Key Drivers and Drags on Future Innovation in Legal Services
Twenty years ago, the offshoring of back-office legal work was in its infancy. In the IP space, our firm established one of the very first IP offshoring operations. This early IP offshore operation was established not because our firm could foresee the Indian outsourcing boom to follow, but rather because it solved a problem we had with a shortage of experienced paralegals here in the United States. Further, it was easy for us to do, because of our early move to put our files in a web-based docketing system, FoundationIP® (now part of CPA Global), which was hosted in the cloud. Essentially, by changing some permissions in our online file system, we could make our files available to our offshore team in India. With this simple change in procedure, we were able to access more plentiful and economical offshore labor – and this led to lower costs for our customers.
Now, twenty years later, our firm has developed automation capabilities that perform a large percentage of the work being done both by offshore and U.S. docketers and back-office staff. For example, almost all of our incoming U.S. and PCT docketing, and a large percentage of docketing for the major IP jurisdictions, is now fully automated. This percentage is very high for most industrialized countries. Along with docketing, we have also automated most of our data verification processes, and increasingly our reporting processes. Meanwhile we can maintain the ability to configure our processes to client requirements. Docketing received at any time of the day can be docketed and reported to our clients in fifteen minutes or less. Most importantly, our docketing accuracy and consistency has never been higher.
Challenges to innovation
As always, however, we found there are barriers to innovation: This cycle of innovation was no different. In the first years of this century, our clients were reluctant to have their data accessible in the cloud, and strongly resisted offshoring initiatives. Now, ironically, the very offshore teams that our clients wanted no part of twenty years ago are one of the biggest barriers to automation. And, while almost all our clients now have IP management systems that are connected to the Internet, many clients are reluctant to open these systems up to exchange data directly with other IP systems. In addition, virtually all of these systems were primarily designed to receive data input by a human, with little or no thought given to interoperability with other IP management systems.
So, how do these factors limit innovation in the IP space, and work against client interests? Principally, this is because the cost reductions that clients want and need in legal services are greatly inhibited by four factors that are the byproduct of these factors.
- Manual data entry and exchange
First, a great percentage of low-value-add manual labor required by IP law firms, or corporations for that matter, is spent doing manual data entry and exchange between systems. This data entry and exchange is a pure waste of labor, and introduces delay and errors. While our automation can automate the most difficult part of docketing – deciding what to do and where to do it – the manual labor component remains a major cost and delay that cannot be avoided unless we can access our clients’ systems with application program interfaces (APIs). Further, by continuing to perpetuate the exchange of information primarily between humans who in turn enter it into their systems, the information remains largely unstructured and therefore difficult to ingest automatically and use to update even our own systems with our own automation.
- Sending data entry to outside counsel
Second, in order to reduce internal costs, many large corporations have delegated data entry to their outside law firms, which appears to eliminate the cost from the legal department, but does not keep the cost from being a component of the final cost of the legal service. While a corporation can refuse to pay its law firm directly for the data entry, ultimately the corporation will pay for it indirectly when it becomes part of their supplier’s overhead. Getting rid of the cost altogether by automating data entry will lead to real cost reduction and service speed, for both the law firm and the corporate client. Moreover, the elimination of human error in this process will also reduce cost.
- Corporate departments not providing API-friendly remote access
A third problem arises from corporate patent departments which, for understandable security or cost reasons, are reluctant or unable to provide API-friendly remote access to their IP management systems. While the need to tightly protect the security of a corporate IP management system is clear, there are readily available solutions that can both protect these systems and at the same time allow for efficient and effective electronic data exchange. In fact, as more and more back office IP jobs are replaced by sophisticated automation, the use of humans to perform data exchange between the automation system and the IP management system will soon become an untenable limitation on a state-of-the-art IP management eco-system.
- Vendors not allowing access
The last problem is the attempt by certain IP management system vendors to limit access by competitors, whether by API or otherwise, to their IP management platforms. They do this in order to protect their investment in offshore docketing teams. This hurts corporate patent departments by suppressing cost-saving automation in the industry. It also has a negative effect on law firms, who are forced to have their high-paid paralegals spend an appreciable part of their workday doing low value data entry in their clients’ systems.
A plan to move forward
Our call to action to law firms and corporate clients is to take all reasonable steps they can to adopt proven automation when it is as good or better than the offshoring alternative; support, encourage and indeed even insist on full interoperability of all IP systems in the IP eco-system; and lastly, avoid agreeing to tying arrangements that allow vendors of IP management systems to lock out competition from automation innovators.
While certain vendors are less than helpful to innovation, there are others that have done an outstanding job providing API’s into their IP management systems, and also have opened their systems to friends and competitors alike. Notable standouts in helping to drive innovation and interoperability with solid, open APIs include AppColl, CPA Global, CPI, Patrix and Black Hills IP. Our firm applauds these companies, and our hope is that corporate consumers of IP services will insist their IP system vendor provide for ready interoperability on a non-discriminatory basis, to allow best-of-breed innovators to reach their full potential.
As we look forward into the future we see data-driven automation and interoperability growing rapidly in the coming decade, spawning many new analytics capabilities and a corresponding transformation of staffing requirements. As always, our firm remains committed to leadership in these efforts in order to lower costs and increase quality for our deeply valued clients.
Steve Lundberg
Principal & Chief Innovation Officer
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