Will the Real Winner of BigHand’s Esquire Innovations Acquisition Prove to be Small Law?

Will Small Firms Be the Real Winners in BigHand’s Esquire Innovations Acquisition?Just in time for this week’s ABA TECHSHOW, dictation workflow management provider BigHand has acquired Esquire Innovations, Inc., a document automation company. At first, my reaction to the news was that this makes sense since the two companies’ technologies are natural complements with a strong business case for large and midsize firms. These companies represent BigHand’s core market (and the integration has a lot to offer them), but following a conversation with BigHand North American President Eric Wangler and Esquire Innovations Managing Director Ian Kujawa, I found my thoughts repeatedly drawn back to the long-term potential for small law firms.

Let’s start with some background. BigHand goes to market as an enterprise “voice productivity” platform. Its product suite combines dictation and voice recognition technology with process and workflow management to support transcription and document creation. The solution centrally manages digital dictation files and assigns work among legal secretaries, transcription services, or other stakeholders.

Esquire Innovations’s iCreate uses templates to automate the creation and formatting of legal documents. When incorporated within the BigHand workflow (a task which is already complete), this has the potential to reduce manual document creation tasks, allowing secretaries to focus on typing and editing the end document. Combined with BigHand’s voice recognition capabilities, this creates a near total automation of dictation, leaving only review and correction to human work.  The result is a solution that promises to reduce costs within legal services by increasing the efficiency of legal support. The current integration is only the first step for the company, which plans to further integrate Esquire Innovations products, which will include at least the incorporation of iCreate becomes the default template system for BigHand.

Assessing the Acquisition

Large firms that make a wide use of dictation or dedicated transcription pools (or services) will identify clear opportunities for cost savings. Reducing the tasks that that must be completed by a person improves the efficiency of legal support staff. These efficiency gains can be applied to increase internal capacity or to pare down the organization’s cost structure (although, this is not as easy as one might think). Of course, these gains are well aligned to the current legal market, with firms under increasing pressure to reduce fees and lean out operations.

BigHand already has strong penetration among large law firms, counting 80% of the largest law firms in the United Kingdom (the company’s home market) within its client base. After only about one year of focused engagement in the United States top-tier firms, it has grown to 52 of the NLJ 200, with two top ten firms added in the last several months. For these firms, the Esquire Innovations acquisition expands on BigHand’s value proposition but currently offers little beyond an integrated workflow that could not be accomplished simply by using BigHand and iCreate separately.

It should come as no surprise that large and midsize (who face similar market and organizational dynamics) firms represent BigHand’s core audience. Their strategy following the acquisition undoubtedly will focus on these organizations. Again, these firms will find clear business cases, related to legal support costs and capacity. I don’t doubt that this will be the company’s main focus going forward. However, as we spoke I was surprised by how often Wangler returned to the topic of small firms, providing some indication of the company’s longer term objectives.

On reflection, it’s not as surprising. The integration of BigHand and iCreate potentially offers a new opportunity for small firms to embrace dictation in a way that didn’t make sense previously. BigHand has already demonstrated its interest in the small firm market with the launch of BigHand Professional, its cloud-based dictation workflow offering for small law firms, about a year ago. Following the acquisition, the company’s initial attention will be devoted to bringing Esquire Innovations capabilities to its enterprise customers. However, in the longer term, we can expect that it will begin to bring Esquire Innovations technology into BigHand Professional. That shift stands to create new opportunities for the use of dictation in the small firm market (and expand BigHand’s addressable market considerably).

At the moment, small firms don’t use dictation with near the kind of regularity of large firms. There are exceptions, of course, but I don’t hear about dictation when I speak with small and solo firms, even among the tech savvy New Law crowd. With thinner resources, attorneys in small firms are much more likely to type and format their own documents. Support staff, when available, tend to have a wider set of responsibilities on their shoulders, making transcription a low priority task. This is a fairly significant obstacle to BigHand’s traditional value proposition. (I don’t know if this is the case in the U.K., where dictation is more widespread and formalized. I’d be interested to find out if any one knows.)

In this light, BigHand has the potential to become useful, not for process management but as a dictation productivity tool. The act of dictating (generally) is faster than typing and can be conducted in a wider set of circumstances. It is the processes of transcription and document generation that create the extra labor demands. For small firms, then, the promise of the BigHand and Esquire Innovations acquisition emerges from an integrated environment that automates these aspects of dictation work, connecting the act of dictation to a finished draft of a legal document. By comparison, a solution like Nuance’s Dragon (which is incorporated by BigHand), only automates transcription, it leaves the major obstacles unaddressed.

With the integration of Esquire Innovations, BigHand Professional could open the door to dictation in small, resource-constrained law offices. Unlike large firms, the potential benefit here comes in terms of attorney productivity, not organizational cost structure. This ties closely to the business pressures on the industry. Small firms face the same pressures related to client savings and value as Big Law, but they have much less leeway to cut costs or reduce fees. The productivity gains of automated dictation could potentially help these firms besee_related_postscome a bit more nimble to remain competitive against firms with greater resources.

About David Houlihan, Esq.

David Houlihan researches enterprise risk management, compliance and policy management, and legal technology. He is an experienced advisor in legal and technology fields with a unique understanding of complex information environments and business legal needs.
Posted on by David Houlihan, Esq.

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