UPS Means Business with Tech Requirements
Candidate firms that were not tech savvy did not survive the first rounds of the beauty contest. By Mark Voorhees
UNITED Parcel Service of America Inc. is in the business of keeping track of things. It delivers more than 12 million packages and letters a day with a fleet of more than 150,000 motor vehicles and 200 airplanes.
Lawyers are another story. The $25 billion, Atlanta-based company was having trouble communicating with and keeping track of its 170 outside firms. Often, lawyers would take wildly different approaches to similar problems, especially in labor and employment cases.
Earlier this year, UPS decided to try to do a better job of keeping track of and communicating with its outside lawyers. Technology will play a big role in how UPS and its lawyers stay in touch.
Over the summer, it selected 25 "core counsel" firms to handle its legal work. All of the firms had to demonstrate technical competency in order to get the work.
UPS invited 64 firms for interviews. The firms were free to bring whomever they wanted to the three- to four-hour interviews, but UPS insisted that a technical expert be on hand to answer questions. Bryan Brum, an in-house lawyer, said that 45 minutes to an hour of each interview was devoted to technology.
Some firms couldn't talk the talk. "It turned a lot of four-hour interviews into three-hour interviews," Mr. Brum says."
"They were far more active than most clients in wanting to know about our processing systems," says one outside counsel.
UPS, of course, is not the first firm to whittle its ranks of outside lawyers, wean them from hourly billing and wed them to technology. Wilmington, Del.'s E.I. du Pont de Nemours & Co. started its so-called convergence program back in 1991.
UPS' focus is slightly different. Its primary motive is not to force firms into cutting rates in return for higher volume. Many of UPS' firms are brand-name outfits: Los Angeles' Gibson, Dunn & Crutcher L.L.P.; San Francisco's Morrison & Foerster L.L.P.; Akin, Gump, Strauss, Hauer & Feld L.L.P.; and Atlanta's Alston & Bird L.L.P., among others.
UPS will ask firms to bill creatively, but "we believe most of our efficiency will come from greater communications," says Linda DiSantis, a vice president in UPS' legal department.
Alston & Bird, for example, won a place at the table partly because of an effective presentation on how, through Web technology, it could streamline the paper-heavy process of creating real estate investment trusts. "If you ever have seen the picture of a [real estate investment trust] closing, you'd have to question how many forests have died," Mr.Brum says.
UPS' technology platform within the legal department rests on four legs. The first is its matter management software, CompInfo Inc.'s LawPack. PricewaterhouseCoopers customized LawPack so that it takes much less time to analyze data. Mr. Brum, for example, can produce a regional breakdown of fees in labor cases in five minutes. "If you can't measure something, how can you manage it?" he asks.
The second leg is electronic invoicing. UPS has worked with Occam's Razor Technologies Inc., of Houston, to develop an invoicing system that eliminates the need for firms to convert their invoices to a particular format. UPS expects all of its outside firms to be submitting electronic invoices through the system by the end of the year. The company has also begun to market this invoicing system under the UPS Document Exchange.
The final two legs are an Intranet and an Extranet, secure Web sites for internal use and for use by outside counsel, respectively. UPS will not build the Extranet until next year. It will contain information that can be shared among firms, such as stock answers to interrogatories and summaries of legal memos. You'll have to go to UPS' main Web site to track packages, however.
Mark Voorhees is technology editor for American Lawyer Media Inc.