Feature

posted 18 Feb 2010 in Volume 12 Issue 8

Going paperless

It’s the end of the bi-fold as we know it (and we feel fine)

Fenwick & West LLP’s ‘paperless’ office project stands the law firm in good stead for advising clients on the most appropriate document management, retention/destruction and security policies for their own data stores.

By Robert D. Brownstone, law and technology director, and Matt Kesner, chief technology officer, Fenwick & West LLP

Ever since its inception in 1972, our law firm has had a high-tech client base and has represented a wide range of leading Silicon Valley companies.1 Over time the firm matured to the point where recovering lawyers were functioning as technologists and recovering technologists were practising as lawyers. This evolution made it inevitable that we would strive to achieve a paperless environment. We ‘went digital’ in three sequential yet overlapping phases:

Altering internal law firm processes/platforms;
Developing entirely electronic joint firm/client environments (extranets); and
Working with clients and advising them as to their own respective electronic information management (EIM) environments.

While we are most, but not all, of the way up this hill, we have faced, and continue to address, standard challenges familiar to law firms of all shapes and sizes. This summary of our story will hopefully help your own firm get further along this road towards fullly-fledged electronic information. There are still piles of paper decorating our office. However, our firm and clients have directly benefited from our development of an approach in which most operational data is now never printed.

Convincing and co-opting internal processes

The 3 Es

When we make major changes at the firm we follow the ‘Three Es’ 2 theory. First, we establish policy goals and write the policies. Second, we educate employees about the policies, the underlying goals and the means of achieving them. Third, we enforce the policies as consistently as possible.

Only with these three Es in place do we focus our colleagues on technology. Technology is only an implementation mechanism. It is not a magic bullet. In fact, we do not believe that business process changes can be successful when sold in the guise of a software or hardware roll-out. It is only when you engage with colleagues in frank communications about the policies and reasons for them that you can achieve a change in behavior.

Establish

When we set policy goals, we intentionally avoided referring to a reduction or elimination of paper. Instead we focused on positive goals.
At our firm, we aimed for:

Better collaboration inside and outside the firm;
Reduction of onerous paper-pushing;
Adoption of use of digital formats wherever possible (thus making printed versions less useful); and
Creation of more ‘stickiness’ with clients via low-cost, user-friendly online systems.

Educate

As to the educational aspects of our work, we focused on skills building, upgrading jobs and treating our colleagues as grown ups. We have not taught ‘shalls’ and ‘shall nots’. Instead we have analysed various jobs and tasks, and eliminated many repetitive, mundane duties entailing older paper-based processes. Even before the advent of social networking and Web 2.0 we realised that each of our colleagues needed to be trained as a records manager. Teaching why certain kinds of records need to be kept, and others can be discarded, has proved to be a valuable investment.

Enforce

Careful readers will notice that we have not mentioned technology or automation to this point. Our experience has taught us that there is no new software or hardware tool that will solve the information-management problem. Again, only after colleagues understand the additional utility of digital records do questions of technologies arise.

Grappling with the paper piles: past, present and future

Going paperless entails its own three-pronged approach, namely tackling past/existing paper; present documents generated in-house; and future documents to be received from the outside.

Past

As to the past, first consider disposition of all old paper documents stored onsite and offsite in boxes that are unlabeled and/or have not been retrieved or looked at for years. Then, for boxes that are labeled, and/or whose contents are described in indexes, dispose of all those that reflect neither a legally-imposed retention need nor a current business purpose.

Many paperless projects fail at this stage. It is often overwhelming to think about the disposition of years of paper. Moreover, in any given organisation there are likely to be a number of people who define their jobs based on handling that paper. Therefore we often recommend that an internal firm department or an outside client mired at this step skips it, at least for the time being. Many of our clients have succeeded by addressing current and future procedures. When those vested in the old systems see the new opportunities that these projects bring, they are often much more accepting of change to the old systems. In fact, many of those initially reluctant become active agents for, and proponents of, change.

Present

As to the present, assess the workflows of all documents and information (letters, invoices, receipts, and so on) created within, and/or disseminated by your firm. Wherever possible, shift to electronic methods of creation, transmission and retention.

Then, as to the future, namely all incoming documents and information, wherever possible get buy-in on electronic transmission. For items that must arrive in paper form, develop – and train on – a scanning/imaging protocol.

Some suggested best practices might include only keeping the ‘original’ paper longer than a designated short period if legally necessary; making sure a replicated set of all firm and client ESI is kept backed up in a distinct physical location on an ongoing basis; optical character recognition (OCR) of all scanned text documents; and scanning in colour documents containing colour signatures and/or other colour contents. Ideally, any established protocol should also be committed to writing, with accompanying ‘how tos’. Avoid any, or too many, compromises in developing and training on your scanning protocol. Individuals can always print to paper a personal use copy and then discard it, but the default method of transmission should be to post one ‘original’ centrally-stored copy of each scanned document and to send the recipients a link to a spot on the intranet or on a shared network drive.

Digital and ethical factors

Many senior lawyers cling to an innate belief that paper files are sacrosanct. Usually these learned people can be swayed with two arguments, however: one practical, the other legal.

First, the truth is that most of what comprised paper files 20 years ago now only lives in electronic systems. Your IT leaders can provide some very convincing statistics that the vast majority of any modern law firm’s records only exist on e-mail, document management, intranets and extranets.

Second, ethical rules have evolved throughout this decade to generate principles supporting paperless record keeping. Electronic file repositories have been green-lighted – assuming “reasonable care” is used – by many state bar and bar association ethics opinions throughout this decade.3 So has routinised maintenance of client-matter files in all-electronic form, including disposing of hard copies after scanning/imaging them.4 Some states’ ethics opinions have gone even further, by endorsing client expectations of a right to receive e-mails, word processing documents and all other ESI from a law firm upon matter-closure.5

Use of the so-called ‘cloud’ has apparently not yet been addressed by name. Yet presumably the same ethical imprimaturs apply, assuming that steps are taken to maintain attorney-client privilege.

Extranets

Cajoling, convincing and showing respect to colleagues did yield some positive results for our firm. Frankly, however, client demand and appreciation were much more persuasive. Some nine years ago we began using extranets – secure file shares available via the internet – with our clients. Initially we only used these extranets for a few clients on discrete projects. Gradually we began offering them to most clients. As we gained experience and made them easier to use, clients commented that these sites were extremely useful. They not only lowered the transaction costs of working with us, but also increased the actual and perceived speed of our collaboration. Our clients began to comment that instant access to well-organised collections of their data was highly appreciated. We also found that the more data we shared, the better the client perception.

We call our current extranets ‘ShareRooms’. Each ShareRoom is a single searchable set of folders that contains everything important for the handling of a client matter. The ShareRooms are secure, offering varied levels of access rights for respective categories of participants. They also make it possible to conduct asynchronous workflow without the need for a face-to-face meeting or any other direct, real-time communication. Clients have commented that these attributes provide them with increased participation in the process and help to negate typical geographical limitations.

In addition to the benefits for clients, our lawyers and staff quickly realised that posting information and documents to ShareRooms would reduce and sometimes eliminate e-mail, fax and telephone requests. We have now customized ShareRoom templates specifically for litigation, corporate M&A, corporate securities, patent, trademark and tax work. With many of these ShareRoom templates we have aggregated data from a variety of internal and external systems, and these factors have made the ShareRooms a true ‘win win’. To extend their utility further, we are today experimenting with new iterations of ShareRooms, with dashboards, calendars, real-time billing information and threaded discussions.

A majority of law firms outsource the provision and management of their extranets to application service providers (ASPs). Outsourcing is by no means a necessity, however, and firms that are able to bring this function in-house gain greater control over features and the ability to reduce client costs. Firms that manage the process in-house simply cut an additional third-party vendor out of the picture. As the firm’s business is its legal advice, it can essentially price its extranet at, or very close to, cost with little impact on its usual model.

Fenwick & West went out on a limb a number of years ago, and ever since then it has generated and administered its own extranet platform. Although developing in-house extranet expertise6 took some significant initial resource commitment, the positive consequences for corporate deals have included:

The ability to customise ShareRooms to fit the contours of particular deals;
Reuse of popular, deal-tested ‘template’ folder sets to avoid reinventing the wheel;
Increased – and upbeat – collaboration between lawyers and IT staff within the firm;
In the mergers and acquisition (M&A) setting, significant time reduction between the target’s document collection and the analysis of pertinent information; and
Ultimately, ‘stickiness’, with pleased clients, who return for additional efficiently managed deals.7

Whether an in-house or ASP solution is employed, as much information as possible should ideally be gathered in native electronic formats rather than paper form. However, there are some factors in the trenches that still militate toward the continued vestigial reliance on paper, namely:

Many organisations do not have paperless or electronic-signature regimes in place. Thus, many lawyers, paralegals and others worry that they are not getting the final drafts of pertinent documents unless they obtain a hard copy that includes a physical signature page;
People are creatures of habit and have become used to printing, then scanning, then converting to searchable text via OCR software and then coding, even though those steps add much time and expense to the process. Still, the current state of the art – often a ‘semi-high-tech’ approach – is an improvement on the old days.

The client environment

As we improved management of our own evolving electronic-records processes, we became aware that clients were grappling with similar issues. We found ourselves fielding these questions throughout our practice areas. So we formed an Electronic Information Management (EIM) group comprised of lawyers with a technology bent who can provide formal and informal advice to clients.

We advise clients on legally compliant and technologically sound methods of retention, preservation and destruction of electronic information. We prepare retention/destruction policies and implementation protocols. Where such policies and protocols are already in place or in development, we consult by providing additional perspectives, including urging laptop encryption and installation of metadata-scrubbing software. We also advise as to additional information security and EIM obligations imposed by the ever-changing legal rules and addressable by the most cutting-edge technologies.

Finally, we provide two additional client offerings that tend to save our clients money and time:

Data collection and analysis

For due diligence on corporate transactions and eDiscovery in litigations, we enable clients to reduce the cost of working with our lawyers. We use a unique set of software tools to collect, process and review data very quickly. We understand that paying lawyers to review mountains of duplicative or irrelevant data is too costly. Thus, we only collect the necessary data and then apply automated de-duplication processes before turning loose lawyers or reviewers. Our methods typically reduce the volume of reviewed data by a factor of 10 to 100, thus driving down client costs by more than 20 per cent. We also often scale our efforts to handle the largest of matters, including one with an online database of more than 180 million pages.

Investigation

Our EIM group includes a practice-support team that conducts in-depth investigations of computer data and data systems. The team, comprised in part of technologists trained in computer forensics, has supported our lawyers in more than 100 matters involving the Securities and Exchange Commission, Department of Justice, IRS, the Attorney General of the State of New York, as well as hundreds of litigations in the Federal and state courts.

Our firm has invested in a digital environment that is paying dividends in terms of more efficient and less costly services for clients. We have carefully evolved from better internal policies and practices to ShareRoom extranets to a practice group, built to answer questions about clients’ own compliance, eDiscovery and digital record-keeping efforts. The experience has been rewarding in that clients regularly tell us we are providing a more timely service that is also more efficient. We have nearly achieved the mythical paperless office during our journey. Along the way, more and more colleagues have joined us on our trailblazing path to 21st Century digital law practice.

References

1. http://www.fenwick.com/fenwickfocus/1.1.0.asp;

2. Dunn, D., ‘Email is Exhibit A’, Information Week, 8 May, 2006);

3. See, e.g., these ethics opinions respectively addressing online matter files, outsourced electronic information storage and online repositories of digitized matter files: Arizona State Bar Committee on Rules of Prof. Conduct, Ethics Op. 05-04 (July 5, 2005); State Bar of Nevada Standing Committee on Ethics and Professional Responsibility, Formal Op. No. 33 (Feb. 9, 2006); N.J. Sup. Ct. Advisory Comm. on Professional Ethics, Op. 701 (Apr. 24, 2006);

4. See, e.g., Adv. Comm. of Sup. Ct. of Mo. Formal Op. 127, ‘Scanning Client Files’, (May 19, 2009) (citing Mo. R.P.C. Rule 4-1.15(j));

5. See Cal. State Bar, Standing Comm. on Prof’l Responsibility & Conduct (COPRAC) Formal Op. No. 2007-174 (Aug. 2007). See also Robert D. Brownstone and Gideon Grunfeld, ‘Saying Goodbye Just Got More Expensive; Complying With New Ethics Opinion Regarding Returning Electronic Data to Client at End of Representation’, 29 The Bottom Line, No. 2 (Feb. 2008);

6. Useful jumping off points are in the following articles: Gerow., M.,, ‘Simplify Project Management With SharePoint’, Law Technology News (April 2008); Gerow, M., Marshaling Firm Resources With SharePoint; ‘How to integrate Microsoft Office SharePoint Server 2007 with legal line of business applications’, Law Technology News (January 2008); Gerow, M., ‘Implementing large-Scale Extranets’, Law Technology News (November 2007);

7. See generally Robert D. Brownstone and Todd Gregorian, ‘Information Management for Mergers & Acquisitions – Data Wrangling, Lassoing and Roping at the M&A Corra’l, VC Experts Inc.’s Encyclopedia of Private Equity and Venture Capital (May 2009);

Robert Brownstone, an attorney for 23 years, is the law and technology director at Fenwick & West LLP, and has been in several hybrid lawyer and IT roles at the firm since 2000. Matt Kesner, formerly an experienced trial lawyer and partner-in-charge at other law firms, has been chief technology officer at Fenwick & West LLP since 1998. Contact information, full biographies and extensive bibliographies are available at: fenwick.com/attorneys/4.2.1.asp?aid=544 and fenwick.com/attorneys/
4.2.1.asp?aid=734