Ethics Opinion on Cloud Computing

After a request from a member of their bar association, The North Carolina Bar studied the ethics of using cloud computing -- also known as Software-as-a-Service or SaaS -- in a law firm, and they've finished drafting a proposed Formal Ethics Opinion on the matter.

The American Bar Association's Legal Technology Resource Center describes SaaS computing as the following:

"SaaS is distinguished from traditional software in several ways. Rather than installing the software to your computer or the firm's server, SaaS is accessed via a web browser (like Explorer or Firefox) over the internet. Data is stored on the vendor's data center rather than the firm's computers."

The North Carolina Ethics Opinion clearly states the central question:

"SaaS for law firms may involve the storage of a law firm's data, including client files..., on remote servers rather than on the law firm's own computers and, therefore, outside the direct control of the firm's lawyers. Given the duty to safeguard confidential client information... may a law firm use SaaS?"

The Ethics Opinion concluded that SaaS computing is acceptable by lawyers and law firms, provided that:

1) "Steps are taken effectively to minimize the risk of inadvertent or unauthorized disclosure of confidential client information and to protect client property, including file information, from risk of loss...

Although a lawyer has a professional obligation to protect confidential information from unauthorized disclosure, the Ethics Committee has long held that this duty does not compel any particular mode of handling confidential information nor does it prohibit the employment of vendors whose services may involve the handling of documents or data containing client information. "

2) The law firm should be able to answer a number of questions, including:

• Who has access to the data besides the lawyer?

• Who owns the data -- the lawyer or the SaaS vendor?

• How does the SaaS vendor, or any third party hosting company, safeguard the physical and electronic security and confidentiality of stored data.

• Where is the data hosted? Is it in a country with less rigorous protections against unlawful search and seizure?

• If the SaaS vendor goes out of business, will the lawyer have access to the data and the software or source code?

• How often and on how many geographically distinct servers does the data get backed up?
  

As a Legal Process Outsourcing company with years of experience in data security on third party servers, the North Carolina Bar Association's opinion seems entirely pragmatic.

"...the Ethics Committee concludes that a law firm may use SaaS if reasonable care is taken effectively to minimize the risks to the confidentiality and to the security of client information and client files. However, the law firm is not required to guarantee that the system will be invulnerable to unauthorized access."

ROI for Law School Downgraded

A few months ago we discussed the return on investment for law school tuition. Now, according to U.S. News and World Report, those numbers are looking even worse.

To put it simply, both sets of numbers are going in the wrong direction: Tuitions are increasing to unprecedented heights, while job prospects are both diminishing and paying less.

More money spent for less return can't be a good thing.

The problem starts with tuition, for which U.S. News cites ABA statistics:

• Average tuition at private law schools was up six percent in 2008 to $34,298

• State schools were up nine percent to and average annual cost of $16,836

• At Yale Law School, number one on the most recent U.S News ranking, tuition is $48,340 a year. The lowest tuition for a top 10 law school is at the University of California at Berkeley, which is in seventh place and charges in-state residents $35,907.

Now combine those numbers with dwindling returns, and the equation really goes down hill.

According to a separate U.S. News article, first-year associates at large law firms can expect to make $106,500 to $131,250, down 5.1 percent from last year. At midsize firms, associates can make between $71,500 and $100,750, and at small firms they might make from $49,750 to $73,000.

However, anecdotal reports indicate even those numbers are inaccurate, coming in significantly higher than real-world reports.

Reports from Manhattan, which historically would land at the higher end of the salary scale, say small firms are starting at $42k and midsized firms are offering $55k.

Job postings for small firms in Chicago are reportedly significantly less than that, starting in the mid 30,000 range. And this is without benefits.

However, the discrepancies might be explained by the source of U.S. News's salary statistics: Robert Half Legal, which is an attorney placement firm. If they are basing their statistics on their clients' salary offerings, then it's a safe assumption they are dealing with firms who can afford to pay the additional 20-25% of a first year associate’s annual salary that placement firms typically charge as a placement fee.

And this would argue for the anecdotal reports that those figures are out of step with real world offers.

New Models for Legal Education

The recent trends in the legal world (e.g., an emphasis on project management, a bottle neck for new associates, growing demand for alternative pricing models) all involve not the practice of law, but the business of law.

Responding to those shifts, New York Law School and Harvard Law recently teamed to spearhead an initiative to reevaluate the way future lawyers are educated.

The American Lawyer reported that 75 law school deans, legal educators and lawyers gathered April 9th and 10th for a two-day conference called "Future Ed: New Business Models for U.S. and Global Legal Education".

In general, the two themes that emerged were 1) the need to augment existing curriculum and, 2) the possibilities of creating alternative curriculum.

In terms of augmenting existing curriculum, the consensus was a heightened emphasis on the practical skills clients require.

• Business Management Skills

• Financial Literacy

• Executive Communication

In a forceful concurrence with this idea, Chester Paul Beach, associate general counsel of United Technologies Corporation "hammered home the need for more real-world training. To cut down on legal costs, Beach said, his company absolutely will not pay for first- or second-year associates because "they're worthless." Lawyers need more "skill development" in school because, especially amid the current economic downturn, businesses are "not going to pay for people who can't add value."

The other theme to emerge was alternative education models, which might include:

• Accelerated Programs

• Experiential Learning

• Distance Learning

• Specialized Schools

The collective agreement here was that "there should be "multiple futures" to legal education. Every school can't be Harvard, and every school shouldn't follow the same system, said Joseph Altonji, from consulting firm Hildebrant Baker Robbins. Schools should specialize, he said, "because we need different kinds of practitioners."

"Altonji added that a model based purely on grades and LSATs for all graduating law students embarking into various careers "is just not working today."

Teaching Project Management

Project Management for attorneys seems to be on everybody's mind right now.

We posted last week about Orrick, Herrington & Sutcliffe creating a career track for legal project management.

This past week, Legal Intelligencer reported on a firm-wide initiative undertaken by Dechert LLP in conjunction with legal consultants Altman Weil to train their attorneys in project management.

The article quotes Altman Weil's Pamela Woldow, addressing a number of topics, including:

Initial Trepidation:

• "I think lawyers like to believe that everything they do is unique and complex and the truth is there are some parts of representation that are complex, but there is an awful lot that is rather easily mapped."

• While litigators often get the blame for being the most averse to using project management because cases can take unexpected turns, Woldow said finance attorneys, though "battle wounded" in the recession, have been the most resistant to the training.

Process:

• The training breaks down a matter from the earliest stages of assignment to the end, with an emphasis on a lot of up-front communication with the client about expectations and defining the scope of the project.

• The training sessions for partners included no more than 20 partners at a time, from varied practice groups. They were brought in for four- to six-hour sessions and taught the concepts of project management and tools to implement it. Lawyers visually mapped out matters related to their practice to see how the process works.

The Changing Landscape:

• "I do spend most of my time with GCs and in-house counsel and the message beyond the recession is that they want their law firms to operate more like businesses and deliver their services more efficiently and cost effectively."

• "From a law firm perspective, this type of process is enormously effective when operating on an alternative fee arrangement because, if they are going to be profitable, they cannot operate the way they have in the past."

• The push for efficiency among large law firms has largely been driven by cost concerns from clients and the need to make good on the alternative fee arrangements that are often seen as a solution to these cost concerns.

• While certain matters may prove more challenging than others in terms of implementing project management techniques... there are enough clients out there demanding these types of services that firms have to embrace this.

It certainly seems that project management is not just a fad with a limited shelf life.