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Practice Innovations — Managing in a changing legal environment
Gray Rule
March 2017 | VOLUME 18, NUMBER 2
Gray Rule
A Case for Standards in the Legal Industry
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»AI in Law—It's Here, It's Coming
»The Agile Lawyer—Project Management that Really Delivers
»A Case for Standards in the Legal Industry
»Psychological Safety and the Qualities of Team Success
»Security Awareness Education for the Mobile Workforce
»Intelligent Innovation
»Law Firm Business Development Forecast: Looking Brighter
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A Case for Standards in the Legal IndustryBy Toby Brown, Chief Practice Management Officer, Perkins Coie LLP, Seattle, WA
The legal industry is struggling to evolve and find more efficient ways of operating. Industry standards will be an effective way to address portions of that need. A group, called Standards Advancement for the Legal Industry (SALI), is forming to develop these standards in such a way that will get broad participation and ultimately broad adoption. Their initial focus will be developing standard for - type of law. Learn what the key elements in good standards design are, and how developing a matter type standard will benefit the legal industry.

A number of organizations and individuals have come together to form a product definition standards effort for the legal industry. The group is named Standards Advancement for the Legal Industry (SALI).

The first question one might have is obvious: What is a standard? The second follows naturally: Why create standards? This article tackles these questions along with questions on how to best to achieve these goals.

What is a Standard?

Simply answered, a standard is an agreed upon approach for how a product or service is classified, categorized, or designed.

Why Create Them?

Industry standards have been around a very long time. Their purpose is to enable a more effective and efficient market for a product or service. A relatively simple example is that of electrical outlets. Years ago industry participants came together to establish common measurements, specifications, and materials for how electrical outlets are designed and built. Imagine if every outlet was different. We would need custom plugs for every electronic device we use to match every manufacturer's outlet style and size. For those who have traveled abroad, you may have already experienced the consequences of not having an international standard for outlets. Magnify that frustration by 100,000 and you have an idea of why a standard has value.

Standards come about when industry participants recognize that a there is no real competitive advantage to having a custom and unique design, instead realizing that the lack of a standard hinders the market, limiting adoption, innovation, and creativity. Standards have value for all participants in the market, from raw material companies, to manufacturers, to supply chains, and especially the ultimate consumers. The costs of consumer products would be dramatically higher absent multitudes of standards.

And it's not just manufacturing industries. Service industries have been in the standards game for quite some time too. One shining example is that of the Generally Accepted Accounting Principles (GAAP). Imagine if every company utilized different accounting practices. Attempts to value companies in a common, understood fashion would be much more complicated and expensive. Custom bookkeeping is obviously not a best practice for businesses.

Why Legal Standards?

The legal industry has had limited efforts and success around creating product standards. The best known example in place is the UTBMS Task Codes Set. These were created in a world of hourly billing so that invoice data could be easily exchanged between law firms and clients. The need to have one data exchange standard was obvious, since having a unique exchange protocol for every e-billing system was cost prohibitive and slowed adoption of e-billing systems. So a segment of the industry came together to agree on a standardized method for exchanging billing data. Since that standard was created, the legal market has experienced significant change, becoming more commercial and competitive, with buyers expecting more demonstration of value from their legal services providers. Simultaneously, hourly billing is slowly diminishing as a method of billing and engagement. This is putting demands on the billing data standard that it was not intended to serve.

We are working in an environment in need of standards that address the more sophisticated requirements of legal buyers as well as the service providers responding to those demands and their attempts to highlight their competitive differentiation. We need standards to enable the market to mature past one-off customized approaches for every engagement.

Where to start?

A logical starting place for most industry standards is defining products or services. This allows buyers and sellers to have a common basis for a more rational marketplace for pricing, selling, and delivering services. For the legal market this means describing service offerings in a common manner, or more specifically, agreeing on the definition of the various types of work lawyers provide. From a high level, this might include: Dispute Resolution (e.g. litigation), Transactional Services, Regulatory Offerings, and General Advice and Counsel.

Once this high-level is established, then sub-segments can be tackled. The group noted above recognized this need and moved to create a not only a standard, but a standards body for the legal industry.

What's in it for Buyers?

For clients, this new standard will allow them to better secure bids on work. Many times (absent standards) when clients put out requests for bids or proposals, the law firm replies are difficult to compare, since each firm bases its bid on their interpretation of the type of work. This is frustrating and counterproductive for clients. They typically have to go through a second cycle (and sometimes a third) to get all of the law firms bidding on the same definition of work.

What's in it for Sellers?

For law firms, defined types of work will allow them to produce more focused and effective bids for client work and do so with fewer resources. It will allow for an easier evaluation and decision on whether it makes business sense to respond to an RFP or bid in the first place. Going forward it will enable firms to better understand the costs for each type of service, allowing for more value-driven delivery approaches.

Who is driving this and Where are they?

The SALI group has met in person and via conference calls on a number of occasions over the last year and a half. The meetings initially addressed the value of creating a standard along with possible organizational structures. Later meetings began efforts to lay the foundation for a matter type standard.

The earlier effort began with a mix of law firm representatives, in-house client-side people, and technology providers. Recently a number of industry associations joined the effort which will help raise awareness and drive the successful adoption of the standards developed.

Best Practices for Standards Development

For a standard to have value, it must be broadly adopted in the market. Absent that adoption, it's not really an industry standard. And the best way to drive broad adoption is to have broad participation in its development. This is accomplished by having representation from key stakeholders around an industry. For the legal industry, this primarily means law firms, clients and those from the ecosystem offering supportive products and services. Most typically those in the last group will be the technology providers in the legal market.

Beyond these three primary stakeholders, a successful effort will need to include representatives from all around the legal ecosystem, such as associations, academics, consultants, government, and many others.

In order to bring this broad group together, the initial members formed the SALI entity. This will provide neutral ground for dialogs on the standard, and equally important, will provide an organization to own the process of developing standards and to maintain the intellectual property of the standards

IP Protections

A common barrier to standards development and adoption is the existence of intellectual property (IP). Think of our electrical outlets example. Prior to the development of the standard, a number of companies had patents on these ideas. These companies would not be willing to submit their protected ideas into a standard unless there was some protection for their IP. Otherwise competitors could steal their IP and use it to take market share. Or in the inverse, a company could provide IP, then demand licensing fees from anyone utilizing the standard.

So what is needed is an IP framework that allows participants to contribute IP in a safe environment. As well, once a standard is created, it becomes IP that also needs to be maintained. Having an entity in place to own and manage that IP is a best practice for these needs.

"Rules of the road" also need to be in place, for how standards are proposed, developed, and approved. Again, having a stand-alone entity provides the vehicle for this. Finally, that entity allows for long-term ownership and evolution of the standards. Once more think about our electrical outlet. The original standard had to evolve as technology and the market changed. For instance, they went from two prongs to three prongs. As such, any legal standards we develop will also need to evolve. The new entity will be positioned to own this role for the long term. As mentioned earlier, the entity will be called Standards Advancement for the Legal Industry (SALI).

Going Forward

This effort already has considerable support from industry associations, law firms, clients, and the vendors who support the legal market. The group has developed a sound strategy involving key stakeholders. The long-term view of this approach will also allow for adapting to the market as it evolves and for addressing other standards needs in the legal market. Watch for more information and movement from this group. For those interested in getting involved in the effort, send an email to info@sali.org.

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