by
Ron Friedmann on July 27th, 2010 at 8:16 am :
Comments 000
We recommend reading Innovators at the Barricades, a blog post last week by Bruce MacEwen at Adam Smith, Esq. He argues that legal process outsourcing (LPO) is a disruptive force for law firms, citing Clayton Christensen’s The Innovator’s Dilemma. We agree with most of his analysis though take issue with a couple of points.
MacEwen notes that “Outsourcing is here to stay” and describes different flavors using a 2 x 2 grid: location on the x-axis with offshore or onshore (”foreign” or “domestic”); ownership on the y-axis with captive or 3rd-party (”owned” or “rented”). MacEwen notes that this model is “by no means exhaustive; it’s merely indicative and representative”. We agree this is a good model for thinking about centralizing support services though we have a small quibble. He cites Integreon as an example of foreign / rented; we are, in fact global, and have onshore facilities in both the UK and US.
Most of the post assesses the impact of outsourcing. “Once clients begin to get accustomed to the notion of being able to unbundle, or unchunk, legal engagements - be they disputed matters or transactional ones - there’s potentially little end to it.” MacEwen argues that LPOs are likely to go upmarket, meaning they perform higher value work, which will threaten law firms.
In our view, there is a clear line between legal support and law practice. We do not practice law nor is that part of our corporate strategy. So we see a clear limit to how far “up the value chain” an LPO can go before it practices law and is therefore no longer an LPO.
In fact, we would turn the “LPO moving up the value chain” idea on its head. The very forces that enabled the birth of the LPO industry - globalization, technology, and shifts in buyer attitudes - continue to push legal work toward standardization and systemization (as Richard Susskind discusses in The End of Lawyers?). That means work once done only by associates will flow to new and more efficient operating models offered by alternative sources such as LPOs, contract attorneys, virtual law firms, online legal resource providers, and still-to-be-invented providers.
So we do agree that lower value, repetitive tasks once the exclusive domain of partner-track associates will continue to be unbundled and move to more cost-effective approaches. Document review in litigation is the classic example. Even without LPOs, law firms’ ability to offer this service at associate billing rates is already threatened by corporate clients contracting directly with contract lawyer staffing agencies. This is why we think one successful “new model” for the delivery of legal services may be an amalgam of law firm and LPO working together in a collaborative fashion.
Given this shift, MacEwen questions the fundamental premise of large firms, citing Ronald Coase’s Nobel Prize winning The Nature of the Firm. He suggests that LPO-enabled unbundling calls into the question the “why” of law firms: “Why create the management overhead, bureaucracy, and administrative friction entailed in any firm of scale? Why not just purchase whatever is needed, when it’s needed, on the open market?”
That is a good question indeed, but we view LPO as symptom, not cause. The cause is corporate client price sensitivity and quest for value. These have changed buyer (general counsel) behavior, which in turn has propelled growth of law firm alternatives. We think that smart large firms can still profit from their scale. For example, they can
- Coordinate across practices and geographies to serve global clients. Cross-selling is not only a profit lever, done correctly, it is a service enhancer.
- Assemble large teams of highly skilled and experienced lawyers to work on tough, big cases or deals.
- Serve as expert general contractors with project management skills to ensure the swift and cost-effective resolution of client matters. Many general counsels will happily delegate that function.
With these market shifts, firms must consider not only revenues, but also costs. More firms now outsource significant portions of their middle office to companies like Integreon. That allows them to focus on law practice, reduce costs, and maintain if not improve client service and partner profits.
MacEwen raises provocative questions that large firms need to consider carefully. Those that adopt sound strategies and execute effectively will continue to thrive. Those operating on auto-pilot may indeed lack a good answer to the question MacEwen / Coase asks.
Filed under Legal Economics, Legal Outsourcing (LPO)
by
Liam Brown on July 19th, 2010 at 7:28 pm :
Comments 000
As the only professional services provider of legal, discovery, research, and business solutions serving clients from four continents, a question I am often asked is “what is Integreon’s global strategy?”
This seems to be a topic of interest for the market recently and has prompted me that it is probably time for a blog post about onshore versus offshore services.
Obvious reasons for a global delivery footprint include cost and availability of talent, language capabilities, disaster planning etc., which I discussed a year ago in my post Choosing the Right Outsourcing Destination in Changing Times.
Each of our locations has a role in our overall strategy. India has a large talent base of high quality, lower cost knowledge workers, especially in areas such as legal, accounting, and research, which is where Integreon originally built those professional services capabilities during our start-up years. The Philippines provides a similar talent and cost base to India, with arguably closer ties to the US, while also allowing clients to mitigate the business continuity risk of being over-concentrated in India. In China, we are able to satisfy increasing demand for knowledge and language skills that could not be gathered without local presence.
In the UK and the US, where we have most of our clients, we have found that nothing builds trust better than being served by experienced staff onshore - or even onsite. Our South Africa operations serve clients who require collaboration with people close to UK time. We are just about to open an office in Tokyo to serve our Japanese clients and hope to open in Eastern Europe and South America in the future, in response to client requests for language capabilities.
So far, this has been a hugely successful strategy, helping us grow from $19M per year in 2006, the year in which we launched our first onshore operations (we believe thoughtfully anticipating the demand for onshore capability), to over $100M this year. During the first 6 months of 2010, 64% of our revenue has been delivered from onshore operations and 36% from our offshore operations. Compare those numbers to Infosys, which has 53% of its revenue from onshore and 47% from offshore.
You can see that we are a fast growing business that invests for the future, which is the purpose of the more than $80m of equity capital we have raised to date. We believe in a “Built to Last” philosophy. That means we forward invest to meet client needs. Some of our onshore and offshore departments are still young - we do not expect immediate profitability as we invest in building infrastructure, management, human resources, training, technology, etc. We do expect, however, that all of our operations will balance out and make similar contributions to profits as they reach steady-state scale.
In Bristol, for example, in the past twelve months we have doubled the number of associates from approximately 80, when we first launched services for Osborne Clarke, to 150, just recently signing an expanded lease. We are also expanding in New York. Fargo has almost reached pre-financial crisis levels of activity and we are actively seeking another location for our next US delivery center. And we look forward to launching and growing our operations in London as part of our recently announced agreement to serve CMS Cameron McKenna.
Interestingly, our most profitable department today is onshore, where our clients have trusted us to re-engineer their processes and deploy proprietary technology. This has driven improvements in quality of services, reduced cost, and we haven’t moved a single process offshore. This kind of transformational capability is at the heart of how we make a business impact for our customers.
In short, the answer to “what is Integreon’s global strategy?” is that we are committed to delivering the highest quality services for our clients and that requires that we offer them global choice - onshore and offshore.
We are pleased that the market has taken such interest in legal outsourcing and we believe this interest is a sign that we are on the right path to help our law firm clients prosper.
Filed under Legal Economics, Legal Outsourcing (LPO), Onshore v. offshore
by
Foster Gibbons on July 14th, 2010 at 7:00 pm :
Comments 000
A Posse List blog post earlier this year, Computer-aided document review has arrived (12 January 2010), comments on a thought-provoking e-discovery study described in an academic journal article. The premise of the underlying study, which compares computer classification of documents with manual review, is that automated systems are capable of categorizing documents at least as well as teams of human reviewers in an
e-discovery setting. While it raises interesting points, I am not convinced that the evidence supports the authors’ conclusion that computer-aided review has arrived quite yet. It is still a stretch to suggest that human document reviewers face an imminent risk of being supplanted by artificial intelligence-based processes.
The underlying study by a trio of recognized experts in cognitive science, information management, and e-discovery, Herb Roitblat, Anne Kershaw, and Patrick Oot, is described in detail in their journal article, Document Categorization in Legal Electronic Discovery: Computer Classification vs. Manual Review, published in the January 2010 issue of the Journal of the American Society for Information Science and Technology (link is to PDF at the Posse List).
There is no question that software can detect ever-more sophisticated language patterns in documents and classify them by theme. Whether this translates readily into a persuasive argument that legal document review will be more fully automated in the near future, or even that such a development is inevitable, is a different question. And I don’t think the study provides conclusive support for the proposition that computer classification could reasonably substitute for human review.
Before turning to my reservations about the study, I want to raise a potentially bigger issue. Irrespective of advances in technology and compelling statistics, we need to ask whether courts and litigators will accept a discovery process that is ever more reliant on technology in pursuit of efficiency. I think the likely answer is, ‘only to a point.’
Right now, e-discovery professionals use many tools to filter large collections to focus lawyers’ attention on a subset likely to be most relevant. Are we missing another step? Is there a way to emulate or even exceed human review to cull the relevant from the extraneous? If so, how do we determine the “reasonableness” and “completeness” of the process? That is the multi-million-dollar question.
Courts now often accept concept clustering and searching in aid of review, but not all the time nor in all settings. For many lawyers, the key argument for using these tools is the ability to reassure courts that these tools focus or prioritize review on the most promising “clusters” of data but do not wholly eliminate review of apparently “unimportant” clusters. I disagree with my colleagues who cite clustering technology as a harbinger of full automation of review. In my experience, it is just a tool that helps humans to make decisions that are more consistent and coordinated.
I think most practicing lawyers would agree with the study’s central premise that lawyers should use technology to reduce cost. That said, often senior lawyers who ultimately decide on how to conduct a document review neither understand the latest technology nor are they - or their clients - likely to accept the challenge of having to defend an entirely new approach to discovery. And that is why I think the answer to the question, ‘will lawyers and courts accept an expanding role of technology in order to reduce discovery costs’ is, ‘only to a point.’ If that is indeed the case, how does the study advance us toward that critical point?
It raises - and partially answers - the important question whether we are approaching a breakthrough in terms of the capability of automated review tools to render ‘consistent’ and ‘correct’ decisions, as measured against an existing standard, while classifying documents in a legal discovery context. The study pitted two teams of contract attorneys against two commercial electronic discovery applications to review a limited set - 5,000 documents - culled from a collection of 1.6 million documents. The larger collection had been reviewed two years earlier by attorney teams in connection with a Second Request relating to Verizon’s acquisition of MCI. The authors’ hypothesis was that “the rate of agreement between two independent [teams of] reviewers of the same documents will be equal to or less than the agreement between a computer-aided system and the original review.”
The study set out to test whether an automated review tool would show similar levels of agreement with classifications made by the original reviewers as did the two contract teams. The two re-review teams agreed with the original review on about 75% of document classification decisions; the commercial automated applications fared slightly better. By this measure, my initial read would be that the two approaches were proven equally unreliable and inconsistent. But I concede that the study demonstrated that automated applications can match or exceed the performance of two human teams working under certain and arguably limited conditions. The question is, whether the study demonstrated more than that?
The study is properly understood as a demonstration of capability, rather than as a controlled study, which by definition, operates under controlled conditions with a constrained set of variables. Several factors could have affected the study outcome:
- The sample set was extremely small. While 5,000 documents out of 1.6 million may be statistically significant for certain purposes, it is not a big sample for a document review. Empirically, we know that a review team gains proficiency and confidence in stages during a review project, eventually reaching a ‘steady state,’ where their decisions are likely more consistently correct on first pass. The two contract teams who were pitted against computers in a test of which alternative more closely mirrored the decisions made by the original review team did not have the benefit of a warm-up, which the original review team likely did have. In addition, we do not know whether the original review team was more senior or experienced than members of the review teams in the study.
- The study write-up does not make clear whether instructions given to the original review team were provided in identical form to the two review teams in the study. In essence, what we ask review teams to accomplish is to approximate, as closely and consistently as possible, decisions that would have been made by the supervising attorney (or client’s lead counsel) had that attorney personally reviewed each and every document. (In TREC terminology, this is the topic authority.) A key to running a successful review and delivering clean and correct work product is first ensuring that counsel provides clear and complete instructions to the team at the outset and resolves questions raised in the course of review.
- We also do not know what standards of quality control were applied for any of the review processes. A well-designed and executed regime of quality control enhances the consistency of review results. Much more on this theme, below.
Although I would not hang my proverbial hat on the results of the study, it does open the door for follow-on work. We may yet see a convincing demonstration that automated systems render more consistent decisions than human review teams. The issue will remain whether any amount of proof would persuade the bar to accept use of automated review as a substitute for attorney review in the context of discovery.
A more immediate question is how can we make good use of what appear to be very capable software engines? Can we integrate automated applications to assist human review and make it more consistent? Indeed, making review more consistent has been the aim of quality control and validation processes all along.
A well-designed quality control regime makes use of intelligently-designed searches to identify likely errors and inconsistencies in a set of reviewed documents, and directs “suspect” documents to a team of more experienced reviewers for a focused re-review. This continuously re-focuses QC review toward outliers and other documents that may warrant a second look.
My reservations notwithstanding, I think there is a good amount of value in the study, which sets a stage for further comparisons of automated and human review. The best purpose, in my view, however, might not be to aim toward replacing human reviewers on a first pass review.
One possibly feasible and very attractive target is to develop a process in which we can fully leverage automation to reduce the effort (number of attorneys) required for first pass review. With the right process, fewer, more senior reviewers may need to review only a set of representative documents in a collection, while technology acts as a ‘force multiplier’ to speed review and ensure consistent coding.
Indeed, there are applications in development and commercially available which have demonstrated an ability to “crawl” a large collection of documents to identify documents with substantially similar content. If we can properly leverage that technology, in tandem with a small elite team of attorneys, we have a hybrid workflow that benefits from both human intellect and machine power. I would like to see a study proving the capabilities of such a hybrid model.
A potential hybrid model would have senior attorneys review representative sets of documents and the tool analyze features of the reviewed documents to identify and auto-tag “like” documents in the larger collection. As the review proceeded, the tool would ‘percolate’ to the review team’s attention subsets of documents from the collection dissimilar from those already reviewed. Based on the reviewers’ decisions as to these documents, the tool continues to apply tags to more of the collection.
The attraction of this approach is two-fold: human attorneys are still making initial determinations but the application magnifies the effect of their determinations by propagating decisions to similar documents throughout the larger collection. It has been suggested that, in the proper context, this approach would permit a single attorney to “review” a vast collection of documents in several hours. A test of that claim is warranted and, if the premise were proved, it would be impressive and could directly influence the increased use of automation in review, even if, for all the reasons stated above, wide adoption of such processes would take a while.
An alternate model - one more readily proven in a single study - and one that I believe holds promise as an immediate aid in improving the quality and consistency of document review as a process, would be to fully integrate available automated searching and categorization applications into existing quality control processes. So I would very much like to see a well-designed test of an automated-classification tool in that context, one that demonstrates how the model outperforms quality control processes using a series of term searches to identify sets of documents for targeted QC.
Filed under E-Discovery (EDD)
by
Ron Friedmann on July 6th, 2010 at 9:21 am :
Comments 000
The Lawyer reported last Friday, in Osborne Clarke’s PEP rises on flat turnover figure, that Integreon middle office outsourcing client Osborne Clarke reported significantly increased profit per equity partner despite almost flat revenue. The article notes one of the reasons: “The firm has also saved money through its continuing relationship with legal process outsourcer Integreon. The £50m deal struck last year saw around 75 support staff transfer to the outsourcing provider (2 February 2009).”
We are certainly pleased - but not surprised - that we are helping our client improve profitability. Back in November 2008, when it was just becoming apparent how bad the downturn was for law firms, I wrote here Controlling Cost to Increase Profits. In that post, I argued that the old adage ‘the only way to improve law firm profit is to grow revenue’ was no longer true.
That reducing overhead cost can move the profit dial should not be a surprise. In the US, the median overhead per AmLaw 100 lawyer in 2009 was $206,000. Compare that to almost any other business, including other high end professional services, and it seems clear that savings are not just possible but easy. (See my May 2009 personal blog post Cost Control as Part of AmLaw 200 Turnaround Strategies for my assumptions to calculate median overhead.)
Of course, by definition, one-half of firms are above the median. Firms that could bring their overhead down to the median could increase profits by anywhere from a couple percent to over 20%. That conclusion is admittedly weak because it mixes high-cost NYC firms with lower-cost-base Midwestern and Southern firms. Yet the point still stands: reducing overhead can make a big difference.
As firms consider how to reduce overhead, they need to keep in mind that legal outsourcing is not just about lower cost labor. While ‘labor cost arbitrage’ can indeed save, the process improvements are as, if not more, important.
Filed under Uncategorized
by
Liam Brown on June 25th, 2010 at 5:24 pm :
Comments 000
Successful organizations know that being the best is very much determined by who they hire and how they integrate and develop those employees once on board. At Integreon, we pride ourselves on identifying and attracting top talent, and integrating that talent into our workforce to help us deliver high-quality professional services that enable our clients to be more productive.
It is with this in mind that I warmly welcome Bill McClements to Integreon. Bill is a seasoned executive who will serve as our Chief Human Resources Officer as we continue to build our team globally.
Our people are dedicated, enthusiastic, and highly successful professionals who work collaboratively with our clients to impact their businesses. Bill embodies this. In his new role and as part of our senior management team, Bill will have the resources and the mandate to continue our commitment to world class talent management and reinforce our market leadership.
Our success as a company is closely tied to the culture that we create here – a culture of talented and valued people who provide quality client services of which I am very proud. I can say without reservation that the individuals we welcome into our organization are of the highest caliber. Please join me in welcoming Bill to the team. I know he has the expertise to succeed and provide us with the guidance to maintain a world-class workforce – and to ensure that all of us here at Integreon can continue to say that we simply work with the best.
Filed under Uncategorized
by
Ron Friedmann on June 11th, 2010 at 8:42 am :
Comments 000
On Tuesday I read with interest Jordan Furlong’s blog post The evolution of outsourcing. He opens by noting that though LPO is “in its relative infancy, legal process outsourcing has already had a huge impact on the legal services marketplace”. Furlong focuses on two effects outsourcing has on the legal market:
“The first affects LPOs themselves: they now need to move their value proposition beyond cost savings in a market they helped to make more sophisticated. The second affects everyone: the legal profession’s response to LPO is having an unexpected effect on how legal work is distributed and how legal resources are allocated.”
We agree. As a provider, we know that simply offering lower labor cost is not enough. We therefore work hard to improve processes, introduce technology, increase efficiency, reduce cost, and achieve better outcomes for the lawyers whom we support. Personally, “I’ve put my money where my mouth is”: I recently turned over global marketing to colleagues so I could work in Integreon’s legal operations consulting group to help do exactly that.
Furlong was perhaps even more prophetic than he realized when he wrote that “a surprising number of law firms are adopting — and adapting — the outsourcing model themselves.” On Thursday, Legal Week published Taylor Wessing set to create arm in Cambridge for standardised work.
The article reports that the Anglo-German law firm will set up “an affiliated corporate services business to offer clients standardised work.” Their goal is to offer lower-cost options for routine work such as corporate due diligence. Eventually “it is likely that the firm will offer the service to third parties, including other law firms.” The firm may also partner with an IT outfit to streamline work.
“Adopting the outsourcing model” as Furlong suggests is exactly right. From the limited information we have, it sounds like the firm’s Cambridge unit will be a captive LPO.
We think this development is good news for the legal market. It further validates that law firms must respond to corporate pressure for (1) options, (2) lower cost, and (3) process improvements. Of course, we also view it as an explicit endorsement of the LPO approach.
Until recently, the corporate law market was served almost exclusively by inhouse lawyers and large law firms. Today, however, clients can choose from among boutiques, regional law firms, LPOs, and now, law firms as LPOs. This choice and competition foster innovation and drive costs down - good news for clients. Firms like Taylor Wessing that innovate benefit. And LPOs benefit because in a diverse world of providers, we believe LPOs have the skills, experience, know-how, technology, and global platform to win a good share of the work to support lawyers.
Filed under Uncategorized
by
Ron Friedmann on June 7th, 2010 at 5:09 pm :
Comments 000
The Legal Process Outsourcing (LPO) market is relatively new and rapidly evolving, with a multitude of providers. Like many markets, it will probably consolidate over time, which means careful buyers will consider which providers are likely to be around for the long haul. This adds to the usual challenges of evaluating a crowded playing field, especially for buyers with relatively little LPO experience, but analyst reports that evaluate the market and buying process can help.
One such report is the recently-released “Sourcing Prism” report, Legal Service Outsourcing Edition, published by the ValueNotes Sourcing Practice (”VN”), which has been tracking the LPO market for several years. The report rates 41 LPOs and helps buyers understand key selection criteria. Integreon is pleased to be highly rated across all key criteria, ranking as 1 of just 3 “Pacesetters” identified.
This post summarizes the Sourcing Prism; readers who would like a complimentary copy can register for it here.
VN suggests that buyers consider three main criteria:
- Services Maturity, which consists of depth of service, provider experience, ‘position on the value chain’, and technology
- Sustainability, which consists of financial strength, brand, scale, and risk.
- Strategic Intent, which consists of clarity of vision, clarity of tactics, and demonstrated ability to execute.
Depending on their score on each of these, providers fall into one of three categories: Pacesetter, Contender, and Aspirant. The report uses two types of displays to visualize its ratings.
First, each vendor is scored on a “Sourcing Prism”, a triangular spider chart that shows its scores on each criterion. In this type of display (illustrated below), the vertices of the outer triangle represent the highest score for each criterion. Each vendor’s performance is represented by an inner triangle; the best-scoring vendors have the “biggest triangles”, that is, inner triangles coming closest to outer ones. An inner red, dashed triangle represents the industry average score. To illustrate, below a conceptual diagram alongside Integreon’s Prism:
Second, to facilitate comparison across vendors, VN also provides three “2×2 charts” that map all vendors against combinations of the criteria. As usual in a 2×2, the top-right position is most favorable. In all three charts, Integreon is in the top right quadrant with just two or three other LPOs.
Law firms and law departments considering using an LPO likely will find this report helpful. We encourage buyers who are considering LPO services to register to receive a free copy of the report.
Filed under Legal Outsourcing (LPO)
by
Babs Deacon on June 3rd, 2010 at 10:14 am :
Comments 001
Early Case Assessment (ECA) is the e-discovery solution most in demand, according to the 2009 Socha-Gelbmann Electronic Discovery Report. In my blog post, E-Discovery Takeaways, I discussed the various methods clients are using to reduce the cost of handling e-discovery such as by in-sourcing and moving data to the cloud. Many corporations and law firms are also pinning their hopes on ECA. This hope, however, is often misplaced; effective ECA requires detailed process know-how and avoiding undue faith in a single application touted as an ECA panacea.
The report describes industry wide confusion between perceived and true functionality offered by ECA applications:
“ECA has been a hot topic for the past two years. We believe a major factor for this level of popularity is that it is being portrayed by many as a silver bullet for constraining runaway costs. A concise, generally accepted definition of ECA does not exist. Consequently, defining ECA depends on who you ask. Some purveyors of products are working at rebranding old tools as ECA adding to the confusion.” [emphasis added]
The survey results also indicate that “overselling” by software providers is one of the biggest problems in e-discovery related to ECA. Hand-in-hand with this problem is the need for ESI-specific lawyer education and mentoring.
From Silver Bullet to Gold Rush
Consumers of e-discovery services and software should take note of the Socha-Gelbmann report’s warning. It is always wise to be wary of applications that promise to “do it all”. Most applications do one or two things well and the rest poorly. Recently, it seems that developers slap “Now with ECA!” stickers on products that could potentially be used for ECA (often with an enormous amount of effort) but which don’t actually include any new functionality specifically designed for this purpose.
The confusion surrounding ECA recently prompted George Socha and Tom Gelbmann to author an article on the subject, Don’t Box ECA (Law Technology News, June 2010). They point out that, while ECA can intersect with the discovery process, it actually goes beyond it. For the purpose of this blog post though, I’ll focus on how ECA does apply to discovery.
The Truth about ECA
At Integreon, because we consult with organizations at every stage of the EDRM framework, we have been beating the ECA drum for a long time. There is no replacement for old-fashion know-how, preparation and organization. True ECA is a managed process where the litigation team creates and reviews data maps, conducts and reviews potential custodian interviews, and looks at sample data. There are tools that can make some of this process easier but nothing really replaces this litigation-research.
It is nice there are tools that help litigation teams get a whiff of the data without having to fully process significant numbers of PSTs (a common type of mailbox archive file) or restore stacks of backup tapes. Integreon uses tools such as Index Engines (i.e. Advanced Tape Discovery) and Clearwell (i.e. First Line Analysis), but these are only the tools deployed as part of a comprehensive, documented ECA process.
Simply put, discovery related ECA is all about scope. The goal of this “assessment” or “analysis” is to make an educated prediction as to how much data should be preserved, collected and processed; how much the full discovery effort might cost; and benefits and risks to the client in a variety of discovery scenarios. If the ECA effort is effective, the litigation team will be able to put a relative value on the litigation, prepare for the meet and confer or settlement conference, and correctly target its collection efforts to the truly, potentially responsive custodians and data stores.
Based on a review of interview memoranda and data maps, attorneys should also work with in-house specialists or outside consultants to analyze representative samples of data to understand and document data types, thread topics, participant interaction, timelines, etc. The team can run searches on this data to attempt to extrapolate the amount of information which may be potentially responsive and that will eventually need to be sent into review.
After this phase, which is aided by e-discovery applications but is certainly not a “magic” turn-key process, the team should be able to formulate an initial strategy. If formal discovery is called for, they should be able to make an informed decision as to what to collect. Helpful ECA should allow the team to collect less data overall, and produce more responsively.
Again, ECA is a human process. One hundred custodians dumped into an ECA tool will not miraculously percolate a case strategy, and could be an even bigger waste if the case might be won by collecting only twenty custodians. If the litigation team hasn’t done its homework, then no ECA tool in the world will be helpful. It will be like that All-in-One power tool that just collects dust in the basement, or that blender that is supposed to delicately crush ice but instead makes margarita soup.
Perhaps the persistent underlying distaste for e-discovery is part of the reason that some attorneys look for a magic ECA tool to make all their troubles go away. The Socha-Gelbmann survey had an interesting comment on this:
“As one survey participant put it, ‘electronic discovery is viewed as something you have to do, rather than something that is vital to learning about the case.’ Fortunately, some organizations understand this imperative and have been developing technologies and techniques to help electronic discovery practitioners craft and tell a persuasive tale.”
I reiterate that true early case assessment isn’t primarily about e-discovery. It’s about litigation tasks such as interviewing potential custodians and witnesses. I often hear attorneys complain that document review and production management “aren’t why I went to law school”, and yet I hear almost as often that many of these same attorneys don’t bother to draft or review interview memoranda. I have also experienced litigation teams that don’t even want to look at evidence until it’s been pared down by review and production.
Perhaps the mountain of electronically stored information (ESI) is so daunting that attorneys don’t think they can tackle it early in the process. I believe that litigators will not regain their confident management of the entire discovery process until they are extensively schooled in e-discovery management. The 2009 Socha-Gelbmann survey results do show that education is the weakest link in the e-discovery industry today.
A Need for ESI Professionals
If litigators are beginning to agree that e-discovery is really just part of discovery, then all litigators will have to have some level of comfort with e-discovery management — from Information Management at the far left of the EDRM framework through Presentation. No litigator, or even an attorney in another practice area, should be truly free from the responsibility of attaining basic competence in this area. However, this does not mean that the industry doesn’t need specialists. I may be a real home DIY-er but I still hire a plumber or electrician to do the professional work.
Effective participation in the management and processing of ESI requires a similar level of specialization. The Socha-Gelbmann survey respondents decried the lack of good project managers and litigators who are able to participate fully in cases that involve ESI.
“[M]any participants estimated that no more than 100 to 200 lawyers in the entire country [USA] really get electronic discovery.”
This is especially problematic for law firms and corporate legal departments that are seeking to recruit members to an e-discovery team or practice group. As mentioned previously, corporations are hiring full-time ESI and litigation support personnel. According to the survey, law firms are doing likewise:
“Law firms, for whom the move in‐house means taking on activities previously delegated to providers, hope to retain relevance. Increasingly they feel the need to replace [the] dwindling volume of large case review projects with new electronic discovery revenue streams.”
To meet the demand, new ESI professionals will need to be “created” by the e-discovery community. Early and on-going ESI education — in law schools, firms and corporate legal departments for attorneys, paralegals and litigation support professionals — should be a priority for 2010 and 2011. The curricula should include case law, technology, and project management training. A recent positive sign is that law schools are indeed beginning to offer classes in ESI; note Ralph Losey’s law school lectures available via his blog.
Industry organizations are also stepping in with certification and training programs. For example, the Organization of Legal Professionals (OLP) and the Association of Certified E-Discovery Specialists (ACEDS) are both offering online training courses.
However ESI program creation cannot be limited to education and mentoring. ESI competency needs to be a prerequisite for advancement. Conversely, don’t sideline ESI attorneys as “nerds” and push them off of the partner track — a fear I’ve heard articulated more than once from junior associates. Another issue is the time training can take away from reaching billable quotas. Associates should be rewarded for updating their skills, not penalized.
Fernando M. Pinguelo, Esq., of Norris McLaughlin & Marcus, P.A. told me, recently, that his e-discovery class at Seton Hall Law School is one of about a dozen or so such courses dedicated solely to e-discovery taught in US law schools. His class members maintain a blog, www.eLLblog.com, as part of their course work which seems like a great way for law students to encourage their peers to sharpen their skills.
If only 100-200 litigators in the USA “get it,” then more attorneys should be availing themselves of the services of a qualified ESI consultant. It is no sin to admit you’re not a techie; rather it’s a sign of foresight to bring in the right kind of technical assistance. Ralph Losey’s blog post from January 12th makes the case that hiring a consultant can in fact be a sign of competence, rather than weakness. Similarly, a recent report of recommendations for changing how e-discovery is handled in New York State Courts states that:
“Court rules should be amended to require that counsel appearing at the PC possess sufficient knowledge about client technology systems to competently discuss them with the court and opposing counsel; counsel may, as appropriate, associate themselves with and bring client representatives or outside experts with knowledge of the issues.”
Clearly, there is much credence to supporting e-discovery educational opportunities and bringing in ESI professionals in order to ensure that an efficient, accurate, and defensible process is conducted.
In the third and final post of this e-discovery blog series, I will next discuss another trend reported in the 2009 Socha-Gelbmann survey: Data Analytics.
Filed under E-Discovery (EDD)
by
Ron Friedmann on May 17th, 2010 at 3:35 pm :
Comments 000
Recent evidence suggest that the new normal for large law firms will differ from the pre-crash legal market. Two weeks ago Hildebrandt Baker Robbins released its Peer Monitor Economic Index (PMI) for Q1 2010, which is flat - at the same level as 2009 Q4. PMI is a function of demand (billable hours), productivity (hours per lawyer), rates, direct expenses, and overhead expenses. Three components were down; the two that were up do not signal an upturn. Rates were up but reflect only a change in mix, meaning lawyers with higher rates did more of the work. Productivity was also up but reflects fewer lawyers doing what work is available. Hildebrandt concludes:
“It is increasingly apparent that the fundamental economics of legal practice are undergoing a significant and permanent shift…. With slow revenue growth, firms will continue to focus on cost‐cutting to bolster profitability, and consequently aggressive cost controls are now the norm, no longer simply a short‐term response to weak demand and pricing….. The strategic emphasis is shifting toward a different imperative: the need for greater efficiency in the delivery of legal services.”
Other signals also point to a new normal. For example, Alternative Billing Arrangements Putting Down Deep Roots General Counsel Say (National Law Journal, 17 May 2010), reports that “costs to U.S. companies have risen 20 percent over the past decade. During the same time period, however, legal costs have risen 75 percent.” In reaction to ever-increasing costs, GCs increasingly use alternatives to the billable hour. “[M]any companies and law firms now report that as much as 40 percent of their work is billed on alternate billing arrangements that include flat fees, phased billing and contingencies.”
The need to control cost, increase efficiency, and improve the value of legal services is turning new attention to law firm costs for lawyer support. With AmLaw 200 median lawyer support cost at $170,000 in 2007, there is room for savings. (See my personal post, Cost Control as Part of AmLaw 200 Turnaround Strategies, for how I estimated this. For 2008, the latest year available, the same assumptions and method yielded median overhead of $180,000.)
Two recent announcements will likely catch the attention of many law firm managers as a way to control and decrease this very high overhead. As I discussed in my recent post here, WilmerHale Reduces its Middle Office Costs, US-based WilmerHale announced at the end of April that it will soon move about 200 staff positions to a low cost operations center near Dayton. This move is initially only for staff support but will include a more cost-effective approach to high volume, routine legal support: WilmerHale moving support staff to Ohio in the Washington Post (3 May 2010) reports that the “business center will develop the resources to provide on-site document review as well.”
On Friday, UK-based Cameron McKenna announced a major middle outsourcing deal with Integreon. The Integreon press release explains that the firm has signed a 10-year agreement with the company for outsourced Middle Office services, including portions of accounting and finance, HR and training, marketing and communications, learning and development, library and information services, research, information technology, and facilities. The deal value is £583 million. “By outsourcing non-billable tasks to Integreon, CMS Cameron McKenna can focus on its core competency – providing high-end legal and tax services. CMS Cameron McKenna’s decision to outsource its Middle Office is part of its ambitious and progressive strategy to create a new model for law firms.”
Like WilmerHale, this deal does not initially include legal process outsourcing (LPO) services but a Legal Week article, Camerons set to outsource entire back office with Integreon deal (14 May 2010) , notes “Camerons will also review future legal process outsourcing opportunities with Integreon, but no legal services have been included in the initial deal.”
I was surprised that WilmerHale’s announcement garnered little legal media or blog attention. My recent Google search “WilmerHale dayton ‘business services’ ” yielded only three dozen hits, few of which comment on the firm’s move. That’s not much discussion about what strikes me as a momentous decision. If Hildebrandt is right about the new normal, more firms should consider this type of move. It will be interesting to see if the CMS Cameron McKenna announcement generates more coverage and discussion in the coming weeks.
I wonder how many more quarters of bad index readings will it take before we see more such announcements? WilmerHale illustrates the ‘captive’ route to reducing middle office costs and CMS Cameron McKenna illustrates the outsourced approach. Firms that figure out how to support lawyers at lower cost and let lawyers focus on practicing law and client service will have an advantage in the new normal.
[This post is an extension of my May 10th personal post, BigLaw New Normal Looks Bad - More ‘WilmerHale Moves’ Coming?)
Filed under Captive v. 3rd Party, Legal Economics, Legal Outsourcing (LPO)
by
Babs Deacon on May 14th, 2010 at 4:01 pm :
Comments 000
The EDRM 2010 Spring kick-off meeting this week in St. Paul Minnesota had nearly 100 attendees turnout, which may show that the electronically stored information (ESI) community is regaining some of its former optimism.
The work of EDRM (The Electronic Discovery Reference Model) is done by a series of project teams and committees. Each reported on progress over the last twelve months and goals for the next year and I share some highlights here.
Data Set Project
One of the big challenges in e-discovery (EDD) is creating a large, freely available data set, against which lawyers and vendors can test software or develop new semantic or text handling algorithms. The Data Set project has soared past their initial goal of 100 GBs of unencumbered data and is currently offering three different sets of helpful test data.
As reported last year, they are reaching out to other organizations to work for the betterment of the ESI community. Their very productive interaction with NIST (National Institute of Standards and Technology) has even resulted in receiving a copy of NIST’s source code used to run Hash values. (A hash is a mathematically generated ’signature’ for any digital file. Each is a limited and fairly small number of characters, irrespective of file size. Hashes are used to identify and compare files.)
Data Set is supporting the TREC Project, the Text Retrieval Conference, run by NIST. EDRM Data Set is helping to create an improved set of sample data for this year’s TREC legal track. The goal is to create an enhanced, canonical set of public Enron data that accurately represents Enron’s email environment. This year’s TREC sample will grow from 104 to 150 Custodians.
The Data Set project group sees their work as very practical, even though it sounds very techie on the surface. They are dedicated to lowering the cost of ESI processing. Their current goal is to answer the question, “What if there was a way to probabilistically determine if any file was user-generated or not?” They believe that non user-generated files could be automatically stripped out during pre-processing for most cases. With this in mind, they are working on creating the grandly named, Probabilistic Hash Data Set (“PHDS”). Success would mean reducing the cost of processing and reviewing ESI by eliminating irrelevant files early in the process.
Evergreen Project
The Evergreen Project is the group responsible for keeping the original content of EDRM, the information that matches the Model, or Framework itself, up to date. Evergreen is roaring out of the gate, having spent a year dedicated to completing and updating all EDRM Framework content.
Julie Brown must be lauded for her dedication to this work. She co-chaired the project and spent an enormous amount of time and energy shepherding the various nodes toward the goal of complete content. Julie is remaining with Evergreen, thank goodness, but is handing over her co-chair responsibilities to Therese Carey. I am staying on as the other co-chair and Therese and I are very excited about the progress made last year and the plans for the next twelve months.
Evergreen will be accomplishing the following enhancements to the website and its content by May 2010: A “Pack and Play” download for each phase of the EDRM framework containing a Standards document, supported by tools such as check lists and templates, case studies and an introductory, educational PowerPoint presentation. Evergreen is so fired up that you may see some of this material in Podcasts, Vcasts and live presentations.
Information Management Reference Model
IMRM or Information Management Reference Model project is still a new addition to EDRM and has already created useful content. They envision themselves as an “entirely new reference model – separate counterpart to EDRM.” Look for their helpful graphic on their page http://edrm.net/activities/projects/imrm
Model Code of Conduct
MCOC, led by Eric Mandel, is determined to have final content available for public comment by May 2011. It may seem like the code is taking a long time but the project is tackling very complex issues and they don’t want to give short shrift to the various points of view and factors related to these spiny issues.
Public Relations
The PR Committee has broadened its mandate to include entertainment. They put together a sneak-peak of a game show they are working on for LegalTech. They will be soliciting additional questions and answers from the ESI community.
—-
Once again, St. Paul, was lovely in the Springtime and the residents were welcoming and helpful. I managed to make it to the Minnesota Science Museum for a very quick look at the Dead Sea Scrolls exhibit, before the reception Tuesday evening. I doubt the work of EDRM will last 2000 years but at least we don’t have to produce TIFFs on papyrus.
Filed under E-Discovery (EDD)
top of page