A BigLaw Watershed: O’Melveny Partners with H5 for EDD
Last week top law firm O’Melveny and information retrieval firm H5 announced an alliance to provide clients with innovative search methods for electronic document discovery (EDD). This is a legal market watershed in my view. I was fortunate to interview Richard Goetz, Chair of O’Melveny’s Class Actions practice group about this agreement and the firm’s thinking behind it.
On 3 August 2009, the two organizations issued the press release O’Melveny and H5 Form Strategic Alliance to Offer Cutting-Edge Model for Document Review. I understand why blogosphere and Twitter chatter about this was limited. E-discovery software vendors and service providers sometimes persuade law firms to issue press releases announcing the use of their products or services. These releases are about the vendor, not the firm. As far as I can tell, only Law.com’s Legal Technology Blog noticed something different here, observing the firm likely sees competitive advantage in the announcement.
I agree and go further. Unlike the typical press release announcing partnerships with e-discovery software vendors or service providers, O’Melveny stakes out a clear position: it wants to provide “clients with a cost-effective, efficient and accurate alternative to traditional search methods for document discovery, review and analysis.” The release quotes Goetz acknowledging client concern about the cost of e-discovery and document review. Everyone in the legal market knows this is true but few BigLaw firms say so; fewer still take public steps to address the problem. So I was pleased be able to learn more by speaking with Mr. Goetz.
Goetz explained that the firm started an initiative several months ago to identify a means to help address what the firm knew was urgent client concern about the spiraling cost of document review. O’Melveny spoke to clients about the problem and sought potential solutions. The firm put aside any consideration of their own economics and legacy approach. After evaluating options, they chose H5.
I asked Goetz if the firm conducted a competitive analysis of how other firms handle EDD, mentioning Dorsey & Whitney’s LegalMine offering (my blog post about LegalMine here). O’Melveny did not consider how other law firms handle doc review; rather, the firm wanted to figure out the problem from a client perspective. Their idea was to solve the problem by offering a completely different model. So the diligence was on e-discovery providers and Goetz says the firm spent much time looking at available technology and process before reaching out to H5.
So will it work? I have long been impressed with H5 technology and process and have mentioned the company in several posts over the years. So I have no doubt that H5 is a good approach. The question is really better stated as, “will lawyers adopt this new way of working?”
In my two decades of legal technology experience, I know that it’s one thing to come up with an innovative approach, another to sell it inside a law firm. Goetz says that O’Melveny focuses on what clients need and the rest flows from that. The firm will not require partners to use H5 and will still offer traditional doc review approaches for those clients who want it. But Goetz reports that in internal discussions, partners are very receptive to the idea of a better way and recognize the importance of offering desperate (my word, not his) GCs an alternative. One internal selling point was the potential to get litigation matters that the firm might not otherwise get.
I pressed him on the internal pitch, pointing out that many firms profit hugely from staff or contract attorneys and consequently don’t want to disturb the model. Goetz’s view is that if you want to be a leading law firm and litigation powerhouse, you cannot ask how to keep high margins. Instead, you have to ask how to deliver the best service for clients and solve problems in the best manner possible, at the best cost.
I agree – this point seems obvious yet sorely missing at many firms. When I was a law firm manager discussing client service issues, I often said – to partners and to staff – let’s have this discussion as if the GC of our biggest client were in the room. He or she does not necessarily have to agree with everything we say but should not be embarrassed, appalled, or angry at anything we say. I have heard many a discussion in BigLaw about attorney review that fails this simple test.
I wonder though, if in breaking the mold, O’Melveny has created yet higher expectations for itself. After all, many other methods exist to control and reduce litigation cost. Two of my favorites are budgets (based on rigorous analysis of aggregated data from prior matters) and risk analysis using decisions trees. So I asked Goetz if clients may now expect O’Melveny to announce additional cost control measures. Goetz hopes so. He agrees that more rigorous budgeting is a good candidate. Plus he thinks a really big opportunity is better collaboration with in-house counsel to make business-based risk decisions about litigation.
The jury is, as they say, still out. It will be interesting to watch O’Melveny and H5 to see if either discusses their future joint experience, especially cost savings they achieve. Irrespective of outcome, however, I view this partnership as a great step forward for the market. Goetz talked about gaining the “first mover” advantage – words seldom heard in BigLaw. O’Melveny may very well gain the benefits accruing to a first mover. Moreover, with luck, the entire market will benefit: the firm’s move may force the rest of BigLaw to talk about the elephant in the litigation room in new terms.
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