other factors driving choices, associate departures were strongly affected bythe availability of training and professional development opportunities, effective supervision,and the availability of mentoring to associates in law firms.

continued on page 2

AttorneyProfessionalDevelopment

2

Since that time, law firms have dedicated sig-nificant resources to the formation anddeployment of professional developmentand training programs. Many law firmshave institutionalized this effort, while oth-ers have implemented an assortment ofdevelopment tools, including work assign-ment protocols, formal attorney and partnerevaluation programs, mechanisms for feed-back and mentoring, as well as impressivein-house training curriculums. These effortsby law firms on behalf of legal professionalshave been well received. This is evidenced bythe 2003 NALP survey results, where asso-ciates refer to those same factors cited bytheir peers in the 1998 report—the avail-ability of training and professionaldevelopment opportunities, effective super-vision, and the availability of mentoring—as“givens” in law firms today. Interestingly,the associates surveyed in the 2003 NALPreport also noted “[I]t is not the presence ofthese opportunities that is a selling point forfirms but rather the absence of them that isa recruitment death knell.”2

Law firms are under great pressure toremain prominent in the market through thedelivery of superior legal services to clients.Therefore, there is intense competitionamong law firms to attract, recruit, andretain the legal talent capable of providinghigh-quality legal expertise to clients.According to consultants at HildebrandtInternational, “[T]he future ‘war for talent’is not likely to be decided simply on the basisof salaries. A firm’s ability to recruit andretain top quality talent will increasinglydepend on its ability to offer well-designedprofessional development programs to

lawyers at all stages of their careers.”3 In itsmost recent Client Advisory, HildebrandtInternational restates this position and pre-dicts law firm operations will reflect “thecontinuing importance of and emphasis oncomprehensive professional developmentprograms.”4 Firm management at Hogan &Hartson shares this view and has taken stepsto expand upon the firm’s professionaldevelopment initiatives with a programdirected at the firm’s individual associates.

The Individualized ApproachHogan & Hartson has a long history of fos-tering attorney professional development. InJanuary 2000, the firm created the H&HAcademy with the stated mission of “pro-viding to firm lawyers at all levels thetraining opportunities necessary to achieveand sustain preeminence in their fields.”5

The H&H Academy continues to offer cur-riculum topics of interest to all attorneys andserves to encourage the development ofeffective lawyering skills. Through theH&H Academy, Hogan & Hartson pro-motes the concept of an individualizedapproach to associate professional develop-ment. To advance this mission even further,in November 2004 Hogan & Hartsonappointed Linda Oliver, a partner in thefirm’s Communications Practice Group, tothe new firm-wide position of AssociateDevelopment partner. In this role, she willsupervise the firm’s associate professionaldevelopment program and provide guidanceto individual offices and practice groups asthe firm implements an individualized pro-fessional development program for allassociates.

Attorney Professional Development continued from page 1

“[A] robust professional

development program can

enhance a firm’s profile

and provide a competitive

advantage in the marketplace.”

3

According to Oliver, the purpose of the indi-vidualized approach is to help associatesgrow professionally, to encourage them toget the most out of their experience at thefirm, and to ultimately develop the associ-ates into strong lawyers. Hogan & Hartsonbelieves that the firm can provide the profes-sional development framework and supportstructure, but only the individual associateknows what he or she wants to achieve.Therefore, it makes sense to have each indi-vidual lawyer think about his or her careerstrategically and systematically. The funda-mental premise of Hogan & Hartson’sindividualized professional developmentprogram is that each associate would createhis or her own professional developmentplan tailored to the associate’s seniority, lev-el of experience, and type of practice.

The associate’s individual plan would con-sist of realistic short-term goals for thecoming year and would outline the specifictasks and objectives necessary to reach thosegoals. When drafting his or her plan, theassociate would work closely with a partnermentor from the associate’s practice groupwho can help identify and clearly defineavailable goals and opportunities. Eachpractice group also provides its own set ofmaterials to the associate to use as a refer-ence. These documents are generallycomposed of a series of questions the associ-

ate would answer in the plan, a skills orexperience checklist, and a list of trainingopportunities. Legal industry consultant IdaAbbott recommends a similar frameworkand provides a detailed reference guide forfirms wishing to implement an individual-ized professional development approach. Inthe resource Lawyers’ ProfessionalDevelopment Plan: Guidelines, Baseline,Goal Categories, and Action,6 Abbottaddresses the process of creating a plan,offers specific planning considerations, andprovides a template of a sample profession-al development plan.

At Hogan & Hartson, once the plan is cre-ated it is shared with the Practice Groupdirector, the partners with whom the associ-ate works, and the Practice Areaadministrator. This way, the practice groupand its members are informed about whatthe associate aspires to accomplish and theycan better assist the associate in achievingthose goals. Each associate benefits fromhaving a written plan by having a path tofollow as well as the guidance of seniorattorneys and mentors. According to Oliver,Hogan & Hartson believes that the individ-ualized professional development programis going to enhance associates’ competence,strengthen the firm’s culture, and become avaluable investment in the future leaders ofthe firm. •

1. Beyond the Bidding Wars: A Survey of Associate Attrition, Departure Destinations and Workplace Incentives(NALP Foundation 2000).

2. Keeping the Keepers II: Mobility & Management of Associates (NALP Foundation 2003).

3. Client Advisory 2004, Hildebrandt International, available at http://www.hildebrandt.com/Documents.aspx?Doc_ID=1649.

4. Client Advisory 2005, Hildebrandt International, available at http://www.hildebrandt.com/Documents.aspx?Doc_ID=2208.

5. H&H Academy: Mission Statement.

6. Http://www.idaabbott.com/diag/lawyer-pdp.pdf.

Glance at any Am Law 100 law firm’s budget and you will almost always find the sametop line items: associate salaries, staff compensation, rent, liability insurance, technology,and the cost of running the Information Resource Center (IRC). All items are direct over-head. All items affect the firm’s profits per partner. Although it is difficult to negotiate costsavings on the other items, the IRC is a prime target for potential savings and is oftenmaligned as a cost drain. Law firm finance personnel and librarians come into somewhatsurprising conflict as one group jostles to increase revenue and the other defends the meansto generate more revenue.

Calculating the Real Cost of Legal ResourcesProfit and loss statements, gross vs. net, and other interpretative tools do not necessarilywork well with analysis of the IRC budget. Information resources cannot be seen as cham-pion-less. Attorneys are attached to every title, every database. The librarian is notpurchasing resources for himself or herself. Subscriptions are initiated through suggestionsfrom the attorney population. Traditionally, upon renewal, a review is done on a title-by-title basis. But this is shortsighted. Information resource expenditures should be examinedpractice group by practice group. Relative cost per practice area is not a difficult calcula-tion to make. Ken Svengalis has published the Legal Information Buyer’s Guide andReference Manual for a number of years. The book is a bible for those needing to pur-chase in a new area of law or update an existing one. Succinctly, Ken not only abstracts

4

AT A GLANCE: The Information ResourceCenter budget is a handy target for costcutting. Here are some tips for creativebudgeting that may leave your IRC intact.

By Linda Will, Director of Information Resources,Dorsey & Whitney L.L.P., Minneapolis, MN

CreativeBudgeting

“Attorneys and finance

department personnel need to

be educated on the ’true’ cost of

renewing legal resources.”

ofInformationResources

5

necessary primary and secondary treatisesby practice but, in the appendices, he alsochronicles historical supplementation cost.For example, one might have purchased acopy of Law of Water Rights andResources (one volume) in 1996 for $228.Its maintenance costs for the next sevenyears priced out as follows: 1997 ($113),1998 ($120), 1999 ($152), 2000 ($164),2001 ($161), 2002 ($189), and 2003($216). In seven years the annual cost ofsupplements increased $103 or 91 percent,an average annual rate of increase of 13percent, which is a far cry from the 3 per-cent cost increase I was asked to use for2005 budget calculations. Attorneys andfinance department personnel need to beeducated on the “true” cost of renewinglegal resources. They should understandthat online is not always cheaper thanprint (as many attorneys and financial staffseem to assume).

Developing Vendor Relationshipsfor Effective NegotiatingProcuring legal resources is also not thesame as the one-time purchase of a usedcar. You cannot go into the information“dealership” and haggle, knowing thatyou will never see the place again. Yourlegal resource vendor is your “rep,” mean-ing he or she represents you to the homeoffice. You have a relationship, one thatcan benefit both of you. Until just a fewmonths ago, I had an entire cadre of Westrepresentatives. I had been chanting “onelaw firm, one account representative” forseveral years, when suddenly the cloudsparted and I found myself bathed in sun-light. West is piloting a single accountexecutive role in several Am Law 100firms. And why do I want just one accountexecutive? One account executive knowsthe culture of my firm. One account exec-utive knows the inventory of all of his orher represented products. One accountexecutive knows all of my contracts andcan negotiate several products at once,

adding and subtracting products as thefirm’s needs change. West knows that I canwalk across the proverbial online street toanother vendor and have my same needsmet. A cordial relationship does more thanmaintain the status quo; it provides build-ing blocks for the future. West knows myneeds, and is there with new products andservices as needed. I, in turn, am able toleverage purchasing power by combiningmultiple contracts with the Thomson fam-ily into one. For years, both the accountingdepartment and the Information ResourceCenter have been trying to predict whenhigh cost items are going to hit the generalledger. But, with the growth of the businessof law and the proliferation of newresources, this has become increasingly dif-ficult to forecast. Enter the LibraryMaintenance Agreement (LMA). TheLMA nails down growth costs for a cer-tain period and ensures, going forward,that we will have one invoice per month,calculated at the same monthly sum.

Print is a medium much more predictablethan the elusive online because it has beenaround for such a long time. In the past,publishers of print material were usually inthe dark as to how to price digital prod-ucts. Several paradigms were tried: officelocation, seats, concurrent users, sitelicense, enterprise license, etc. All failedfrom the standpoint of the customerbecause they were static templates.LexisNexis® and West have long given usonline usage reports; indeed, it was howthey leveraged annual negotiations. Butother vendors insisted that they were inca-pable of following suit. Enter WestResearch Partner, a tool created to tabulatetraffic to Web sites. By installing a simpletoolbar on my Internet browser, I can go toany number of Web applications and gen-erate reports that are either detailed orsummarized to include users going to thesite, how many Web pages they accessed,and time spent online. I can track this

information by product, user, orclient/matter number. West ResearchPartner will provide much-needed leveragein future contract negotiations with vari-ous online providers.

Although the field of players has dimin-ished in the past few years, there are stillchoices among vendors, and it behoovesthe librarian to know the vendors’ com-petitors. As we know, everything isnegotiable, and you never stop negotiat-ing, but the ability to bargain effectivelywill be enhanced when you can tout thestellar features of the competition. Onesuch area in which firms have not hadmuch choice is in negotiations with theCopyright Clearance Center (CCC).Formed in 1978 by a group of publishersat the time the Copyright Act of 1976went into effect, the CCC was set up to bea clearinghouse between rights’ holdersand end users. Prior to the recent intro-duction of Valeo Intellectual Property, aservice similar to the CCC but muchenhanced, librarians were pressed to eithernegotiate license agreements, vendor byvendor, or subscribe to the CCC. Withoutcareful attention to a library’s individualvendor agreements and its license agree-ment with the CCC, the library could finditself paying twice for the same copyrightprotection. Libraries also need to be care-ful when publishers “bundle” products.You may be paying for information thatyou don’t need, didn’t ask for, and mayhave in other forms. Insist on usagereports.

In summary, presenting a budget in its“real world” context may help you toachieve a more straightforward relation-ship with your finance colleagues. Wecertainly owe it to our attorneys to take abiennial, if not annual, inventory of ourstock. This is consistent with best practicesin corporate America. Law firms, whichare now run as companies, should followthis example. •

6

Please describe your role as Director of Real Estate for Skadden, Arps.My responsibilities entail managing the firm’s real estate around the world. As background,Skadden’s 23 offices occupy almost 2 million square feet of leased space. They operate 24/7in 10 time zones. We serve approximately 400 partners and more than 1,700 attorneys inmore than 45 practice areas. As one of several directors who administer the firm’s opera-tions, I help our local offices with leasing transactions worldwide, manage constructionprojects in the United States, and work with the facilities teams in New York City.

What career path did you take to your current position?After graduating from the Cornell Hotel School I worked for a hotel company in Texasand did hospitality and real estate consulting at Travis Wolf in Dallas. Next I moved toNew York where I joined Ernst & Young’s business and real estate valuation group, andthen Apollo Real Estate Advisors, a real estate investment fund. Before joining Skadden,I worked in J.P. Morgan’s corporate real estate group where I managed the bank’s realestate assets around the world.

AT A GLANCE: Janet Accardo speaks withSuzanne Heidelberger, Director of RealEstate for Skadden, Arps, about law firmspace planning at the local, national, andinternational level.

Janet Accardo, Director of Information Services, Skadden, Arps, Slate, Meagher & Flom L.L.P., New York, NY

ManagingLaw Firm

GloballySuzanne Heidelberger, Director of Real Estate, Skadden,Arps, Slate, Meagher & Flom, L.L.P. & Affiliates

An Interview with

SuzanneHeidelberger

7

What, if anything, is different aboutspace planning in a law firm?Whenever I speak with service providers inthe industry, they see law firms as justoffice space. In a public company, the

owners are the shareholders who rarelycome into the office. In a law firm, theowners are the partners who come into thespace every day. It’s very personal to them.It reflects the image that they portray totheir clients. While there is a sense of per-manence to the space, it must also beflexible enough to provide the privatespace in which they do their work and thepublic space that they need to meet withtheir clients. Law firms also use their spacefor recruiting purposes, unlike many cor-porations. How they are viewed in themarketplace for recruiting efforts must betaken into consideration. These threethings: the clients, the owners, and therecruiting efforts affect the real estatestrategy and the way decisions are made.It’s consensus driven and fairly risk averse,which makes it more difficult and compli-

cated in making decisions. The partnersbecome involved and take space planningvery seriously. Their image is at stake.

How do you manage these variousprocesses and requirements?I have an excellent team of five people inthe real estate department on whom I rely,as well as other people in the facilitiesgroups. In addition, I interface with ourlocal offices, their administrators, officeleaders, and our real estate partners andattorneys around the world.

Keeping track is always a challenge. One ofthe first things I put together when I cameto Skadden, Arps in 2001 was a full binderof lease abstracts. I took each of our leasesand broke it down into components thataffect decision making for the firm. Thatincludes a simple schedule of rent increas-es, but also more detailed information onexpansion options, dates and the timing ofwhen we have to give notice or take expan-sion or termination options, and what oursubleasing clauses are.

In a global firm like Skadden, Arps with23 different offices, how much do localand regional differences affect decisions?

The questions are the same. Depending onthe answers, your strategy will change. Ithas to do with what practice groups arelocated in each office and locational con-siderations.

Could you give an example?Absolutely. In Tokyo we have a bengoshilaw practice. (In Japan, bengoshi arelearned barrister-advocates who act as tri-al lawyers in the higher courts of the landin litigation for large corporations and incriminal cases.) The space needs are differ-ent from those of litigation or corporaterestructuring practices. In terms of region-al differences, in some locations the mainpriority is to be near public transportation.In others it’s to be near a specific client orcourthouse. The particular landlord alsohas a big effect. In some locations, thelandlord has a standard fit-out level. Inother locations, the landlord providesslab-to-slab space—concrete on the floorand ceiling—and you provide everythingin between. So, working and communicat-ing with the landlord in different ways isimportant. And not just when things arebad. It’s essential to have a long-term rela-tionship with the people in the office andwith the landlord so as to communicateconstantly—the good, bad, and the ugly. Ithelps when there are crises because youalready have that relationship developed.Communication is very important.

When managing global operations,how much travel is required?It varies project to project. I use a combi-nation of travel, e-mail, telephone,conference calls, and face-to-face commu-

continued on page 8

“[P]lanning creates flexibility down the road,

so firms don’t have to invest over and over again in the same space.”

Space

8

nication. In the beginning of a project, Ifind in-person communication to beinvaluable. Also, with real estate, you real-ly have to walk it to understand it. I’veprobably been to almost every Skaddenoffice at this point. Working together isrelationship building. Developing a teamis an investment that helps in the future.

Is understanding cultural differencesimportant in your job? It’s worthwhile to understand how realestate is handled in different locations, andhow to conduct person-to-person interac-tions. When you go to a new location it’simportant not to make a bad first impres-sion. I read articles, do searches on theWeb, and ask people whom I trust what Ineed to do. Should I bring a gift? Do Ishake hands? I remember in Tokyo Iabsolutely made sure that I had enoughbusiness cards and to hand them out fac-ing the person. You nod and they handtheirs back to you, and they nod. It’s acontinuation of the greeting, compared tothe United States, where we sit down andeveryone passes cards across the table. InMoscow, for instance, timing is different.There, if someone shows up a little late fora meeting, it’s OK. In Germany, however,if you’re five minutes late for a meeting thephones are flying off the hook and it’s aproblem. So to understand that level ofcomfort is invaluable.

Does a large law firm like Skadden,Arps try to provide a continuity ofdesign from one office to another?Our goal is to have standard offices.That’s not to say that if you go into aSkadden office in Houston it’s going tolook just like the Skadden office inSingapore, Beijing, or Sydney. But in termsof office size and functions, we try tomaintain standards. That comes down tothe fact that we’re a partnership and the

Managing Law Firm Space Globally: An Interview with Suzanne Heidelberger continued from page 7

Photos from bottom front:

Internal stairway viewed from a

conference room; partner office

in Skadden’s New York office;

multipurpose room in Skadden’s

New York office; cafeteria in

Skadden’s London office.

Stairway

NY Office

Multipurpose room

Cafeteria

9

partners should be treated equally, so it’s abalance. Certainly there are differencescity to city. In some locations, it’s accept-able for recruiting efforts to double upassociates. In other cities, it’s not. Codeissues can vary from city to city. For exam-ple, California is very restrictive on certaincode issues, which can affect the design ofthe space. Differences also arise out of thekind of real estate available in each city.There may be high-rises in one, and onlylow-rises in another. Old stock. Newstock. What kind of technology are wegoing to include in each of the offices?How large are the floor plates? All of thesefactors affect the design of the space.

What are some of the changes thatare occurring in law firm space plan-ning today?There are a lot of exciting changes occur-ring in law firm space planning.Historically, law firm office sizes were notstandardized. There’s been a lot of varia-tion, attorney to attorney. That’s changing.Now on a practice floor, there’s more of astandard size for partners, another forassociates. The goal really is to obtain flex-ibility. For example, two associate officesmay equal the size of a partner office. Thisplanning creates flexibility down the road,so firms don’t have to invest over and overagain in the same space. You see secretari-al stations becoming more teamed, moreclustered, so that secretaries can sharesome of the workload, and the printer, fax,and scanner equipment. File storage isbecoming more standardized. It’s 10 to 12to 15 files per attorney.

Is the need for file space decreasing?I don’t think we’re at the paperless stageyet. But I remain optimistic.

What about conference centers?Conference centers have become more uti-lized and practical. It makes sense to havea diary-controlled conference center ofmeeting rooms. It’s more efficient. It’s eas-ier to keep track of guests or clients of thefirm if they go to one reception area andthen are greeted or led to another location.It maintains the public vs. private space,confidentiality, and security. I also seeamenities changing, depending on a build-ing’s location in a specific city. Cafeteriasare becoming more attractive. Creatingopportunities for interaction like coffeebars or gathering spaces, fitness centers,and places for face-to-face interaction isbecoming important.

What other trends do you see?Technology has impacted space plan-ning—not to the point that real estate isshrinking, but real estate is being used indifferent ways now. Because of new tech-nology, our lawyers are really able to work24/7. Remote access increases flexibilitybecause people can retrieve documents viathe Web and intranets. Many conferencecenters in other law firms are wireless now.

Do you see technology develop-ments leading to more decentralizedlaw offices?Decentralization is happening for a fewreasons: flexibility, cost savings, and betterutilization. Case rooms are being groupedinto one area. Support operations arebeing moved to interior spaces or otherlocations to allow for attorney offices onthe perimeter of the building.

Could you comment on the chal-lenges that firm mergers present inreal estate planning?With mergers, the critical thing is to haveyour records in place and know what youhave—the critical dates, the square footage

of your space, and your occupancy andcapacity for the different offices. It’s notjust about how many people you have ineach office, it’s how many people youcould have. Then you start looking at onelocation and the other and comparing thetwo and looking at expiration dates ofleases and subleasing clauses in leases.That goes back to when I first came here.The first thing I wanted to take a look atwere my lease abstracts because that letsme know where my flexibility is.

It sounds like it is imperative to beproactive and prepared for everyeventuality.Exactly. Skadden has not been involved inmerger talks, but that kind of knowledgeabout where the firm stands relative to itsreal estate can be helpful on a lot of fronts.It takes time to put all the informationtogether, but it’s a good investment. Whatwe’ve done is to send our lease abstracts toeach of our office administrators in the dif-ferent cities. They understand theirobligations and their occupancy require-ments and what the landlord is supposedto provide to them and what they’re sup-posed to provide to the landlord. And,again, it just helps with the communica-tion and the relationship building becauseeverybody knows what’s expected.

What are the biggest challenges fac-ing law firms with space planning inthe future?I don’t have a crystal ball, so that’s difficultto say. But reacting to change and beingflexible has to be my answer. Real estate isnot a flexible asset, so it’s challenging tomaintain flexibility. But keeping up to datewith the law firm industry trends and realestate market cycles helps me to managethe Skadden real estate portfolio. My jobis never dull; in fact, it’s always very inter-esting and challenging. •

10

AT A GLANCE: Using online hosting serv-ices to store large document collectionscan be an efficient alternative to addingcostly storage capability to existing lawfirm infrastructure.

By Conrad J. Jacoby, Senior Consultant, Potomac Consulting Group, Arlington, VA

One consistent trend over the past 20 yearshas been the increasing size of the averagedocument production in litigation involv-ing one or more corporations. Manyfactors have contributed to this dramaticrise in discovery volume, though one pow-erful cause has been the flood of electronicmaterials—e-mail messages, PowerPointpresentations, spreadsheets, and other doc-uments—that might have been discardedafter review in the pre-electronic age whenstorage capacity was limited to linear feetin a file cabinet, not the number of plattersin a hard drive. Voluminous documentproductions add significant cost to litiga-tion matters, as these materials must bereviewed, often redacted, and readied forproduction with control numbers (i.e.,Bates numbers). These are significant,labor-intensive tasks.

Because a large document production canoverwhelm even an army of litigators,legal teams have increasingly turned todatabase indexes, digital images of hard-

copy materials, and “native format” elec-tronic versions of discovery documents togain better and faster insight into thesematerials. Unfortunately, while a largedocument collection today may no longerrequire a warehouse to hold all the boxesof paper, a single case’s storage require-ments may completely overwhelm a lawfirm’s existing equipment, requiring multi-ple additional servers to store all thematerial plus additional staff to maintainthe equipment and databases for that case.Though perhaps cheaper than rentingbuildings, hosting a digitally stored casecan still be expensive.

One alternative to adding costly serversand storage area networks to existing lawfirm infrastructure is to rent digital storagespace from one of many online hostingservices that have sprung up in the pastfew years. These companies, at least 50 ofwhich offer services to the U.S. legal mar-ket, host litigation documents—in imaged,“native” electronic, or a mixture of both

Conrad Jacoby is a senior consultant with the Potomac ConsultingGroup, where he focuses on developing effective strategies forcollecting and managing electronic discovery and helping clientseffectively use technology in their legal practices. He can be reached via e-mail at conrad.jacoby@potomac.com.

Using Online Services to Host

Litigation Docu

formats—on servers that they maintain ina remote location. Litigation team mem-bers then access the document collectionthrough an Internet browser or, less com-monly, client-server software. Hostingcompanies generally charge an initial set-up fee and a monthly service charge thatis based on the volume of the documentcollection and the number of users access-ing the material. In addition to servingdiscovery documents and databases, theseservices may also offer other features likegroup calendaring, collaborative online“meeting space,” a private, case-specific,e-mail messaging system, and the abilityto host deposition transcripts, pleadings,and other case-related materials.

Advantages

Hosting discovery documents on a third-party server can have clear advantages.Because a hosting service loads (andunloads) a significant amount of dataevery day, it has very efficient processesthat can make case-related data available

sooner than it would take to load andindex the data inside a law firm. Law firmIT departments also do not have to createspecial workstation configurations orinstall additional software because mosthosting services make documents availablethrough a Web browser (normallyMicrosoft® Internet Explorer®, though anincreasing number of services also supportMozilla Firefox). Internet-based accessalso means that documents are availablewhether a team member is in the office, onthe road, or part of a multi-law firm con-sortium spread across the country. Accessis also easily adjusted to reflect increasesand decreases in the size of a team, likethose that commonly occur during a docu-ment review project. Finally, hosting costsare easily quantified and passed through toa law firm client. This simplifies preparinginvoices and can reassure a client that thelaw firm is not trying to generate extra rev-enue through padded ancillary servicecharges.

11

continued on page 12

“[W]hile a large document

collection today may no longer

require a warehouse to hold all the

boxes of paper, a single case’s

storage requirements may

completely overwhelm a law

firm’s existing equipment.”

uments

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DisadvantagesThird-party document hosting is not with-out disadvantages, however. First,competing services each have differentinterfaces and commands. Like learningnew software programs, a lawyer or para-legal will need to learn how to use eachnew hosting service used by a law firm.Second, while online repositories offer rel-atively quick database access over ahigh-speed Internet connection, these serv-ices can be painfully slow if they areaccessed over a modem or other slow con-nection. Performance bottlenecks can beespecially noticeable when users reachbeyond a document database to accesslarge electronic files (like some PDF filesand Microsoft Excel spreadsheets) orTIFF-image documents. Printing, in partic-ular, can be so slow and sufficientlyproblematic that many online hosting serv-ices offer to print documents at their serverlocations and ship them overnight to liti-gation team members. Third, once ahosting vendor has been selected, it can bedifficult to move the document collectionto another service if problems arise.Fourth, although online hosting can be setup for much lower cost than creating astand-alone network from scratch, theseservices are not inexpensive. Particularly ifdocuments must be hosted for an extend-ed period of time (one or more years), itcan ultimately be more costly to host doc-uments externally than it is to load themon internal servers.

A special sensitivity for external hosting isthe physical location where the documentsare electronically stored. Though onlinehosting services permit hosted data to beaccessed from anywhere in the world, a lit-igation team must implement processes toensure that no protective orders or privacylaws are broken. Certain intellectual prop-erty materials are so sensitive that theycannot leave specific jurisdictions or coun-tries. In such circumstances, it is essentialto document where the physical serversholding the litigation data are located, andit may also be important to instruct litiga-tion team members that they should onlyaccess these materials from certain geo-graphic locations or computers. In mattersinvolving documents created in theEuropean Union, special attention must bepaid to make sure that the team complieswith the EU’s stringent privacy laws,which significantly restrict where certaindocuments containing personal informa-tion can be shipped or transmitted.

Suitability for Online HostingOnline litigation document repositoriesare particularly well suited for certaintypes of litigation matters and poorlymatched for others. Very large, short-termdocument reviews (like Federal TradeCommission “second requests”) are excel-lent candidates for external hosting. So aredocument reviews that involve multipleoffice locations, multiple law firms, or geo-graphically distant attorneys. Still anotherexcellent use may be for law firms that

have only limited internal litigation sup-port resources available, but still want totake advantage of modern documentreview and production technology. Casesless appropriate for online repositoriesmight include matters with only a smallnumber of discovery documents, matterswhere the legal team strongly prefers toconduct its document review and produc-tion exclusively in hard copy, and mattersthat have extended dormant periods inwhich no case development takes place(but during which the documents must stillbe hosted).

Ultimately, remote document hosting isonly one of several different solutions thatcan be applied to litigation-specific materi-als. Not every document review or legalmatter will be appropriate for these sys-tems, and legal teams should carefullyconsider the costs and benefits of out-sourcing—or retaining—control of theirdiscovery documents. Law firm clients,too, will be strongly interested in not onlythe monthly costs, but also the estimatedtotal hosting cost over the expected life ofthe litigation. In addition, no third-partydocument hosting situation should evertake place until both sides agree on howthese online materials will be archived ordiscarded at the end of the case. •

Using Online Services to Host Litigation Documents continued from page 11

“Very large, short-term document reviews are

excellent candidates for external hosting.”

Thomas Malone argues that a fundamental rev-olution parallel to the democratic revolution ingovernment is taking place now in business. Thisrevolution is being driven by the introduction ofnew information technologies that reduce thecost of communication and enable businessorganizations to become more decentralizedwithout giving up the benefits of bigness.

The amazing pattern that Malone sees both rev-olutions following first worked itself out in thesocial and political spheres. Before the inventionof agriculture and writing, humans lived ashunter-gatherers in small autonomous bands inwhich most decisions were made by most adultmembers of the band. They could only commu-nicate face-to-face, and communication amongbands was difficult and expensive. Agricultureand writing allowed people to live in larger,more hierarchical groups, and kings arose togovern them. These societies offered economicadvantages (economies of scale and specializa-tion of labor), along with a military advantage(superior numbers). Centralized societies hadcosts, however. Leaders kept much of the eco-nomic value created by the group forthemselves, and most members had to give upmuch of their individual autonomy.

The printing press reduced the cost of commu-nicating to large groups and encouraged a rapidexpansion of literacy, both of which were neces-sary for large-scale democracies to function.Better-informed citizens began to reclaim someof their autonomy, and states began to adoptdemocratic governments and decentralize polit-ical power.

Malone believes that the same pattern is repeat-ing itself in the organization of businesses. Untilabout 1800, most businesses were, like bands ofhunter-gatherers, small, autonomous familybusinesses. The declining cost of communica-tion, this time in the form of the railroad, the

telegraph, and the telephone, allowed businessto reach much bigger markets in order to profitfrom mass production. Top managers in centralheadquarters gathered information from largeareas and made better decisions by taking anational or global perspective. Now, new tech-nologies including e-mail, conference calls, andthe Internet are reducing communication costsagain, and firms are decentralizing by variousmeans, all requiring more back-and-forth com-munication. Businesses are spreading out alonga spectrum of decentralization, from centralizedhierarchies to loose hierarchies, to democracies,to markets.

Loose hierarchies are corporations that remainintact, but with power pushed down to lowerlevels. They are characterized by dense commu-nication up, down, and sideways that musttherefore be cheap, and by a relative, but notcomplete, lack of central control. They retain theefficiency advantages of large organizations, butavoid the inertia.

There are various ways of organizing corpora-tions as internal democracies, including pollingworkers, electing managers at various levels,and giving ownership interests to workers.Corporate democracies allow anyone to shareinformation with anyone else, and require every-one to abide by decisions once they are made.Their primary disadvantage is their relatively inef-ficient decision making.

Markets could replace large enterprises by tem-porary combinations of small companies andindependent contractors formed for specificprojects. These teams would come together onlywhen needed and include only the precise skillsand people needed for that project. For marketsto replace corporations as a primary organizingprinciple, we would need to find other ways toprovide the same security and benefits (e.g.,health insurance, pensions) that corporations

provide. Malone suggests that new organiza-tions, analogous to medieval guilds, may arisefor this purpose.

Alternatively, enterprises are finding ways tobring markets inside. Professionals in some com-panies act as internal freelancers. There areinternal markets where corporate units explicitlycharge each other for services or manufacturingcapacity.

For many businesses, then, the question iswhen, and what, to decentralize. Malone pointsout that some parts of the business can bedecentralized while others remain centralized,and gives rules of thumb for deciding when, andif, to decentralize.

Decentralized businesses need to give up the oldcommand-and-control model and move to anew one: coordinate-and-cultivate. A coordina-tor may act as a facilitator to help a group figureout shared goals for itself, rather than imposinggoals. The principles of cultivating peopleinclude harnessing their natural tendencies, let-ting them experiment, and encouragingcross-fertilization.

In the new, decentralized world of business, val-ues are important. They are, first, a guide tomaking sensible decisions. Businesses will needto appeal to more than just the economic valuesof employees, customers, and others. Once theirbasic needs are satisfied, people also want suchthings as a sense of meaning, a sense of accom-plishment, companionship, etc. In this newworld, each of us will have more freedom topursue our values, even if we work in for-profitbusiness. Indeed, we have more freedom evennow than we realize.

Book Review:

The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Lifeby Thomas W. Malone, Harvard Business School Press, 2004

Reviewed by John E. Duvall, Administrative Analyst, Hogan & Hartson L.L.P., Washington, D.C.

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