Start-up Profits From E-Legal Activities
DataCert automates the bill tracking process for corporate legal departments
May 7, 2001 (Computerworld)
The Home Depot Inc. receives 8,000 legal bills every month, says Libby Troughton, the chief systems specialist in the building supply retailer's legal department. That volume of paper makes it difficult to monitor the law firms - which Home Depot pays on a per-case basis. So Troughton is working on a project with DataCert Inc. to automate the bill presentment and payment processes.
The new system will give Home Depot a way to collect and analyze its billing data, she says. It will also help the Atlanta-based retailer save money by reducing the number of clerical employees needed to handle accounting chores, monitoring compliance with corporate guidelines - such as checking that outside firms adhere to negotiated rates for things like faxing and making copies, and cutting checks faster so the company can earn discounts for speedy payment.
CEO Eric M. Elfman says DataCert has plans to move into new markets such as health care and insurance.
DataCert Inc.
Location: 3100 Timmons, Suite 310, Houston, Texas 77027
Telephone: (713) 572-3282
Web: www.datacert.com
Niche: Software and services for developing Web-based applications and integrating them with back-end systems; e-commerce sell-side applications
Why it's worth watching: DataCert's technology translates invoices into standard formats for easier processing. Security features ensure document integrity.
Company officers:
• Eric M. Elfman, co-founder, president and CEO;
• Eric A. Smith, co-founder and chief technology officer;
• Geoff S. Elfman, co-founder and vice president of technical services
Milestones:
• April 1998: Company founded
• January 1999: ShareDoc/Legal launched
• August 1999: UPS-branded version of ShareDoc debuts July 2000: First round of venture funding
Employees: 26; workforce growing at 500% per year
Burn Money: $7.7 million from United Parcel Service Inc., angel investors and co-founders
Products/pricing: ShareDoc/Legal service costs $18,000 per year for corporations, $2,000 per year for outside counsel firms; WebManager, $15,000; FlowManager, $50,000.
Customers: AT&T Corp., The Boeing Co., Compaq Computer Corp., Philip Morris Cos. and others
Partners: UPS, Elite Information Group Inc., RSA Security Inc., Compinfo Inc. and Bridgeway Software Inc.
Red flags for IT:
Product doesn't integrate with back-office financial systems. Software currently works only with Windows-based systems.
Setting a Precedent
Although legal departments have wanted to move to electronic billing for years, there isn't a common document format used throughout the industry that will ease the process, says Eric M. Elfman, president and CEO of Houston-based DataCert. Many small law firms still generate unique paper invoices, he says. By acting as a middleman - validating and reformatting legal invoices to comply with XML data schemata like the Legal Electronic Data Exchange Standard 2000 - DataCert's ShareDoc/Legal Web service can offer customers the clean XML-formatted data that's necessary for online transactions.
Elfman says that the ShareDoc/Legal service works even if the source document is a print file. All DataCert needs is a digital representation from which to scrape data; it will generate a translation scheme to convert from the outside counsel's file format to the client's format.
Law firms can send bills to their corporate clients by logging onto the ShareDoc/Legal Web site, choosing which client should receive the bill and then uploading the document. ShareDoc/Legal does the translation and validation, then sends the resulting XML data to the client company. The law firms don't have to install any hardware or software.
By using a Web interface, says Elfman, DataCert can enforce security through public-key infrastructure encryption and digital certificates without modifying the law firms' systems. Because it uses encryption throughout the system, DataCert can ensure the integrity of any document transferred through ShareDoc/Legal, including pleadings, briefs and depositions. These documents pass through untouched, with no translation or formatting required.
ShareDoc/Legal works with DataCert's Windows 2000-based WebManager and FlowManager software. WebManager is an XML viewer application that lets legal departments see invoices. FlowManager routes billing data and handles the approvals process. DataCert has integrated its software with the management systems most commonly used by legal departments, says Elfman. That allows customers like Home Depot to directly enter information from bills into those systems for analysis.
Integration Issues
The fact that DataCert's products can be integrated with existing systems is a key part of the company's value, says Matthew Kovar, an analyst at The Yankee Group in Boston. Because legal departments generally aren't technically sophisticated, he says, DataCert can get them running more quickly than if they built a similar system in-house.
But DataCert doesn't integrate into financial systems, says Kovar, so users must use existing payment methods. In the future, enough companies may use DataCert to make it appealing for someone to partner with the company on a payment system, he says. But DataCert's executives aren't planning on that integration.
Elfman says the company plans to expand the number of platforms that WebManager and FlowManager support. The products currently run on Windows; Elfman says he wants to target Unix.
The company also plans to expand into new niches. The secure communications technology is agnostic, says Elfman, so DataCert can easily move into markets that aren't yet moving much of their data electronically, such as insurance and health care.
The Buzz: State of the Market
Legal Maneuvers
DataCert is in a hot market, and its focus on the legal niche is smart, says Matt Kovar, an analyst at The Yankee Group. He estimates that the market for secure content delivery will grow from an estimated $450 million this year to more than $2 billion in 2005. The market encompasses everything from copyrighted material to proprietary business information to bill presentment and payment.
The market is in a hypergrowth phase, says Kovar, pushed by businesses wanting to digitize a wide variety of material and transmit it via the Internet. No single technology has emerged as the de facto standard, but encryption, authentication and receipt notification and confirmation are key elements of any system, he says.
Kovar says he also likes DataCert's plan to expand into insurance and medical niches. Organizations in those fields have big budgets and high-value transactions, with high privacy and confidentiality needs, he says. "They're certainly ripe for this environment," says Kovar.
DataCert has limited competition, he adds. One group includes systems integrators that build extranets. But in the realm of secure document delivery, no other company has exactly the same service, he says, although DataCert has competitors in both the bill presentment and document transmission markets.
RealLegal Inc.
Denver
www.documentforum.com
RealLegal doesn't compete with DataCert in the area of bill presentment and payment, but it does have services for the secure transmission of legal documents. The electronic transcription service will deliver documents from a court reporter via e-mail or on diskette. Electronic signature technology verifies the integrity of the document. RealLegal also offers Web-based products for sharing transcripts and depositions.
MessagingDirect Ltd.
Edmonton, Alberta
www.messagingdirect.com
MessagingDirect's M-Bill billing software competes with DataCert's products, but it isn't directed specifically at the legal community. The bill arrives in the customer's e-mail and incorporates payment options and procedures, unlike DataCert's ShareDoc/Legal. Like DataCert, M-Bill also authenticates the user's identity and ensures the integrity of the document being delivered.
Johnson is a Computerworld contributing writer in Seattle.