Best Practices in Discovery Planning: The Discovery Response Team

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.

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Best Practices in Discovery Planning: Establishing Discovery as a Business Process

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.

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E-Discovery Roundtable: Buyers’ Perspectives on the Impact of Technology Innovation

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.

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Mallesons offers LPO with Integreon

Bob Gogel and Tony O’Malley

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.

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Offshoring and Outsourcing. Report from ILTA Session

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 Best Practices: 8 Steps to a Defensible and Efficient Review Process

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.

Both LPO and Contract Attorneys Growing in US

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.

Explaining Onshore Legal Outsourcing Growth

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:

1. Price pressure likely will continue when the economy rebounds.
2. “[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.

Insight and Innovation are the Real Drivers of Legal Outsourcing Benefits

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.

New Legal Week Survey Finds 15% of UK Firms Use LPO

Legal Week just published No LPO Rush Despite Cost Pressure (Legal Week, 5 May 2011),  an in-depth look at the UK legal process outsourcing (LPO) market that includes in-depth analysis, numerous charts, and a key findings summary.  It is based on a 575-lawyer survey by Incisive Media Research that Integreon co-sponsored.  We present some highlights and comments here.

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LPO Penetration is Up and Rising. The survey found that LPO penetration in law firms is up substantially from other recent reports.   For example, in a June 2009 blog post, we reported on surveys that found only about 5% of firms had used LPO.   Now, Legal Week finds 15% of UK law firms use LPO services.  Furthermore, over half of respondents – both LPO users and non-users – believe that law firm use of LPO services will grow over the next year.  Given another trend the survey identifies – growing cost pressure – it is reasonable to conclude that LPO penetration will continue increasing.

On the law department side, 6% report using LPO.  We think this lower penetration reflects a client preference that law firms partner with LPOs.  The survey results support this view:  both firms and departments “give the biggest vote to a solution where the law firm supervises the outsourcing. Amongst law firms, the vote here represents nearly 52 per cent of respondents. In the inhouse sector, nearly 29 per cent support this approach.”

Work Suitable for LPO Spans Several Practices. The survey provides insight on the areas most suitable for LPO work.  Scoring highly among both inside and outside counsel were litigation document review, e-discovery (e-disclosure), and contract management .   Significant minorities also believe compliance, library/research and know-how, debt recovery, and conveyancing are suitable for LPO.

Using LPO is Not a Risk to Law Firm Brands. Some law firms seem to worry that using an LPO might send clients the “wrong” signal.  The survey show this fear is unfounded.  A vast majority, about 75%, of both inhouse and firm lawyers believe using an LPO “does not diminish the brand.”   The article also notes that some of the largest and best-known UK law firms use LPO and so observes   “If the leading firms are using LPO, it is difficult to see LPO as a sign of weakness.”   This is consistent with our view, summed up by my colleague Matthew Banks in the article, saying

“Rather than see their brand diminish, those law firms that embrace LPO will gain a competitive edge. What we term ‘LPO 2.0’ involves close collaboration between law firm and LPO provider. The LPO provider’s solutions are so closely integrated into the firm’s overall value proposition that they are simply viewed as part of the suite of solutions the firm provides to its clients. The firm’s brand is enhanced.”

The Real Issue is Lower Cost, Not LPO. We recently suggested that the question is no longer “outsource or not” but rather “what’s the best way to centralise non-core support functions in a low cost location?” (See Legal Outsourcing – A Changing Conversation by Mark Ross and Ron Friedmann in Outsource Magazine, 17 Nov 2010.)  Legal Week reaches a similar conclusion:

“Outsourcing is typically seen as the relocation of repetitive work to India. But LPOs can take many different forms…  LPOs are being developed by many firms in the UK. Some are doing forms of it by outsourcing routine work from their City offices (where salaries and other costs are higher) to regional offices where they can offer lower charge-out rates. Other firms – particularly the big name international firms – are working with regional law firms to outsource those processes on which they can add little extra value.”

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We think the results confirm our view that lawyers have become comfortable with LPO and that market pressures will continue to favor LPO adoptions.   We understand, however, that not all share this view.   For those who remain skeptical about LPO, the article does a nice job presenting contrasting opinions.