A funny thing happened on the way to finishing my annual article on legal technology trends this year. All of a sudden, the issue of an economic downturn and the use of the R-word (recession) became big news in the US and for plunging world stock markets. I ended up revising my trends list in light of recent economic news.

I have written recently about how to make prudent technology choices in a negative economy. The key idea is not simply to cut spending, although you might, but to think clearly about the economic justification for each technology decision that you make. You should be doing that anyway, but the importance of good decision-making gets highlighted when times are tough.

It’s not rocket science. You look for technology that either helps you cut costs or enhances your opportunity to earn revenues. Better said, you want technology that makes it easier for fee-earners (and, increasingly, other revenue generators) to generate more revenue and makes it possible to reduce costs without making it more difficult to generate revenue. It takes some analysis, some thinking, and often some tough decisions.

In recessionary times, technology decision-makers must focus on good planning and on even better execution. Costly technology mistakes can have a direct impact on a firm’s bottom line and its ability to retain staffing levels. Since technology budgets have crept up in recent years to become one of the larger line item expenses at many firms, we’ll definitely see a movement toward getting tighter control of those budgets.

Does that mean we should expect to see a sleepy year for legal technology? In a word, yes. At least that’s my prediction. What does happen will occur largely under the surface rather than in the headlines. Development will be focused primarily on core technology and business needs and bread-and-butter issues. I don’t expect to see a lot of stories about law firms running out and buying iPhones for all of their lawyers. I don’t see one great killer legal app on the immediate horizon. I do expect to see more pressure placed on law firm technology committees to produce better results. Legal tech vendors will certainly be under pressure and further consolidation and shakeout in the industry is likely.

At the same time, legal technology tends to be unevenly distributed. As a general rule, I expect that we’ll continue to see solos and small firms driving innovation in the practice of law. Firms that are good at technology will take advantage of opportunities to widen their technology advantage over their competitors and position themselves well for the time when economic recovery comes.

In general, 2008 will be a year of retrenchment. Let me remind you, however, that my favorite approach to legal technology is based on the Nobel-prize-winning economic theory of modern portfolio management, which emphasizes that safety comes in the diversification of investments, and is required for the prudent investor. You want o mix in a few higher-risk, potentially higher return efforts rather than rely totally on a one-dimensional conservative, cautious approach. 2008 is a year where inexpensive efforts like blogs and podcasts might be a great way to get outstanding returns for your technology investment.

Here are the eight top trends I see for legal technology in 2008.

1. Making Better Use of What You Already Own.

What more efficient use can you make of your tech budget than not spending it? Law firms often hold treasure troves of software and other technology tools that have been purchased, but not used. Often, the left hand does not know what the right hand is doing and one part of firm laments the inability to do something that another part of the firm uses every day. Duplicate purchases get made. Time and effort is wasted.

With the likely tightening of technology belts over the course of 2008, look for law firms, legal departments and individual lawyers to get more creative in using what they already have. In large part, that means inventorying and finding what they already have, and then communicating the availability of that functionality to the people who need to use it. I often hear lawyers complain about not having tools while, at the same time, IT staff wonders why lawyers aren’t using great tools they have installed for them. It often is as simple as just having the conversation. A good approach is to describe the functionality you need and not just name the program or technology.

The term “audit” is only slightly more appealing than “root canal,” but in tight economic times, it is essential to learn what technology you have, and determine what you don’t need and what you can use better. Creative ways to use what you have will separate winners from losers in 2008, but this trend will affect all lawyers.

2. Lawyers Win Round 1 in the E-discovery Battle . . . by a Wide Margin.

Every legal technology pundit has been predicting, for many years, that we would see a huge movement from paper discovery to electronic discovery. There was a broad consensus that the amendments to the Federal Rules of Civil Procedure in December 2006 would open the floodgates to electronic discovery. We’re still waiting. Electronic discovery remains a trickle rather than a flood in today’s litigation world.

I’m taking a contrarian approach in 2008. Lawyers have proven to be the immovable object to the surprisingly resistible force of electronic discovery. The post-FRCP amendment battles have been fought and lawyers have won round 1 handily. Electronic discovery has not become routine. Electronic discovery vendors and their investors are still disappointed by this market. And that simply will not change in 2008. Lawyers, for the most part, will move slowly and grudgingly to electronic discovery, but I don’t expect to see any cases, technologies or other developments that will dramatically speed up the pace of change.

I realize that it will be easy for these observations on e-discovery to be misinterpreted. Let me be clear. It is wrong-headed for lawyers to put off the day of reckoning on electronic discovery. Last year, I wrote about 26 trends in electronic discovery. Craig Ball has recently written persuasively about 17 trends. There is and will continue to be a widening EDD gap between the lawyers who do electronic discovery well and those who don’t do it at all. The professionalization of the litigation support management role will continue, as well as a slow movement toward the creation and evolution of technology counsel – lawyers who specialize in the e-discovery discipline. At some point, this EDD gap will become insurmountable. There are great opportunities for lawyers who want to differentiate themselves by being great at e-discovery in 2008. While that’s certainly the path I would advocate, for most of the legal profession, 2008 will be a sleepy year in e-discovery.

3. Security Begins to Matter . . . Really.

Given the volume of confidential data held and handled by lawyers, it is surprising that the legal profession has never been considered a leader in information security. I have never met a “Chief Security Officer” at a law firm. However, what’s more troubling than the lack of leadership role is the all-too-common lax security practices of lawyers at even the most basic levels. The password policies and practices at too many law firms flunk even the most basic security tests.

With the frequent stories of data loss from stolen laptop computers in 2007, security has bubbled back up to the top of the information technology agenda. As recessionary pressures force cutbacks on new technology projects, there will be more time and attention paid to security matters. Law firms representing clients in the financial and healthcare sectors can also expect more pressure from clients on security.

Security is another area where the word “audit” comes into play. You can’t know how good or bad you are until you test and measure what you are doing. Hot topics in security in 2008 will be encryption (especially at the drive and folder level), remote access concerns, and getting a handle on the password issues. A firm that loses or reveals confidential client data puts the reputation and possibly the viability of the firm at risk.

4. The Death Throes for Email?

We’re all buried by email. If you have a BlackBerry, you’re buried all day wherever you are at and you feel like you can never get away. At the same time, some studies indicate that 80 – 90% of Internet email is spam, and a large fraction of internal email is not much better than spam. You increasingly hear people saying that “email is broken.”

The real difficulty with email is that we are asking email to do far more than what was intended for. Email is for sending, well, email messages. We use it for everything – from a document management system to a collaboration platform. People are gradually finding that RSS feeds, news readers, instant messaging, phone calls, and even face-to-face meetings are often better and more appropriate than email for certain types of communication. Some even suggest that the trend toward social networking platforms, like Facebook, is in some part due to the failures of email. Email has also become unreliable as spam filters and overloaded inboxes make it difficult to be certain that email messages are actually delivered and received. All these problems are just the tip of the iceberg when it comes to email problems, but these problems threaten to tip over the iceberg.

The trend to watch is the movement away from email into appropriate tools for the task at hand. Two trillion instant messages were sent in 2007. Firms with policies against instant messaging will find that their clients will insist on the use of it. It has become difficult to send large files by email at a time when it has become essential to send large files. Watch for use of online services for the transfer of large files to grow. Almost every communication alternative to email can be expected to grow in 2008. Email will not die as a tool for lawyers, but 2008 will demonstrate how rickety and sickly the email system has become.

5. Going Mobile.

Lawyers can and do work from anywhere and everywhere. As I write these words, there’s an ice and sleet storm outside. If you can do all of your work from home, does it make sense any more to drive through bad weather to the office?

Remote access has become a big issue at law firms, and something many lawyers take for granted or refuse to accept the absence of. The iPhone, other smartphones and the BlackBerry have shown how valuable remote access and mobility can be. Laptop computers are routinely the first purchase of solos starting their own firms, and often are now standard in large firms.

Mobile computing is a big trend in the world at large, so it’s easy to predict that it will be an important trend in the legal profession as well in 2008. Asking whether a new technology initiative helps people to be more mobile or less mobile will become the rule rather than the exception.

6. Opening Audio and Video Channels.

I always emphasize the importance of opening up channels of information and communication. Blogs and RSS feeds are great examples of successful new channels of communication for lawyers. People consume information in many ways today and it’s important to communicate on a channel that your clients use.

There has been a huge growth in the consumption of audio and video content over the Internet. The recent Hollywood writer’s strike might have even accelerated the transition to Internet delivery of audio and video content. Podcasts (downloadable audio programming) and streamable video (YouTube being the best example) have gotten a lot of attention and astonishing numbers of downloads.

The legal profession has made only tentative steps to date into these channels. There are a small number of legal podcasts (a small fraction of even the number of blogs) and a few lawyers using YouTube for video. However, the potential is enormous. 2008 will see lawyers moving to these channels in two ways. First, lawyers will be consumers of audio and video in the form of CLE programs and other learning materials. An iPod loaded with podcasts can turn your commute or workout session into a mobile university. Second, we’ll see a slow but steady growth in the area of podcasts and other online delivery of audio and video content from lawyers. There is a real audience for audio and video and lawyers should consider how to open up a channel and serve that audience.

7. Dancing with a Recession.

I’d, of course, like to be wrong about a slow economy or recession, but the there’s seems to be some consensus that that’s where we’ll be in 2008. In an article about prudent legal technology investments in a time of recession that I wrote in the early 2000s, I identified six types of technology to concentrate on:

• Technology That Cuts Costs
• Technology That Makes You Indispensable to Your Clients
• Technology That Helps You Get New Clients
• Technology That Helps You Move into New Practice Areas (or Creates Profitable Niche Practices)
• Technology That Helps You Recruit and Retain Great People
• Technology That Makes You Saner

Expect to see lawyers and law firms trying to do more with less and trying to find efficiencies and cost savings. Standardization on software programs and generally smarter approaches to usage and licensing will become the order of the day. Staff reductions are not out of the question, although moving IT staff into litigation support roles might become a common approach. Green legal technology? Yes, if it helps save money. Lawyers will have to get creative and work within economic and other constraints.

Two big areas to watch will be Software as a Service (SaaS) and Open Source software. SaaS can be thought of as hosted software or utility computing – you use a browser and the Internet to access the functionality of the software for a monthly cost rather than installing the hardware and software locally to run the programs. Open Source software represents a relatively new approach to software licensing that has, as a practical result, offers some free and well-regarded software options, especially in the area of tools and utilities, but also in standard applications. Look for significant growth in both areas.

8. Smart Ways to Work Together – Collaboration Tools.

I’ve recently co-written a book with Tom Mighell called “The Lawyer’s Guide to Collaboration Tools and Technologies: Smart Ways to Work Together.” It will be published in March, 2008. Not surprisingly, I now consider using technology for collaboration to be the most important trend in legal technology for 2008 and a good deal beyond.

Tom and I had the epiphany that using technology to “improve productivity” or to work “better, faster and cheaper” wasn’t appealing to lawyers because it didn’t appeal to us. Instead, we found that all the new technology we used and wanted to use, and the technology we liked best, had one thing in common: they made it easier for us to work together with people we had to work with on the projects we had to complete. It’s not much more complicated than that.

Whether it’s collaborating on documents (track changes, redlining, transferring large files) or collaborating on projects (online meetings, group calendars, extranets, deal rooms, and much more), 2008 will see the growth of ways for lawyers to use technology to work together with clients, colleagues, courts, opposing counsel and others. Web 2.0 and other exotic terms? At heart, they deal with collaboration tools. If you want to think about the next step in the evolution of legal technology, collaboration technology is a great place to start. I’ll also note that e-discovery is a classic example of an area where collaboration tools are essential. The economy might go up or down, but, no matter what, lawyers will need to work together with others.

Conclusion.

Admittedly, it’s difficult to narrow down to just eight trends. As I mentioned earlier, I recently wrote about 26 trends for electronic discovery alone. However, I write this article each year to get a conversation started about legal technology and the ways lawyers can and should be using technology. For 2008, my message might be a bit more controversial than in other years in some respects, but the core of my message is to watch the economy, plan well and execute even better, and be cautious, but not over-cautious, and be a little bold but not-over-bold. Choose a few things and do them well. Note well that the gap between the tech-savvy and the not-tech-savvy will continue to expand, and it’s up to you to decide on what side of the gap you want to be.

The Lawyer’s Guide to Collaboration Tools and Technologies: Smart Ways to Work Together (Lawyer’s Gu Author: Dennis Kennedy, Tom Mighell Binding: Paperback List price: $89.95 Amazon price: $103.63