Contract Management. Corporations continue to have an opportunity to improve how they manage contracts. I looked at two contracts software companies exhibiting at LTNY. Upside Software is a long-established and leading contract management system provider. Its software helps companies manage “contract creation and negotiation, performance, compliance and risk management, amendment and renewal processing, and event management.” Seal Software discovers (finds) contracts by spidering corporate storage locations. It also automatically extracts key terms and fields from any contract it finds. Its affiliated Dolphin Contract Manager then helps manage the full contract lifecycle. Contract management software companies typically target corporations but I’ve long suggested that forward-thinking law firms have an opportunity to create value for clients by taking a more active role in helping clients manage contracts.
Project Management. Legal project management is hot. So I was pleased to spend time with ERM Legal Solutions, whose software offers a very systematic approach to managing complex projects. The company has pilots with some large law firms. Stay tuned for a deeper dive on this product.
Process Improvement and Control. Managing projects is one thing, improving and automating a process another. Onit helps “business and legal teams become more efficient at what they do so they can streamline operations, control costs, gain visibility into projects and reduce company risk. Solving everyday problems with simple solutions is what we do.” Their software makes it easy to automate commons processes.
News Beyond LTNY. In the US, on Tuesday, a press release announced that Nixon Peabody Establishes Preferred Vendor Relationship with Pangea3. Arguably, this is bigger news than anything announced at Legal Tech. To my knowledge, this is the first large US law firm to announce publicly it is working with a legal process outsourcing (LPO) provider for document review. Across the pond, UK legal reform, which just went live, yielded a noteworthy transaction: publicly-traded Australian law firm Slater & Gordon will acquire UK law firm Russell Jones & Walker. Both firms focus on the consumer market; nonetheless, this deal bears watching for its broader implications on the global legal market. For an excellent analysis of the deal, see Slater & Gordon and Russell Jones & Walker tie up confirms law firms as business-savvy innovators, not ‘merge or die’ desperadoes by Edge International consultants Sean Larken and Chris Bull.
]]>What is driving the current push to automated review now?
Maas: time and cost are the keys. Judges not providing sufficient time and the increasing volume of data means costs rise and time frames shrink.
Whitaker: volume and the manifest failure of key word searching to be effective are the keys. Cites example of using “road” as a key word, which appears in many addresses. [RF: seems to me that is a failure of humans, not of technology]
Peck: agrees with above. Also cites “out of control costs” for e-discovery, which is impossible given the volume, and key words miss key docs, especially since most lawyers don’t do key words very well. Stresses importance of technology and process; cites studies showing computer assisted review better than human review.
Waxse: clients don’t want to pay the huge bills for human review. The knowledge base in bar is improving so that pushes the move to automated review. No choice but to use tech in every case - it’s just a matter of degree and type. Also cites studies showing that human review is not reliable. Does not understand why some lawyers ignore science and still insist that human review is better. [RF: amen]
What experience have you had with tech-assisted reviews in matters that have come before you? What type of cases are ripe or better-suited for tech assisted review? What paramters drive decision?
Waxse: Parites should reach agreement on what they should use. Most efficient is for parties to agree on a single approach to review. Cooperateion is the biggest sources of a solution - if we could just get lawyers to agree on which technology to review. Says that judges will sign-off on joint decision by parties.
Peck: Not sure he agrees entirely that judges will just sign-off. Is now using NY questionnaire for all cases. In 2 of 3 cases, parties agreed on paper production with this new approach.
Maas: sees computer assisted review coming to fore most often in government investigations. While opposing party agreement is good, disagrees with J. Waxse that this suffices exclusively. There may be instances where opposing parties have good reason to use different tech approaches. But they should still agree on overall approach.
Whitaker: Example of one case where discovery can go wrong. One side had most docs; both sides agreed to use predictive coding. Side A, with all the docs, chose all the seed sets, trained the system, but did not consult Side B re the seed sets. Responsive docs were under 2%. Side B was not pleased but the Judge says having so few documents is a good result. The issue is that both sides should agree in advance on the search protocols. Opponents should sign-off on the selection of seeed sets. Need to eliminate challenges deep into the case. Goes on to say the judges do not need to look into the “black box” of how the tech works.
Peck: Agrees parties most agree in advance ("Cards on the Table"). This is key to avoiding disputes. Either parties will agree upfront or put the dispute before the judge before time elapsed and much money spent.
Maas: Notes that privileged docs may often be the best seed set. This point should be subject of discussion between the parties.
Will parties have to share seed sets? Does this touch on work product and privilege issues:
Waxse: Yes, need a 502(D) agreement to avoid privilege issues. But key to use the best docs to get the best results. Don’t play games about the rules - go for the best approach to doc review. Clients will have to drive lawyers to a more cooperative stance.
Peck: Other side should not seed privilege docs but still can have input into seed sets. In most cases, opposing party already has a lot of docs and/or info about the case. Typically, opposing counsel will be able to offer the docs it already has as part of the seed set.
Waxse: Privilege designation has to be with respect to issues at stake in the case, not how the document is labeled.
Maas: Does not think privilege docs must be part of seed set. Says 502(D) protects in federal and state court but not necessarily outside US. Thinks parties should always enter into a 502(D) agreement.
How do you think we can change the culture of reliance on human review?
Waxse: Must rely on good science. Tells Kansas story of controversy over teaching creationism where courts said rely on science. There is no science supporting reliability of human review.
Peck: Agrees that the science shows human review is not reliable. Points out that even on the panel, the judges would likely not agree on all the doc review designations were they to conduct a human review. Also, we simply cannot afford human review of huge volumes. This does not mean using tech without human guidance. Studies show computer assisted reviews is 10x to 50x less expensive than human review.
Maas: humans have to inform the software what is relevant and what is not and then judging if ocmputer is making the right automated designations.
Waxse: human inolvement is essentail; human review is not. Emphasizes that lawyers must analyze the case. Discovery must focus on disputed issues in the case. That requires opposing parties to agree what’s at issue. Proper cooperation can narrow the issues, which makes discovery less burdensome.
Maas: most experienced trial lawyers agree that in any civil matter, there will end up being 6 or 7 key documents on which the case turns.
How do you each priortize process and methodology versus the actual technology? How od you balance these. Assuming that all tech review methods are created equally, what metrics and ouputs re the process would you expect to seee to establish defensibility?
Waxse: wants an agreement between opposing parties. Litigation is not setting some absolute standard. The simplest way is narrowing issues and reaching agreement on what each side will do. Federal system is down to trying 1% of cases. Two-thirds of rest settle. If most settle, when does that happen? Too often, it takes too long becuase lawyers have fun in battle. Lawyers need to focus more on resolving the case. Focus should be on issues, not on how the doc review should take place. The goal is resovling dispute, not playing games about documents.
Peck: I don’t want a scientist coming into court to explain formulas and algorithsm inside the black box (the search / review tool). Wants to know what the process was: how did you train computer; how many iterations did you do; for those docs that computer said not relevant, did you conduct QC on that set to refine search to adjust accordingly. Many systems score docs rather than make binary determination re relevance. Need to make case-specific determination of what the index value should be. Proportionality is a key factor: absolute perfection is NOT a requirement.
Maas: consider the era of paper discovery…. lawyers interviewed key custodians, they looked through paper files, looked at boxes in warehouses. Lawyres never started at box 1 of 15,000 and go linearly. In paper cases, lawyers and jusges would make determination that enough review and production had occurred. Parties exerted a reasonable amount of effort. The same principle applies to tech assisted review. There is no clear cut, numerical rule.
Whitaker: review is about process. Agree on process and stick to results it produces.
It seems that lawyers are waiting for a key opinion. Do you think a decision will be forthcoming? Do we need to change rules? Who should be pushing these issues?
Peck: odds are fairly good that first case talking about computer assisted review will get it wrong. The alternative is key words. Most decisions on key words said lawyers got key words wrong. The leading judges on EDD advocate computer assisted review. I can’t write an opinion where the parties agree on computer assisted review. An opinion will only issue when parties do not agree on approach. Hopes judge writing that understands the topic. Someone has to go first.
Waxse: litigants mut take risks. They have to make rational cost-benefit decisions. It’s a big mistake to wait for the right court opinion. Lawyers are not analyzing the cases that imposed sanctions appropirately. All the sanction cases of note involved a party that lied. So sanctions cases provide little useful guidance.
Maas: re amending rules…. it would be a mistake to amend to deal rules to deal with a specific technology. Does not see a need to amend rules to accommodate computer assisted review.
[Q&A session not captured]
]]>I recently spoke to Veronica Picciafuoco of Docracy, an open source law website. She is Director of Business Development and Community and is a lawyer who keeps an eye on the site’s content. The Docracy about us page states a bold mission:
“Docracy is a social repository of legal documents. Our mission is to make useful legal documents freely available to the public. We also hope to make them easier to find, customize and sign. No more crappy templates behind a paywall that you download hoping everything will be alright. Instead: reputable, transparent sources and social proof to help you find something as close as possible to the perfect document.”
When I first wrote about open source law in 2004, the mechanisms to gather, collect, and vote on, if not vet, documents were primitive. Today, with the social web and Facebook generation, the idea that people share content freely, comment on it, vote on it, and download is almost second nature.
Docracy wants to apply this thinking to legal documents for individuals and small businesses. The company’s start illuminates the need it’s trying to meet. The co-founders, two entrepreneurs developing mobile apps, looked on the web for contract templates they could use. They did not like what they found. So what else to do but start a company to fix the problem?
I asked Veronica why a user should trust a document uploaded to Docracy. She said that people already download legal documents from the web from a range of sources, many perhaps dubious. With Docracy she says, the source of the document is clear, the ability to create branches / versions of it allows improvements, and the number of downloads provides an indication of “social acceptance”. Lawyers likely find that answer lacking but I suspect she is right. Some social vetting is perhaps better than no evidence of usability.
I also asked who will be motivated to upload documents. A general answer is that many people share because they think that’s the right thing to do - look at the open source code movement. As for Docracy specifically, Veronica suggests that some organizations will have incentives to upload vetted documents. Some trade associations and advocacy organizations already provide templates, either for members or the public. They might well want to upload documents to a central source if doing so expands their reach. Docracy, with a concentration of similar documents, likely would achieve higher search engine rankings for document searches, which could benefit the contributing organization reach more of their target audience.
The open source law model should hold much appeal for inhouse counsel. The typical large law department faces many legal issues and transactions that are not competitive differentiators or even all that sensitive. If general counsels were to share documents more freely - across law departments and law firms - they likely would lower their legal costs. I don’t know if Docracy will serve that purpose but it certainly illustrates a path for law departments.
]]>Over the holidays, I had a conversation with partners from several large law firms. Most asserted that because their firms had become bigger, they - individually and collectively - were more efficient. I conceded that larger firms had the potential to cross sell more than smaller firms but beyond that, it was not clear how they were more efficient. Though they honestly believed their views, when I pressed, I heard no satisfactory explanations.
Stark Choice for Lawyers— Firms Must Merge or Die in the WSJ today reports that at “least 60 mergers occurred in the U.S. and abroad last year, the highest level since 2008 and a 54% jump from 2010″ (per Altman Weil data). As I read it, merger mania better serves clients by offering more offices and more practices in one entity. And the article closes, quoting Frank Burch, global co-chairman of DLA Piper, saying “More people now appreciate that there are real benefits of scale.”
In my view, this article describes but does not explain. So let me try to fill in the gaps, specifically, examining the benefits of scale. I can think of four potential scale benefits. I’ll take these one at a time.
1. Offer Clients a Broader Range of Services
Perhaps buying legal services is like buying software: the decision between a single, integrated package versus assembling the best-of-breed on your own.
Some general counsels might prefer the integrated package - more practices, more offices, more states, more countries. They can buy more from one firm and, at least in theory, the firm manages the delivery of multiple services as a single whole. This would favor mergers and big firms. Other GCs, however, might prefer to buy the best lawyers and firms and act as general contractor to integrate the effort. This approach does not favor mergers.
The question is ultimately empirical. Unfortunately, I don’t have data to answer this question. But I have heard plenty of clients say “I hire lawyers, not law firms”. And many large firms have struggled to manage both large matters and large client relationships.
2. Improve the Efficiency and Effectiveness of How Lawyers Work and the Value They Create for Clients
It is not obvious that lawyer efficiency and effectiveness (let’s call this “value") improves as firms grow in size. Let’s look at a few key value drivers and if they improve as firms get bigger:
3. Reduce the Cost of Providing Support for Lawyers
Lawyers require a lot of support. The cost of overhead - occupancy, secretarial support, HR, marketing, IT, finance, etc. - at many large firms is over $200,000 per lawyer. When assessing mergers and bigger firms, the question is whether the cost per lawyer of key support functions drops. It’s not obvious to me that it does:
4. Generate More Income for Rainmaking Partners
Rain-making partners certainly benefit if they can make more rain within a firm than if they have to refer work outside the firm. I’m reminded of 1994 book by Galanter and Palay, Tournament of Lawyers: The Transformation of the Big Law Firm, which argued that rainmaking partners had to be able to spread their “excess” business-generating ability over a larger number of lawyers. That same general theory would apply to rainmakers seeking to cross-sell more services.
The ability to do so certainly benefits the rainmaker. Whether that truly benefits clients I don’t know. Separately, given a different set of ethics rules, namely a lifting on the ban of referral fees, size would matter much less.
Conclusion
I have long wondered if larger law firms truly create more value. The WSJ article raises but does not answer the question. Returning to Mr. Burch’s quote “More people now appreciate that there are real benefits of scale.” I’d love to hear him explain exactly what he means and provide the data to support this assertion.
]]>I first observed the trend of ‘law firms becoming LPO providers’ in a blog post I wrote when I was still at Integreon, an LPO provider. In my Integreon blog post, Now, Even Law Firms are Doing “LPO” (November 2010), I reported on UK law firm Herbert Smith opening a wholly-owned document review center in relatively (to London) low-cost Belfast, Northern Ireland. I commented that
“Clients will benefit as more firms opt for centralized, low cost service operations, which provide better value. Firms will benefit because they will retain the higher value work for which clients are willing to pay high rates. And LPOs will benefit because more firms will want low cost centers and many will not want to build their own.”
Last week the Law Practice Today, a webzine of the American Bar Association, published my article The Impact of Legal Process Outsourcing (LPO) You Might Not Have Noticed. In it, I suggest “We Are All Legal Outsourcers Now”. That is, law firms are rapidly adopting the “operating system” developed by LPO providers. That includes process improvement, metrics, project management, low cost labor, alternative lawyer sourcing, and budgeting.
For a long time, many in the legal market thought that LPO was all about offshoring work to India. With the passage of time, we can see now that the real story is the drive to efficiency and the search for appropriately priced resources in multiple locations.
]]>The article addresses “How analytics harvested from massive databases will begin to inform our day-to-day business decisions. Call it Big Data, analytics, or decision science. Over time, this will change your world more than the iPad 3.”
I wrote about Big Data last May in Data, Data, Everywhere… Someday in Legal Too. That post focused mainly on how law firms could use Big Data. It only touched lightly on how Big Data might help corporate clients reduce the amount of law we need to do (also known as preventive law).
My idea - and it’s only embryonic - is that we should be able to tap corporate proprietary databases as well as public databases to find relationships that might give us early warning of legal problems. I’ve long been intrigued by the idea of legal early warning systems. In my April 2005 post Legal Radar, I speculated about analyzing blog content “to get an early handle on the possible emergence of a new legal problem.”
Today, Big Data tools allow going well beyond blogs. Big Data is big business, from established player such as IBM to newer but already widely adopted players such as Splunk.
Yet when I search the web for examples using Big Data analytics for preventive law, I find nothing. I am convinced that we should at least try. With tools form IBM, Splunk, and others, general counsels could tap corporate operational data - accounting systems, customer transactions, product returns, call center volumes, complaints, trading records, etc. - to look for patterns that might portend legal problems. This is not easy and it might not work. But it is intriguing: after all, what better way to reduce legal spend than to eliminate legal problems before they occur?
Beyond any inherent analytic difficulty lies a bigger challenge. Who will undertake this analysis? Law firms lack both the interest and capability as far as I can see. Law departments must lead. But, as I lamented in The Case for General Counsels to Invest in R&D (Nov 2010), the GC seems to have no interest in research and development.
Companies with more than a couple of hundred lawyers or legal spend in excess of $100 million should be motivated to conduct R&D on how to reduce legal spend. Sadly, however, I am not sure they are.
I hope that in my lifetime we will see someone undertake this exercise and even achieve success.
]]>You face ever-increasing pressure to control and predict cost. Here are steps I suggest you take to accomplish this:
1. DETERMINE WHAT PROBLEM YOU NEED TO SOLVE
Are you trying to reduce risk? Reduce cost? Improve service to your internal clients? Gain a seat at the table? Protect your job? The problem for which you are solving drives what you should do. I’ll assume that reducing cost is high on your list and address the rest of my advice to that goal.
2. DECIDE HOW MUCH LAW IS ENOUGH
The fastest and perhaps easiest way to reduce cost is to do less law. Work with your clients to define risks and trade-offs; educate them on the cost of legal service. You may find that you can reduce your spend by not addressing every issue that comes your way. Impossible you say? If don’t decline to deal with some issues, are you doing your job? So all I am suggesting is that you more systematically decide where to draw the line. Of course, doing less law runs counter to other goals such as reducing risk or protecting your job. So make sure your executive peers are on board with your strategy.
3. CHOOSE THE RIGHT RESOURCES
For issues that really do require legal attention, make sure you choose the right resources. Build or buy is always a good place to start. If you regularly retain outside counsel for similar issues, consider pulling that work in-house. For work you keep in-house, decide if you can assign a paralegal or other professional instead of a lawyer. For work you send out, choose the firm wisely. Can you use a mid-tier national or strong regional firm instead of a high-end, big city firm? Can you identify your efficient law firms and send them more work? Can you can unbundle tasks, for example, use an LPO or managed review provider for high volume work?
4. MEASURE WHAT YOU DO
Get religion about metrics. If you do not use e-billing, start. If you do, remember that it is more than an invoice management system. Get a data analyst to review two years of outside counsel bills: assess which firms are efficient and allocate more work to them. Remember to include judgments, fines, or settlements when you analyze costs. And finally, don’t be satisfied because your spend is comparable to a benchmark group. Unless your peers rigorously analyze and manage their own spend, emulating them proves nothing.
5. GET MORE FOR LESS
The best way to lower cost is to work smarter. For all work - inside or outside - make sure you apply process improvement techniques, legal project management, the appropriate technology, and knowledge management. Ask your law firms how they improve process, use LPM, deploy technology, and rely on KM. You may learn a few tricks. If you don’t, you may well be working with the wrong firms. (As you consider firms, think about what managing partners must do.)
***
As general counsel, your job is not just managing legal risk. It is also managing legal cost and scarce resources. If you can’t do that, others can.
Happy New Year
]]>Mainstream Media Reports on the Legal Market
NYTimes: What They Don’t Teach Law Students: Lawyering http://nyti.ms/uhQK6Q || Is there any hope for US law schools? 20 Nov
NY Times - more lawyers skip partner track to start own practices http://nyti.ms/sXf2Tz || anecdotal but indicates MSM still taking note 24 Nov
WSJ: At GE, Robo-Lawyers: Oil + Gas Unit Tests Online Resolution to Control Costs http://on.wsj.com/uXBGm5 | blip or trend? (w @Cybersettle) 28 Nov
The Price to Play Its Way http://nyti.ms/sBm2lo || NY Times Biz sec cover story rips into ABA law school accreditation (HT @richards1000) 17 Dec
BigLaw Management
The Lawyer: Lawyers and business plans <sigh> http://bit.ly/tp0xeR || time for BigLaw to get serious about strategy 25 Nov
@AmLawDaily ABA Panel Says No to Outside Law Firm Ownership bit.ly/tHTGR8 || Empirical evidence supporting this “client protection"? 5 Dec
RT @gnawledge (3 Geeks) The End of Traditional Billing http://bit.ly/sCpmPz || law firms have lost pricing control 6 Dec
Hildebrandt Blog: Rising expenses and uncertain economy cause firms to re-evaluate staffing http://bit.ly/uXo2wP || Agreed 9 Dec
Legal Process Outsourcing
The Lawyer (UK) analyzes costs of legal + biz support globally. http://bit.ly/tdUQoX || will more firms nearshore, farshore, or use LPO? 21 Nov
RT @redbridgestrat Beyond India – Optimizing the Locations of Offshore Operations http://bit.ly/uJrMbl || Good LPO analysis 23 Nov
@ALB_magazine: Aussie GCs say legal process outsourcing (LPO) here to stay, better than paralegals bit.ly/uJKiwt 28 Nov
Legal Week: Eversheds mulls low-cost service after joint LPO bid falls thru http://bit.ly/tu8BS7 | can firms survive w/o lower cost options? 7 Dec
Fronterion legal processing outsourcing predictions: Ten for 2012 http://bit.ly/veiwyB || LPO has transformed market but faces challenges 12 Dec
@DannyErtel on legal process outsourcing: Selection criteria that are fit for purpose bit.ly/sLWfh7 || gd advice 4 GC looking at LPO 12 Dec
e-Discovery
Pippins v KPMG #eDiscovery: @chrisdaleoxford (http://bit.ly/rDDnmi) on Craig Ball’s http://bit.ly/s9y2xM || holds + proportionality 25 Nov
LeClair Ryan’s @denniskiker: Who Will Save #eDiscovery? Say “Hello” to Big Data! http://bit.ly/rLjiZk || Will we need quant jocks? 2 Dec
a rel="nofollow” href="https://twitter.com/#%21/RalphLosey">@RalphLosey on human doc review limits bit.ly/vc2eR0; I too flagged #eDiscovery Gold Standard bit.ly/tYje7z | more evid today 12 Dec
@DannyErtel post: HP - %5 legal process outsourcing doc review in 2006 to 80% in 2011 bit.ly/w3oWAs || #eDiscovery #LawFactory 20 Dec
Legal Tech
Two New State Bar Ethics Opinions Suggest Cloud Computing OK http://bit.ly/s3jzqe (via @catalystsecure @bobambrogi) || BigLaw CIO take note
The cloud’s dark lining. Connected MS OneNote to SkyDrive to sync to iPad. With OneNote saving to cloud, as fast typist, I see lag. #in 14 Dec
]]>You recognize that the Old Normal is gone. Inertia may carry you a bit but change looms. If you are not retiring soon or if you want to help your younger partners, you need to take four actions to thrive in the New Normal. They’re hard and will take time, so start now.
1. IMPROVE VALUE BY PRACTICING LAW MORE EFFECTIVELY AND EFFICIENTLY
To meet the growing client demand for better value, you must improve how your lawyers practice.
Yes, partners don’t like others poking around what they do. But you can’t credibly say to clients you are one firm when every partner works differently. Figure out best practices, develop check lists, and standardize. Tell your partners this frees them to be creative where it really counts.
That will take time. So meanwhile, get cracking on legal project management. Whether your process is good or not, someone other than the billing partner needs to manage it. Grow or hire real project managers.
If you don’t have good KM and IT to support better process and project management, get it.
2. DIAGNOSE AND IMPROVE YOUR BUSINESS OPERATIONS
Have you taken a good look at your staff functions? Lay-offs reduced cost but did not fix underlying inefficiencies.
Find the fluff in your finance, marketing, IT, HR, library, secretarial, recruiting, and facilities. Figure out what you can centralize and streamline. You almost certainly have too many staff in your most expensive office space. If you don’t have the scale or stomach to open a low cost service center in a place like Wheeling, Dayton, Manila, or Nashville then consider outsourcing. Or consolidating operations in one of your own lower cost office locations.
3. ENGAGE YOUR CLIENTS
Delivering a brief, advice, or deal document is easy and billable. But to truly engage clients your lawyers need to know their business. Partners must read the news and attend the events important to clients and spend non-billable time talking to them about their business and legal problems ("what keeps you up at night?").
Separately, you personally need to know what big clients think of your firm. Find out what your clients think; have regular conversations and act on what you learn.
4. ADOPT METRICS AND FORMAL GOVERNANCE MECHANISMS
You won’t succeed with the above unless you measure what you do. Decide what’s important prospectively, then measure to see if you hit targets. Rinse and repeat. You’ll also need a governance structure: who does what when you don’t hit the targets.
***
Your work is cut out for you. But you have one other task to do support all this: quit saying “non-lawyers”. Dividing the world in two serves no good purpose. Teams works best when you eliminate castes. And in the New Normal, it takes a team.
Happy New Year.
]]>[Note: This article was first published in slightly different form in InsideLegal Thought Leaders Digest, College of Law Practice Management Issue, October 2011.]
The Old World of Ignorance and Denial World
In the old world, still with us sadly, lawyers and law firms seem unfamiliar with e-discovery. I wish I could say “uncomfortable” but discomfort suggests a degree of familiarity that is absent.
I often hear stories about lawyers who are shockingly unaware both of the legal rules and practical issues of EDD. At conferences, the handful of judges known for their grasp of and decisions on EDD say many litigants (and judges) are clueless about EDD. For example, in October, I attended the Masters Conference, an EDD event. In the session More on E-Discovery Certification, the panelists bemoaned how many lawyers and other legal professionals lack even basic EDD know-how.
I offer two hypotheses to explain the old world. One is ignorance. It’s hard imagining, however, a lawyer missing the hundreds if not thousands of articles, conferences, and advertisements about EDD over the last half-dozen years. Even general legal publications and mainstream media cover it. If, in fact, more than a few lawyers have missed all this, perhaps we as a profession have an even bigger problem to fix.
Another possibility is denial. Some lawyers seem to think digital data is unimportant or that the rules of civil procedure regarding EDD somehow do not apply to them. The willing suspension of disbelief is fine when enjoying a movie, but not for professional pursuits.
Old World inhabitants take a big risk, namely judicial sanctions and malpractice. And let’s not forget ethics: Model Rule 1.1 requires competent representation. Failure to at least consider the role of EDD in a contentious matter arguably violates the rule.
Education is the cure. It is readily and widely available. Now, persuading this world’s inhabitants that they need it… well, that goes beyond my expertise.
The New, Real World
Fortunately, many lawyers and law firms live in the New World. In this real world, they know about and regularly engage in EDD. However, its inhabitants may not yet have noticed that after a period of rapid evolution, their world is entering a new, slower phase.
EDD became a big deal around 2002 or 2003. I characterize its early days as the Wild West. Technology debates loomed large, for example: file formats (TIFF, PDF, or native); review systems (hosted or in-house); and productions (include metadata or not). Litigators and commentators alike hung on every word of the few judicial decisions. The Federal Rules were up for review and were amended in 2006. Vendors came – and they came and they came, from copy shops, Silicon Valley, and points in between. Smart law firms saw opportunity and built document review empires, generating huge profits, while others put their heads in the sand and ignored EDD. Corporate law departments struggled with information governance and retention policies.
Two events in October caused me to realize that the New World has vastly slowed down. EDD today has matured; it has become a business battle. Of course, not every debate is resolved, but the areas of contention have narrowed considerably.
First, when I was at the Masters Conference, I had many private conversations with EDD experts, some leaders in the field. They confirmed that the market is maturing and consolidating, even if it is still growing, even if debates on computer-assisted review loom large.
The Wild West has been tamed. Now, it’s a matter of case law development and convergence on a few technologies and processes. The action today seems more in the realm of marketing than of solving fundamental problems. (It’s just a matter of time before mythological belief in the reliance on human review falls by the wayside.)
And second, days after the conference, in the October issue of Corporate Counsel magazine I found a two-page ad for WilmerHale’s Discovery Solutions offering, at www.wilmerhalediscoverysolutions.com. This site describes in detail, including pricing, the firm’s approach to e-discovery and document review. The reference to the firm’s low-cost (relative to Washington, New York, or Boston) Dayton service center is via a listing of lawyers in Dayton. This is a substantively impressive site; more importantly, it reflects that marketing and positioning have become primary.
WilmerHale competes for e-discovery and document review with other large firms and vendors. To illustrate, here is my “unaided recall” list of firms (i.e., ones I happen to remember) with dedicated e-discovery practices:
Yet law firms have no lock on this business. In fact, in the Wild West days, the vendors dominated. I first started seeing a change in 2007: my blog post Coming E-Discovery Battle between Vendors and Firms noted the emergence of law firms with their own EDD capabilities. I even encouraged this trend with my white paper that year called 4 Ways an eDiscovery Attorney Can Make Your Firm More Successful, suggesting that law firms consider hiring lawyers specializing in EDD.
Law firms listened. They built EDD capabilities to compete with their clients’ in-house EDD capabilities and a still-long list of vendors. So as I see the EDD market, the real action is no longer fundamentals, but a battle for market share based on pricing and feature mixes.
One of my recent Twitter exchanges helps makes the point. I asked re WilmerHale “Do other firms have dedicated #eDiscovery sites?,” to which leading UK EDD expert Chris Dale responded “any firm not doing something similar within 2 years is dead for #ediscovery work.” I think Chris is right.
Any firm that litigates will need not just to understand e-discovery, but also to have the capability to do it. Owning is one option, outsourcing another. Either way, firms that litigate will need this expertise and capability.
Many lawyers are “outstanding”. Clients take that for granted. They also take for granted decent technology and process. So law firms need to persuade ever-more-sophisticated clients that the firm can do the EDD work cost effectively. Go ahead, tweak your process, tune your technology, but make sure you have the right business strategy and marketing.
As EDD capabilities grow and converge toward standards, competitive differentiation is increasingly hard. Price, service, and marketing become the keys to winning. Okay, I am forward thinking. We may not be quite there yet but, to paraphrase Churchill, in the New World, we are way past the end of the beginning.
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