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April 2002
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The Quiet Revolution

By Monica Bay

The Quiet Revolution I HAVE stopped writing checks. I didn't even notice, it just happened. A few weeks ago, I realized that I now pay most of my bills online. I know I'm not alone. It's a trend that is worth examining, because it has significant ramifications for lawyers and law firms.

Ironically, the Sept. 11 terrorist attacks were triggers for the change in my consumer habits. (I also discovered Power Bars, but that's another story.)

I was already signed up for automatic payment of my mortgage, utility and insurance bills. But I was still paying credit card bills via mail. Then came the anthrax scares, and I lost confidence that the U.S.P.S. would get my Diner's Club payment to The Lakes, Nev., on time.

I'm always traveling, so I tend to procrastinate the task of paying bills. So I often would FedEx my payments, at about $12 a pop. Then came pay-by-phone, which ranged from free (Bank of America) to exorbitant (as much as $15 from some companies). When I balked at a high tab, an MBNA rep suggested I go online and pay for free.

I was leery, but what tempered my fears was PayPal Inc., a free online payment service which caught fire with eBay junkies about 18 months ago. It's an amazingly easy way to send and receive money online.

You set up a PayPal account with a credit card number or bank account number, and PayPal acts as a financial intermediary between buyers and sellers.

No more fears about giving out credit card numbers to strangers. PayPal, which just launched its I.P.O. in February (NASDAQ: PYPL), primarily makes its money on the float, and on merchant fees.

So I tried online credit card payments, and was hooked.

Flowers, Books & Health

How else has Web commerce snuck into my life?

Gifts. It's easy to pop to or and fulfill birthday obligations. (Plus, they offer United Mileage Plus miles.)

Ditto for books. (Amazon and Barnes & Nobles.) Now, I almost resent having to go to "real" stores.

' Like medical patients, clients now come armed with online research. '
But that's not all. I hit 50, and I discovered yet another Web tool: medical information. Like most baby boomers, my body creaks a bit more and there are all those tests. Forget about quality time with specialists in New York City. You're lucky to get five minutes (and my mom insists it's just as bad in the real world).

But at least, with the Internet, you've got ammunition. Now, I wouldn't dream of going to a doctor without first visiting the Web.


So what does this all mean for law? Just as consumers are using the Web for medicine, shopping and bill paying, they will use it for legal services.

And just as in medicine, the entire lawyer-client relationship is evolving. It means that your clients are changing their expectations of what they want from you, their counselors.

No longer will clients (be they individuals or giant corporations) be supplicant, and simply accept, at face value, what you present to them. Or pay, at face value, your invoice.

Like medical patients, clients now come to appointments armed with online research, increasingly expect you to present options, not just a single answer.

Whether it's a middle-aged couple arriving to draft wills, or a corporate counsel beauty contest, your clients are now armed with information, and they expect you to use technology to deliver their work product efficiently. They want a partnership, not a father who knows best.

The Billable Hour is Dead

Clients, large or small, will no longer accept the classic "for services rendered" invoice. Here's the hardest concept for many lawyers to accept: The billable hour will be dead within 10 years, maybe even five. And that's a good thing. For both clients and lawyers.

Clients also want value billing -- whether it's a flat fee for that will, or a bank's bidding contest for bulk rates for debt collection work.

Likewise, savvy lawyers recognize that practices based on billable hours stunt growth. After all, there are only 24 hours in a day, and to grow, they must think creatively and develop new revenue streams. Futurist Richard Susskind calls it "earning money while you sleep."

That means, in a nutshell, that lawyers are going to have to rethink how they make money, and look at ways to leverage and repurpose their work product -- their "intellectual capital."

That's where Internet commerce comes in. You simply must incorporate Web technology into your daily practice if you expect to thrive -- or even survive.

Whether it's as basic as using e-mail and setting up a firm Web site with driving instructions to your office, or as complex as offering corporate clients access to online collaboration with attorneys, Internet technology is going to transform legal practices.


Here are some examples:

* A rural Southern California solo told me she was exploring setting up a flat-fee will service. Clients would fill out an online questionnaire, her paralegals would draft the wills using templates. She'd review and tweak the final will --in minutes, not hours.

The service, she speculated, would be superior to "wills-in-a-box" products such as Inc.'s popular WillMaker software, because the wills would be reviewed, by an attorney, for often-subtle red flag issues. (A common complaint of state bars is that canned programs paralegals can miss important legal issues.)

And the service would benefit her constituency of clients (many of whom were rural, elderly and with restricted incomes) because it would be flat-fee and could be done even without a trip to an office. One advantage to the lawyer: Instead of a face-to-face client interview "on the clock" (even if conducted by a paralegal), the client enters most of the necessary data via the Web.

Many small firm lawyers say they simply cannot afford to take on small cases, because they can't make enough money.

But with Internet tools cutting down the time, and with flat billing, they can.

It becomes a win-win situation rather than a lose-lose prospect for clients and attorneys alike.

* Sacramento's Examen offers automated Web-based bill review services that target insurance companies and other large corporations, as well as sophisticated "matchmaking" services to help corporations engage attorneys.

* Linklaters & Alliance offers a subscription-based "Blue Flag," online research service, that allows clients to search a comprehensive database of securities and financial information. That's just a start.

* Law firms are spinning off tech-related offspring. At ABA Techshow, Seyfarth Shaw, announced plans to capitalize on its labor and employment expertise with Web-based training courses for corporations, on topics ranging from harassment to security. (See page 1.)

* Holland & Hart launched CaseShare Systems Inc., which develops technology tools for clients, such as Extranets.

CaseShare's C.E.O. John Tredennick compares the Internet to a train, that moves forward, slowly at first, and then getting faster all the time. "The smart ones will get on board and take a ride."

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