Archive for April, 2021

Digital Transformation Lesson #6: Digital Transformation Requires Changes in Process and an End to Low Value Customizations

Monday, April 26th, 2021

Any law firm or department undertaking digital transformation will typically encounter a considerable number of process nuances and customizations that fly under the radar in a human executed process. I call a lot of these nuances “concierge services” because many are requested by influential attorneys “off the record” and implemented by staff without any notice to management, and typically without any thought given to countervailing considerations such as cost/benefit and quality implications. The result is that most law firm and department processes are riddled with low or no value process nuances that were requested or demanded by personnel who were only seeking to conform operations to their perceived needs using only their limited perspective as options. These sub-optimal customizations are frequently costly overkill and yield little benefit other than satisfying peculiar individual needs that are not important to the vast bulk of attorneys or staff. One example of this in the banking industry would be special treatment bank tellers might offer bank customers in a branch bank, such as filling out deposit slips in a certain way that requires special knowledge of the customer’s preferences. This level of service may not be documented anywhere and known only to one or two tellers among many.

As a result, perhaps one of the most difficult lessons of digital transformation is that unduly complex or nuanced “concierge services” are typically baked into most legal workflow processes and are becoming formidable digital transformation roadblocks, as these process customizations are not infrequently undocumented, much more complex to automate, and authored by influential individuals. If these nuances are required to be included, they can dramatically drive up the cost and time needed to digitally transform, or even derail it altogether.

So what can you do to overcome these “concierge service” issues? First and foremost, leadership has to make it clear that digital transformation is essential, and that no process is sacrosanct unless it is indispensable to getting the job done or serving the needs of the most important bulk of customers. That means for example that customizations that are only for the convenience of attorneys or paralegals (and other only slightly less convenient alternatives exist) should be viewed skeptically, as well as “nice to haves” for customers who may not or do not perceive as high value, should also be discouraged, particularly if the customer is focused on cost reduction or is cost sensitive. This is not to say that better or new services should be discouraged – it is only that they should be designed and prioritized for implementation in a way that allows for maximum impact digital transformation.

Digital Transformation Lesson #5: It’s All About the Middleware

Tuesday, April 20th, 2021

In previous lessons, I noted the importance of interoperability in achieving digital transformation in the legal industry. This can be said to break down to two major components: 1) API’s for each legal application to allow automated interactions with other applications in the ecosystem such as an IP management system, accounting system, patent offices, or cloud services like automated docketing or analytics; and 2) the middleware that can translate data exchange between the API’s according to the requirements of each individual application and an enterprises’ particular needs. Middleware simply means software that sits “in the middle” between two other systems. Sometimes this middleware performs simple tasks such as a simple relay of information from one system to another, and sometimes middleware can perform additional automation functions, replacing human labor that used to “sit in the middle.” For example, patent docketing personnel receive data from a patent office, and use their knowledge and skills to make an entry in a docketing system that consists of data (such as a mail date) and commands (such as a docketing code) used by the receiving system to add a docket entry. Most of the time, middleware needs to “transform” data as it passes through it from one system to another. For example, if an accounting system sold by a first vendor needs to exchange data with an IP system from a second vendor, it is rarely a simple matter of pulling data from one field and writing it into another. Often this data transfer requires data from the accounting system to be transformed and manipulated before it can be uploaded into the IP system, and furthermore for an API to work it needs to know what to do with the data, which is provided in the form of API instructions and commands. All this manipulation of the source data and instructions and commands to the receiving system’s API is done using middleware. Another form of middleware is a cloud-based service that receives data from a first source such as the United States Patent and Trademark Office (USPTO), transforms it into a format that is compatible with a law firm or legal department docketing system, and also determines which docketing instructions or commands (such as a template or docketing code to launch) to provide to the docketing system’s API. In another example, docketing events can be obtained from the docketing system and reported using e-mail to the appropriate recipients. This is typically accomplished with middleware that sits between the docketing system and the e-mail system, so the reporting can be customized to the needs of the situation. These are just a couple of examples of the tens of thousands of middleware components that glue legal systems from various different vendors together.

What this all boils down to is that while middleware may often be an obscure component of the legal system ecosystem, it is nonetheless essential for connecting up all the various systems that need to talk to each other but cannot do so directly. With an explosion of new software applications from many dozens of new high tech start ups addressing the legal market, API’s and middleware will lead the way to hook up all these systems in our digitally transformed future.

Digital Transformation Lesson #4: Interoperability Requires Predictable and Reliable Data Exchange

Tuesday, April 20th, 2021

In my first three lessons of digital transformation you learned about the importance of making it an ongoing effort vs a one-time event, that merely externalizing manual work does nothing to digitally transform your operations, and that system interoperability is critical. Today we will talk about how interoperability greatly increases inter-enterprise dependencies and therefore requires a different process for making system upgrades or changes that may impact downstream consumers of data your organization enters into interoperable data flows.

One good example of this is the critical need for government entities such as the USPTO to provide adequate notice, lead times and testing before rolling out changes to data it produces such as the various PTO actions it generates and the bibliographic data it supplies to its customers or third parties. In times gone by the output of patent offices has been documents read and interpreted by humans. Adjustments or changes in the format of those documents could be easily accommodated by humans who in some cases would barely take notice of such changes, or quickly adapted to them, with no interruption of comprehension or throughput. Now, with PTO output being downloaded and processed through docketing and beyond automatically, even small changes can stop a law department’s processing of incoming PTO documents in its tracks until adjustments can be made. As labor is increasingly replaced by automation, manual processing of documents as a back up option becomes less and less feasible.

This same interoperability dependence holds true at all points in digitally transformed data ecosystems, affecting government agencies, corporations, law firms and vendors.

So the lesson here is in our digitally transformed world we always need to make sure changes we make do not result in downstream disruptions. This means giving plenty of advanced notice to allow customers to make any required changes and to test those changes and therefore avoid costly service interruptions.

Legal Digital Transformation – Lesson #3: Successful Digital Transformation Depends on Excellent Interoperability of All IP Systems

Tuesday, April 20th, 2021

Imagine for a moment you are a bank owner looking for new software to support your international banking customers. Could you even consider for a moment buying software that wasn’t interoperable with the international banking network? Would you consider buying this software if the vendor insisted any outsourced back-office operations had to be done using the vendor’s off-shore team? Of course you couldn’t and wouldn’t. Yet, this is where the IP industry finds itself in 2021 – many large installations of legacy IP management systems are not interoperable with the online IP ecosystem such as patent offices around the world, law firm IP systems, and cloud services. Even worse, some existing vendors who regard themselves as leaders in the industry not only don’t offer serviceable APIs for interoperability, these vendors refuse to allow their customers to connect their systems to cloud services provided by what they regard as competitors.

Anyone who works in the IP industry knows the IP industry requires the daily exchange of large quantities of IP data between the various entities that work in the ecosystem. These exchanges are between patent offices and legal representatives, and between corporate law departments and their law firms, between law departments and outsourced docketing or paralegal services, and between annuity payment services and patent owners.

The lack of interoperability of the various IP management and processing systems in this ecosystem has now become a huge barrier to the digital transformation of the industry. The cost of manually moving data between systems, such as between an automated docketing service and an IP management system, or from an e-mail sent by a corporate law department into a law firm IP management system, now accounts for a large percentage of the cost of these transactions where the rest of the transaction can be automated.

Take for example the cloud-based autonomous docketing services provided by Black Hills IP. Thousands of docketing decisions can now be made in the matter of seconds or minutes. Where interoperability is provided by the target IP system, the docketing transactions can be automatically loaded at lightning speeds. The result is total digital transformation of this IP function, with many advantages including order of magnitude increases in accuracy and speed, and also the benefit of having IP transaction data structured in a “digital transformation” friendly form, allowing more automation downstream like automated reporting.

On the other hand, where interoperability is not supported, and data entry must be done manually, around two-thirds of the benefit of the automation is negated, lost to the delays, labor cost and errors introduced by requiring manual input of the data into the target IP system, and the loss of ability to readily verify the data has been correctly loaded.

Moreover, the lack of interoperability in the industry also hinders many other avenues of digital transformation where so much of what is done on a day in and day out basis is exchanging information that is sourced from structured databases. This data, without interoperability, has to be unstructured in order to be exchanged, and then restructured manually and entered manually on the other end of the exchange. This is clearly a huge problem when digital transformation is a primary goal of law departments, law firms, and back-office operations.

On the plus side, many vendors do support interoperability and are helping firms like ours and companies like Black Hills IP deploy fully autonomous IP services that are revolutionizing the industry. These vendors include: Patrix (Patricia), CPA Global/Clarivate (FoundationIP, IPfolio, Inprotech), Computer Packages, Inc. (CPI), and AppColl. If you have one of these systems, for example, you can enjoy the full benefits of digital transformation in the IP industry. If your vendor or system is not on this list, you should consider switching as your IP system will be a major barrier to your digital transformation journey.

Legal Digital Transformation – Lesson #2: Externalizing Manual Work is Not Digital Transformation

Tuesday, April 20th, 2021

In recent years many corporate IP departments have turned to externalizing data entry and management processes in an effort to reduce internal staffing needs and lower department costs. This cost-cutting externalization effort typically involves one or both of the following strategies:

  • requiring law firm suppliers, at no cost, to enter IP bibliographic, PTO transactions/or and related communications directly into the company’s online IP management database, thereby eliminating the need to use internal resources for this purpose
  • outsourcing department tasks such as “paperwork” around invention disclosures or routine internal department tasks to off-shore back-office suppliers that use low-cost labor

Both of these strategies involve a reduction of cost to the corporation and less manual work for the department, so they offer immediate benefits of value. They also arguably make the operation more “digital” and appear to be a step in the direction of digital transformation. But these strategies are not digital transformation, because neither replace manual labor with automation – they just push the manual labor off to a different place.

Now, one might hope that the new recipients of manual labor responsibilities (law firms and off-shore operations) could take up the task of actually digitally transforming these externalized operations, but there are two reasons this is either very difficult or highly unlikely to happen.

Let’s take the externalizing of data entry to law firms first. In this case, only a small number of corporate IP departments use IP management systems that include API’s that provide the the functionality needed for digital transformation of the externalized processes. Of those that do, even fewer allow law firms remote access to such APIs due to data security concerns. The result is digital transformation is not possible to achieve even if the law firm wants to do so. It’s like giving a sherpa an extra five pounds to carry and forbidding them from buying a pack horse to help.

Regarding the other strategy, off-shore providers specialize in using low cost labor to do laborious, low complexity tasks. They charge by the head, so the last thing they want to do is reduce the amount of labor required to perform the services they offer. As a result, these operations become a barrier to digital transformation because the domain expertise required to implement the transformation is incentivized to find every reason possible that it can’t be done.

So the lesson here is clear: any legal department that wants to achieve real digital transformation should not start with externalization of existing manual processes to law firms or off-shore providers. The true transformation journey begins with figuring out how to eliminate as many of the manual labor steps as possible using automation, and only after that has been done, takes steps to externalize what is left. And, moreover, any such externalization should afford a pathway to continued digital transformation, such as providing APIs to their IP systems.

Finally, no corporation should ever buy a new IP management system that does not offer open API’s to any supplier the the corporation chooses to work with. The following systems offer open APIs for their users: CPA/FoundationIP/IPfolio, Patrix/Patricia, CPI and AppColl. All of these vendors are excellent to work with for API access and offer excellent API capabilities. The automation docketing specialists BlackHills IP have interfaces to all these systems, and can actually move data between systems automatically, if they have the API connections available to them.

Again, if your provider or provider under consideration is not on this list, you should be aware the vendor will constitute a major barrier to digital transformation, especially if they want to trap your back office work in a manual, off-shore operation, where increasing head counts leads to greater profits.