Tech Audit

The Expense of the New

Why Is Technology Costly? Because It’s Worth It

Posted Aug 1, 2004 5:21 PM CDT
By David Beckman and David Hirsch

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A core precept of this column is that technology in the legal system makes things better. It improves the administration of justice. It speeds the legal process. It facilitates better legal product. It provides peace of mind to lawyers. It improves income.

Then a lawyer tells us: “I find it amazing that in this time of elec­tronic wonder, overheads are rising instead of dropping. It tells me that lawyers still have not lev­eraged the power of technology. I suspect that most lawyers use com­puters as glorified word processors and are realizing little, if any, savings due to auto­mation.”

That lawyer may be correct regarding how most lawyers use computers, but many are actually quite innovative with technology. But it’s filled with unintended consequences. The greatest cost of technology is assimilating it and understanding how to use it.

Is it reasonable to expect technology to help the firm’s budget by cutting costs? A strong argument can be made that technology does not lower overhead, but may actually increase overhead both in the short and long runs.

If, for instance, overnight, over­head were somehow cut in half because of technology, com­peti­tive pressure would compel us to pass the savings along to clients by, perhaps, cutting fees or doing more work for the same price.

Technology is an expense, a pure expense. And it is an expense that largely did not exist 30 years ago. On top of that, it is the worst kind of expense: It is recurring because of the built-in obsolescence of both hardware and software.

Most of the other expenses of a law office are still there. True, lawyers don’t spend as much on books, but a rough­ly equivalent amount is spent on electronic research. A technologically efficient law firm does not need as many secretaries. But guess what? If you are a small firm of three lawyers (like us), you almost have to have three bodies for support staff or you cannot handle vacations, sickness, peak periods, etc.

Furthermore, even if you have fewer secretaries, it is harder to find good hires for two reasons:

• First, secretaries must be smarter in firms that actively incorporate technology. Raw secretarial skills, like typing speed, are much less important in a law office properly using technology. The ability to think is far more important.

• Second, finding secretaries who can think is harder now than it was 30 years ago. Not so much because of demand but because of supply. Fewer thinking people become secretaries because thinking people have many better work opportunities.

The solution ultimately will be higher pay for support staff. More overhead.

A TOOL WITH CAVEATS

Here’s another problem: to be used properly, technology requires proactive problem-solv­ing, absolutely unselfish sharing of information and no turf battles. This runs counter to the traditional law office political setup.

Even success is not a solution. There is the side effect of increased work output ultimately increasing staff need, even if on a different level.

Technology is not a panacea. It is a tool. Certainly, many computer programs are horrible. As a result, many firms are beat before they start. But let’s assume the existence of perfect programs. What is the effect of introducing technology?

If you want to use technology right, you must reinvent your practice. Why? Because inserting technology into a law firm is no different than inserting a diploma into a law graduate’s hand. It doesn’t make a real lawyer. Real lawyers must go into the real world, meet with real clients who have real disputes, then go into real courtrooms and try real cases. The knowledge picked up in law school is just a tool (mainly a language and a log­ic). It’s up to you to figure out how to use the tool. That largely involves relearning everything from a different view.

The same is true with technology. Like a diploma, technology is necessary, but additional learning and experience are needed to use it skillfully.

DISPOSABLE LEARNING CURVE

It takes time and patience to re­invent one’s practice. But how can one do with technology what may take decades to do with a law degree—that is, learn how to practice? It’s not easy when machines are thrown away after five years and programs are dis- carded in three years. Learning is best when it is cumulative, not when it must be thrown away.

But this problem should fade as the old generation retires and new generations more comfortable with technology are able to learn the practice at the same time they assimilate tech­nology.

Technology is an essential tool, just as important to a lawyer as a law degree. The economics of the problem is complex, and (like economics tends to be), sometimes counterintuitive.

Don’t be afraid to spend. Expense is required. But acquire technology carefully and thoughtfully. Don’t bite off too much at a time. Be patient. Have low expectations but require constant progress.

Remember that technology itself is not a solution. Take responsibility for what you acquire. Make sure you will productively use the tools you buy.

And as your work product begins to improve, pay attention to your hour­ly rates. Know your worth and charge for it.

David Beckman and David Hirsch practice in the law firm of Beckman & Hirsch in Burlington, Iowa. Contact Beckman by e-mail at ddb@iowalaw.com or Hirsch at david@iowalaw.com.

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