Andrew Haslam of Allvision Computing has put together this useful white paper to provide an analytical framework to categorise and assess the tools and suppliers available within the litigation support and electronic data discovery (EDD) marketplace. 

In broad terms there are three main stages to the litigation lifecycle:
•    Capture of information.
•    Preparation for trial.
•    Presentation in the courtroom.

1.1    Litigation Lifecycle - Information Capture
Before the advent of Electronic Stored Information (ESI), in terms of EDD systems, the first stage of the lifecycle was primarily concerned with the scanning of pages, coding of documents and creation of Optical Character Recognition (OCR) text.  Over the past 10 - 15 years this has been a stable and easily understood process, with suppliers able to provide relatively accurate estimates of the volume of paper within lever arch files and hence fairly rigorous costing estimates for the process.  These estimates are based on industry normalised prices for handling the individual elements of the procedure, i.e. so many pence per document/page to disassemble files, scan pages, reassemble documents, produce OCR, conduct objective coding, etc.  Although there will always be minor variations between suppliers due to different quality control procedures, software used, and plain old human errors, effectively the scanning and coding of documents has become a commodity item, with known elements of risk and risk reduction management processes.

1.2    Litigation Lifecycle - Trial Preparation
The trial preparation element of the lifecycle was where the majority of technical innovation took place from the mid 1990’s onwards.  Software tools emerged which provided functionality for lawyers to handle larger volumes of documentation.  They enabled users to review documents on-line to establish their relevance, privileged and trade secret statuses, and then develop the issues and themes required to support the defence or prosecution of the case.  Users could carry out the exchange of disclosure information and ultimately produce the documents required for the courtroom bundle. The software in this area developed from MS-DOS roots, into Windows based applications and then technology employing the design principles which underpin the Internet, i.e. becoming web based. 

Examples of this kind of software are Concordance, Summation, IntroSpect, Ringtail and iConnect.  The initial focus of the development of these tools was on the requirements of this part of the lifecycle, with an emphasis on strong searching capabilities, identification of issues, key words, and themes, linkage to chronological analysis of events and very robust production capabilities.  The development emphasis of these tools has changed over the past few years in response to the increasing volumes of ESI, see 1.6 below for further exploration of this proposition.

1.3    Litigation Lifecycle - Courtroom Presentation
Though quite a significant technological area within the United States, differences between the US and English legal systems, technical infrastructure and cultural acceptance, means that this is a very small element of the analytical framework.  Effectively the UK does not have the “show and tell” approach to evidence favoured by the US and, with the exception of Livenote for stenography, there is not a lot of technology deployed within UK courtrooms.  The one exception to this “rule” is the kind of technology deployed in the Bloody Sunday enquiry, or the Hutton enquiry into the death of Dr David Kelly.  Outside of these examples, the UK courts remain worryingly technology free.

1.4    Litigation Lifecycle - Advent of ESI
Though ESI had always formed part of disclosure material, from late 2003 (particularly in the United States) there was a significant increase in both the percentage of disclosure consisting of ESI and the volume of the material itself.  In reaction to this various companies developed software products to enable users to meet the challenges of conducting Electronic Data Disclosure.  These applications generally comprise of two elements.  The first allows for the collection and filtering of the ESI.  In this process, superfluous electronic files are discarded, duplicate documents removed and techniques employed to try to weed out irrelevant material.  At the end of this filtering process, the data is passed into an application that is geared to allow a large number of simultaneous reviews to occur under a robustly designed workflow, with comprehensive QC and reporting faculties.  The main feature of this part of the lifecycle is the sheer volume of ESI and the impracticability of any supplier being able to provide an accurate estimate of eventual volumes and hence costings.

Examples tools here were products such as Kroll’s Electronic Data Viewer (as was) and nMatrix’s (now Epiq) initial offering.  These products initially focused on the “pure” processing and review of ESI, with data being handed off into systems such as Ringtail or IntroSpect.  However, they very quickly evolved into systems which also try to provide the functionality required to support the preparation part of the lifecycle.  Hence Kroll’s Ontrack Inview offering, Discovery Mining’s eponymous product and Epiq’s DocuMatrix application.  In response to this encroachment upon their marketplace, products such as Ringtail, IntroSpect and to some degree iConnect and Concordance’s FYI application have added “data processing” tools that offer functionality to pre-process, filter and sort data before it is loaded into their main software engine.

The main issue to be aware of when evaluating these tools is that there is, to some degree, a danger of comparing “apples with pears”.  The ESI review tools come from a background of very strong review and workflow, ideal for dealing with the large volumes of ESI that are generated at the start of a project.  They have only lately turned their Research and Development budgets towards the different requirements of the middle stage of the litigation lifecycle.  Similarly the electronic case management vendors are moving into unfamiliar territory with their attempts to control the overwhelming flood of ESI at the start of the lifecycle.

The key point is to be aware of the different strengths of the products, balance that with the individual requirements of specific cases, tempered with the ethos and approach of the law firm and arrive at the most suitable software application for that situation.

Finally, within this area there is also the specialist sub-topic of Computer Forensics.  The functionality provided here ranges from the detailed restoration of “deleted” information from a computer hard disk, through to the bulk processing of information stored on back-up tapes.  The specialist organisations that operate in this area can provide a legally sound evidence trail for electronic information which may be appropriate for some cases.  The majority of EDD projects will not need this kind of input, but it is an essential weapon to have in the EDD armoury.

1.5    Emergence of ESI based analytical tools
Along with the problems raised by ESI, its very nature means that it also offers the potential for significant advantages in terms of evaluating and automatically grouping information.  An early player in this area was the Autonomy product which employs Artificial Intelligence techniques and a “learning” process to identify patterns and documents corresponding to a certain type, i.e. initial Privilege calls based on a knowledge base built up over months of training.  This approach relies upon users supplying the key words and issues which they think are relevant before the analysis works starts. 

Increasingly, the marketplace is seeing products which work by grouping similar documents together.  The “similar” assessment is done by linguistic matching, i.e. documents with the same sets of words are grouped and similar groups are linked via a concept spine.  These “Analytic” tools do not rely upon user preconceptions as to the relevant or important themes before the case, instead they reflect what actually exists with the electronic material.  A known player in this market is the US product Attenex, which is now being challenged by the built-in analytic tools of Kroll’s Ontrack Inview, Discovery Mining’s product and Epiq’s DocuMatrix as well as direct competition from Recommind’s Axcelerate eDiscovery product.

Though this category of tools provides significant savings in terms of time and effort in cutting through the initial review phase for ESI and can provide valuable assistance in case development, they do not (at present) provide enough functionality to take a case all the way through to the end of the preparation phase.  As such, they would currently be used as an adjunct to a electronic case management system.

1.6    Analytical Framework
Based on the above analysis, the following categories / functional groupings exist within the analytical framework.  Because of the overlapping nature of this environment, there are some companies/products which will span more than one category, however, this approach does provide a methodology for conducting the review process required within this assignment.  The groupings are:

a)    Provision of scanning / coding facilities
Despite the increasing volume of ESI within disclosure material, there still is a residual element of paper.  Currently, even if firms are moving towards a electronic case management environment based on an electronic approach, then there will be an ongoing need to scan, OCR and code paper files.

b)    ESI collection
The issue of collecting ESI at the start of a project can be a problematic one.  In a number of large cases, it may be prudent to employ a third party organisation to assist / carry out the process.  This service is normally provided by vendors who also process the data, though it also part of the “one stop” approach offered by accountancy consultancy firms.

c)    ESI processing / review tools
The need here spans both the in-house requirement to process information and the need to establish preferred suppliers to cope with larger volumes.  The cleaned and de-duplicated data might then be returned to a law firm for loading into their selected environment, or might be reviewed in a hosted application. 

d)    ESI analytic tools
The selection of an analytic tool is not an essential part of establishing an EDD environment, but given the fast moving developments in this area, it is considered as an issue which should be evaluated.  The key decisions in this area will probably focus on either using the “built-in” analytics modules of EDD tools (normally provided at an additional cost), or deploying a discrete tool in its own right.  As ever, the particular requirements of individual cases will define the outcome.

e)    Electronic Case Management applications / vendors
This is the area of greatest overlap and the one where individuals should try to understand the differences between the different software vendors as well as the similarities.  Products which are excellent at the large scale processing and review demands of cases will be ideal for some large volume collection exercises with tight deadlines.  Relatively smaller cases with more complex issues leading to deeper demands on the case preparation side of things will suit the products with roots in that part of the litigation lifecycle.

f)    Computer Forensic capabilities
Within law firms there is normally a low level requirement for these specialised services which should be addressed by the establishment of preferred suppliers.  Experience normally shows, that when these kind of services are required, they are needed on very short notice with immediate effect, i.e. we need to image a suspect PC tonight in a forensically sound manner, or we have 200 backup tapes we need to restore and examine.  Once organisations with the required skill set have been identified, then a preferred supplier status should be established with selected companies.

g)    Overall EDD project management / consultancy support
A number of the professional services firms operating in this area, e.g. KPMG, Deloittes, Ernst & Young, PWC offer overall project management support for larger EDD projects.  However, this area is also considered as a strategic requirement as the role of litigation support within a law firm, increasingly moves from an individual who knows how to get the best price per page for scanning and coding, into the arena of central co-ordinator, orchestrating a project involving the firm’s lawyers, the client, external vendors and external parties including barristers and joint/opposing law firms. 

1.7    Conclusion
The aim of this white paper is to provide an overall analytical framework so that readers can have a reference model in order to compare the relative merits of competing vendors.  There is no “right” answer to the question “which product is the best?”.  When law firms establish panels of preferred suppliers, the successful vendors vary according to which provide the tools and personnel which most closely fit the work type and ethos of the law firm.  As in all things in life, you get what you pay for, and if in doubt, take advice from those who know what they are talking about.

© Andrew Hasla, 2008 – andrew.haslam@allvision.co.uk

If some of you are wondering why in the middle of Sunday afternoon you suddenly received duplicate copies of the December and/or January editions of the Legal Technology Insider newsletter, relax – it's not you or us that is going barmy. We've tracked the problem down to our former internet service providers (we dropped them at the end of January) restoring their backup tapes. It may not be best practice but there's nothing we can do to stop them.

There's really too much choice today. We've got an American satellite TV installer who decided the simplest way to drill a hole through a wall was to shoot at it with his gun. It created a hole all right, unfortunately it also created a fatal hole in his wife who had the misfortune to be standing on the other side of the wall. Then there is the BA + BAA Heathrow Terminal 5 meltdown – nothing more needs to be said about that. However we are picking on an announcement that the creation of a new national e-crime unit was being held back because the Home Office could not find the £1.3million needed to provide its initial funding.

Now £1.3m may seem a lot of money to you and me (OK, not you, if you happen to be an equity partner in a City law firm) particularly as we are all contributing £3500 to bail out Northern Rock but it is not a lot of money in government and parliamentary terms.

For example, Scottish Nationalist MP Alex Salmon ran up an expenses bill of over £130,000 last year, during which time he visited the House of Commons just 6 times. So, if he stayed in Scotland for the next 10 years (where he already has a job as the First Minister of the Scottish Parliament) that would fund the new unit. Then there is the Speaker of the House of Commons who is reportedly going to spend £100,000 in legal fees to prevent more public disclosures about MPs £23,000 second home allowances. Hmmm... 646 (the current number of MPs) x £23k = £14.8m. If MPs just bought their TVs from Currys rather than John Lewis, the saving there could probably fund the unit.

And £1.3m is also considerably less than the £1.59m the Ministry of Justice (aka the Department of Constitutional Affairs, aka The Lord Chancellor's Department) spent on its rebranding exercise. I guess its all a matter of priorities.

With e-billing now making its way on to the agendas of more and more law firms, you may be interested in this announcement made earlier this week...

eBillingHub has announced availability of its newest version, emphasizing continued expansion of its on demand library of client formats; dramatic improvements in its online dashboards and out of the box reporting functionality; and support for international requirements, such as LEDES 98Bi.

Included immediately in the Hub are three new dashboards providing real-time information as to status of eBills, including average days to pay, billing progress, etc, as well as eleven new ‘out of the box’ reports that give detail on clients, vendors and overall activity. In addition this new release expands eBillingHub’s commitment to LEDES and International capabilities by supporting LEDES 98Bi and VAT calculations. Finally, an additional thirty-four client formats have been added to the eBillingHub’s on-demand library of formats allowing clients to add support for these clients in minutes.

“We continue to increase the value of the eBillingHub to our customers with this release, as we have expanded our domination of this market with our partners, RainMaker Legal and Thomson Elite”, said Greg Coticchia, CEO of the eBillingHub, “This release addresses many of the challenges that financial executives have in truly knowing if they are 100% compliant with delivering electronic bills every month, let have clear and accurate visibility into the process.”

“As electronic billing volume and complexity has grown, law firms have realized that it’s not simply a workload capacity issue, it’s a business process issue,” remarked Brad Blickstein of  The Blickstein Group, a recent member of the LEDES Oversight Committee (LOC) board of directors and  who also drove the formation of the group of the UTBMS Working Group in 2005.
www.ebillinghub.com

What more could you want – a website that combines a computer game with matrimonial law? Well actually it's a little shoot 'em up game that lets you play Heather Mills sloshing water over the bouffant hair of Paul McCartney's lawyer Fiona Shackleton. You can find the game here – and relax, its quite boring, you'll be backed at work in under a minute.

We clearly started something with our picture of the nFlow freebie flask at the top of an Alpine mountain as we've now been sent a picture of a promo hat from Eclipse Legal Systems sunning itself at a bar in Skiathos, Greece. And we suspect Skiathos is where a lot of people would like to be today given that the rail service into London Liverpool Street Station has collapsed, again. (Our condolences to those people on the 5:10am from Norwich to London who, we understand, spent the best part of 4 hours stuck at Maningtree.) Just a thought – given that we are supposed to be living in a 24/7, Web 2.0 digital age – but what is the point of rail services advising passengers to check their websites before they travel when the information available on those sites is so inaccurate as to be useless? Have the muppets taken control of the asylum?

Over the past couple of years SDLT.co.uk – a private company – has spent the best part of £150k on advertising, forged alliances with 16 case management software suppliers and processed over 100,000 SDLT submissions – making it the biggest handler of e-submissions among any of 16 TPVs (third party vendors) currently serving the English & Welsh e-conveyacing market.

So what does it get for its troubles? A Queen's Award for Enterprise or an OBE for the company's founder Archie Courage? Not exactly, in recognition of these sterling efforts (and you need to bear in mind that Stamp Duty Land Tax is one of UK Gov's nicest little earners, raising squillions each year) HM Land Registry has, via HMRC, asked the company to change its advertising strapline.

The offending wording is SDLT.co.uk a future part of e-conveyancing which HMLR objects to because it might cause confusion with the HMLR's own product/service concept for the future that is also called 'e-conveyancing'. Hmm, as Archie Courage has pointed out, with remarkable restraint (we'd have told them to piss off) 'e-conveyacing' is a long established generic term* so 'no' HMLR can't claim rights to it just because they wished they'd thought of it first. After a week of weasel words, HMLR backed down.

* We think we first heard the term e-conveyacing used in the UK by Neil Ewin of Solicitec (as it then was) in about 1997.

Check out the latest comments on this story (to say you the effort they are reproduced here) which sees an inhouse IT commentator put an alternative view on the calculations...

The 'savings calculator' is one of the most risible I have ever seen. For a 600 person Exchange system, it will supposedly cost me £356K over three years, vs. £50K for a hosted solution, resulting in a £306K saving. Wow, can't wait for the managing partner to come dashing through the door demanding to know why we haven't signed up yet.

Hold on though, before you long suffering IT Directors and IT Managers groan in despair, I can save you! I've done a back of the fag packet Excel based on their model, but using realistic assumptions like:

a) Nobody in legal IT writes stuff off over three years and then immediately bins it. You are going to run it for at least two more years, so a five year cost model is more reasonable and plenty of firms would be sweating their ageing assets beyond even this.

b) I'm going to need hardware and licenses for domain controllers anyway, so it isn't a saving.

c) I'm going to need Windows licenses for my PCs anyway so it isn't a saving.

d) I'm going to have Outlook licenses anyway, as I need MS Office, so it isn't a saving.

e) I'm going to need a backup solution anyway, there might be a slight saving on the cost of backup tapes, but that is all.

f) If you can find anyone qualified to run a 600 person exchange system for 25K per annum in London then send their CV over to me at once! £40K is more realistic but still on the low side. In practice I reckon you'd need about 0.3person/year to run a 600 user Exchange system, not the 1.5 person/year they quote.

g) The calculator didn't even manage to work out their own monthly per user cost and showed it as zero. I've (quite reasonably) added that back in!

So I reckon the realisable saving of going hosted vs. running your own 600 person Exchange solution per year is:

They say (over five years and adding in their missing costs):
Own solution: £340K
Hosted Solution: £354K
Saving: (£14K)

I say (over five years and using real world assumptions):
Own solution: £130K
Hosted Solution: £292K
Saving: (162K)

I accept there are plenty of variables that one could add in and ways to make either option more or less expensive, but using their own assumptions it would be hard to show a significant saving. Bear in mind their own model comes out at £14K more costly over five years to go hosted, and I haven't even included any costs for actually making the transition (which could be £30-50K without even trying too hard).

When a more realistic model is used based on the assumptions set out above, the hosted solution comes out £162K more expensive over five years! Hardly bargain of the century, is it? There might be good reasons why you would want to go hosted (e.g. reliability, availability, focus on core business, agility, etc.) and be prepared to pay the premium, but cost savings are not the reason.

The latest edition of the Legal Technology Insider newsletter – issue 207 for March – has now been published. Its contents include the results of our latest readers poll on which are the most widely used versions of Microsoft Office among law firms...

With great relief we are able to report nobody is using (or at least nobody admits to using) anything earlier than Office 2000. So goodbye Office 95 and 97. We were also pleased to see the most widely used version - used by over half the participants in the survey - is Office 2003. And, a by no means shabby take-up of Office 2007. Here are the results showing the percentages of respondents using each version of Office...
* Office 2000 (9.0)      19.4%
* Office XP (10.0)       15.3%
* Office 2003 (11.0)    52.8%
* Office 2007 (12.0)    12.5%


How much a day?
We've had a number of readers complain about the widely divergent prices IT suppliers, systems houses and consultancies are charging for onsite training, implementation and other consultancy services, with rates varying from £350 to £2000 per day so for out next survey we are trying to discover what is the going rate - ad whether there is a regional variation between London & the S-E and the rest of the country? This survey is open both to suppliers to say what they charge and firms to say what they pay. As ever, all responses are entirely confidential. Please tick just one box in appropriate column. The survey can be accessed via the Insider website, just follow the link www.legaltechnology.com

One of the factors that has aways held back the adoption of hosted services (whether it is on an ASP or SaaS model) has been the cost. In otherwords, despite all the operational benefits it has always seemed cheaper (and we appreciate that the true cost of ownership is frequently under-estimated) to buy a system and run it on an inhouse basis. Now e-know.net, a provider of SaaS and other hosted services, has produced a price comparison showing the difference between running an inhouse email solution and using their messagehub hosted service. (Yes, we know, the use of all this lower case text is just so 1990s.) Anyway, e-know.net reckon that over a three year period, the cost of messagehub works out to about a third of the cost of the inhouse solution. And, if your are interested, messagehub (+44(0)1952 236200) is currently offering a free try-before-you-buy option so you can assess whether hosted is a viable alternative to an inhouse email infrastructure. www.messagehub.co.uk

You can find the cost comparison here.

IRIS Legal report they have just won two Axxia sites – one of them is Dawson Hart. Full details to follow.

Aderant has just announced that Farrer & Co has selected Aderant Expert as its new practice management system, to replace its incumbent LexisNexis Axxia software.

Here on The Orange Rag blog and our sister title Legal Technology Insider, we encounter stories involving IT incompetence and stupidity of such gobsmacking awfulness (usually perpetrated by terminally dumb managers within government agencies) that they deserve greater publicity than we've previously be able to afford them.

To remedy this situation, from this week we're starting a regular section on this blog to highlight these stories – in effect this will be the legal IT equivalent of the Darwin Awards. We're calling this section the Midgley Corner in honour of the work of the now largely forgotten American scientist and inventor Thomas Midgley Jr (1889-1944). Who he, you ask?

In fact he is the individual now credited with having single-handedly caused more harm to the Earth's atmosphere than anyone else in mankind's history. His first claim to fame was the discovery that the addition of tetra-ethyl lead to gasoline prevented internal combustion engines from 'knocking' –  yes, he was the man who caused lead to be added to petrol. Not content with this, ten years later in 1930 he discovered a safe refrigerant for household appliances, such as fridges and freezers. Midgley called this new substance Freon – technically this was a chlorinated fluorocarbon or CFC. Fast-forward 70 years and we can now see Midgley as the grandfather of polluted urban streets and global warming.

Sadly for Midgley (although happily for us, as it prevented him from going on to devise a third horseman of the ecological apocalypse) in 1940, at the age of 51, he contracted polio and was left severely disabled. Ever ingenious, Midgley devised a system of pulleys and ropes to allow him to climb in and out of an adjustable bed. Unfortunately, this all went tragically wrong on the 2nd November 1944, when he became entangled in the bed's ropes and died of strangulation.

As ever, please feel free to submit your own nominations for the Midgley Corner.

The Tikit Group plc published its preliminary results for its trading year to 31st December 2007 earlier today (Wednesday 12th March). Here are the summary results...

•    Group Revenues up 12.4% to £26.43 million (2006: £23.52 million)
-    Total services, including consultancy and support, up 16% to £17.56 million (2006: £15.18 million)
        -    Consultancy up 8% to £7.9 million (2006: £7.3 million)
        -    Recurring managed services and support revenues up 23%
            to £9.63 million (2006: £7.84 million)
-    Software sales up 8% to £8.12 million (2006: £7.53 million)

•    Profits before taxation and share option charges up 24% to £3.62 million
(2006: £2.92 million)

•    Proposed final dividend of 3.25 pence per share resulting in a full year dividend up 25% to 5.0 pence per share (2006: 4.0 pence).

•    Cash generated from operations was £2.09 million (2006: £3.61 million).  In the year, £1.58 million of Tikit’s cash resources was used to satisfy earn-out payments and £0.39 million was used to purchase shares into treasury, resulting in net cash of £2.55 million at 31 December 2007 (2006: £4.15 million)


And here is chairman Mike McGoun's statement...

I am pleased to report that solid organic growth in revenues combined with our continued focus on improving margins has resulted in the Group achieving its planned profit growth over 2006. 

This is the first set of full year results announced under IFRS with comparisons against re-stated 2006 results. Total Group revenues of £26.43 million in 2007 represent organic growth of 12.4% compared with £23.52 million reported in 2006. The Group has again increased its operating margins, achieving 13.8% for the full year (2006 12.4%).   Profit before taxation increased by 22% to £3.39 million (2006: £2.79 million) and after adjustment for share option charges increased by 24% to £3.62 million (2006: £2.92 million).

Good progress has been made in many areas of the business, with continued solid growth in our contracted support revenues, major project wins with our existing large legal clients and significant success from our recent move into the accountancy sector. In addition, customer response to the release of new Tikit-developed software, particularly the enhanced version of Tikit e-marketing suite and the Tikit Template Manager System for Microsoft Word (TMS) resulted in sales in the second half and also indicate potentially higher sales of these products during 2008 and beyond.

Our European subsidiaries based in France and Spain continue to make good progress with new customer wins and increased market share. Both France and Spain are experiencing a good start to 2008..


Results
Revenues for the period increased by 12.4% to £26.4 million. (2006: £23.5 million). Reported revenues were slightly below expectations as a result of the earlier implementation of subscription-based pricing on some of our products than was originally planned. In conjunction with one of our key software partners, we offered subscription-based pricing to new clients in the final quarter of 2007. This is an exciting development for the Group, which will secure more predictable long-term revenues. There will be a short term impact on both revenues and profits as we move from initial licence fee recognition of software sales to revenue recognition over typically 5 year contracts.

Total services revenue from our consultancy and managed services businesses increased by 16% to £17.6 million (2006: £15.2 million) of which £9.6 million (2006: £7.8 million) related to managed services and support revenue. These contracted recurring revenues accounted for 37% of total group revenues in 2007.   

The improvement of operating margins from 12.4% to 13.8% reflects higher utilisation rates of our chargeable staff and efficiencies gained through the integration of managed services operations and reducing some lower margin business in non-strategic areas such as hardware sales. 

Profits before taxation increased to £3.4 million (2006: £2.8 million). After adjusting for share options, profits for the Group increased by 24%, achieving an audited profit before taxation and share option charges for the period of £3.6 million (2006: £2.9 million).

Share option charges during the period, as required by IFRS, were £231,000 (2006: £127,000). This is a non-cash charge to profits based upon the best estimate of the market value of shares at the time in the future that share options become exercisable. In order to eliminate the potential dilution effect of share options and to meet the anticipated future liabilities associated with share options, the Group has purchased 250,000 Tikit Group shares and hold them in treasury. The average price paid for these shares was 251 pence per share.

Earnings per share, before share option charges, increased by 10% to 20.1 pence (2006: 18.3 pence). However, the effective tax rate on profits increased from 22.4% in 2006 to 30.0% in 2007. On a normalised tax basis, earnings per share increased by 21%.  Normalising tax means restating the prior year earnings as if the effective rate of tax was 30%. Basic earnings per share were 18.6 pence (2006: 17.3 pence).

Our balance sheet remains strong, with net assets at 31 December 2007 of £8.2 million (2006: £6.9 million), including cash balances of £2.5 million (2006: £4.1 million). Cash generated from operations was £2.09 million (2006: £3.61 million). The reduction in cash generated is primarily as a result of an increase of £2.45 million in trade receivables at 31 December 2007 over the prior year.

In summary, 2007 was a good year for the Group. We enter 2008 with a strong order book of projects to be implemented, reflecting the blend of consultancy, support and software business sold in the last quarter.

Tikit is in an excellent position to continue to support its clients in the legal and accountancy sectors. Both of these sectors have shown good resilience in previous economic downturns and it is our belief that the excellent range of services and products available from Tikit will enable our clients to manage their businesses more effectively during such a period and beyond.

During the last twelve months, we have seen a strengthening in the partnership with LexisNexis to expand their business in the legal and accountancy sectors. LexisNexis, part of the Reed Elsevier group of companies is an established global provider of information-based subscription services to the legal sector. In recent years they have expanded, through acquisition, into the provision of software, such as Interaction and more recently Redwood Business Analytics. Tikit are their partner in the UK for these products.

We have recently been appointed as a partner for the implementation of Thomson Elite products into the legal market place. We expect to capitalise on this arrangement in 2008 and beyond, not only in the UK, but also in mainland Europe, utilising our own operations and clients in that territory.

Its always good to see that marketing and promotional materials aren't wasted. Here's one of DDS supplier nFlow's insulated drinking mugs sitting on top of a mountain in the Alps. The photo was taken by Damian Blackburn of Davenport Lyons. Funnily enough Davenport Lyons actually use the rival Bighand DDS software. Clearly some suppliers giveaways reach places others can't.

Following on from last summer’s report that the Spanish law firm Garrigues had decided to implement SAP, in conjunction with Accenture, as its new practice management system, comes news of a second big Iberian legal win for the supplier. This time the firm is Cuatrecasas (with 22 offices, 193 partners and 1368 fee earners) that is ordering SAP to handle finance, practice management, analytics, HR, workflow and elements of CRM. SAP say the contract was won ‘in a competitive engagement’ against the Thomson Elite 3E product.

DocsCorp has announced the acquisition of US based redlining software specialist DocuComp. DocsCorp say that with this acquisition they have gained access to the most mature and sophisticated text comparison technology in the software industry. DocuComp was first introduced in 1988 and its core comparison algorithm was awarded a groundbreaking patent in 1989 for its ability to accurately identify fine-grain text changes in documents of any length or complexity.

The acquisition of the DocuComp algorithms and technologies will enable DocsCorp to build on the success of its own document comparison solution (pdfDocs compareDocs) released in late 2007. It also underscores DocsCorp's commitment and resolve to develop a leading-edge comparison tool for those seeking an alternative desktop or server-side solution.

Editors note: after the demise of CompareRite redlining system, DocuComp was the only serious competitor for Workshare's DeltaView software.

Rob Hailstone, CEO of home information pack provider Hipag, has welcomed the Department of Communities & Local Government’s announcement that area trials of HIPs have been successful. "It is heartening to learn that three quarters of customers surveyed are satisfied with HIPs. It’s specially welcome to hear that nearly one third of buyers plan to carry out the recommendations contained in the Energy Performance Certificate in order to improve the energy efficiency of their homes. However, I am surprised to learn that 81 per cent of sellers understood the documents. That probably means that 81 per cent understood what the documents were and not what the information contained in those documents would mean to them or their buyers."

We did ask Mr Hailstone whether he actually meant to insult homebuyers by suggesting they were too dim to understand the HIPs documentation and this is what he replied...

"I think the use of the phrase '81% of sellers understood the documents' used by the CLG may have been a bit misleading. The implication is that a high proportion of the general public would understand some very dry legal documents written mainly for lawyers to interpret. What I suspect happened was that the public were asked if they understood what a Water and Drainage Search etc was, not what information that document contained, in exactly the same way as I would not expect to understand the contents of a medical document for example.

"As an ex property lawyer I would not expect most of my clients to understand the documents I was employed to explain. The guide I have produced is to help begin to explain the kind of information that you would find in the documents in a HIP if those documents were delved into thoroughly. I was most certainly not intending to be condescending. I am sure the majority of home owners are bright, however most have no legal training, nor are they expected to. The HIP (in its current form) without a guide or a lawyer to interpret is not really a document for the layman."

Hipag do produce a comprehensive layman's guide to HIPs as part of their HIP package.

Lyceum Capital, a UK mid-market private equity firm that recently announced its latest £255 million fund, is targeting the legal services industry to tap investment opportunities arising from the Legal Services Act 2007.  To assist in identifying and evaluating investment opportunities in the legal sector, Lyceum has recruited to a new legal industry advisory board three senior figures: Tony Williams, Paul Hewitt and Professor Richard Susskind, OBE.

Tony Williams was Managing Partner of Clifford Chance from 1998 to 2000, undertaking the substantial reorganisation of the firm and completing its mergers with Rogers & Wells in the US and Punder in Germany.  He then became Managing Partner worldwide of Andersen Legal and head of its UK practice, developing the firm’s international strategy and restructuring its various groups.  In 2002, Tony established Jomati Consultants, international management consultants to the legal profession.
 
Paul Hewitt has substantial experience in both young private and established public companies.  He is currently chairman of YSC, senior non-executive director of the Kiln Group and a non–executive director of Co-operative Financial Services and GMT Global Aviation. Previously, he spent four years with the Co-operative Group, latterly as Deputy Group CEO and four years with RAC as Finance Director, after three years in the same role with Redland. At both RAC and the Co-operative Group, Paul was instrumental in developing legal services businesses offering a range of services to consumers.
 
Richard Susskind is an independent adviser to law firms, in-house legal departments, and national governments. He specialises in future trends in legal services and the impact of IT. He is the author of numerous books including the legal best seller, The Future of Law, has written more than 100 columns for The Times and has been invited to speak in more than 40 countries.
 
Described as the lawyers’ equivalent of the City’s Big Bang deregulation of 1986, the Legal Services Act will enable law firms to secure private or public investment and will permit non-lawyers to compete in the provision of legal services – together with or separately from legal professionals.  Research by Smith & Williamson published in November last year indicated that nearly a quarter of firms interviewed would be seeking external capital in the next five years, typically of up to £20 million each.  Most of those seeking capital were expected to be small to mid-sized firms and private equity was deemed a more popular source of finance than the public markets.  

Lyceum Capital has a track record of successful investment in service businesses. The firm’s funds provide capital for expansion through organic growth and acquisition, and the Lyceum team provides operational and strategic support to management in pursuit of growth, operational efficiencies and innovation. Lyceum anticipates that mid-market private equity firms of its size and focus can bring several strengths to legal services businesses, including investment in areas such as improved systems and IT, capital for acquisitions and the purchase of partnership equity interests, as well as expertise in accelerating growth and value.

Commenting on Lyceum’s expansion into the legal services sector, Managing Partner, Jeremy Hand, says: “The legal services market is large, fragmented and offers considerable potential for continued growth – all characteristics of the sectors in which Lyceum has been successful.  We anticipate consolidation of small and mid-sized legal services businesses and believe that, in spite of increased professionalisation of the legal industry in recent decades, many opportunities remain to improve service standards, efficiency and profitability.  Although the Act does not come into full force until 2011, now is the time to build the early businesses that will have first mover advantage when the Act’s changes come into effect in three years’ time.”

Paul Hewitt comments: “The deregulation of legal services will provide many opportunities for firms providing these services to develop and improve their offering.  I am excited to be working with Lyceum to identify the best of these."
 
Professor Susskind says: "I believe that external investment in legal businesses will be vital in coming years, not least to support the development of modern systems and processes. I am very pleased to have this opportunity to advise on the most promising IT-related investment opportunities."
 
Tony Williams adds: "The Legal Services Act presents many opportunities and challenges for legal services firms, but will clearly transform the profession over the medium term.  I'm delighted to be working with Lyceum Capital as they have a strong and successful track record of investing in growing businesses."

Yesterday, at the AIIM International Exposition & Conference taking place in Boston (Mass), ISYS Search Software – a supplier of enterprise search solutions for business and government – announced the availability of ISYS:web and ISYS:sdk for the Linux operating system.

ISYS:web for Linux is a direct port of ISYS:web for Windows to the Linux platform and therefore transfers the majority of capabilities and supported file types to the new system. ISYS:web for Linux provides users with enterprise search functionality, such as automatic categorization and entity detection, while administrators can take advantage of controls that enable rapid implementation and instant monitoring of search trends and performance.  

ISYS:sdk for Linux provides software developers and system integrators with the ability to incorporate the power of the ISYS search API into custom applications and solutions, whether for commercial distribution or internal use. Over the years, ISYS has licensed its ISYS:sdk technology to a variety of organizations, including EMC Corporation, Autodesk and TOWER Software.

Recognising that over the years various legal IT vendors had tried, without much success, to generate interest in law firms over 'open source' alternatives to Windows, we asked Dave Haucke – the VP for global marketing at ISYS – whether he thought there was any demand for a Linux version? This is what he replied...

"Re your question about demand in the legal sector, the answer is we don't expect to generate too much demand directly from the legal firms themselves, but there are some exceptions to that outlook.

"1. Legal software vendors looking to embed best-of-breed search from a third party often offer both Windows and open source versions of their software. The problem we ran into in the past is these vendors (both inside legal and outside) wouldn't give us serious consideration with having just a Windows version ... did them no good to integrate us only into their Windows apps. That right there was the primary motivator for us, since like you, we've never seen much value in offering an open source version otherwise. We can't turn away chunky OEM deals when they come calling. :)  This also relates to the point we made in the release about being ready for anyone hesitant over selecting FAST, MS or Autonomy. As you know, we're not trying to compete with FAST or Autonomy, but we are actively marketing our stuff as an effective and affordable short-term solution while companies wait and see what happens with the high end vendors.

"2. Law firms to some extent need this, and general counsel most definitely needs it. Think of the e-discovery scenario – you're tasked with indentifying and collecting information, some of which resides on open source systems. Now, ISYS has always been able to go out and get that stuff, but you've never been able to install us natively on a Linux box. So, from that standpoint, we reduce the headache somewhat by giving firms and GC a tool that can run natively, which means indexing and searching is faster, and the whole "pre-discovery" process is faster. Make sense?  I have a current real-world example of that with the firm Robins, Kaplan, et al in Boston. They're excited about the prospect of a Linux version for the very reason I cited above."