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November 2000
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Intranets & Extranets

The Next Magic Bullet?

By Jon Klemens

The Next Magic Bullet? FEW CLIENT-oriented law firms will dispute the value of the latest client Extranets technology. The ability to interact with clients in a secure environment, to share and review documents, e-mail, legal strategies, evidence, and case status collaboratively offers the promise of unprecedented client service, while being highly cost effective. Incorporate law department beauty contests for new legal services, the desired capability has now become a standard request.

Recent presentations of case studies at Legal Tech and the Legal Marketers Association by several major law firms cited the advantage of their real, operating (as opposed to planned) client Extranet technology as decisive factors in winning new business.

Firms such as Morgan, Lewis & Bockius; Akin, Gump, Strauss, Hauer & Feld; Brobeck Phleger & Harrison; and Baker & McKenzie report using client Extranets on a significant scale with success. Undoubtedly, these early-adopters have found the technology to be an important differentiation factor in competing for new services. But, as with most early adopters, they will blaze the trail for the rest of the legal market as the new players and services shake out, incurring the costs, technology mistakes and administrative costs associated with what is still an evolving market.

Ironically, as further indication of the price paid for their pioneering, the very corporate clients who drove them to use new Extranets are now complaining of "Extranet overload," having to interface with and learn the disparate techniques, nuances and systems being employed by multiple outside counsel as usage proliferates. The law department of one such Fortune 50 multinational reportedly is frustrated in having to deal with more than 20 different Extranet technologies employed by their various outside firms.

LAN Integration?

What to do, and more importantly, whither goes the market? Perhaps there are lessons to be learned from the past. In can be argued that current client Extranet systems, software and related service companies are at a development stage very similar to that of local area network (LAN) software and systems integrators in the early 1980s. Specifically, standard approaches, operating platforms, and application functionality have yet to be determined.

Several venture capital-funded start up companies (think back to Novell, Macintosh and NeXT, AmiPro, Softsolutions, PCDocs, yes, even WordPerfect) took the early technology lead and gained market share, but over a longer term were unable to build on and sustain these advantages.

Today's originators of the new Web-based software technique offer the leading products and technologies, with implementation and management being made available from a number of independent systems integration sources.

Just like then, the prospects for these new economy Extranet companies are bright, but hard to predict.

Given the nature of client and law firm feature and function demands, today's Extranet systems can be expected to "leap-frog" each other for the foreseeable future until a limited number of winners (i.e. survivors) are left to create market driven standards that everyone accepts.

At which time, it's not to hard to envision, a major applications and operating systems company biting the bullet and acquiring one of the leading Extranet players or building its' own comparable version, subsuming best of breed Extranet functionality into its browser, ASP and/or Web-server operating system offering.

Sound like a familiar outcome? Quite possibly, but we get ahead of ourselves.


In light of this possible outcome, it should be helpful to understand the different approaches available from today's Extranet offerings. Though the market is evolving as we speak, most of the major players can be placed in three main categories: 1) generic, Web-hosted systems and services; 2) site-licensed systems; and 3) practice-specific systems.

Web-hosted systems offer Extranet services that are outsourced and maintained by a third party, either pre-paying or on a "pay as you go" basis. Typically, per seat or per Extranet pricing under these scenarios with range from $100 to $350 per year, depending on the number you agree to buy in advance.

These systems tend to be more generic in functionality, warrant a high degree of security and limit internal staff and resources required for operation. Leading vendors of such systems include eRooms (both directly and through re-sellers agreements with LexisOne and West Legal Directory), IntraLinks, Niku, and QuickPlace.

Site-licensed systems can be purchased directly by firms, often using the same software from the vendors cited above. Under this scenario, the Extranet software is licensed annually, and installed and maintained by in-house technical staff. So far, these licenses have been offered on an unlimited user or seat basis, ranging in price from $125,000 to $200,000 per year. A 10 percent to 20 percent recurring maintenance fee is typically incurred each year thereafter.

Obviously, the cost of Web-server hardware and software, along with communications cost must also be factored into this category. Scalability for unlimited users is also an obvious consideration for law firm choosing to do it themselves. The leading sellers of site-licensed systems are Niku, eRooms (direct and possibly thru a site-license exclusive with Lexis, using its PlumTree linking and navigation environment), IntraLinks and QuickPlace. As of this writing, QuickPlace and IntraLinks both will require you to implement Lotus Domino technologies and servers if the systems are brought in-house.

The best example of practice-specific Extranet technology is Lextranet, a Boston-based start-up company. (See page 60). For the last two years, Lextranet has been quietly developing and implementing Extranet technology for joint use by corporate and outside litigation counsel in large scale, complex litigation matters.

It reportedly has been used in more than 50 large scale complex matters, and as one would expect, offers a full array of case management, evidence and imaging, collaboration, document management, and on-line deposition functions.

The company offers consulting and implementation in support of its' site-license sofware, which is mostly installed on a project by project basis, bringing the typical litigation project cost in excess of several hundred thousand dollars.

As other examples of practice-specific Extranets, the author is aware of private and commercial systems under development or in use for securities transactions, intellectual property, mergers and acquisition, international tax and consumer/small business transactions (the latter scheduled to operate almost as a new age service bureau for solos and small firms).

Buying Considerations

At present, initial exposure to client Extranet services will result in a host of "next generation" feature questions to consider. It can be expected that these functions will serve as the battleground in the near term, as vendor and developers seek to meet the ever-increasing demands of their customers.

Most of the current suppliers don't yet offer or haven't yet figured out a standard approach to providing the important functionality listed below. Specific features and functions to ask for include:

  • What API's or tool sets exist to integrate your firm's content, processesor substantive practice systems into the Extranet platform?

  • What levels of security and redundancy exist in the Extranet configuration, particularly if it is to be outsourced? Are back-upped, recoverable systems offered in the event primary systems fail?

  • How does the Extranet integrate with the firm and the firm's clients' document management systems?

  • What tools or reporting systems exist to track case status, to do lists, or more detailed case management functions? Are they integrated or linked?

  • Are there performance limits as to how many users can collaborate on one Extranet simultaneously?

  • Are any additional license fees for add-on or integrated applications required in the event the Extranet scales quickly?

  • How are firm or transaction-specific systems and content such as document assembly, case management, brief banks or checklists maintained in the


Given, these options and knowing that in some cases law firms being dictated to by clients will not have a choice, what strategic and operational considerations law firms and departments should be considered in choosing an Extranet.

The nature of the client request or market opportunity being sought should be of paramount importance -- in other words, figure out the end game before deciding on the features of the tool be used.

Secondly, unless a large scale, opportunity exists, it is probably best to consider an outsourced, "pay as you go" model to save money and to gain experience with the new technology.

If, on the other hand, site licensing is justified, make sure a thorough analysis of the internal technical management, hardware, communications, set-up and maintenance costs is completed. Unanticipated increased usage and scalability issues could turn your IT department into it's own little


Perhaps, most importantly, in order to avoid the highly customized, self-perpetuating characteristics (and costs) that resulted from many of the LAN integration projects left over from the 80s and 90s, do your best to seek out a company and Web-service provider that is sound financially and has demonstrated integration or hosting expertise in more than just a handful of accounts. Finally, if you need a system to handle large scale, complex litigation matters, use Lextranet as your benchmark.

Foregone Conclusion

Like it or not, every law firm of any size or sophistication will have some form of a client Extranet in the foreseeable future. Fortunately, there are multiple options in today's market that will allow firms to experiment with as little or as much capability as it needs to meet its strategic objectives.

Hopefully, over the longer term, a client Extranet software and services market will evolve that uses standardized tools from succesful, stable companies, making the clients happier while limiting the technical and financial resources required of law firms to implement them.

Until that time, it is probably more prudent to select generic, flexible Extranet tools from brand name providers, while limiting development of highly proprietary, firm-customized platforms that your clients may end up resenting in the long run.

Jon Klemens is president of First Renaissance Ventures an investment advisory and consulting firm based in Radnor, Pa.

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