Posted by Jeff Fehrman on February 13, 2012, 10:06 am
This year’s LegalTech New York offered a little something for everyone, from the latest iPad apps to recent developments in social media and cloud computing. And of course there was considerable buzz around electronic discovery too, especially technology-assisted review (a.k.a. predictive coding). While the latter was not unexpected, I did note a shift in the dialog.
This shift in the dialog reminds me of an earlier wave of hype in which the role of ECA as a technology was once over-emphasized, despite the fact that early case assessment had long been and still is an important litigation process. (Recall George Socha and Tom Gelbmans’ “silver bullet” warning about ECA in their 2009 report.) I believe there is a parallel to be found in some of the media hype about “predictive coding” and its role in the document review process.
But as Judge Peck reminds us (Search, Forward, Law Technology News, Oct. 1, 2011), it is the “methodology” for discovery that is most critical. I have no doubt that technology-assisted review will result in greater workflow efficiencies, but human expertise will still be needed to make effective use of the technology. It takes people to train and validate that the coding process is achieving the desired levels of accuracy. Even then, someone needs to lay eyes on documents in order to be sure that privilege documents are set aside properly and that only responsive documents will be produced. No one is simply going to trust hitting the proverbial “Produce” button and then go off to court. Though perfection may not be required by the courts, ultimately the discovery process must be supervised by a practicing lawyer who will be responsible for ensuring it is conducted in a reasonably defensible manner.
Efficiency is also important, but legal teams should address this (along with defensibility; particularly obligations for timely preservation) by focusing more attention on establishing the appropriate discovery processes and response teams. Technology has a role, but not at the expense of human expertise and a sound process. (See my Best Practices in Discovery Planning white paper series which goes into greater depth on this subject: Part 1: Establishing Discovery as a Business Process; Part 2: Building a Discovery Response Team.)
Where technology-assisted review does make sense to use, I believe it can serve as a powerful tool for both reducing cost and improving the quality of the discovery and document review processes. I participated in numerous meetings at LegalTech in which we discussed the benefits of Integreon’s own offering for technology-assisted review, i.e. we announced eView 4.0 with Adaptive Coding at LegalTech.
We use the term “adaptive coding” to reflect our viewpoint that technology-assisted review involves an iterative process of training and validation in which automated coding is systematically adapted to the characteristics of the given set of documents subject to discovery as well as other case or client specific requirements. The following is a video interview I gave to LXBN TV during LegalTech in which I explain more about our approach in applying Adaptive Coding.
Interview on LXBN TV at LegalTech New York 2012
Update 02/14/2012
As reported today in Law Technology News (Judge Peck Orders Predictive Coding in Federal Case), Magistrate Judge Andrew J. Peck has ordered the use of automated coding in a case now before the U.S. District Court for the Southern District of New York. I will be following the case with great interest, as it appears to be the first federal case mandating the use of this technology for document review. The outcome of the case will likely have significant implications for how this type of technology can be defensibly applied during the discovery process.
Posted by Eric Feistel on January 25, 2012, 11:10 am
Establishing an effective discovery response team (DRT) can help your organization greatly reduce the costs associated with discovery. A DRT can also reduce the impact of litigation on daily business operations by assembling internal expertise and domain knowledge – particularly of key personnel and the IT infrastructure – and driving repeatable processes that will increase the efficiency and quality of discovery responses. This white paper discusses the roles and responsibilities of the DRT and recommends best practices for building the team, including tips to help set the stage for the team’s success.
Posted by Eric Feistel on January 6, 2012, 10:35 pm
For organizations in highly regulated or litigious industries, responding to legal and regulatory matters has become a normal course of business. Establishing discovery as a business process, rather than reacting to discovery matters on an ad hoc basis, enables organizations to ensure a complete and defensible process that also controls costs and reduces business disruption. This paper details a best-practices approach for establishing discovery as a business process.
Posted by Eric Feistel on December 12, 2011, 10:32 pm
Today’s fast evolving technology landscape is challenging the ability of e-discovery professionals to keep up. From cloud computing and social media to technology-assisted review, the impact of technology innovation on the discovery process and how organizations are adapting to the changes were the focus of a recent roundtable discussion hosted by Integreon. Viewpoints and recommendations from the corporate and law firm participants are summarized in this recently published report.
In a Boardroom Radio audio cast, Mallesons offers LPO with Integreon (October 27, 2011), Integreon’s Bob Gogel (CEO) and Mallesons’ Tony O’Malley (Managing Partner) comment about their firms’ recently announced preferred supplier agreement for legal process outsourcing (LPO) support services. Widely reported as a first for the Australian legal services sector, the agreement between law firm Mallesons Stephen Jaques and LPO provider Integreon signals a watershed in the way legal services in corporate Australia are provided.
This is a live blog post from the International Legal Technology Association annual conference. The panelists for the session Offshoring and Outsourcing are Toby Brown, Vinson & Elkins, Kevin Colangelo, Pangea3, and Jordan Furlong, Edge International. [This is a real time blog entry, posted as this session ended; additional commentary available at Twitter #ILTA11 #INFO2]
Agenda:
Have you analyzed your business?
Where should you focus your energy?
What do LPOs bring to the table
What does this mean for you and your firm?
Jordan: We should start the discussion by looking at what clients want. Clients no longer just think all legal work is the same – they view it as stratified: At the top of a pyramid is “mission critical.” In the middle is the “ordinary course of business“. At the bottom is “commodity.” The amount of mission critical work is fairly small. Clients will pay top dollar for this work. The volume of ordinary course work is fairly high volume but it does not matter much which lawyer does the work. Commodity work occurs in very high volume. Most law firms say they do not do commodity work Clients are now asking if they even need a law firm for commodity work. LPO, for example, is an option.
Jordan: Most firms say they want the mission critical work. But the volume available will not sustain that many law firms. What does this mean for law firms? Jeff Jarvis says “do what you do best and outsource the rest”. Jarvis is in the newspaper business. His view is that there is not point in 50 reporters each covering the same news. Journalists need to focus on topics on which they have a unique perspective. Jordan applies this thinking to lawyers. [Editor's note: see Jordan's blog post The Rise of the Super-Boutique for more details of this thinking.]
Toby: Distinguish between “core v. context“ This is from Dealing with Darwin by Geoffrey Moore. Core is what clients hire you for. It is any activity which creates sustainable differentiation in a target market. Context is all other activity required to support the delivery of core activities. Until recently, law firms did not have to think about business and practice in this way. At one time, law firms thought that copying was the only non-core activity. Today, many activities may not be core, for example, e-discovery. Toby is now “Director of Pricing”. In this capacity, he needs to think through the different elements of work and price them appropriately.
Kevin: “Current market drivers for law firm use of LPO are primarily reactive, while evolving market drivers focus on proactively growing the business and deepening client relationships.“ Cites Michael Porter’s work on competitive forces, saying that until recently law firms have not had to think about competition deeply. Today, it is not just other big law firms that are competitors, but various alternative providers. In early days of LPO, it was law departments that sought the service because of cost control. Today, law firms talk to LPOs as well. Talks to law firms about “weaponize”, meaning using LPO to improve competitive positioning. There may be 20 firms that do not have to worry about pricing and competition. There are also firms are actively talking to LPO about competing more effectively. The vast number of firms in the middle have to figure out what they will do to compete.
Discussion and Audience Questions:
1. For Toby: how, as a firm works on the different elements of a matter, should it consider outsourcing? Toby uses patent work as an example. Patent work falls into three tiers, from easiest / lowest value to hardest / highest value. To succceed at each tier, firms must figure out (A) what work to do and what can be skipped altogether and (B) of the work that must be done, who should do it. The who may be different levels in the firm or outsourced providers.
2. How should firms split out work on a single matter (to different resources or an LPO)? Kevin: law firms have different thinking about this. Discusses the issue of onshore v offshore resources, time zones, and the need for both the right technology and communication protocols to coordinate work. It’s easist for an LPO to “bolt in” to litigation because the process is well-defined. But thinks LPO is not at the “plug and play” stage yet. Many legal organizations are not yet ready for integrating their operations to work seamlessly with external providers.
3. Recently HP acquired Autonomy. How do acquisitions play out in legal and LPO? Jordan says that many big companies have ‘outsourced’ R&D by buying small companies with new technology. He thinks that is what Thomson Reuters did in acquiring Pangea3.
4. How should firms think about outsourcing multiple functions? Kevin says that what is hard to think about in legal market is commonplace in most industries. Most industries have outsourced a range of functions for a long time. In terms of job security, the real issue is that many law firms are still over-staffed in many areas. Individuals have to work hard to make sure they focus on work that is strategic to their law firm. Outsourcing may force everyone constantly to make sure they are keeping up their skills. Toby: most in law firms are not worried enough about the job they do. Many jobs and roles are at risk because of the underlying economic pressures. Uses himself as example: worked at a firm where he transitioned from KM to AFA because firm saw more value in latter.
5. What percent of work is tactical and what percent is strategic? How will this look in 3 years. Kevin says 1/3 strategic and 2/3 tactical. It will be a slow march. Lawyers take time to develop comfort using alternate providers, whether it is an Axiom or an LPO.
6. In UK, we see firms setting up their own near-shore centers. Is that happening in US? Jordan cites Dayton [WilmerHale], Wheeling [Orrick\, and Carrollton [Pangea3].
Document review is a critical component of the e-discovery process and a subject that I often speak and write about. Resource-intensive review in particular is an area that gets a lot of attention, especially with many law firms and corporations focusing on cost containment of the discovery process. We’ve worked with many clients to help them balance simple and expedient solutions with effective and defensible processes.
On Tuesday, July 19th, I will be joining with Vince Neicho, Allen & Overy’s litigation support manager, to present a webinar discussion of a best practice framework for review, incorporating real-world, experience-grounded advice for the practitioner and client. We have worked closely with Vince on a number of challenging exercises and so I am honored to share the virtual dais with him.
If you are interested in learning more about document review best practices, I hope you will join us for what is sure to be a lively and informative session. Learn more or register for the webinar here.
Update: A replay of this webinar (recorded on July 19th) is available here.
Two recent publications point to continuing changes in the legal market:
Lawyers Settle… for Temp Jobs in the Wall Street Journal (15 June 2011) reports on the “growing field of itinerant ‘contract’ attorneys who move from job to job, getting paid by the hour, largely to review documents for law firms and corporate clients.” About 10% of 2010 law graduates accepted temporary work, double the rate of 2009. Contract lawyers earn as little as $15/hour; the highest average hourly rate is $35/hour in Washington, DC (according to the video associated with the article).
Separately, a recently released Altman Weil report, Law Firms in Transition by Thomas S. Clay and Eric A. Seeger, finds that 8% of large US law firms used legal process outsourcing (LPO) in 2010 and 11% expect to do so this year. That is an almost 40% growth rate. (Note that Legal Week recently found that 15% of UK law firms use LPO.)
The global economic downturn still has law firm clients demanding better value. Both LPO and contract lawyers lower clients’ legal costs. Which option should they choose? My answer turns on my suggestion last week in Explaining Onshore Legal Outsourcing Growth: lawyers must examine the process of how law is practiced.
A focus on process will favor LPO because LPO includes not just the labor cost benefit of contract lawyers, but also a managed service that incorporates automation, streamlined processes, metrics, service level agreements, and a governance system. With LPO, clients and law firms can also keep a core dedicated team on a full time basis, which offers continuity of knowledge and staff and so supports better repeatability and scalability. (Our November 2009 post Next Gen Legal Models: Service vs Staffing explains differences between LPO and staffing models in more detail).
The age of large law firm associates spending weeks or months reviewing documents or conducting any other high volume, routine, and repeatable work is over. Delegating this work to technology, to contract lawyers, or to LPOs frees associates to focus on what the documents really mean and craft winning arguments. The growth of both contract lawyers and LPO is a win for clients.
Legal process outsourcing (LPO) has long meant “India” to many lawyers. We have often written that LPO is about working smarter, not where the work is done. A New York Times article last week drives home this point. And an American Lawyer op-ed explains the “news behind the news” in the Times.
Legal Outsourcing Firms Creating Jobs for American Lawyers, a June 3, 2011 front-of-the-business-section NY Times article, describes how LPOs such as Integreon and Pangea3 are creating jobs for American lawyers in low-cost US locations. It contrasts the growth of LPO, both onshore and offshore, with the challenges US law firms face, noting that “[t]op American firms have cut hiring or moved to a lower-tier pay system for many new associates.”
American Lawyer Editor-in-Chief Aric Press’ June 2011 commentary explains both LPO growth and U.S. BigLaw challenges. In The Am Law 200: A Chasm with Consequences, he reports “a $1.1 million gap between the average profits per partner of the top 23 firms on The Am Law 200, as ranked by PPP, and the average of the next 27 firms.”
This gap, Press suggests, stems from how the market now segments legal work, with bet-the-farm matters on top and commodity work at bottom. The highly profitable 23 firms get the lion’s share of less price-sensitive premium work; the rest face increasing price pressure to win non-premium work. Addressing the question of whether this gap will continue, Press offers two “safe” observations:
Price pressure likely will continue when the economy rebounds.
“[W]hat’s striking about the behavior of many law firms over the past two years is that they managed their way to profitability by shedding colleagues who did not have enough work, not by examining how the work itself is done.” (Emphasis added.)
We think the phrase “not by examining how the work itself is done” links the Times and American Lawyer pieces. We talk to many firms and law departments that now do examine how they practice. Most conclude that old ways of working must improve. They realize that large swaths of legal work must be industrialized with standard practices, appropriate technology, and cost-effective human resources. Many turn to LPOs to accomplish this. As more and more lawyers examine the process, we expect to see LPO growth continue, both onshore and off.
Last month I read an insightful blog post at Horses for Sources, the advisory business of respected outsourcing analyst Phil Fersht. In a guest post, Where have all the consultants gone?, Deborah Kops, principal of sourcing strategy firm Sourcing Change, looks at developments in the business process outsourcing (BPO) industry. Because the roots of legal process outsourcing (LPO) lie in BPO, following the latter can help better understand the former.
Ms. Kops observes that BPO success was originally driven by consultants who had intimate client and hands-on industry experience. She writes
“the pioneers of the outsourcing industry, primarily BPO, came out of consultancy backgrounds… Consultants from the Big-whatever-it-was, the then Andersen Consulting and even the likes of the white shoe strategic firms, got a bee in their bonnets that their intimacy with and knowledge of their clients could be harnessed to improve and deliver business processes. They formed business lines with skin in the game, exclusively focused on doing rather than just advising, tapping not only into their own expertise, but that of their partners and colleagues.”
These BPO founders, she notes, are now exiting the business. Current BPO managers are capable but lack “the soft and problem-solving skills that come from having the training, intellectual freedom, proximity, and the ability to connect the dots that only consulting experience allows.” So she expresses concern that the “real sourcing benefit” will be lost because it “comes from the ability to solve a problem, the skills to develop a relationship with a client team at the highest level, and the knowledge of what drives value in an industry from the top down.”
Fortunately, LPO does not suffer this issue. Ms. Kops’ post nonetheless helps illuminate the real benefit of legal outsourcing. Many lawyers think labor cost savings drives legal outsourcing. We disagree. The real value lies in providers’ deep experience solving lawyers’ problems.
In LPO, the BPO analogue to consulting experience is a deep pool of legal management, operations, and process improvement experience. For example, Integreon management includes former practicing lawyers who pioneered outsourcing, lawyers who managed document review for law firms or for corporations, senior law firm managers such as COOs and CIOs, and process improvement consultants. Hands-on law firm and law department operational experience extends deep into our middle management team. Our competitors could make similar statements.
This collective wealth of experience gives a provider deep insight into law firm and law department operations and ideas about how to improve practice and support. My Integreon colleagues and I all feel the same sense of “there has to be a better way to do this”. We all sought out a place where we could work closely with lawyers to help them improve what they do and reduce costs. So reading Ms. Kops’ post triggered a very personal reaction – that’s us, without the problem of exiting experts.
Of course access to teams of associates in low cost locations is an important benefit for our clients. The real value, however, is our ability to improve how lawyers work and how law firms operate through process improvement and technology. Fortunately, as a still-growing industry with a plentiful supply of experienced legal managers interested in outsourcing, we do not face a brain drain.
Establishing an effective discovery response team (DRT) can help your organization greatly reduce the costs associated with discovery. A DRT can also reduce the impact of litigation on daily business operations by assembling internal expertise and domain knowledge – particularly of key personnel and the IT infrastructure – and driving repeatable processes that will increase the efficiency and quality of discovery responses. This white paper discusses the roles and responsibilities of the DRT and recommends best practices for building the team, including tips to help set the stage for the team’s success.
For organizations in highly regulated or litigious industries, responding to legal and regulatory matters has become a normal course of business. Establishing discovery as a business process, rather than reacting to discovery matters on an ad hoc basis, enables organizations to ensure a complete and defensible process that also controls costs and reduces business disruption. This paper details a best-practices approach for establishing discovery as a business process.
Today’s fast evolving technology landscape is challenging the ability of e-discovery professionals to keep up. From cloud computing and social media to technology-assisted review, the impact of technology innovation on the discovery process and how organizations are adapting to the changes were the focus of a recent roundtable discussion hosted by Integreon. Viewpoints and recommendations from the corporate and law firm participants are summarized in this recently published report.