Using extranets and their outgrowths—such as digital workplaces and deal rooms—law firms can develop client relationships that are far ahead of the curve.

An extranet is a restricted-access network that offers a law firm a way to manage client relationships or other matters of limited duration. Extranet devotees say that before long, extranets will be viewed as law firm staples, like telephones and copiers.

A flexible Web-based system, an extranet can be designed to meet the particular needs of each client. It can improve collaboration among parties and increase efficiency. Multiple users can share information and exchange valuable and relevant resources—in the same place and at the same time.

Extranets can be hosted by a law firm, a client or a third-party company that specializes in these services.

A well-designed extranet enables lawyers to accomplish a number of things:

The best extranets integrate with many existing accounting and document management systems. They can be completely Internet-based and work globally through a Web browser. Traveling lawyers don’t have to carry laptops to access the extranet, because they can connect through any regular Internet connection.

eRoom (www.eroom.com), described as a Web-based digital workplace, is becoming a popular extranet tool for collaboration with clients and co-counsel. External users can enter eRooms, set up for a particular case or client, and share documents, calendars, dockets, white boards, discussion threads and so on. Matrix Logic has designed eRoom Service for DOCS, which allows eRoom users to work on documents in DOCS Open, a document management system, even if they are not registered DOCS users (see www.matrix-logic.com/products/ eroom.asp). An audit trail of recent events is kept, so lawyers can see who has accessed, edited, printed or viewed documents in the eRoom, just as they can in DOCS. The greatest advantage to eRoom (and a problem with earlier off-the-shelf extranet products) is the ability to work on a document directly in DOCS. With this feature you always have the latest edits in your document management system—not one version in the eRoom and another version in DOCS.

Four of London’s so-called "magic circle" firms that handle major merger and acquisition and corporate finance matters—Linklaters, Clifford Chance, Allen & Overy and Freshfields—have all set high extranet standards. They have taken the extranet concept further and are hosting online "deal rooms," where lawyers from both sides of a deal can meet and exchange documents.

Ashby Jones, writing for Law Technology News (www.lawtechnews .com), said that it is noteworthy that the London firms have built these extranets on their own. "Many large U.S. firms, such as San Francisco-based Heller Ehrman White & McAuliffe L.L.P., and New York’s Cravath, Swaine & Moore, have outsourced their extranet platforms … on a deal-by-deal basis. By contrast, the London firms have built their own deal rooms. This is more labor-intensive, but the firms believe it gives them speed and flexibility, and offers clients a greater sense of security … These are the firms that compete intensely for the United Kingdom’s and Europe’s biggest and sexiest clients. Their extranets are one way the firms try to set themselves apart from the competition … So far, U.S. firms don’t seem to have felt the same competitive need to develop extranet services. Davis Polk & Wardwell is one of the few American firms that has created an elaborate extranet system on par with those of the ‘magic circle’ firms."

In the same article, Ashby Jones goes on to say that some British firms are doing more than just extranets—they are making splashes with other Web-based platforms: "Linklaters, for instance, launched its Blue Flag ‘expert system.’ On Blue Flag, clients can get answers to a whole range of basic legal questions … The site functions like a decision tree: Each answer elicits a more specific question, until sufficient information has been taken in. Then the site provides links to pertinent information and even advice."

Law firms struggle to leverage their work product and maximize knowledge management. Linklaters has succeeded at both in Blue Flag, and it charges subscribers for the service—currently about $200,000 for a one-time initiation fee and an annual flat fee of about $72,000 for each subsequent year. The financial and practical successes of this strategy haven’t been reported, but Blue Flag has received considerable legal and business media attention.

According to David R. Hambourger, writing in a 2001 issue of The Alert (the newsletter of the Federal Bar Association’s Corporate and Association Counsels Division), there are compelling reasons to make extranets an important part of your practice:

1. Clients are demanding it. Many clients who have been exposed to the use of extranets are pressuring their law firms to provide similar services as a means to enhance communications. Corporate counsel are increasingly saying they expect their major law firms to provide extranet connections.
2. Reduced "friction." One of the aspects of Internet technology is its ability to eliminate steps … Now that I can check my credit card balance online, I no longer need to call and wait to speak to a customer service representative. Similarly, an extranet can greatly decrease the number of "Can you send me a copy of … ?" or "What was her fax number?" type of calls.
3. Improved client development and retention. Creating a specialized, customized extranet application can help create a stronger link between clients and law firms and a much deeper sense of partnership. With this kind of integration and sharing of common information, counsel and clients have a better chance to develop a long-term, mutually beneficial relationship.
4. Decreased costs. With less information being exchanged through traditional methods, there is the potential for a reduction in costs (telephone calls, postage, messengers, etc.). And the professionals involved will likely spend more time on higher value activities.

Transactional or administrative. This type of extranet focuses on a specific transaction, deal or administrative filing. It may be short-term and may involve large numbers of third parties (banks, underwriters, etc.). The major functions of a transactional extranet are likely to be document distribution and archives, matter status updates, feedback delivery and contact lists.

Litigation. This is similar to the transactional model, but it focuses on one or more litigation matters. It may be designed for use by multiple parties (client, co-counsel, opposing counsel, experts) and would likely include pleadings, hard-copy and e-mail correspondence, transcripts, relevant documents, calendar of events and ongoing case status.

Relationship. This extranet is designed to serve long-term lawyer-client relationships. It can be used to collaborate on current matters, provide an archive of documents and forms from past matters and share pertinent and frequently used information about both the client and the firm. It can include data related to billing, budgeting and accounting of disbursements.

In addition, lawyers can post recent client-development materials of interest to each type of client, such as labor and employment information, venture capital or REIT industry newsletters, industry white papers or briefings on late-breaking legal developments. Also, firms can schedule e-meetings in their extranet space and post the PowerPoint shows or demonstrations used during the meeting.

If your firm is willing to make the investment of time and money in an extranet, don’t keep it quiet. At LegalTech New York 2001, Rodney A. Satterwhite, a partner in the Richmond, Virginia, office of McGuire Woods, gave solid marketing advice. He stressed that a law firm should not market an extranet as a technology tool, and the law firm’s IT staff should not be on the front lines selling the extranet. Instead Satterwhite recommended marketing the extranet as an educational tool for hard-to-impress clients.

That means lawyers must be comfortable with an extranet and its functions. Satterwhite suggested giving how-to in-house presentations to lawyers, and discussing the benefits to the lawyers and the firm’s clients. Firm lawyers must be clear on the advantages of an extranet so that they can sell the communication-enhancing benefits to firm clients.

After the lawyers are on board, they can then invite the legal departments of firm clients in for personalized demonstrations of the extranet.

Greg Siskind (gsiskind@visalaw2.com) is a principal of Siskind, Susser, Haas & Devine in Cordova, TN.

Deborah McMurray (mcmurray@couchmoney.com) is a strategic marketing consultant to the legal profession and principal of Deborah McMurray Associates in Dallas. Rick Klau (rklau@interfacesoftware .com) is Vice President of Vertical Markets at Interface Software, Inc., in Oakbrook, IL.

Excerpted with permission from The Lawyer’s Guide to Marketing on the Internet, 2nd ed. American Bar Association, ©2002.