RT @jordan_law21 New at Law21: measuring lawyer productivity: http://tr.im/qjpD || also consider actual outcome v. expected / hoped for

RT @glambert ‘Alternative Fees - “How To” Tech’ - http://bit.ly/NFYQK - there’s Redwood, then … not much else? || good blog by @gnawledge

Altman Weil survey: signs of real change in legal market. Press release re new GC survey with link to summary PDF. http://bit.ly/nOCd4

Maybe GC don’t exercise market power b/c their law firms are job landing pads. Rees Morrison suggests a policy to fix at http://bit.ly/HjZLf

‘Pinsents – first firm to offshore work of qualified UK lawyers’ The Lawyer. http://bit.ly/5IXPE

RT @jordan_law21 New blog: the UK crucible: http://tr.im/p4lG || Great update on UK legal reform; links to recent reports

RT @PosseList Womble and Alt Fee Arrangements – Focus Report for ACC http://is.gd/16EYn || Wow - first time I see Monte Carlo sim in legal

More Sprint Nextel - RIM Blackberry 8830 issues: I’m techie and cannot get sync to work. What do non-tech users do?

@VMaryAbraham great KM blog re mixologists v bartenders. Applies to IT too? http://bit.ly/FTXrH

@RossMark RT Managing Partners on Outsourcing, Cost Control, Indian Liberalization, and Law Firms of the Future: http://tinyurl.com/ndtzjc

Alt fees = avoidance. To lower lawyering cost: accept some risk; decision tress, budgets, processes, metrics, best practices. What else?

Am I the only one who finds that the ABA website is chronically among the slowest sites to load?

Can we tell if BigLaw revenue decline is bigger than total drop in legal demand? That would be best sign of structural buying change by GC.

Jones Day tells staff to work harder http://bit.ly/TY3T0. imo: tell lawyers to get over their caste system mentality and learn team work

Anyone have experience w http://www.paperchace.com/ for litigation risk analysis w decision trees? Esp. curious to hear from TreeAge users

In June 2006, Chris Boyd, Senior Director of Professional Services at Wilson Sonsini, and I explored the idea of tapping into existing law firm processes in the June 2006 ILTA KM white paper. Three years and one economic crisis later, we thought it was timely to re-visit this topic. Rather than rely on anecdotal evidence of how law firms “power their KM windmills,” I thought that a survey would provide a better way to answer our fundamental question: Are law firms baking KM into their processes?

Today, ILTA released the survey results: Baking KM into Everyday Workflow: An Analysis of Knowledge Management Survey Data. The bad news is that law firms are not baking KM into processes as much as they could. The good news is that KM does not seem to be suffering unduly in these tough times.

As the author, I’m obviously not disinterested, but I think that anyone interested in legal KM will find the survey interesting reading. And I personally look forward to reading to the ILTA white paper released today, Knowledge Management: More than the Sum of Its Parts.

Over at my employer’s blog, I co-authored a post, What Law Firms Think about Legal Outsourcing. It summarizes key findings of ValueNotes’ Legal Services Outsourcing: What Do Law Firms Think? and comments on them. Here is a summary of that post.

Many VN findings match the market assessment of Integreon as an LPO provider; there are some differences however from the supplier perspective…

LPO Penetration is Low. VN found that offshoring still has fairly low penetration among law firms; less than 3% of firms in a random sample had tried offshoring. Prior surveys and Integreon experience suggest it is much higher. VN surveyed lawyers, not firms, which may account for the lower finding.

Onshore Outsourcing is More Common. The total volume of outsourcing is higher if you take into account onshore outsourcing, which is more common than offshoring (especially in document review). In Integreon’s experience, only a small portion of the market is dogmatic about location; the vast majority let business requirements drive the location decision.

Cost Savings is the Main Driver. VN found that cost savings is the main driver but Integreon also sees that many customers, both law firms and law departments, also focus on satisfying client pressure and improving turnaround time. I know that other outsourcing providers share this view.

What Customers Seek in an LPO. VN found that customers of offshore services seek a provider with deep management and domain expertise, good references, end-to-end services, the ability to scale, and onshore/ global delivery capability. This is consistent with Integreon’s own experiences and what I hear from my peers in other LPOs.

Lack of Awareness is Biggest Reason Not to Offshore. The biggest reason law firms cite for not offshoring – 85% of firms – is lack of awareness of offshoring or no perceived need to do so. I was quite surprised since LPO has been around for 5 years and there’s been plenty of hype. Regular readers of this blog may recall I’ve been reporting on legal outsourcing since 2003!

Security Concerns. Firms cite security as a reason not to offshore. Firms can easily allay these concerns by assessing a provider’s facilities, security, and procedures. VN notes that firms with more extensive offshoring experience say that “client confidentiality and client conflict are not major concerns.” My own view is that the security I’ve seen at Integreon’s facilities exceeds that of any law firm’s I’ve seen.

Quality Concerns. Some firms that tried offshoring were not satisfied with the quality. These instances were likely ad hoc projects that were not properly planned or executed. A reputable LPO should be able to demonstrate understanding of the components of quality and a customer due diligence should reveal whether it’s real.

Document Review Dominates Offshore Work. For firms that do offshore, VN found that document review is the most popular function to send offshore. This is consistent with LPO industry experience.

Conclusions. It is certainly true that many lawyers are skeptical about both offshoring and outsourcing. We think this will change. My colleagues and I know that in the legal market, any new way of working takes years to penetrate. Firms take time to gain comfort with new ways of working; indeed, it takes time to use those ways effectively and achieve the desired quality. The legal market is slow to “tip” to a new way of working. But when it does, it tips quickly. We think in the current environment, the tipping point is upon us.

[Integreon has a free offer for the report - details at that blog post, What Law Firms Think about Legal Outsourcing. See where they agree and disagree with above observations.]

Update 26 June 2009 @ 830. The PosseList blog commented on above post. PosseList is a thoughtful and insightful blog focusing on contract lawyers in US and often comments on broader legal market trends.]

I’ve argued that litigators and judges should rely on statistical analysis to determine the the most reliable and accurate approach to reviewing documents. In my March 2007 blog post, The Gold Standard for E-Discovery Document Review, I argued that lawyers’ belief in the accuracy of human review is likely misplaced. In that post, I described an empirical study H5 conducted.

The Equivio>Relevance ™ study is available by registration. It compares human review results to Equivio>Relevance ™ results and found that

“Out of the 4,107 documents in which the review analyses differed, the Oracle ["Topic Authority” in TREC lingo, aka “subject matter expert"] reviewed a statistically drawn sample of 190 documents, or slightly less than 5% of the documents in dispute. Of those 190 documents, the Oracle determined that Equivio>Relevance was correct in 147 of the cases. The human review team, by comparison, prevailed in only 43 of the disputed sample documents.”

In my view, that means the computer performed better than humans. Equivio is, however, rightly more cautious and draws this conclusion:

“computer-assisted review can dramatically increase the efficiency and accuracy of a document review team’s work”.

I think about the Equivio analysis by way of analogy. Let’s say the corpus of documents were a bunch of cells in your body. And let’s say the responsive docs represented cancerous cells. Further, the more cancerous cells you can find and segregate, the higher your chances of survival. If you, as the patient, had to choose the diagnostic test you wanted, which one would you chose? I’d go with the computer because it’s finding more cancer cells. And if the FDA were evaluating whether to approve human search or computer search, the statistics would strongly favor the latter.

Of course, we are lawyers and not doctors. And lawyers must appear before judges and defend their discovery methods. And we know judges don’t like “black box” approaches to discovery. That however, may have to change. We can learn from medical clinical trials and how the FDA approves new drugs or devices. It’s all about statistical outcomes (technically, the “mechanism of action” for a treatment does not have to be understood to obtain approval).

Anyone care to do the stats to compare smart keyword searching against concept searching?

Rio Tinto’s legal switch puts pressure on London by Alex Spence reports on the fact. Rio Tinto deal heralds huge changes by well-known commentator and author Richard Susskind discusses the ramifications.

Spence reports that “Rio Tinto has hired a team of lawyers in India to try to reduce its annual £60 million legal bill by 20 per cent.” It is working with an LPO to recruit a team of 12 lawyers in India to “work for it on tasks such as reviewing documents and drafting contracts.” Rio expects to have 24 Indian lawyers within one year.

Susskind writes “the Rio Tinto deal suggests that imaginative pricing may not fully fix the more-for-less dilemma. Lawyers will need to go further and source their work differently, often by using less costly labour to do routine legal work…. People often assume that outsourcing and the options are applicable only to high-volume, low-value legal work. The Rio Tinto deal confirms this is wrong.”

For me, the Rio deal just adds to the list - literally - of corporations that offshore or outsource work. The list Outsourced Legal Services on this site shows 15 companies that offshore work to outsourcers or to their own offshore operations. So Rio is just one more company offshoring. Or is it? Specifically, this deal is announced with the intent of significant cost cutting and that feels new.

More generally, markets tip where the new and exotic become accepted and common. Geoffrey Moore’s Crossing the Chasm provides one framework for thinking about new approaches. Well before his work, however, you could see and model adoption of new high tech products (e.g., Polaroid cameras or Xerox-brand copiers) with S-shaped curves: slow ramp up followed by sudden acceleration.

The continuous (smooth) S-curve may not be a good fit for legal. Instead, a discontinuous step-shaped function may apply. Consider adoption in the legal market of e-mail, document management, marketing, lateral moves, or mergers. For each, there seemed to be only a few firms doing it and then, quite suddenly, many or all were. The “step function” reflects lawyer decision making: the first few adopters change slowly, gingerly, and quietly. Everyone wants to follow so once you have a dozen adopters, “the coast is clear” and the rest rush in.

Unfortunately, like calling the bottom of a recession (or the top of the market), it’s much easier to recognize the tipping point after the fact. Working at an LPO my view may be distorted, but it feels like legal outsourcing is at a tipping point. Of course, we won’t know for some time. Whether it is this year or beyond though, I am confident that, as with e-mail, marketing, etc., we will look at outsourcing and offshoring and try to remember what all the fuss was about.

The LexisNexis Technology Survey Gap [PDF]. LN conducted the survey (via a third party) in summer 2008. My take-away from the copious data and analysis:

• Almost all professionals now rely on technology. [What’s up with the few who don’t?]
• Gen Y [born 1980+] legal professionals spend more time on applications than Gen X or Boomers but may be less productive as a result
• I found page 23, hours per day spent using various devices, the most fascinating. All respondents report spending time using a fax machine, typewriter, and pager, for an average total of 2+ hours / day. Excuse me? I don’t see how this can be reliable. Even when fax was important, legal professionals did not spend much time using a fax machine (maybe reading faxes). I can’t think of anyone I know who owns a pager. I don’t think there are enough typewriters available to support the implied usage.
• CIOs who want to control non-work applications may find some good ammo for their arguments

As I read the survey, it does not address a long-standing question I have: are Gen Y legal professionals more tech savvy than older generations? Many lawyers and tech managers assert this is true. And this survey shows they use more applications. But that still leaves open the question of whether, when it comes to practicing law more effectively with technology, newly minted lawyers are better than older ones.

In 1997, I characterized the goals of discovery as: [see note below for source]
A. Achieve the best outcome for the client
B. Minimize cost
C. Learn the facts of the case
D. Prepare offense or defense
E. Fulfill obligations to produce documents

I don’t think that has changed. Producing documents is a requirement of discovery; the goal, however, is learning case facts, telling the best story and winning. We hear countless stories of EDD gone awry. Where are the stories about how a team found the best documents, put together the best chronology and witness binders, and did the best job marshaling the facts?

Winning a case by “doing great EDD” should be newsworthy – but can you cite a single article in the last five years on this topic? Are litigation teams so paranoid about blowing e-discovery that case prep has suffered? If yes, that’s bad. If no, let’s hear the success stories, not just the disasters.

In an earlier discovery era, some were more concerned about winning. I remember the transition from paper + objectively coded databases to scanning + OCR + full-text + coded data.

Sure, we were careful to avoid pitfalls. For example, in serial litigation, inconsistent privilege designations across cases was a big problem. Corporate defendants sometimes did not turn over relevant documents in one state when they had in another. Why? Reviewers did not properly identify duplicates so a document could be in the database multiple times with different privilege designations. We mitigated this problem by using “document footprints” to de-dup.

The real excitement, however, was better case prep and winning. For example, we asked the lead partner to write his “dream smoking gun document”. The paragraph he drafted was literally copied and pasted into the search field of Personal Library Software (PLS was one of the earliest concept search tools). The search surfaced many useful documents – many that we never would have found using the then-standard coded database search and paper pulls or even Boolean searches on a full-text database. The partner estimated that finding the documents so quickly added $250,000 to the settlement value.

Then there was a time a partner was eager to find a document he felt sure must be in the collection. Many a search failed to find it. Then he had an idea: search for the fax number of the person who likely wrote it. Sure enough, even though the fax number was in small type and fuzzy, it had OCR’d well and we found a cover sheet, which quickly led to the document he sought.

Lawyers might do EDD better if they saw as much upside as downside. If anyone has good stories about how they used modern EDD tools to find the best documents and tell the best stories, please comment or send me e-mail to ron at prismlegal dot com.

[You can read more about my experience with this earlier generation of technology in an outline I wrote for a PLI presentation available on this website at Lessons Learned in Litigation Support.]

Update (23 June 2009): EDD consultant Tom O’Connor responds to this post in What Is the Goal of E-Discovery?. He writes:

“I disagree. I believe that there are two major additions to the goals of discovery since the amendments to the FRCP and they are both significant new obligations. The first is establishing the preservation of electronic documents at a point before the litigation actually commenced, that is that a proper ESI litigation hold strategy was employed and the second is the duty to cooperate in order to better facilitate FRCP 1.”

Failure to File Routine Financial Statements Can Mean Trouble for Law Firms, AmLaw Daily Blog 9 June 2009, describes how two AmLaw 100 firms face challenges for allegedly not taking simple steps concerning UCC filings.

As I read the blog post, the alleged oversights are not about some esoteric and seldom-seen point of law. Rather, they seem to be the types of steps one would always take in similar matters. A bit like the pilot lowering the landing gear before landing? I’ve argued previously that lawyers, like pilots, should have checklists. Perhaps if the lawyers here had operated from checklists, they would not face these challenges.

I’ve also argued in the past that lawyers resist checklists or other systematic approaches because they think of themselves as artists. That view is wrong. Good artists are VERY systematic. I remember a Chuck Close exhibit at the Hirschorn that illustrates how he creates his work - he does not leave things to chance. Indeed, creativity and being systematic are not at odds. Artists may break rules but they know it when they do. And that may be more than one can say about lawyers. So, what explains lawyers’ resistance to systematizing what they do?

BT Group pilots eBay-like online auction for roster of law firms. Corp Counsel Mag http://bit.ly/Nzd×9. Auction resurgence or blip? 31 May

LegalWeek launches Linkedin group for in-house lawyers http://bit.ly/3Zn3eM. Contrast to Legal OnRamp. Who’ll ‘own’ law dept online space? 24 May

Firm Management Jobs for Lawyers http://bit.ly/VT5vi Maureen Reid law.com article. Also Clark Cordner and my views at http://bit.ly/3QdXL. 24 May

Grim prognosis for BigLaw / #amlaw100 by consulting guru Peter Zeughauser, interviewed by WSJ Law Blog. http://bit.ly/Rpg6v 17 May

Geek Tip: Use mouse scroll wheel, with cursor over Firefox tabs, to scroll through all open tabs. Great for when you have many open. 17 May

BigLaw pyramids become diamonds. law.com http://bit.ly/19J3Oh. Ward Bower: more contract lawyers, outsourcing, and offshoring. 12 May

Suit Claims Firm Overcharged for Online Legal Research. NLJ http://bit.ly/8ab5f. Can firms make Wexis profit center? With disclosure ok? 10 May

Geek Tip: Use OneNote for task management. Open separate instance for ready access to task list. Hyperlink to frequently used pages. 7 May

Law firm wants text/link update on a 2004 listing at prismlegal.com. No: date is clear and list was accurate then. Preserve historic record. 3 May

Rees Morrison: ACC Covenant with Counsel is not all that game-changing http://bit.ly/WrB0U. I was reluctant to be first to say that. 3 May

Investing in Lawsuits, for a Share of the Awards (New York Times, 3 June 2009) is a front page business section article about investment companies such as Juridica Investments, which invest in lawsuits.

According to Juridica’s website, it is

“a limited liability, closed-ended investment company registered in Guernsey*, that has raised £80 million and commenced trading on AIM, a market operated by the London Stock Exchange, on 21 December 2007…. The investment objective of the Company is to build a diversified portfolio of investments in claims and to provide Shareholders with an attractive level of dividends and capital growth through investing directly and indirectly in litigation and arbitration cases, claims and disputes.”

The NYT article notes that

“Companies often jump at the chance to have an investor help pay for litigation, and lawyers usually appreciate having money set aside to pay them…. The investing companies say that because they do not take control of the lawsuit from the company and lawyers waging it, their most important task is identifying cases likely to produce a substantial return.”

An investor in a lawsuit necessarily must have a way to value the underlying claim. According to its annual report, Juridica “made substantial progress in developing scalable underwriting systems and processes for the evaluation of claims and continue to refine these.” This is tantalizingly vague - it would be very interesting to know more about the techniques (litigation risk analysis with decision trees perhaps?)

Assuming this investment model continues to work, how far can we be from the idea I proposed of rating lawsuits? It seems a small leap from an assessment for purposes of investing to an assessment for a fee.

I wonder whether these investors look at law firm efficiency and the use of legal technology in its assessment.

Whether Juridica and other investors represent a niche or the beginning of structural change in the litigation market is hard to say. Certainly the introduction of third-party forces in health care caused huge shifts. Might litigation face the same fate with the involvement of smart investors?