Delia Venables is a computer consultant for lawyers and also editor of theInternet Newsletter for Lawyers. She can be contacted on 01273 472424 or delia@venables.co.ukand her web pages are at http://www.venables.co.uk/legal/
This article explains some of the trends and ‘buzzwords’ currentlyassociated with developments on the Internet. Some of these are associated thedevelopment of e-commerce – the hottest topic since… well, ever… andothers are associated with the underlying structures of the Internet andintranet.
What is E-commerce?
E-commerce is the general term for everything concerned with making money onthe Internet.
The arrival of e-commerce has turned the stock market on its head. At arecent SCL meeting in London, Edward Forwood, of Durlacher Ltd, gave somefigures comparing the market capitalisations of traditional companies ascompared to their new e-commerce counterparts.
Here are some of the figures he quoted:
- Barnes & Noble has sales of $3,000 million, a profit of $90 million and a market capitalisation of $2 billion.
- Amazon.com (the online book shop) has sales of $610 million, a loss of $183 million (it has never made a profit) and a market capitalisation of $16.9 billion.
- Sotheby’s has sales of $447 million, a profit of $28 million and a market capitalisation of $1.4 billion.
- eBay (the online auction house) has sales of $47 million, a profit of $8 million and a market capitalisation of $20.2 billion.
Edward stressed that these figures related to a few weeks previously(Internet stocks had gone down in the meantime) but this just underlined thedrama, and volatility, of Internet shares.
The development of e-commerce would appear to be the magic ingredient whichhas kept the USA economy expanding every year for the last 10 years and there isno sign of it slowing down. Other countries, the UK included, are now scramblingto be part of this new world. Shares for the recent launch of Freeserve were 30times oversubscribed (only 20% of the company was released on to the market) andthe company is now valued at around £2 billion, despite a loss of £1 millionin its first year of trading and a turnover of only £2.7 million.
Secure Transactions
The topic of secure transactions covers several separate areas:
- How can the customer be sure that the goods being ordered and paid for will actually arrive?
- How can the customer be sure that credit card details will not be misused either by the merchant or by some ‘electronic eavesdropper’?
- How can the merchant be sure that the customer is genuine and that he will actually get paid for the goods he is sending?
All these have to be addressed if a successful ‘deal’ is to be made.There are various standards of security being developed to cover these problems,including the system called ‘SET’ – Secure Electronic Transactions. Thissystem was launched in 1996 and is still being developed by Visa and Mastercardwith support from Microsoft, IBM, Netscape and many others. This standard shouldbecome the ‘ultimate’ one for credit card transactions but it is movingrather slowly. Presumably this is because so many of the big names are involved,all with their special axes to grind, and only very limited trials have takenplace so far.
In the meantime, the ‘ordinary’ encryption provided by current browsers,which uses a standard called ‘Secure Sockets Layer’ (SSL) is leading peopleto become more relaxed about inputting their credit card details over the Web. Anumber of organisations like NetBanx (http://www.netbanx.com)provide online checking of credit cards as part of the transaction. This is howthe Desktop Lawyer, on Freeserve, collects its cash. Other organisationsoffering payment services include WorldPay (www.worldpay.com),secure Trading (www.securetrading.com)and eBanx (www.epdq.com).
It is also possible, from a law firm’s point of view, to ask for cheques orcredit card payments and simply not to dispatch the results of the online workuntil payment has cleared. This is how quite a few of the present suppliers oflegal services manage the financial part of the transaction, including KayeTesler & Co.
Micro-payments
This is the concept of small purchases, perhaps of a few cents or pennies orat most a few dollars or pounds, where the costs of secure transactions (as justdescribed) would outweigh the cost of the purchase being made. For example, ifpeople are paying small amounts of money to hear a piece of music, or view anarticle in a magazine, how are they going to pay?
One early pioneer in this market was CyberCash with a concept calledCybercoin. Basically, systems start by carrying out one ‘traditional’transaction to obtain a reasonable amount of money from the customer which isthen maintained in a ‘cyber wallet’ and can thereafter be dispensed in smallquantities, without further credit checking required.
One of the problems for this type of development is that both ‘sides’ ofthe transaction – merchant and customer – have to be signed up to the samesystem. If there are different systems needed for different shops (for example,Cybercash for one and DigiCash for another) the user simply cannot be botheredto get registered, and part with initial money, for any of them.
This method seems to have faded from the front view at the moment. The realgrowth of e-commerce does not seem to be in small purchases but in larger ones.
Smart Cards
These provide another way of taking money from people in a relatively secureway. The smart card is a development from the credit card – it is also made ofplastic and is the same shape, but it has an embedded microprocessor instead of,or as well as, a magnetic stripe. This chip can store the amount of money left‘on’ the card and other security details to identify the person concerned– even an image of a thumbprint, for example. The major credit card companieshave all been experimenting with smart cards; for example, Visa has a‘visacash’ card.
The disadvantage of a smart card is that it needs a small unit in the side ofthe computer to ‘read’ the card; thus they are not a simple software-drivensolution to the problem. Many commentators think that they will become popular,however, as many other types of machine (cash machines, loyalty cards at majorretailers, vending machines, telephones, train tickets etc) will all start touse the same type of card, or at least one with enough compatibility to be partof the same overall system (there is a standard called EMV developing for this).Examples so far are the Boots Advantage card and the Swiss public transportsystem, allowing bus, rail and ski-lift customers to purchase their ticketswithout queuing and without cash.
Dis-intermediation
This is the general term for cutting out the middle man. If you can interactdirectly with the owner of a product that you want (using eBay for example,which provides online auctions) why do you need anyone between you and the otherperson? If you can view and purchase houses or cars in this way, or buy airlinetickets at the latest reduced price, or book a hotel, or find the cheapesttravel or house insurance, or find and purchase the latest book on astronomy orbuy shares on the stock market or… why do you need anyone in the middle?
Many traditional business have been built on the concept of assisting thepotential customer to find what they want. If the customer can do it withoutassistance, and get a cheaper price, then that is what the customer will do.
From the point of view of selling legal services online, there is a majorquestion to be asked:
- Is the ‘end product’ the solicitor, which the customer needs and cannot obtain in any other way? or
- Is the end product the document, or the procedure or the advice, which can be obtained without the solicitor?
Most of the developments of legal services being sold online so far fit intothe second category.
E-commerce Software
This is software to provide the facilities you need to set up shop –designing the Web site to attract the shopper and manage the process, setting upa catalogue of products with prices and special deals, managing a ‘shoppingcart’ so that shoppers can collect their goods, and collecting the money.
This software can be set up for a small business, using someone else’sserver and a rather limited range of options, or it can be a massive systemdesigned for large corporations with their own hardware and communicationssolutions. Companies involved in this market in the UK include Web-Store (www.web-store.co.uk),Shop Assistant (www.floyd.co.uk)and Intershop (www.intershop.co.uk).
Personal Landing Site or Personal ‘Shopfront’ Software
(and cookies)
The site knows about you and what you bought before – or what you looked atbefore but did not buy. This information is provided by ‘cookies’ which aresmall computer files which record where you have ‘been’ on the Internet andare stored on your own PC. Cookies are not trusted by many people, but yourcomputer probably goes on creating them unless you have been very diligent intelling it to stop. ‘Universal cookies’ are ones which are shared betweendifferent parts of an organisation or different (linked) traders, so that evenmore information is built up about you. The software then offers you theproducts it thinks you will like (CDs or clothes or airline destinations)immediately you access the site; offers you prices specific to the type ofcustomer you are, or even to you as a named individual; offers you specialcombinations or multiple purchases; and anything else that an inspired marketingcompany can think up.
Intranet
An intranet is a set of information resources which looks and feels like the‘World Wide Web’ but is limited to internal use within an organisation. Itrequires a modern network of PCs, running current versions of Novell or NT(which use Internet protocols for moving information around the system) togetherwith ‘Web server’ software to manage the overall information. The user thenviews the information on his/her PC using browser software, ie Internet Exploreror Netscape.
Typically, the information which firms provide on an Intranet is informationwhich was previously circulated in printed form – telephone books, practicemanual, lists of experts and other rather boring information. This is a pity. AnIntranet really comes to life only when it starts to include sources of moreinteresting information, such as opinions and legal advice, information from thelibrary, online information from the publishers, general Web access or otherdatabases of interest.
Many of these more interesting resources are not initially provided in htmlformat (the language in which ‘pages’ of information are presented to theuser) but require some kind of interface program to search the informationsource in question and return an html page to the person requiring it.
Knowledge Management
This is really a natural development of an intranet. It means the managementof a large number of different resources so that a single interface, and asingle searching process, can access any of them.
Thus, a search made on a client’s name, or a product, or a legal concept,could bring back information from the client database, the word processingarchives including stored opinions and advice, spreadsheets, forms, e-mailarchives, the firm’s diaries, the library catalogue (ideally the whole libraryonline), external publishers and the many resources available over the Internet.
To ‘manage’ this information is enormously difficult not only fortechnical reasons (interfacing with different types of database and externalresource is a major task) but also from the point of view of human comprehensionsince there is a real danger of vast quantities of information being‘dumped’ on the unfortunate user, without structure or any indication of itsvalidity. In some cases, the ‘knowledge manager’ is the firm’s librarian,and in other cases, it is a lawyer with special interest in information systems,and in yet other cases, it is an information scientist – effectively aseparate discipline. There is a certain amount of jockeying for position goingan at the moment in this fast-developing field.
From the point of view of the system architecture necessary to supportknowledge management, there are number of types of software available. Theproducts themselves originate from different market applications, for example,Soutron’s ‘Textbase’ system (www.soutron.com) has been developed fromspecialist library management systems. Others come from document managementorigins, like PC DOCS/Fulcrum (www.pcdocs.com), which provides documentmanagement and knowledge management software used by many large firms in the UKand the USA. Other software available for creating and/or searching largeknowledge bases comes from Cambridge-based Autonomy (www.autonomy.com). This isthe software used by Butterworths for its Legislation Direct service.
Coming from a different direction, the Lotus Domino Notes system (now part ofIBM), which was originally designed as a means of sharing information within anorganisation, is also often used as the basis of an intranet. This works bestfor information created by the organisation internally, however, and is notreally designed for accessing external databases or different sources generally.
Extranets
Once you have an intranet, with a wide range of useful information sourcesavailable to you, you may wish to allow other people to share in it – it thenbecomes an ‘Extranet’.
In the commercial world, an extranet is often a network of suppliers andpurchasers, in particular vertical markets, for example in the markets ofcommunications equipment but in the legal world, you may wish to include yourclients in the network. However your clients would be able to ‘dial in’ toyour network and, subject to passwords and checking generally, to have access tocertain areas of your system. They can follow the work being done for them bythe firm or they can access databases of information and advice which arerelevant to them.
Several suppliers are working on systems of this sort, including Solicitec(who have won several awards for their product), Axxia, AIM, Select and TFB.Others will doubtless also follow, since this is one area of real interest andgrowth in the market at present.
The access itself can either be with a direct-dial facility or it can be setup using the resources of the Internet as a whole (the public Internet), withclient access being controlled by passwords. If confidentiality is of evengreater importance than this allows, then special software and often hardwarecan be used, with the network then being generally known as a Virtual PrivateNetwork, but this approach does not seem to have become established in the legalmarket yet.
Virtual Private Network
Let us go back a stage for a moment. Imagine a firm with six branches acrossa 20-mile area, running a wide area network. At the moment, linking all thesebranches requires a series of leased lines, probably from each branch to acentral location. There are major costs in this. If instead each branch has aleased line to the nearest Internet Service Provider, then the branches can actas part of the overall network whilst using the general infrastructure of theInternet. A special server at the central location manages encryption acrossthis network so that confidentiality is assured. This is a Virtual PrivateNetwork or VPN.
For the six-branch firm, the benefits of the VPN may not be large, but thelarger the number of branches and the wider the physical spread the greater theadvantage. If you have international branches, which until now have requiredleased lines across large distances, then the benefits could be considerable.
Another useful facility of a VPN is that, once established, the network canexpand in other ways. Salespersons (or fee-earners) can access the VPN from homeor a hotel room and other organisations – suppliers, say, or clients, can alsobecome part of the VPN for particular purposes – in other words, they canbecome part of an extranet. ‘Ubiquitous Access’ is the phrase to use here toimpress your friends.
Companies specialising in this type of product include Failsafe ComputingLtd, offering a system called VPNware (www.vpnet.com),and Checkpoint Software Technologies Ltd (www.checkpoint.com).
