In these earlier posts Time to visit the legal sausage factory - Questions for clients to ask their lawyers in 2017,  The legal sausage factory - will lawyers show clients how they make their sausages? and Technology in the legal sausage factory - what is it, and who does it benefit?  we suggested that if clients want to see improvements in the value they get from their law firms, they need to be more assertive and find out how their law firms currently work.  To do that, they will have to ask some harder questions than they have to date. A similar approach is also suggested by Jacob Herstek, vice president and senior legal counsel at HSBC Bank USA in this article To Cut E-Discovery Costs, Legal Departments Question Outside Counsel.  

We have come up with 13 questions that lawyers could ask their law firms to work out if they are modern and efficient, or are a legal 'sausage factory'.

The first questions we suggested asking have been:

1. Can you show us how you actually work?
2. What technology have you already adopted for our benefit?
3. What technology will you adopt for our benefit?
4. How do you keep our information secure?

Next we suggest you focus on precedents.  Do they even have any?  Do they use them? Is your law firm making its sausages from a recipie or are they just sweeping together whatever they can find on the day to get something out the door?

5   Can you show us your precedents? If you have any, how often are they used? When were they last updated? Are they automated? Who is responsible for updating them?

I’m a precedents guy. I hate making mistakes, don’t like to miss anything, and always want to do the best job I possibly can in the circumstances.

I also hated working in the evening or on weekends on things that took longer to do than they should – whether I was able to recover for my time or not. As a result I spent a lot of time trying to develop precedents and automate them.

However that is uncommon amongst lawyers. As long as they are able to recover their time on a job, most of them don’t mind so much whether they are taking longer than they should. It all goes into this year’s profit distribution. Many have also become accustomed to the long hours and don’t mind doing whatever it takes to get the job done.

As a result, when I talk to lawyers in firms about their precedents, many are surprisingly frank about either not having them, or that they don’t maintain and use them. This is so for small firms in particular, but also surprisingly common from people who work in the larger firms. The partners of one smaller firm told me recently that they’ve thought about it on and off for 10 years, but “it’s just never seemed worth the effort”. Another said that they will often just look for a similar transaction with a “big” firm on the other side, and use that document as a start point. That's quite risk, as even in the larger firms the drafting for one transaction will frequently start from the documents from the last one they worked on (whether it was their firm’s document or not) because they’re familiar with it. Not exactly six sigma stuff!

I know that many law firms have very good precedents in particular areas that they mainly focus on – which is entirely logical. Some of the precedents we review for automation are very well drafted, and there is little we can suggest to improve them beyond automation.  However, I would be surprised if there are many firms – if any - who have great precedents across all areas they work in.

Now that document automation is becoming mainstream and easily available, firms should be taking their precedents to the next level so that highly customised drafts can be prepared much more quickly – in minutes rather than hours.  It's easy, fast and very cost effective to have precedents automated - particularly those that are already well maintained. However many firms remain completely unaware of document automation, while others have not looked at it recently and have outdated ideas about what it is, how it works, and the complexity it can handle. There are many videos on the LawHawk website demonstrating how it can work in practice, but because it can be completely customised to a particular organisation, these are only indications of how it could be applied by a particular law firm or client to suit their specific requirements.

I have heard stories about lawyers trying to charge clients extreme sums for the development of "their own" precedents. In one recent case, I was told that a law firm had quoted $40,000 to develop a subcontracting precedent for a client. I said I thought that was a rip off for that type of document and that if the firm had any expertise and existing precedents in that area at all (which they claimed they did) they should be able to provide something for about $5,000, and if they wouldn’t, someone else would. The value in that case is not in the document itself, but in the ongoing relationship and applying the lawyers' knowledge to the client's circumstances each time. The client went back to the firm and said they had been told it should only cost $5,000. What price do you think the firm agreed they could do it for?

I’m not suggesting that every law firm should have its own first class automated precedents across all its areas of work. That would be unrealistic and a poor use of the firm’s resources. There are other options.  One of the reasons we set up LawHawk was so that law firms could have options to use great precedents, with built in automation and regular updates, on a small per-use charge basis. This would free them up to focus on developing precedents and business in a smaller range of areas where they really do have distinctive expertise.  The big legal publishers and ADLS also offer precedents, though at higher cost without the same level of automation.

Some lawyers appear worried that clients will think less of them if they are not using "their own" documents.  I wonder if that is just more "firm-centric" thinking though.  I think clients will care more about the overall service, outcomes and value the firm provides, rather than the documents they start with.

If you are thinking of giving your lawyers work in a particular area, consider asking for proof that they use good precedents in that area, and which will allow them to do high quality work, really efficiently and with minimal risk of error. I know that some firms have put a lot of effort into key areas of their practice and have some very good documents and systems.  It should be easy for them to show you, and those who have made the effort should be only too happy to do it.

If the firm does not currently have control over this area, it could be easier than they think to get it fixed. One New Zealand business which has been established to help law firms get a handle on their precedents – managing what they have, when they were updated, and how often they are being used – is Order of Precedents.

We will set out further questions in this blog over coming weeks.  If you would like access to all 13 questions now, please download this PDF ebook now.