Does Your Law Department Use Matter-Management Software?
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Few would dispute that for law departments of much size, it is a sound practice to make effective use of matter-management software (MMS). That genre of software is the most tailored for law departments and, other than company standard software, is likely to be the most widely installed. Essentially a highly specialized database system, MMS tracks information about matters handled and the fees of outside counsel. Stocked with many fields and functions, able to search and calculate, often integrated with other corporate systems, MMS stores and reports much of what takes place in a legal department's work. MMS is key to evidence-based decisions.

 

Starting in the early 1980s with INSLAW and CompInfo, many MMS vendors have marketed their products and services. Today, according to the General Counsel Metrics benchmark survey, which also collects MMS data, at least 25 vendors license one or more versions of their program to legal departments in the United States. Among the U.S. vendors, several support well more than a hundred legal departments, and some have been refining and extending their offerings for nearly two decades. The others have smaller user bases and a few are relative newcomers. Large companies such as Wolters Kluwer, Reed Elsevier Group and Thomson Reuters have recently acquired players in this niche. Even private-equity investors have turned their attention of late to the field.

By my estimates, somewhere between 1,500 and 2,300 U.S. law departments have licensed a matter-management system. In the General Counsel Metrics benchmark population, of the 209 U.S. and Canadian law departments with five or more lawyers, 55 percent have licensed MMS. Even with more than two decades of marketing, the significant penetration of law departments, the profusion of MMS packages available, and recommendations to use them, the majority of North American law departments of all sizes has not installed this software. Partly that is because small law departments, which predominate by numbers, barely need such capabilities and their expense. In fact, of 142 Canadian or American law departments in the General Counsel Metrics survey that have fewer than five lawyers, only 13 (9 percent) identified recognizable MMS. Partly the benefits of MMS have not impressed general counsel of small departments sufficiently.

Instead, those without MMS track their legal spending through the company's accounts-payable software or its general ledger system or through a combination of spreadsheets, word-processing documents, and off-the-shelf databases such as Access. In fact, the latest Association of Corporate Counsel/Serengeti survey found that 65 percent of the responding departments -- which tilt toward smaller law departments -- use internal spreadsheets and databases, 42 percent use web-based systems for matter management and electronic billing, and 15 percent use an internal matter-management system.

Another choice is to roll your own. Nine of the 209 North American law departments with five or more lawyers reported a custom system. It appears, therefore, that for something like every 20 law departments that have licensed a commercially available system, one department has written its own, usually backed up by corporate information technology, consultants, or a toolbox such as SharePoint. With all the available choices, to write your own matter-management system from scratch is questionable.

So, a general counsel can buy a package, make do with corporate standards, or create a bespoke system. But that is not the end of decisions. Other software addresses some of the same desires of general counsel to track and report on matters. E-billing systems started more than a decade ago, sometimes as stand-alone functions and sometimes as a module in MMS. They take invoices from law firms in specified formats -- the Legal Electronic Data Exchange Standard being the ubiquitous one -- and convert data into the MMS's fields. The merger of the two functions has now nearly finished. There are also contract management packages, intellectual property management systems, time-tracking software, and a variety of other technologies that some law departments have adopted in lieu of (or in addition to) a matter-management system.

The license fees departments pay to vendors for MMS vary significantly, generally in line with the size of the department. They range from low tens of thousands to hundreds of thousands of dollars. Annual maintenance fees thereafter tend to be between 15 and 20 percent of the initial license fee. Other costs include conversion of historical data, training time, perhaps some customization fees beyond what can be done by an adept administrator and corporate IT support charges. To capture all the costs, some people use the notion "total cost of ownership" over a specified period of time but it is a difficult number to pin down.

Benefits asserted for MMS consist primarily of the capability to know better what is happening and to project spending and work volumes -- to manage budgets and burdens, one could say. In-house counsel of some law departments may practice law differently and better because they have more information readily available through MMS, but for quite a few departments the software serves mostly to collect and report on legal fees paid. For departments of size and geographic spread, that is no trivial accomplishment. Still, as merely administrative plumbing, most of the potential advantages of a proficiently used MMS disappoint. Limited mostly to an accounting function, the MMS doesn't help spot trends, make workloads more efficient, generate performance metrics, or reduce outside counsel spend.

The hard savings from MMS generally come from the e-billing function, as that software can detect math errors, deviations from requirements in outside counsel guidelines, and duplicate invoices. Other touted savings have less tangibility.

The bloom on the rose of MMS is reporting. Of course, members of a law department have to conscientiously enter timely and correct data into the MMS for it to be able to produce meaningful reports. And all the wonderful data in the world matter little if you can't filter, organize, and output them effectively. How well and how easily the software can produce intelligible reports about spending by law firm, charge-backs to client groups, work by type of matters, and a range of other findings sets its value -- so long as the law department analyzes and applies those insights to make better decisions.

All MMS packages offer reporting capabilities, and most come with a set of canned reports that meet many department's basic needs, but some go beyond with graphics, tools, and analytical aids. Third-party report writers can supplement the capabilities of the underlying software. Business Objects has the most presence followed by Crystal, which Business Objects has acquired. Next by some estimates would be Cognos and Actuate.

An exciting development in the past year or so has been the mining by vendors of the data they process. The collective data on billing rates and matter loads and costs of services hold the promise of letting general counsel know more about their department's performance. The influx of figures and dashboards will enable a different level of benchmarking and decision-making than is now possible.

Those who have cloud-based products and permission from their clients can most easily aggregate the data of their users; vendors with products hosted on servers behind a company's firewall cannot as easily access the data. Over time, it seems likely that most law departments will gravitate to cloud-based products for their MMS. Updates are much easier, the aggregation of data can be handled expeditiously, there is little or no need for internal IT and their charge-backs, and support generally can be better. The security issues are steadily being resolved.

User groups and conferences of vendors help law departments learn how to make the best use of MMS. Additionally, along with internal IT staff, in the United States more than a dozen consulting groups claim experience with MMS and vie to provide services to law departments. Some help law departments retool their existing system to get more out of it. Otherwise, they help with selection, conversion of data from earlier systems or databases, tailoring the software to the department, customized functions, training, and all other aspects of decisions and implementation -- all are desirable game for consultants.

The common thread in this overview of matter-management systems is decisions. Three kinds of decisions, to be specific: (1) A general counsel or a technology committee of a law department needs to make a number of decisions if they contemplate new or improved software for matter management; (2) a law department needs to make a whole range of decisions about how to set up the MMS to fit as smoothly as possible with its needs, terminology, structure and ways of working; and (3) most promising, MMS should help a legal department make smarter management decisions: what types of matters take the most investment, which law firms are representing the company most effectively, how trends are shaping up -- essentially, how well the company's legal resources are being deployed.