Online services can be a huge boon or a disaster for law firms, as recent developments have shown. Either way, however, their rise is inevitable, writes Grania Langdon-Down
The drive towards increasing use of online legal services and products seems unstoppable. But while some take flight, with 4,500 signing up for the Law Societys online library in the first two months, others can fall spectacularly.
The Legal Services Commission (LSC)s e-business service was launched on 5 November last year. A day later it won the Civil Service Technology Award 2007. Two weeks after that a new, improved version of it was suspended due to technical problems and the system is going to cost £2.7 million to fix (see  Gazette, 20 March, p 1), prompting one disenchanted legal aid practitioner to comment: You couldnt make it up.
The LSC is planning a full re-launch of LSC Online by the end of the year. A spokesman explains: We will be extensively piloting and testing the system during the summer before rolling it out in phases, inviting providers in a particular area to start using the system. This way the number of providers using the system will increase month by month up until September. The service will then be re-launched to the remaining providers in three waves over October, November and December.
In the meantime the commission, which sought to put some of the blame for the systems initial poor performance on solicitors for entering inaccurate and invalid data, is conducting a survey to discover the current level of IT usage and literacy in the legal aid market and to understand the impact future electronic working arrangements will have on providers businesses.
The IT survey will also give an indication of what investment may be necessary by providers for any future expansions of electronic working, including the proposals outlined in the LSCs consultation paper, Managing Legal Aid Cases in Partnership Delivery Transformation.
The key issue in that consultation, which closes on 3 July, is whether the introduction of new ways of working around means assessment, applications for legal aid and general electronic working will lead to improved efficiency and a better experience for clients, providers and the LSC.
It is not all bad news. When the Law Society carried out its Have your Say survey in 2006 it received a strong message from practitioners that they wanted more information online. This prompted the launch in February of the Law Society Library Online, which is getting 70 registrations a day. Maureen Miller, head of membership services at the Society, says firms have signed up for the free service from all over the country, from sole practitioners to top City firms.
But, she adds: What is significant is the interest from small to medium-sized law firms, which have not previously taken up online subscriptions. They are a big, untapped market, which is starting to see the value of online services and of becoming more e-enabled.
Tim Hill, the Societys IT programme manager in legal policy, says the Societys 2005 strategy anticipated that the governments plans for increased e-government, for instance in the criminal justice arena and the Land Registry, would have a significant impact on the legal profession. The effect has been less than expected, however, because so much development is behind schedule.
But, Hill says, the profession needs to prepare because technology, allied to changes such as the introduction of alternative business structures, may change the competitive environment profoundly. And, he warns: Paradoxically, firms that have developed good routines around their current use of IT may have to learn new techniques if the shape of the market changes rapidly. So what can be a strength now could be a weakness in the future, unless they continue to adapt.
Firms of all sizes are taking up online services as they become more familiar with the online environment and as the products and services grow in range and credibility from home information pack (HIP) searches and ID checks to integrated internal practice management and client relationship software. Online services are becoming the norm in the more commoditised practice areas of property and personal injury. Hill says higher degrees of sophistication tend to come when a firm can afford to employ its own IT specialist, probably at around the five-to-ten partner mark.
However, some smaller firms and sole practitioners are also investing heavily to leverage their expertise, says Hill. According to legal information providers LexisNexis, the 20% growth in take-up of its online services over the past three years has been driven primarily by greater use at the smaller-firm end of the market.
Cambridge solicitor Karen Purdy, who specialises in wills and probate, is chair of the Solicitor Sole Practitioners Group. Most, but by no means all, sole practitioners are online, she says. However, cost is inevitably the driver when it comes to taking up online services. Rather than have 14 rows of the All England Reports stacked up in her back bedroom, she has them on CD.
I am always being pushed to go online because the CDs arent updated as often. But I only do wills and probate and I dont need access to family law and conveyancing. I also do identity checks through meeting clients and checking their documents, rather than doing it online. She finds the Land Registrys online service and the Law Societys online library very useful, but in terms of managing client relationships, its still about personal service I wouldnt want clients just checking in online, she says.
Chris Stocker, a sole practitioner in Thame in Oxfordshire who specialises in conveyancing through his Stocker & Co brand, says he uses a search provider to prepare HIPs online. A lot of companies are also offering identity checks. But I am more of a see people face-to-face person, and I do manual checks of bank statements and passports, he says.
I turn away a lot of companies offering practice management systems. They all claim to be low-cost and they probably are, if you have a large budget. But for small firms I dont think it is cost effective, particularly in todays market. We have a database of all our clients and letters are backed up onto each persons folder. I couldnt justify spending £2,000 or £3,000 on a system for the amount of files we have, and I think it would take away from the personal touch if we started doing standard letters.
But for David Bott, managing partner of Bott & Co, a 25-fee-earner specialist personal injury and conveyancing firm in Cheshire, asking if they use online services is like asking someone how important is the telephone.
He says: The vast majority of what we do on the property side is online, while on the [personal injury] side we can now issue proceedings online. We do all our identity checks online, and half our work comes in online. Bott & Co set up its property department from scratch last July, so there was the opportunity to structure it in the most efficient way possible, he says. The key issue with online services and products is always auditability, he adds. You have to keep the same level of scrutiny as you did before.
Derek Southall, partner and head of strategic development at Birmingham-based Wragge & Co, says there are four areas law firms must get right. The first is the internal side and how you support users, he says. The second is e-client services, which tend to be free and include deal rooms, portals, matter status access and access to know-how. We have majored in these areas as there can be real client demand.
The third issue is e-business tools, such as real advice products, certain online document generation tools, online databases and e-learning products, which law firms offer clients for a fee. There are some question marks over whether there is a viable market or actual demand for these services.
The fourth area is data connectivity. If you are a client with seven panel firms, you dont want to have to log on to seven firms systems. What you want is a system of your own into which all the law firms can feed data. It ties in with the way you instruct and with e-billing. Its a shift in power in management to the client having much more control via a single management-focussed interface.
Simon Witney is a corporate partner and head of knowledge management at European firm SJ Berwin. His firm makes extensive use of online data rooms and client extranets. It is very much tailored on a client-by-client basis, but they can provide anything from copies of transaction documents to giving clients access to resources available internally to our lawyers, he says.
The firm does pretty much everything online, he adds. We use all the key databases for our business development and tracking activities. We use all the leading data provider services and have email alerts on legal developments going directly to our lawyers desktops, which we find extremely useful.
But how cost-effective are online services? Witney says: Charges vary, and there are some organisations which offer what are potentially very valuable services but ask what we would regard as excessive sums, so we dont take them. But on the whole we find the services to be cost-effective ways of accessing information.
One relatively new development is online identity checks. Search provider Searchflow launched its service in December 2007, just before the new anti-money laundering regulations came into force. Marketing manager David Kempster says the company is now doing thousands of searches a week, with costs ranging from £6-£12.
On the property side, David Parton is head of national firm Shoosmiths direct conveyancing section, which employs 200 staff working on transactions for more than 20,000 clients a year. We would struggle to survive without online services, he says.
But he is surprised by the number of law firms that still use emails like faxes, and the number of lenders that still want to use post or faxes.
We have reached a [certain] level of e-conveyancing, he says. We receive instructions online, communicate with clients online, obtain documents from the Land Registry online, we are able to go into some lenders websites to obtain redemption statements online and request deeds online. We have moved a long way forward on e-commerce, but it is still some way from being a completely paperless process.
One issue that has yet to be resolved is digital signatures. Hill says: People have been saying every year since 2000 that this is the year everyone is going to start using digital signatures, but it is still not clear when it will become the norm. The Land Registry has developed a security solution for e-conveyancing based on public key infrastructure. Some of the primary issues will involve liability.
Parton is not keen on using digital signatures to entirely replace wet ink. I personally think clients understand emotionally and intellectually when they are signing a mortgage deed that it is significant, and there is a danger they will value the service less if they are not signing it themselves.
I also think lawyers will be reluctant to sign on behalf of their clients. We can do this already through a straightforward power of attorney, but we dont. Particularly in this difficult climate, there will be a real tension where people default and lenders will be going back to the mortgage deeds and, ultimately, to court to get a repossession order. In an e-signature world, you will then be trying to prove the client gave you authorisation to sign.
Another issue is information security. Hill says solicitors will need to have top-notch data security management if clients are going to trust them with their affairs.
Southall agrees. You cant play at this, he says. You have to make sure you have invested in the relevant security, in disaster recovery, in penetration testing. It hasnt been an issue so far. But when you stand back and think where you should be putting your money and resources, I would say they must go on making your processes and your security as good as you can make them.
What is clear, says Witney, is that the development and use of online services is unstoppable. He says: They are helping us deliver a more effective service faster to clients and, at the end of the day, that is what it is all about.
Grania Langdon-Down is a freelance journalist
What are digital signatures?
Public key infrastructure (PKI) is astoundingly complicated technologically, but quite simple to explain conceptually. Fortunately, for the users of services that rely on it, why it works is unimportant compared to how, or simply that, it does work. In essence, PKI is a network of trusted web servers that issue, control and verify the users of digital certificates, allowing everyone to question and verify an email senders identity. These certificates work using public key encryption.
Public key encryption allows two sides in a communication to use separate but interdependent keys to lock and unlock their swapped information. In a hypothetical example, tradition dictates we call them Alice and Bob.
Alice creates a digital private key based on a mathematical function involving a very large prime number. She then creates a public key using the private key (in a mathematical function involving a random number). This public key is given up to a remote database. Bob can now look up Alices public key and use this key to encrypt a message to Alice.
Here is one of the fundamental elements of public key encryption and its infrastructure Alice can use her private key to unwrap a message encoded using her public key, but the public key cannot unwrap a message it itself has encoded. The public key can, however, be used to work out whether an email was created using Alices private key or not.
Digital certification uses this process to guarantee someones identity: Alice signs an email using her private key, and the public key, created using Alices private key and available to everyone, can be used to verify that Alice created the email. Alices signature is provably hers and hers alone.
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