Five Provider Options for Medicare and Medicaid Appeals and Audits

By guest blogger Libby Burke


It’s no secret that audits by Medicare and Medicaid contractors are on the rise and at an increasing rate. What started as a “demonstration” by the Federal government has evolved into a very costly and confusing program that continues to burden health care provider resources.

Health care providers generally respond to Medicare audits in five primary ways:

  1. Utilizing internal clinical staff
  2. Utilizing in-house attorneys
  3. Outsourcing to clinicians
  4. Outsourcing to law firms
  5. Outsourcing to a legal services provider (newest option)

Let’s dig a little deeper into these five options:

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In-House Departments Won't 'Double Dip'

While the credit and debt crises and the political bickering in Washington have sent markets onto yet another roller coaster ride (and disgusted most of us) -- and on the heels of an interesting article in the Wall Street Journal on in-house hiring practices -- it’s worth revisiting the impact the last recession had on the legal marketplace – all of three years ago.

At that time (2008), law firms were just truly beginning to feel the burn of hiring masses of high-paid associates – the going rate in large markets was $160,000 for a first-year, but much of the work first-years were expected to handle (see: e-discovery) was already going away. When the economy’s bubble burst, the effect was quick and uncompromising: corporations instituted immediate hiring freezes, put off litigation and other large and expensive projects as long as possible, and there were dramatic reductions in legal spend. That was the whammy that sent giant and mid-size firms alike into a state of layoffs, mergers and dissolutions, as well as hourly rate reductions… which, of course, was soon followed by masses of news releases about alternative fee arrangements and value pricing for clients. It was what I have heard some refer to as the “we get it, you need to cut costs, trust us we can do it” age.

The reason for much of this was the movement by corporate legal departments to flesh out internal processes while operating on a very lean budget, which resulted in the identification of resources that could produce good work at a reasonable cost. In the fall of 2008, I spent many hours with our corporate clients working on alternatives to laying off in-house staff, and those sessions created a number of innovations in how some of the work gets done. Many of those innovations have “grown up” and will help those legal departments weather whatever storm may come their way in 2011 and beyond.  

The results of this maturation process have been outstanding in many instances – better communications, workflows and use of resources, a better work product, close partnerships with service providers, a more strategic use of outside counsel, and, ultimately, millions of dollars in savings. The reason: they (and we) gained a better understanding of the value of their legal work and how to appropriately allocate it, and business decisions -- not just legal decisions -- became a vital criteria for structuring work. Many corporations have now permanently instilled these processes and philosophies into their everyday practice and are well prepared to face a difficult economic environment if it comes again. While it might not all be caviar and champagne, they aren’t going to have as bumpy of a road when they had to lay down the law with their legal service providers in 2008. This is good news for everyone.

If anything, a double dip recession will only solidify that legal work is handled differently now than it was in 2008. It will prompt some corporations who might not have been pushed over the edge three years ago to further explore and develop new ways of handling their matters from top to bottom -- and there are plenty of existing frameworks to draw inspriation from. The values are a lot more defined. But most relevant to this post, legal work is a collaborative process and there are partners throughout the lifecycle of all legal services that can be effective, whether it be a piece of litigation, an acquisition or everyday contracts negotiation… and it’s clear that it's no longer a world dependent on one partner and there is no lone, single way of delivering legal services.

"Bad E-Discovery Costs $60 Million Per Year."

That was the comment that got the most gasps from attendees of Discovery Symposium 3.0, our annual event for general counsels, directors of litigation and e-discovery managers.

The select group of attendees – approximately 50 senior attorneys from 40 corporate legal departments – come together to discuss the challenges they’re facing involving e-discovery, solutions we’ve collaboratively executed, and share stories about technology tools in the marketplace and different approaches with outside counsel, among other topics. The full agenda can be seen here. It’s a highly engaged and interactive group that has proven to consistently identify numerous best practices in the discovery realm and truly cares about seeing one another succeed.

Now, back to the byline… one of our attendees, from a Fortune 100 company with an extremely knowledgeable legal department that has taken the majority of its e-discovery work and processes in-house, shared with the group that the company conducted an in-depth study on the true costs of e-discovery. The report included issues such as outside counsel and vendor costs, retention and collection policies, internal resources and technology, the possibility of sanctions, and many other factors. The attendee’s full quote is this:

“For a $25 billion company, handling e-discovery very well costs approximately $3 million annually. Average e-discovery costs $10 million. Bad e-discovery costs $60 million per year.”

While results may vary for corporations, those are eye-opening numbers and we're glad we're helping them get on the right side of those numbers. It led the discussion about how a department can’t just let outside counsel handle all things e-discovery anymore (even though most are past that) and it’s now so much more – there has to be process at every stage, there has to be real management and monitoring, there has to be a real dedication to quality control, and IT and Legal must be on the same page. All help build a “great” process. If a company isn’t focused on these things, one attendee shared, it’s “borderline negligence. At best you’re costing your company millions of dollars a year.”

The attendee went a step further, saying that "this data shows that Legal can be a revenue generator, so to speak. We can stand there and make a very strong argument as to why we need to spend money on certain software, or why we want to partner with certain companies... or even not work with certain law firms or vendors."

We’d be interested to hear your thoughts on the numbers above. The legal industry certainly isn’t averse to hyperbole, but this report holds up against much of the client data and results we track and report. For instance, it’s not uncommon to save clients in the eight figures over the course of a year compared to previously utilized models that didn’t focus on eliminating data, experienced project management or incorporating client-dedicated teams of Counsel On Call attorneys.

We’ll also follow up with thoughts and quotes from some on the different DS3.0 sessions.

Discovery Symposium 3.0 Program Announced

Our annual Discovery Symposium (now in its third year) for corporate legal departments is a real labor of love for several of us here at Counsel On Call. A lot of time and consideration -- much of it with our in-house clients -- goes into the creation of the sessions, identifying the proper experts to speak and attorneys who will get the most out of the program, as well as creating an environment in which in-house attorneys are comfortable sharing their stories of trial, success and failure.

We're very excited about this year's program and our group of attendees. Some of the highlights:

  • Leading off with a panel on the challenges presented by Social Media today and tomorrow. Our knowledgeable friends from FedEx and International Paper, along with Barry Willms, will lead the discussion.
  • Search Validation, Intelligent Coding and Smartly Reducing Data Sets, a panel that has been in development for some time and a topic we've addressed in previous events. But this year there's certainly a heightened interest/debate about this topic due to the New York Times article on the subject that went viral, so we're looking forward to getting deep into this subject.
  • Breakout sessions led by Cox Communications, Fidelity Investments and Southwest Airlines, as well as a session led by some of our Team Leaders, who will get into the finer points of creating effective, cost-saving discovery processes.
  • Ten-minute 'snapshot' presentations from six of the leading in-house attorneys who oversee discovery processes at their respective companies. Each will offer at least one 'lesson learned.' 
  • Our annual discussions on relationships with outside counsel, pricing structures, budgeting and technology tools. We get a lot of 'stories from the field' during these sessions and there's always ample audience participation.

The format/size we've created -- small panels, 40 corporate legal departments, 65-75 attendees -- truly seems unique in the dialogue it generates and best practices it fleshes out. It should be another great event and we're excited to host everyone in Nashville again.

PAR Conference Demonstrates Progress

Last week, I had the privilege of attending and speaking at The Project for Attorney Retention’s (PAR) annual conference in Washington, D.C. There were attorneys from various practice areas from across the country in attendance and the event was a great success.

As I listened to managing partners and general counsel discuss the importance of having attorneys working on a flexible basis, including reduced hours, I had to take a moment to reflect over the last 11 years (April marks Counsel On Call’s 11-year anniversary). In our formative years during hundreds, if not thousands, of conversations, the questions I would invariably get, with all sincerity, were "Who would do this? Who does not want to be a partner?" I will always remember receiving one e-mail stating that I was ”crazy” and that I would fail as there is “only one way to practice law.”

I also remember meeting amazing attorneys who were made to feel they had no value because they opted out of the traditional path. Those attorneys kept me going.

At the PAR conference, it was clear that very talented attorneys now choose to practice in a “non-traditional” way, and the focus was on how the profession should embrace and encourage this choice. That’s certainly an initiative I’ve been and will continue to get behind. PAR has done an excellent job of bringing these issues to make real change happen and keep the conversations alive. Realizing that our “little” company isn’t so little anymore – and that our attorneys worked in 33 states for dozens of law firms and Fortune 100 and publicly traded companies in 2010 – serves as proof that more and more people are realizing that there is indeed more than one way to practice law. Today, so many talented attorneys choose to practice in what used to be thought of as a non-traditional manner.

What a difference a decade makes… and that difference is changing the profession for the better.

Efficiency v. Effectiveness v. Innovation: Why Draw Lines?

There’s a quiet debate among legal pundits that’s often played out on social media sites such as Twitter, one that probably not too many people pay attention to. It’s almost an ancillary argument to the “traditional” way of billing for legal services, but it a debate that I believe cuts to the heart of value and innovation in our profession.

On the one side is the “effectiveness” argument, and one of the most outspoken voices on the topic is Ron Baker of California-based VeraSage Institute. Mr. Baker is a proponent of the death of the billable hour, and frames many of his opinions regarding legal value with the “effectiveness trumps efficiency” argument. If you’re on Twitter, I would encourage you to follow Mr. Baker.

Another proponent of the demise of the billable hour is Pat Lamb of Chicago-based Valorem Law Group – you might recognize Pat from recent 'New Normal' posts on the subject on the ABA Journal website. In a blog post over the weekend, Pat addressed the notion that effectiveness comes at the sacrifice of efficiency, and that the pursuit of efficiency stifles innovation. Pat says it all very well, but I’d like to tack on a couple of thoughts.

When undertaken properly, the search for efficiency can undoubtedly lead to innovation. We see it firsthand when we look at the processes of our clients; how they manage their legal work, who touches the documents, if there are better ways to allocate resources, where money can be saved and work can be handled better, as well as many other factors. We put a new plan into action and, as the process evolves, we look at how our attorneys are working, if the quality (or “effectiveness”) is meeting or exceeding expectations, and how we can do even better work in more efficient ways. As long as the goal is better effectiveness, the search for efficiency can certainly lead to innovation.

A huge target for this is the multiple-level review of documents in the e-discovery process. A common practice is for a team of attorneys to handle a first-level review of the documents and then for outside counsel to re-review a certain percentage of these documents. This process is almost always ripe for efficiency, especially considering the cost of the law firm’s review of the documents. But is it effective for the lawyers trying the case to only see a select portion of the documents?

That’s sometimes a contentious subject, but with a thorough quality control process, adept use of technology platforms and experienced attorneys conducting the initial review (especially those with deep experience litigating cases both small and large), it’s become clear to us that outside counsel often needs to review decreasingly fewer documents. The key is to build an effective QC process alongside outside counsel, part of which includes having senior people on the review team who have a solid understanding of the case and who work closely with outside counsel; they understand what outside counsel is looking for to win the case and can build a process to feed them the right documents. In practice, with each ensuing matter these issues become both more efficient and more effective, but it takes a certain level of innovation to design and implement the process.

So yes, I strongly believe the search for efficiency can lead to better effectiveness AND innovation. In fact, I think efforts in any of the three of these areas can benefit the others.

Coca-Cola, Cox and Counsel On Call Webinar Details

I guess that’s somewhat of a tongue twister, huh? Regardless, I am very pleased to announce that I will have the distinct pleasure of hosting a webinar via the network with two incredibly talented attorneys, Russell Bonds of The Coca-Cola Company and Kristen Weathersby of Cox Communications. The title: “MISSION: POSSIBLE | Planning & Execution in the Discovery Process.”

As the title indicates, both Kristen and Russ have been instrumental in helping their respective companies plan and implement discovery processes that have saved time and money while focusing on quality control and consistency. What I’ve found interesting is that both companies have gotten similar results while starting from very different places. Both Kristen and Russ are wonderful and engaging and we plan to have plenty of time for Q&A.

If you have time on Nov. 16, 1:00 Eastern, we hope you will join us for the free webinar. You can register here.

Discovery vs. Document Review Is Value vs. Cost

Counsel On Call has a Discovery Division while many other companies and law firms have document centers. We also have attorneys working on discovery teams, not document review teams. These might seem like subtle differences, but we are often asked why this is the case.

Many years ago, I met with a CEO of a large document review company that had several document centers. At the time, we really were not doing much of this work despite many requests from clients – it just didn’t seem to fit with our business model. During our discussion about the challenges of the document review business, he stated that he had “X number of seats” and explained to me how he had to get his cost per seat to less than $25.00 per hour. I asked, “By saying ‘seats,’ are you talking about attorneys?” He nodded. I left the conversation thinking, what are we doing here? I understood that it was a business and costs are important, but it was unsettling.

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Popular Posts: Jan. 1 to June 30, 2010

July is the perfect time to reflect on the first half of the year. Things have been so busy here that we haven't had as much time to post as we'd like, but one of our second-half goals is to contribute more to Lawdable.

In the meantime, here are the five most viewed Lawdable posts to January to July 2010, in descending order:

#5: Legal Project Management: Fad or Focus? (Barry Willms, April 7)
More discussion on LPM, which points to some recent successes and the necessity for the project manager to have authority and follow several key guideline. This follows other popular posts on LPM from Richard Stout (January, see #3), Dennis McKinnie (June 2009) and Candice Reed (June 2009), among other LPM musings.

#4: E-Discovery Tools: Evaluate, Collaborate and 'Lawyer the Problem' (Barry Willms, May 21)
One of the summaries of a Discovery Symposium 2.0 panel session with Barry, co-author of Lawdable Richard Stout, and Edward Efkeman from FedEx. A synopsis of the process and decisions in-house departments factor regarding technology tools and how they fit with their respective teams and culture.

#3: The Spotlight Shines on Project Management (Richard Stout, Jan. 21)
This post was part of a multi-blog dialogue about whether PMs should be lawyers or non-lawyers as LPM truly cemented itself in the vernacular of the legal profession at the beginning of the year. Richard even suggested that LPM could provide an alternate path to partnership in law firms in the future. There were many great observations on the 3 Geeks and Hildebrandt blogs and plenty of back-and-forth on Twitter.

#2: Q&A With Attorney Chris Cotton: Haiti Update (Jan. 18)
Chris is a real leader within our E-Discovery Division and a trusted tactician and voice on our teams. He has also spent significant time in Haiti, helping build and launch an orphanage through the Hands and Feet Project before he came to Counsel On Call. He was in regular contact with several people on the ground after the earthquake, spoke to the media, coordinated with Tennessee's congressional delegation, and took a few minutes to speak with us about the situation in Jacmel.

#1: Alternative Fee Arrangements Gain Traction (Candice Reed, Feb. 3)
Talk of AFAs was deafening in the early part of the year and has only slightly quieted down in recent weeks, so it's no suprise a post on the subject drew plenty of interest. We also heard a lot about it at Discovery Symposium 2.0 and have written often about the subject on Lawdable. We're confident it will continue to be of interest for the foreseeable future.



Opportunity Missed?

There’s an article today in the ABA Journal regarding a survey of the 50 largest law firms in the U.S. and their use of outsourced legal services.

The only eye-popping numbers you’ll see in the survey results, however, are that 83% of the law firms surveyed declined to participate. The surveyors cite ethical and proprietary business concerns about law firms admitting the use of contract or outsourced attorneys, but in reality this is the fine line firms feel they must walk concerning their image. To be sure, Big Law has taken its lumps in the press during the last couple of years and they probably don’t see much that can be gained by participating in a survey like this.

But here’s what we’ve been hearing and seeing in meeting after meeting with hundreds of corporate legal departments in recent months: 1) they have demanded that their law firms outsource work like e-discovery, due diligence, contracts, patents and many other labor-intensive matters, or 2) they have partnered with law firms who have proactively brought outsourced solutions to them and ended relationships with law firms that haven’t been so forward-thinking.

It's also worth mentioning that we’ve also met and worked with a large number of top law firms in the last year, and call several of the AmLaw 100 some of our best clients -- and a handful have been with us for nearly a decade.

So while the survey results might not be that surprising, it does seem like an opportunity lost for firms who are constantly trying to gain market share and differentiate for their competition. Orrick, for one, has been very outspoken on their plans to utilize contract attorneys. While its “associate track” model is still in its early stages, it appears a promising – and differentiating – model that speaks not only to the needs of clients, but to the ever-changing needs of the attorney workforce.

At some point in the not-too-distant-future, none of this will be an issue... it will simply be part of the business that large chunks of legal work are outsourced (even though that’s the case already -- but shhhhh).

DS2.0 Panel Recap: Working With Outside Counsel and Gaining Control

It what was undoubtedly one of the most anticipated discussions of Discovery Symposium 2.0, Sue Dyer (HCA), Jan Mendel (AT&T Mobility) and Carlos Provencio (Morgan Keegan) served as panelists and led a lively discussion that detailed approaches to working with outside counsel in the discovery process. Anne Whitaker moderated.

Main Takeaways:

  • Set a line in the sand with outside counsel; Say, “This is how we’re doing it”
  • Building a “virtual law firm” controls outside counsel spending
  • Regional law firms and a collaborative model result in great value
  • It is important to set parameters on the front end
  • Law firms “will not change until we make them change”

Sue Dyer began the session by discussing the “virtual law firm” model, which includes the use of regional law firms and a HCA-dedicated team of Counsel On Call attorneys for discovery. Not only has this approach reduced costs, but it has made the discovery process more straightforward and efficient and eliminated the dependence on one law firm’s process versus another. HCA brings that consistency to each matter, wherever the matter takes place.

The panel and audience also discussed that as far as law firms are concerned, “not much has changed.” Some who came from the law firm background empathized with the law firm argument regarding the use of less expensive attorneys, specifically that “they sign the pleadings” and their work is attached to it. The counter to this, according to Carlos, is that it’s a matter of assigning value to types of work, and he sees the law firm in a more strategic role in litigation. He will pay law firms “for inspiration, not perspiration.” Audience members and panelists agreed saying that “law firms will not change until we make them change” and going as far to say that value pricing should be “part of their corporate responsibility.”

Panelists also discussed e-discovery and its addition to their workload, as well as to the budget difficulties they once experienced. While it was somewhat frustrating, panelists agreed that it has been more disappointing that law firms simply “do not get the team approach.” The turf battles and desire to handle everything on a case only impedes what in-house departments are trying to do. For Jan, this has given her the opportunity to be more creative with her budgeting and thought process, and she has seen dividends already and expects more in the coming months.

The cost of legal services was also discussed at length. Several attendees said they will not pay more than $500 an hour in attorney fees. The suggestion that law firms will continue charging high prices as long as “Corporate America” allows it created a lively discussion with the audience. One participant said she believes it is “offensive” to pay someone $900 to $1,000 an hour and will not approve partner hourly rate increases; she will, however, approve some associate increases (once she gets to know the associate’s work product). Since many big firms are not making changes to their hourly rate approach or insist on rate increases, many companies have utilized a virtual/regional firm network, which is much more in line with hourly rates under $300 per hour.

One audience member said she believes the root of the problem is costly law schools and student loan agencies. Because law school loans are due so soon after graduation, lawyers feel compelled to charge an unusually high hourly rate to pay back loans right away. Another audience member then said he believes the problem is law firms competing for higher profits, that it’s not the law school but the “economic model of the law firm.” He cited the cost of a paralegal at one firm of being more than $300 per hour, which indicated a complete lack of understanding regarding value. He also discussed two of his law firms’ stated goal to be on the “top profit per partner list,” which he said they achieved… but his company no longer works with those firms because of it. He said his company’s goal is to never pay more than $300 for an attorney (they are at the $500 cap currently).

The issue of how to tell a law firm “this is how we’re going to do it” was then discussed. While it can be a difficult conversation, all who spoke agreed that it’s important to set a hard line in the sand. Many stated that it’s become clear that whether or not law firms do realign their business model, there’s a better way to handle litigation and discovery anyway. One panelist noted that she doesn’t know if law firms are ever going to “get it,” but that they haven’t waited around for their firms to do so.

The importance of setting parameters on the front end of a working relationship was also discussed. Several participants stated their desire to get better in this area; clearly defining roles and who will handle what work are important issues to address that aren’t always black and white. Including law firms in the decision-making process regarding the distribution of work and budgeting was one approach highlighted; giving firms the opportunity to match prices for discovery work has been utilized by some, but no firms have “met that offer.” Within that context of collaboration, Carlos discussed Morgan Keegan’s approach in using similar-size regional law firms and how, much like Sue and HCA, Morgan Keegan is already seeing benefits. The firms work well with one another and his Counsel On Call team; when a matter arises that a firm needs assistance with, another firm in his network will step up “seamlessly.”

Lather... Rinse... Repeat

I’m sure we’ve all felt like we’re stuck in this cycle at some point. It’s very easy to fall into patterns and ruts, especially with endless piles of work or when something has typically been handled a certain way.

The surface of the earth is soft and impressible by the feet of men; and so with the paths which the mind travels. How worn and dusty, then, must be the highways of the world, how deep the ruts of tradition and conformity!               

- Henry David Thoreau, Walden


If we’ve learned anything the last two years, it’s that taking a different look at the delivery of legal services is, at a minimum, a healthy exercise. Don’t get me wrong, I don’t think corporate legal departments used to search for ways to spend more money or work less efficiently. I don’t believe law firms weren’t trying to provide value to their clients prior to 2008. But it’s not a stretch to say that those issues were once lost in the “lather rinse repeat” world of legal services up until the bottom dropped out of the economy.

Now the focus on these issues is apparent, and many in-house departments and law firms have taken dramatic steps in recent months to retool their operations or install cost-containment measures. But what does it really mean? Does saving $2 million a year in legal expenses signal escape from the rut? Does reorganizing who handles a client’s work mean that a new approach has been adopted? These very well may be very positive steps, but real change has more to it – and the benefits could be tenfold.

Think for a moment about a typical EEOC matter, due diligence need or a stack of marketing contracts that must be renegotiated. If the average in-house department is already short-staffed (and swamped), where is the first call going? Outside counsel. Maybe there are good protocols in place for these issues – the associate receives the message and tries to get to these matters as quickly as he or she can, balancing it with the needs of several other clients. Even if an alternative or flat fee has been arranged for this type of work (ahhh – change!), it is still reliant upon a ‘lather rinse repeat’ way of doing things: Work comes in. Outside counsel contacted. Work handled. Invoice sent. Gratitude that the bill was as expected. There is value in known quantities, after all.

What I would say is that there are different ways to handle this work on both sides of the table. We’ve posted here about the Tripartite Model (or “three-legged stool”) model before – basically installing a new model for some of this mid-level work to client-dedicated (Counsel On Call) attorneys who collaborate with both in-house and external counsel. This allows outside counsel to focus on bigger issues and staff work in a more effective way; in-house counsel utilizes attorneys dedicated to their matters who are available as-needed. It’s flexible, fluid and responsive, and allocates resources efficiently and appropriately. It also saves money for both parties.

But let’s take it a step further and focus on value and improvement (not just process). Tracking, reporting and evaluation are cornerstones in everything, not just in e-discovery. What does the client truly get from our services? How can we better handle this work? How can we reduce the costs? What did we learn? How can we use what we’ve learned to make the work product better? Who needs to be plugged into this and at what point? What work is being duplicated by others or requires similar functions? How much time do these matters truly take? What work has been rejected by legal because of a lack of resources to handle it (but legal would really like to handle it)?

If these questions and others are being asked with your different types of work, your “legal pattern” likely has a more beautiful hue to it these days. There must be a broader perspective, even in the most “rut-like” activities.

Discovery Symposium 2.0: Brief Notes & Quotes

Everyone is back in the office and looking fresh this morning, having wrapped up our 2nd annual e-discovery client event, the Discovery Symposium, with GCs, heads of litigation and those managing the e-discovery process. It was a fast-paced two days, with nine sessions covering a healthy spectrum of issues. All indications are that it exceeded last year, of which the general consensus was “the best discovery event put on by a wide margin.”

What makes the event so unique are the panelists who volunteer to participate and the open dialogue they help generate from the audience. The group is relatively small by design – we capped it at 55 in-house attorneys from 40 corporations – and there are no vendors in attendance. We also don’t put strict parameters on the content; we want the conversation to flow to what the attendees want to talk about. In the end, it’s peers speaking frankly about their experiences with the goal of identifying best practices and new ideas.

The group is diverse, with numerous Fortune 50 companies to small legal departments, with attorneys managing discovery in a variety of practice areas. What is especially rewarding to us is that our attendees have truly connected and reach out to one another to share ideas once they've returned to their respective offices.

Posted below are a handful of the great comments made during the sessions by our panelists and attendees. We will likely have several posts in the next couple of weeks recapping specific sessions.

“What differentiates some of the (software) tools often comes down to whether or not a lawyer can actually use it… I shouldn’t need two days of training, and no one on our team has 16 hours for that anyway.”
- ‘Software Decisions’ panel

“We truly develop and invest in our relationships, whether they’re with outside counsel, our IT department, or partners like Counsel On Call… otherwise it’s constant re-education.”
- Fidelity Investments panel

“I tell them it’s my risk, not theirs. And it’s what we’re doing, so you’re either in or you’re out.”
During discussion about law firms who regularly ‘fight’ when e-discovery is shifted in-house and Counsel On Call attorneys are utilized. The group cited instances in which the law firm said, ‘Well, it’s my name on the pleadings and I won’t risk it.’

“Let’s get real: you can’t budget everything. We’re creating budgets during the summer for the following year... we ask everyone to track key metrics and forecast their work volume, then make mid-year projections.”

“Yes, the action is in the forecast.”

- Discussion during ‘The Budgeting Puzzle’ panel

“I have gotten religion about value. I’m focused on cost and how to reduce it. The events of the past 18 months… there is no turning back. This is the way of life moving forward.”

I’m a lawyer with a practice who has to report to my clients. This IS a legal practice and we have to show we’re providing value. I communicate that to everyone on my team.”
- ‘Litigation Leaders’ panel

Two of our law firms made a conscious decision to pursue inclusion on the best ‘Profits Per Partner’ list. Well… they made it. But they’re no longer working with us."
- ‘Working With Outside Counsel’ audience member; his company has more than 1,000 cases annually

Centralized Approach to Gypsum / Chinese Drywall

We've posted here before about the Gypsum/Drywall litigation, and thought it worth passing along that Barry Willms, Counsel On Call's Senior Attorney + Discovery Process Architect and a frequent Lawdable contributor, recently published an article on the subject in the March edition of The Westlaw Journal.

Barry has worked on some of the country's largest litigation matters of the past 15 years, and his concepts and processes regarding the centralized discovery repository have proven especially relevant for mulitjurisdictional litigation. When costs savings, efficiency, consistency and information management are essential, the centralized approach is a game-changer.

Legal Project Management: Fad or Focus?

Like alternative fee arrangements, Legal Project Management (LPM) has become somewhat of a new fad – or at least a very popular topic to discuss and write about. While it’s still unclear how much attention the broader legal landscape truly gives this discipline (although some are making a noticeable commitment to it), I’m of the opinion that LPM should be a key focus of the legal profession moving forward.

LPM is not only about getting things done cheaper and on time, it’s about using best practices and process to accomplish desired goals and budget predictability. To accomplish this, the project manager (PM) must have authority, as Paul C. Easton states in a recent blog post. It’s key, and not only with the attorney team, but with the different departments and personnel involved in any project. That level of responsibility requires experience and a track record – the ability to develop and oversee processes, meet benchmarks, stay on or below budget, and develop consistency -- and having done it many times over. Simply pushing the task down to the lowest possible billing rate, a practice Easton frowns upon in his post, is counter-productive in most instances.

While we commonly see its use in discovery-related matters today, LPM should be the focus of any-size project requiring coordination of more than one person and there have been many successful PM-led initiatives in other areas of the law. It doesn’t matter the area of law, really, because budgets, organization, timelines, process, quality standards, and repeatability are universally necessary considerations. Each is part of the LPM role, and each can be improved dramatically with a great PM. A PM who understands a client’s bigger picture is even more valuable and can help bring core disciplines from one department to another, building on previously successful practices (e.g. e-discovery to due diligence or employment work).

However, without authority – or at least a seat at the decision-making table -- the PM’s power to generate results is effectively non-existent. Spinning wheels, waiting for sign-off by the higher-ups on everything, direction that differs from previously successful results, and choices that are subject to constant overturning… this breeds confusion, stagnation, indecision, and ultimately higher costs.

If you go the route of project management, don’t go halfway. Make a commitment and give it the resources (and power) it needs to be successful.

Changing Platforms, Leaders and... New Questions

New thought leaders. New paradigms. New providers. New ways to get better results. There’s a lot of “new” out there these days. Yes, the legal landscape is changing. I think all of this is well-said in a post by Jordan Furlong, which quotes from a Seth Godin piece on the legal community needing to be ready for change… and that historically it has been very difficult for the legal community to do so. So much is invested in the way things have always been done, and less thought and effort was traditionally put into looking ahead to see how to adapt, improve and excel in new environments.

In the past, it boiled down to this: Why change if there’s no pressure to do so?

Today, I think the issues have an orbit around a very different question: I need to change, but how do I do it?

This is a pretty dramatic leap for the legal profession, and a question that touches almost every area of both business and practice: the way teams function; defining value to legal work; hourly rates; alternative fee arrangements; taking more work in-house; collaboration; ESI policies; coordinated discovery responses; centralized e-discovery counsel; technology, software, and hardware; project management; data-based decision-making; documented protocols; resource allocation and definition; repeatable processes; quantifiable cost savings; etc., etc., etc. These issues rattle the core of how legal work has traditionally been handled.

Change is simultaneously difficult and exciting and, in the case of the legal profession, very necessary. In fact, it’s very rare to see anyone involved in the legal profession – whether in-house, law firm, service provider, or vendor – publicly say that change isn’t necessary (and usually “dramatic” or "seismic" is prominently involved in the statement somewhere). It also means that there are more people with “change” roadmaps for sale than every before.

As Furlong’s post states, there will be more casualties as we embark on this journey. That’s the rule, not the exception. That's not a bad thing, is it? If you can’t help clients change and improve, there’s really no room for you in the new legal marketplace anyway.

The Spotlight Shines on Project Management

There’s a great post up on the ‘3 Geeks and a Law Blog’ that frames the current discussion regarding project managers, or, more specifically, the professional background of and what potentially makes a good project manager.

We’ve discussed this topic on Lawdable before and it’s a worthwhile, ongoing conversation within law firms and other legal service providers like Counsel On Call (although no one is like us, of course). One can very quickly dive into topics ranging from law schools and their e-discovery curriculums (or lack thereof) to whether the disciplines of project management can truly be absorbed by a practicing attorney, among a host of other sidebars.

Here’s what we’d like to tack onto the conversation: excellent project management is completely dependent on the individual project manager. If you look hard enough, there are lawyers out there who are great project managers, who understand how to budget and track metrics, who know how to design and implement proven protocols -- and who have been doing this for years. On the flip side, there are undoubtedly non-lawyers who can come into a project management role, add a lot of value, and do a better job than 95% of the lawyers who currently have project management responsibility. That’s not a knock on those lawyers, but a nod to those non-lawyers’ skills.

The training PMs receive and their personalities affect the people most likely to stay lawyers in the first place. The old adage that ‘I didn’t become a lawyer to do accounting’ is true. However, those who’ve been in law for awhile also see that there are different career development avenues to pursue and to help their clients. (And who’s to say PMs can’t make partner in the law firm of the future? Clients want to work with great PMs; that can mean more business from a PM’s clients.)

Circumstances, experiences and exposure can also help you develop the skills and expertise to push you in the direction of project management. In the same manner that lawyers involved in e-discovery today may not have started with technological understanding or had any initial training; those who have been thrust into the fire might have had an interest created, and then received the training and knowledge to accomplish and even master the topic. So, too, some of those thrust into project management may find that they like it, are good at it and want to pursue it to create the necessary expertise to become premier in the field.

We’ve found great lawyers who make great project managers, but we’re also in a more unique position than, say, a law firm, for instance. Our lawyers were looking for a different way to practice law and that’s why we’ve found one another; that departure from traditional thought also helps us identify those who could potentially make great project managers. And while MBA-types might run individual departments at a law firm, it’s usually a lawyer from within their own ranks who serves as a project manager on a specific case or matter. Some of those lawyers make great PMs, but many are so grounded in traditional lines of thinking that it’s difficult to break away and innovate; great project management requires a balance of innovation and proven protocols.

That’s a long way of saying there are different ways to approach this issue, and it’s going to be a focus as more people become attuned to it. In the end, it’s great for our profession.

What Are Your (Legal- and Business-Related) New Year's Resolutions?

OK, this is just a different (some might say lame) way of asking what your goals are in 2010… but ‘tis the season, eh?

There’s never been more at stake in the legal profession than there is now. There’s a palpable sense of change in the air… especially concerning the new legal model of law firms and the impact it will have on the way law is practiced and billed. But I’m not one to wait around for that to truly happen, so why not start moving forward? Here are just a few of the things attorneys have to tackle in 2010:

True cost containment of legal expenses … If you’re one of the thousands of in-house managers who has taken the reigns of your budget, designed new processes, brought more work in-house, cultivated new outside counsel relationships, and engaged alternative legal services providers… well, here’s hoping that you get more sleep in 2010, because you’ve likely been busier than ever. Those who’ve undertaken the commitment to cost containment should be applauded and hopefully the work they’ve done will make life easier down the road. This process will continue to evolve for these good people, and thousands more will start down this path anew in 2010. The point: This is the new way of life for corporate legal departments.

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It's 2 a.m. Do You Know Where Your E-mail Is?

I have long argued that companies keep too much e-mail. There are numerous approaches to dealing with this problem that I have seen. First are the companies that have no policy at all. Well, actually they have as many policies as they have employees, as everyone is doing their own thing. This not only enlarges the company’s volume (and therefore cost), but it makes it very difficult to preserve e-mail for litigation or other investigations.

Second are those who have a policy but do not audit it through training or technological means. They’ve gone through the process of creating a policy but never quite got around to seeing to it that their employees follow it.

Third, there are those who have a policy, train on it initially, implement and audit but over time it becomes less important as everyone focuses on their job and no one is assigned the task of making sure there is compliance.

Finally, there are those who arbitrarily deal with their e-mail through a purely technological methodology and do not allow their employees to make any decisions about it at all.

Whatever approach describes your company, you also must deal with the issue of employees using their personal e-mail accounts to handle work e-mail. In a recent survey by Axway, 82% of employees surveyed said they use personal e-mail accounts to send large files that would otherwise not make it through their company e-mail systems. It’s not that they’re trying to hide anything; they are simply trying to get their work done and found that it’s just too much hassle to get IT to let that particular document through the system. Perhaps they even chose to have it sent via a disc of some kind but normally they need that e-mail immediately and thus resort to using their personal account(s) to access it.

This is the reality and thus has huge implications for security, record retention and litigation hold purposes. Is your trade secret and confidential information sitting in Gmail or Yahoo! accounts? Or on the personal computers of your employees? What if it’s the official record that the company has a legal or regulatory obligation to keep for a certain time period? What if that employee becomes subject to a litigation hold that requires the company to preserve that information? Can we simply put a hold on his/her shared drive and e-mail accounts at work or must we now make sure his/her home computers are impounded for the same purposes? Obviously there are privacy issues at work here as well.

The employee is usually doing this for work reasons, efficiency, etc. But do they realize the potential impact on their personal privacy if their home computer is subject to an evidentiary hold? Do the employee’s spouse and children realize that their information might be subject to an attorney reviewer looking at their e-mail if it’s co-mingled with corporate e-mail on a home computer?

If employees and companies start asking the questions and talking about these practical issues even more, perhaps we can come up with solutions that work for the reality of the world we live in. Follow Barry on Twitter.

ESI in 2010: Trash or Treasure?

While calling 2010 the year of deletion might be over the top for most companies, it is a topic to consider during our current economic realities and the constant threat of litigation.

There is no time like the present to undertake a house cleaning of electronically stored information (ESI). Storage costs, poor organization and expensive restoration of backup tapes for litigation purposes are the norm, while at the same time there are many available tools to de-duplicate, organize and store inexpensively.

Most in-house lawyers now understand that a company’s ability to save money when litigation hits starts before litigation hits. That means having an understanding of how your company's ESI is stored and organized and proactively doing something about it. If you have no litigation hold pending that would require you to preserve certain ESI for the duration of the legal proceedings, now is definitely the time to act.

Record retention or ESI management have two parts: retain and delete. Many companies are pretty good at the “retaining” part, although they do need help implementing and organizing it. The harder part is often the “delete” part. This is true not just for the organization as a whole but also for the people who make up that organization. Many people are loathe to delete their lunch invitation e-mails, let alone anything that rises to the level of a substantive subject. It takes a shift in thinking, a shift in policy or, more often than not, a shift of money from your company to a vendor to process the ESI – and the lawyers to review it in a large e-discovery project – before a shift really takes hold.

It often takes that first million-dollar bill during the discovery phase of litigation to wake up a company executive or law department that it might make sense to deal with the excessive ESI issue. Actual money that affects the bottom line is often the only true motivator. Otherwise the expense and/or the mental capital to deal with the issue from a technology, planning and implementation perspective is often too much to handle.

Buy-in at the top is needed. Make your case for how this type of deletion and organization of ESI is critical to the company bottom line. Half of all in-house lawyers believe that their company is not ready to handle an ESI discovery project. I wonder if that’s the half that hasn’t yet been hit with huge litigation and believes that they won’t get hit with litigation this year?

2010 is fast approaching and the new year brings all things new. For many, dealing with ESI would certainly fall under the “new” category -- and makes for a great resolution.

Don't Hit The Snooze Button On ESI Management

There’s almost nothing like the words ‘record retention policy’ to quickly put a group of grown adults asleep. If you’re lucky enough to be placed on the team to formulate said policy, you probably wonder who you ticked off and should remove from your holiday card list. Reminds me of the Dilbert where the boss starts a meeting and falls asleep while talking, slams his head on the desk only to wake up and ask what the meeting was about. They all said ‘the records retention policy.’

But hey, some of us actually like putting these policies and strategic plans together... they offer a lot of value when properly implemented.

I actually prefer to use the term ‘ESI Management Policy’ because that’s really where you get the most bang for your buck. While it’s important to know how long to keep certain vital records, almost nobody seems to care about the boxes piled up like the Pyramids in Egypt that you still pay monthly storage fees on. What they care about is the cost to store, identify, collect, review and produce electronically stored information (ESI).

In the old(er) days, the concern wasn’t about volume of ESI, but content. Everyone was concerned about the smoking gun e-mail – the stupid thing written that no one thought would ever see the light of day. While that’s still a major concern in this current era of extremely tight budgets, it’s not just the smoking gun that can cost the company, it’s also the mounting volume. There are real costs that must be identified and properly dealt with and managed via a policy that helps employees care about their own ESI management.

Don’t jump straight to technology for your solution, however. First, understand your company culture, where it is and where it needs to be regarding how employees create, send and store ESI. Second, create a policy that moves your company culture in the direction you want to go. Don’t try to make it all in one step; try the incremental approach. Grabbing for too much at one time only breeds unrest, and unrest breeds non-compliance. The only thing worse than not having an ESI management policy is to have one that no one follows.

Once you get the policy and the employees moving in the right direction, then it’s time to implement technology to help the company achieve its overall goals, which is cost savings through less volume, and, finally, organization of that remaining volume.

In a previous post, I stated that people and technology are both needed and must work together. Those words can be applied to most situations these days, but especially here. Training and buy-in on the part of your employees along with technology will help you achieve your goals.

Cost Predictions Rely Equally on Technology and People

I’m a little late on this one, but this article outlines the use of technology to budget and control the cost of a document review project and could be helpful to some folks. It's sometimes an overwhelming topic, but there's no question that law-related technology tools have advanced in recent years and, when used properly, can drastically reduce the overall data set that is needed to review, code and produce. De-duplication, near dupes, key words, clustering of some type or another and document-ranking technology all can be very effective steps to take. In fact, if you are not using the available technology to reduce the data set needing to be reviewed, it’s practically scandalous.

I've seen more than a few very professional, normally sane in-house counsel practically lose their lunch when they hear about the initial amount of data that must be reviewed on a case. When the word "terabyte" is uttered, or there are three digits in front of "gigabyte," it can be somewhat alarming... that cash register sound starts to go off inside your head. But once everyone has calmed down, reason sets in and the processing stage begins. A majority of that data is going to be culled out. If using an early case assessment (ECA) tool, another huge chunk of data will be eliminated. All told, as much as 95% of the data could be vanquished. Now we have an amount of data we can work with. It can certainly be budgeted, too -- and if the review partner knows what it’s doing, it can be very accurate and for even less money than anticipated.

So technology by itself is not the final answer. Technology combined with knowledge and experience are the keys to understanding the complexities of such projects and bringing back a semblance of simplicity and predictability. Yes technology, used skillfully, can reduce the overall data set and the volume that needs budgeting. But when coupled with skilled, professional reviewers and experienced project management – known quantities that understand the entire collection, processing and review stages, software, and how to measure results and benchmark data – you can better prepare a cost forecast that can be relied upon for the duration of the project and on subsequent matters. I feel confident in stating that any in-house attorney who has worked with a good project manager in particular will gladly share how invaluable that PM has been to his or her department.

So if you aren’t using 1) e-discovery specialist project managers and attorneys and 2) data reduction and/or ECA tools, there are significant savings to be had.

Additionally, in the normal course of business you can also reduce the overall cost of a review project by creating and following a record retention policy, as well as using project management consulting to help with other pre-litigation planning. These measures reduce the overall data set, help you understand where your data is located, and give more certainty and predictability in later creating the review budget.

Data is key in today’s world; technology has made it readily available, but you also need a cohesive approach to tap all of its benefits. It might sound like a tall hill to climb, but there are some very simple steps that can be taken to start the process without causing too much pain. In the end, the cost savings and improved processes that are gained will make all that work worthwhile.

Legal Savings Needed - STAT!

In early January, I read an interesting piece by Susan Hackett of ACC wherein she laid out a few tips for GC’s on weathering the economic storm. Although things are beginning to look up (for some), lots of questions remain about 2010. Many of our in-house comrades have weathered or are currently going through the budgeting process; the open questions about the upcoming year have made that process almost like shooting at a target in a dark room.

Despite this cloud of uncertainty, it seems there remain a few things that every GC and budgeting lawyer should focus on as we move through the last few months of 2009. During my time as a GC (and admittedly, I’m a list building, check it off, constant evaluator type) I regularly went through some of the exercises below to help determine if our department (and company) was meeting its objectives.

1. In the short view (the next two months), are you going to hit your budget projections? If not, your high-volume, repetitious work could provide the relief you need. There are short-term fixes that can turn into long-term solutions, too … e-discovery, contracts, employment matters, etc. – there are simple measures you can take to generate significant savings quickly.

2. In 2009, there were never-before-felt pressures on legal departments to cut costs, and a response to these pressures was not only expected, it was demanded. Now is a good time to review those measures. What was the impact of cost-cutting on your ability to protect the company from the multitude of risks, known and unknown, that it faces every day?

3. Of the adjustments made during the economic downturn, which are worthy of making a permanent part of your daily practice?

4. Did your department thrive in the current environment or did it just manage to survive? What can you do to enrich the atmosphere during good and bad times?

5. Value has been defined as receiving a solution to a legal problem that addresses that problem for an appropriate cost. Now is the time to conduct a review of the department’s various 2009 initiatives and determine whether value was received for each of those initiatives. If not, there is no better time to fix that problem than budgeting season.

6. Although no one among us likes to think about a layoff once it’s over, now is the time to revisit that event. You have to ask yourself: Was it worth it? Did you really cut costs or did you simply move those costs from one silo to another? If you lost two or three excellent in-house attorneys to a lay-off -- only to replace that expense with an increase in outside counsel fees in order to get the work done -- that reality must be confronted.

7. Did you make appropriate use of outsourcing opportunities? If you are not looking at various ways of using outsourcing (such as contract attorneys), you should.

Of course, these items on this list are just part of the multitude of decisions and thoughts GCs encounter every day, but it really speaks more to the mindset in-house attorneys are moving towards: value. Value is everything in today’s legal landscape, and there are some quantifiable, transparent ways to determine if you’re receiving it.

Do You Like Podcasts?

We're trying to gather some anecdotal information on the popularity of podcasts... internally, people either love 'em or hate 'em, are regular downloaders or seemingly allergic to an mp3 or Real Time player. It's pretty interesting, actually.

This is an very brief and informal survey, but it would be a big help if you could take two minutes to complete the seven questions:


Lessons Learned Can Benefit Chinese Drywall Defense

Asbestos then tobacco then pharmaceuticals. Each an extensive and expensive litigation. Now comes Chinese drywall, which could very well be the next tidal wave.

We have already been out in the field working on the Chinese drywall matter and have spoken to several clients that are in the beginning stages of strategic development. If you aren’t familiar, the issue involves the installation of drywall imported from China during the housing boom from 2004 to 2008, as well as after hurricanes Katrina and Rita. During that time, there wasn’t enough supply of U.S.-manufactured drywall to meet demand, so builders were forced to import it. The Chinese drywall in question has proven to be high in sulfur compounds that could potentially cause property damage, emit a “rotten egg” odor and be hazardous to one’s health, although there is undoubtedly much debate to be had about the claims. Initial estimates say that it costs more than $90,000 to rid a residence of the drywall and/or its toxins; as many as 100,000 homes are estimated to contain it (at least partially).

The lawsuit is multi-district litigation; since May 2009, more than 20 defendants have been named in more than 1,000 civil actions filed by homeowners. These are mainly the builders at this time, but everyone from insurance companies to architects to suppliers are likely to be involved at down the road. So this is almost assuredly just the tip of the iceberg, although it’s hard to imagine it being as large as the tobacco litigation.

So what have we learned from past civil actions such as these? I was fortunate (or unfortunate, depending on the day) to work on both the tobacco and pharma litigations, and what we’ve done for our Chinese drywall clients is take a comprehensive view of the past to see what worked, extract best practices, adapt them to the current circumstances, attack the problem and, we anticipate, build some repeatable processes.

One thing I witnessed during both the tobacco and pharma cases was the inefficiency of having dozens of law firms requesting, processing and reviewing the same data; millions upon millions of dollars were likely lost during the process. Constant education of reviewers and outside counsel, no chain of information and consistency were constant concerns. All of this can be easily avoided in the Chinese drywall matter.

Here is a glimpse of the comprehensive planning that’s required as well as a few of our recommendations:

  1. Be proactive. Decide early on to handle the documents head-on and upfront. Don’t wait to start because you think it might go away; it won’t and you’ll only be behind.
  2. Create efficient processes. The proliferation of technology is a true aid versus prior civil matters of similar or larger size, but working with partners who have repeatable, proven protocols is also key.
  3. Budget properly. This is tied closely with #2. With the implementation of repeatable processes, accurate budgeting is a wonderful byproduct.
  4. Collaborate. There is no substitute for collaboration between the discovery team and outside counsel (as well as the client). If it’s not a central component of your planning, then it’s next to impossible to build the processes that are essential in achieving consistency and efficiency.

Streamline, budget, collaborate. These are a few of the hallmarks of successful document management in these large cases. These steps certainly put the client in the best position to handle the many multi-jurisdictional lawsuits.

As I mentioned, we are already working on this matter and will have a lot to report back in the coming months as this issue heats up even more. We anticipate a lot of redundancy and that our discovery team is going to provide efficiency and streamlined processes to each of our clients that face this litigation.

A Valuable Attorney: The Meaning Is Changing

Last week, I met with a wonderful attorney who has been in-house with one of our clients for several years, doing primarily employment work. She said she was recently offered a position to lead a new business unit that will require putting together processes and managing 30-plus attorneys – a very significant position within the company.

After offering my congratulations and discussing a little more about the position, we left on this note: attorneys who can manage processes and people are going to be vital to our legal profession -- and their company/clients -- moving forward. There are many smart attorneys and there are some who are true specialists in a niche area; but finding attorneys who understand business, who understand the importance of a repeatable process, and who are able to create, modify and manage a process and then bring in the people and manage them as well … is a unique skill set for an attorney. Those with these skills will be immensely valuable as we continue to forge through the changes that we're upon in our profession.

Everyone is being asked to do more with less – from our home life to our professional life. We are in a time that requires all of us to examine our expenditures, what value we are getting for what we spend and whether there are more cost-effective ways to get some, if not all, of our tasks done. This is true in the life of our clients, both law firms and corporate legal departments. Within our company, one question that I encourage people to always ask themselves is, “What can I do that no one else can?” The answers to that question are the real value that you bring the company. If there are things that you are doing that can be done by someone else at a reduction in cost – then let’s look to shift that work to that resource. This is just step one in determining whether you are really getting value for what you are paying. In this economy, everyone selling their services needs to be sure that they are providing that real value.

Susskind: Why Law Firms Have To Change

Richard Susskind has been one of the more outspoken voices on the economies of the legal profession in recent years, authoring two books on the subject. Today, he has a post on the ABA’s Legal Rebels site that’s an interesting read.

He hits several nails directly on their respective heads, as he has similarly in the past, reiterating that “new methods, systems, and processes will emerge to reduce the cost of undertaking routine legal work” and “new ways of sourcing will emerge … and these will often be combined in the conduct of individual pieces of legal work.”

I don’t disagree with anything that he writes -- and we’ve written about these issues for some time -- but I do think his timeline for these changes to occur is on the ambitious side. Lawyers are typically slow adopters; I’m not sure the types of collaborative communities he outlines have enough time to form and truly share new and best practices that have been vetted and tested, especially on complex matters… even though there’s more communication than ever before among in-house colleagues on well-established communities like Legal OnRamp (and other various organic online connectors of in-house counsel). But his point is that the time is now, not down the road, to understand and address these issues.

Regardless, there’s little doubt the legal world is no longer considered flat and the new frontier is upon us. We know that there are some great ways everyone can work together to contain costs and generate the best possible results. Susskind’s post is a good read if you have a few spare moments today.

Pricing In The Alternative

The “alternative” in an Alternative Fee Arrangement (AFA) can be defined as “affording a choice between two or more things…mutually exclusive so that if one is chosen the other must be rejected.”

In the arena of legal fees, the alternative is compared to the standard billable hour. One potential alternative is a fixed fee. For other AFAs, see this interesting article where Pat Lamb argues that the “real point” should be to “shift risk from the client to the firm,” among other things.

The questions to ask are: what is the goal? What is the incentive and who should have it? Who takes the risk? Who should benefit from taking that risk?

Blended rates and known budgets provide predictability. Is that the real issue for clients? Is the debate between low cost and predictability versus unknown budgetary costs, or does it involve the ability of the legal provider to use reproducible cost-effective services over time for the benefit of the client?

I would argue that these types of arrangements will have a short lifespan. After a certain period of time, all a fixed fee arrangement offers is what the cost is going to be, not how the work can be done more efficiently, for less money, more intuitively, or in a manner in which you can best meet your goals. It also encourages a law firm to use minimal staff or attorneys billing at the lowest hourly rate, which may or may not be in the best interest of a client. The lack of value will be exposed at some point.

The bottom line is to define the goals you are trying to achieve. Is it predictability? Cost savings? Particular expertise? Time reduction? Maximum manpower? All of the above?

This is the point I was attempting to make last week: it’s imperative to think how these arrangements can work for both parties, because if it’s tilted one way or the other, it’s not a great system. Someone loses. And there’s just not a great understanding in the marketplace of how these “alternatives” truly function or if value is really received.

So I like to look at what I know. I know my company’s costs of doing business. I have a pretty good idea how long it takes for attorneys to review a gigabyte of data on most software tools. I know a lot of different ways we can reduce the amount of data to review. I know how we create efficiencies throughout the discovery process. Knowing all of this, I feel very confident we can provide several different pricing options for our clients, whether it’s per document or per gigabyte (the ‘fixed fee’ options, more or less), by the hour, or some other structure. (Although I’m talking about discovery here, the same basic principles apply to different types of work that might see alternative fees, like contracts, employment matters, IP issues, etc.)

If I didn’t really know all of what we know about our business, well … I would be basing everything on a lot of subjective data. That’s simply not necessary in today's marketplace. But because we do have the objective data and we understand our capabilities and costs, the client gets a great work product at a low cost, achieves measurable efficiencies, and ultimately the predictability and consistency that are sought. That’s a win-win arrangement, which is a great goal to shoot for from the beginning.

Alternative Fee Arrangements Need Precise Understanding

There’s little question Alternative Fee Arrangements (AFAs) have gained in popularity in recent years, and that interest seems to only be increasing. In a recent survey of in-house attorneys we conducted in Atlanta, 46% of those who planned to implement new strategies in 2010 said they planned to use AFAs. After all, what in-house department wouldn’t want cost certainty in a time when most are being asked to reduce costs?

However, it’s a difficult matter to pin down and price properly. Today’s post from the 3 Geeks and a Law Blog says it very well: you have to understand what goes into your costs before you can manage or reduce them, and thus create a valuable proposition for both you and your clients. And therein lies the rub.

For many matters, there are way too many variables to be able to create a fixed cost forecast that benefits both you and the client. That’s a terrifying predicament for a law firm to be in and roll out on a pricing platform to a client. But is that really the issue? I agree with the 3 Geeks post: many lawyers just don’t understand how these arrangements can (or do) work, and I’d add there’s a question whether they should even be pursued at all if that’s the starting point of the discussion.

I have previously worked on these types of arrangements prior to joining Counsel On Call, in particular, data mapping and record retention projects– two areas in which we had a pretty good understanding of the time it took to create the work product necessary to implement. And ultimately our clients understood and appreciated the certainty of the fixed cost. But the interesting thing was that when we would initially provide the fixed fee amount, our clients would sometimes balk, shocked at the total amount staring them in the face. But then when we broke it down on an hourly rate basis and they realized they were getting a significant discount, they were all for it. (It would often go like this: Us: “The cost is $75,000 for the work on a flat fee basis.” Client: “That much?!??! Are you kidding?” Us: “OK, tell you what, we’ll do it for $250 per hour and it should take at least 300 hours.” Client: “Great! Let’s do that!”)

So for many, certainty outweighs cost, even though they think it’s the opposite. Many law firms cater to that notion, which allows them an easy way out when trying to determine actual costs and value. It’s pretty simple to estimate how long certain projects will take, and then multiply that number by an hourly rate, provide a small discount and come up with an “alternative” fee; but that’s not really very creative and doesn’t truly solve the cost/value challenges the client is facing. In fact, one can argue that deriving a flat fee from this foundation actually de-incentivizes a law firm; it’s going to get paid that amount no matter the quality of the work or how long it takes to complete. That being said, a strong case can be made that AFAs should be incentive-based as a core feature, and we know several clients who are utilizing those types of models. When everyone has a skin in the game, priorities become a lot more transparent. Value is, at a minimum, more apparent in that model.

At Counsel On Call and especially in my role in the E-Discovery Division, it’s pretty simple: We have to understand all of the costs of a typical project and how to make the work product better and operate more efficiently. If we don’t do that, it’s not going to matter how we package our costs because we wouldn’t be providing value to our clients. You have to take care of the former to be able to create options for the latter.

(I'd also be remiss if I didn't at least mention Patrick J. Lamb at Valorem, who posts often on the subject of AFAs.) 

The Numbers Don't Lie

We recently conducted a survey of senior-level in-house women attorneys in Atlanta, with the goal of identifying a few best practices and sharing the information with the group at a luncheon (which was held yesterday). At a minimum, we opined, it would be reassuring for these women to know that their peers are dealing with some of the same issues, and this would be a more formal way to present the proof.

We got a lot more than the minimum. Over three days, 57 women responded, ranging from leaders within Fortune 500 companies to one-attorney departments. The responses provided some very useful information, especially regarding how in-house departments are working with their outside service providers. In fact, 29 of the respondents shared the steps they are taking to manage legal expenses, negotiate flat fee arrangements and take more work in-house. A handful of the survey questions and results are included after the jump.

One nugget that isn’t so uplifting, which we have discussed on this blog in various posts, is that in-house lawyers are still very worried about job security. Thirty-four percent of respondents listed it as one of “three things that keep me up at night,” with the correlated “economy/effect on company’s business” not too far behind (31.3%). Although we have seen that some companies and departments are starting to come out of the thaw, the majority of the in-house lawyers polled simply do not feel secure yet, even as many of them (48.6%) are taking on more work and responsibility.

These lawyers are and will continue to be under tremendous amounts of pressure and the results-driven environment in which they reside is going to have an effect on the way business is done in the legal profession moving forward, there’s little doubt.

A few of the interesting survey responses (more after the jump):

Which of the following best describes your legal department budget for 2010 (choose one):
    28.6%  Less than 2009
    37.5%  Equal to 2009
    10.7%  Greater than 2009
    23.2%  Not sure

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Multiple Reasons To Avoid Multi-Tasking

Last week, I attended a CLE in which three in-house counsel, all serving as General Counsel or managing counsel over a specific division of their respective companies’ legal departments, said that they didn’t believe anyone was capable of multi-tasking. In fact, they each laughed when the topic of multi-tasking came up. As one attorney explained, “Multi-tasking is a concept invented by a law firm attorney so that he can charge multiple clients for the same six-minute increment.”

As a self-proclaimed multi-tasker, I was shocked to hear that rather than praising the “skill” that allowed me to participate in a conference call, respond to e-mails and revise a contract (all at the same time), they were poo-pooing it as nonsense. But as lawyers aren’t we all expected to multi-task? Isn’t that the only way possible to bill 2,400 hours in a given year – and still find time to sleep and eat? I thought that multi-tasking was the sign of an “efficient” lawyer?

However, after listening to this panel of distinguished lawyers (reformed multi-taskers themselves), I understand their point. There was even an article in the New York Times about it recently, although not specific to lawyers. The point is this: when we’re working on multiple matters at one time, all we’re really doing is switching our attention from one matter to the next in a manner of seconds. We’re not actually focusing on multiple matters simultaneously. So does this mean that as lawyers we’re training ourselves to shorten our attention spans – rather than disciplining ourselves to devote the requisite amount of time to the task at hand before moving on to the next one? Are we really being “efficient” by switching in between phone calls and e-mails and contract revisions all within a manner of seconds – or instead are we actually spending more time on each task because we don’t stick with any one task long enough to get it done (and THEN move on)?

I’m not sure why this concept struck me as it did -- I’ve actually been talking to clients about this very premise for years, but I’ve just never phrased it as “multi-tasking.” In practice, the absence of pressure to multi-task for numerous clients is one reason why our attorneys appear to have much higher efficiency rates on e-discovery reviews over law firm associates. Yes, our attorneys have the benefit of experience – most of the lawyers working in our E-Discovery Division review documents for a living and have been doing so for a number of years (much longer than most junior associates at law firms who may only be one or two years out of law school). They are familiar with multiple review platforms and know how to create searches that will expedite review simply because they have done so many reviews over the years. However, in addition to this experience, perhaps their biggest advantage is that when they are on a review they are solely focused on that one matter until it is completed.

Our attorneys are not expected to multi-task; they’re not interrupted by other clients’ phone calls in the middle of reviewing documents; they don’t have looming appeal deadlines or opposing counsel’s briefs to respond to in the middle of a review; they don’t have partners walking into their offices handing them additional work. They come into the office and review documents (on a single matter, for a single client) all day – until they are done. And then they move on to the next matter.

Perhaps we could all learn something from their discipline – and celebrate their lack of multi-tasking. Now please stop reading this blog post on your blackberry and pay attention to the road.

It's Your Fault! No It's Your Fault!

I decided I would begin my Lawdable blogging career with a look at a somewhat light piece of e-discovery case law … if there is such a thing. I do follow case law and I hope that my future posts on the subject will offer more of a “this is the potential bottom-line effect” versus a strictly academic viewpoint – I find that to be much more practical (and interesting). In the meantime, I look forward to your suggestions or thoughts. Here we go:

Lawsuits are about conflict and not always just between the parties. Is there a client that hasn’t complained about its attorney, or a lawyer who hasn’t bemoaned the actions of his/her client? It’s just part of human nature. But what happens when one or both of you fail to fulfill your preservation obligations, and this leads to sanctions? Who pays the piper?

The obligations of the client and the lawyer are clear: you must preserve Electronically Stored Information (ESI) that is relevant to the case at hand. The lawyer must provide the legal advice on what is potentially relevant and the practical advice on how to preserve it – and then monitor the client’s implementation of that advice. Having and implementing consistent best practices will be your best shot at fulfilling this obligation.

In Green v. McClendon 2009 WL 2496275 (S.D.N.Y. Aug. 13, 2009), ESI was lost when the client had “the son of a friend” re-install the operating system on her computer. The lawyer apparently did not properly implement a litigation hold and did not properly inspect and search for relevant ESI on that computer before the son of a friend “helped out.”

The court sanctioned both the client and the lawyer for the costs of the motion to compel and noted that if the court found out later that bad faith was involved in the loss of the ESI, the court would impose an adverse inference.

The final issue for the court was this: how to allocate blame between the client and the lawyer? The court concluded that they should work it out amongst themselves and present the court with a plan. (Really, how do you think that conversation went?) If, however, they are unable to agree on cost allocation then they could present the issue to the court “for determination.” (If that were to happen, does anyone else see any potential conflict there?)

The bottom line is this: the lawyer and the client must understand their obligations to preserve ESI. The lawyer and the client must work together to implement the plan. Working together and following best practices to fulfill the preservation obligation will keep your side moving in the right direction and prevent sanctions – instead of battling each other when sanctions are imposed.

Growth Requires Good People

This is not the type of thing we normally post on Lawdable, but tapping into a group of colleagues who are familiar with the services we offer -- and who know a lot of talented people in the profession -- seems like a good place to start versus the randomness of a job posting.

We're looking for two people to join our corporate team, one in Dallas (expansion) and one in Chicago (existing office). If you know anyone who might fit the job description listed here, please feel free to send them our way. We offer experienced lawyers at a low cost for all types of legal work, from e-discovery to highly complex matters -- and we do so for both in-house and outside counsel.

It's an exciting time at Counsel On Call and these positions present great opportunities to introduce the professional services we offer to clients who are very interested in cost containment and flexible legal solutions. If you have questions about the positions, please contact Greg Allen.

A Lawsuit Delayed Is A Dollar Saved

I know that's a really bad take-off on a common expression, but it can be used to describe the prevailing attitude in legal departments toward filing suit against another company -- or even defending against a suit brought against your company. More accurately, the mindset is, “a lawsuit avoided is many, many dollars saved,” and those savings can directly effect the bottom line.

In past downturns, the Bar has been able to take some solace in the loss of transactional work knowing that the litigators would soon have more than enough cases to carry the load. Everyone expected that to be the case this time around as well. The common thought was that corporate work goes down, litigation goes up. But this recession is not like any other in so many respects, so why should it follow that course?

Since the beginning of this year, I’ve taken note of the lack of an appreciable increase in litigation. Companies are not willing to make the huge investment that even the smallest case requires; big cases can quickly become a massive drain on resources. Has the recession created an incentive to avoid these cash sponges? I believe it’s coincidental for a lot of legal departments.

Monday’s National Law Journal contains an interesting and well-written article by Karen Sloan. In it, she notes that there seems to be a dramatic shift in how corporate America is thinking about litigation as a result of the recession. Ms. Sloan shares my humble opinion that you cannot blame this change in attitude totally on the recession and cites other logical reasons why there has been a shift. There are many, many factors that lie outside of the current economic climate which have, through the course of time, changed the mindset of our corporate colleagues. The reality is that it’s just too darn expensive to enter into a courtroom battle where there are other options for dealing with the problem that are infinitely more cost-effective and efficient.

For years now we have been working with corporate clients on how best to tackle some of the more costly aspects of litigation in the most cost-effective and efficient manner. That being said, there’s little question that most changes or strategic shifts regarding litigation policies are reactive; there is usually something on the front end that demands a change. After all, in our profession the tried-and-true path gets worn bare unless a giant boulder is thrown across it. The recession certainly has provided the needed incentive for many to produce a new course of action.

But for many of our clients, that boulder was placed in front of them long ago, during better economic times, whether it was with rising outside counsel costs, new company standards or policies, or simply an early recognition that e-discovery was going to become more difficult to deal with in the future. So they started looking working with regional law firms instead of the AmLaw 100, or enacted procedures when dealing with specific types of litigation, or they expanded their in-house litigation teams and created strict e-discovery and data storing policies. Collectively, these changes meant there was a new approach to litigation, how and when to respond, and how to manage it. These clients were the early adopters of this shift and forged the path for others to follow. Once the recession set in, the shift accelerated somewhat uniformly throughout the profession.

Sure, we haven’t had a surge in lawsuits like has happened in other challenging economic times. There are many positives to this fact, though. The practices that have been developed during the good times are playing a role in decisions whether or not to sue (or to enact procedures when one is sued). They are certainly playing a big role in how to conduct a piece of litigation.

Holding (E-Discovery) Hands In Public

News of the O’Melveny-H5 partnership was heralded by some -- and likely lost among a list of news blurbs for many in the industry. For those who missed it, the partnership means that one of the globe’s leading law firms has partnered with a legal information retrieval (or “search”) company to offer a uniform litigation support service to clients.

The benefits of this partnership have been outlined by industry bloggers Chris Dale and Ron Friedmann, among others. But moving beyond the deal’s strategy-and-search foundations of service, the partnership is good news for all companies providing litigation support/review services and supplies another indication that law firms are moving towards a different business model. Coming out with a news release is particularly noteworthy, as partnerships like this one have previously been seen as damaging to a law firm’s reputation. Not anymore.

What we consistently discuss with our in-house clients is how to take advantage of the resources they have. In litigation, they have outside counsel to handle and shape the strategy. That’s what law firms do best and why their partners’ hourly rates are often justified (and many of our clients agree with this). That expertise is invaluable and the strategic decisions they recommend can save millions of dollars immediately and on future matters. That is a resource.

Litigation Support providers are another resource. We know how to run an efficient discovery process with strict quality control measures. We have teams of experienced attorneys that can be dedicated to only one client. We have the proven protocols and know how to benchmark and track data. We design our services to save money now and in the future. This is all contained in our value proposition for litigation support services; that's not traditionally the case for a law firm.

So while our methods and costs of actually conducting the review of documents differ from a company like H5, and without knowing how O’Melveny will package and bill its clients for this service, the messages that this partnership sends are 1) some law firms are accepting the need for and creating new business models, 2) they recognize exactly how they are a resource to clients in litigation, and 3) They aren’t afraid to tell the world about it. I don’t think it’s a coincidence that our Litigation Support Division has seen increased interest from law firm clients in recent months.

Ultimately, these are all good signs for the profession (and especially clients).

An E-Discovery Event With Substance

We're not in the habit of event promotion, especially with the sheer number of e-discovery-related conferences in the marketplace, but one in particular has us excited. If you're looking for good, substantive programming and a great line-up of speakers, consider:

ACI’s 7th Annual Advanced Forum on E-Discovery & Document Management

We don't have a dog in the hunt, so to speak, but know and respect many of the panelists involved. Collectively, the in-house counsel on these panels have experienced most, if not all, conceivable challenges related to e-discovery and have developed and/or overseen many efficient and cost-saving solutions. 

If you're weighing different conference options -- and your 2010 legal budget-planning process is fast-approaching or will be in-progress -- it would be hard to go wrong with this event. And if you're planning to attend, drop us an e-mail so we can introduce ourselves while on the same plot of South Broad Street space.

The Forum is Sept. 22-23 in Philadelphia.  

Is 'Project Manager' The Next Big Legal Job Title?

Once upon a time, there were really only a handful of titles in the legal profession: Associate, Partner, Paralegal; General Counsel, Associate General Counsel; or simply Attorney. Sure, there were mini-steps between these positions and other classifications, but for the most part these titles offered a good snapshot of the profession – especially the way business was done. Everything that couldn’t be handled in-house was sent to the law firm. There were no Account Executives, no Client Liaisons, no Information Systems Administrators ... no other business partners to lean on.

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Legal Expenditures, Value and the Three-Legged Stool Approach

Expenditures are always a spotlighted area, but especially so in this economic climate. When looking at the amount of money that some clients pay to have legal services performed, I often wonder: What do they get in return?

Companies pay millions of dollars annually for litigation services. Historically, a good result was the best a client could hope for. However, if an entity has to pay for litigation, a cost of doing business, then why not get something more than a result … why not start building processes so that they next time litigation presents itself the company can build upon what was done in the prior matter to cut costs moving forward? Processes are created, responses are stored, material is archived, knowledge is retained, the decision-making process is enhanced (and more reliable) … these are company assets that can be modified and improved moving forward without reinventing the wheel every time. Short term, heads of litigation are in a position to forecast or budget future litigation. Long term, the money spent on litigation actually creates assets that can consistently benefit the company. This is the mindset in our Litigation Support Division: What is truly in the best interest of the company? Is it a big matter or a small one? Because when we are all looking for value -- and what are we getting in return for the money paid – can we really afford simply to pay a significant amount of money and not create something that can save us money in the future?

A few weeks ago I met with a client, an attorney who is former GC of public company, who is now in charge of operations for several divisions, including legal. During the discussion we were talking about the need that every company has to continue to make budgetary cuts. This client has worked with Counsel On Call for several years and discussed how, based on his experience, this is where he sees the future of the in-house legal department: In-house attorneys, outside counsel and outsourced attorneys making up the legal team (the “three-legged stool approach” referenced by another client a few months ago). Some in-house leaders have seen the value of this approach for several years, but it is certainly becoming more mainstream in today’s business world.

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The Document Retention Policy: A Tough One

As part of its ongoing series of discovery savings throughout the discovery process, Clearwell’s e-discovery 2.0 blog has a post up about document retention policies. This issue was a very hot topic at Counsel On Call’s Discovery Symposium 1.0 in May and panelists on our “Retention and Holds” session said it is one of the most pressing issues facing litigation managers today.

Attendees at DS1.0 cited several very specific examples of why they have a difficult time implementing company-wide document retention policies, including:

  1. Different departments within the company are required to hold onto different documents for different periods of time. While a corporate employee at headquarters can likely delete e-mails at any time, an engineer in a field office may need to retain documents for reference purposes, often for years.
  2. Some departments/employees do not have computers, so they have everything in hard copy form. The cost of reviewing these documents would be a considerable expense, and the company cannot simply dispose of the documents without reviewing them.
  3. How do you decide what to keep and appropriately define it so that everyone is on the same page? Try defining “necessary business records.” The scope of this phrase is often difficult to get one’s arms around and can be very arbitrary.
  4. The goal is to make the document retention process both “defensible and practical,” but questions linger about how to balance the scales between these two goals.

These challenges are independent of a company’s size; we heard the same issues discussed by both small and large companies. There were several companies that had implemented successful procedures, and a common theme was that their respective IT departments were running point on the process with support from legal and security.

Some of the solutions to these challenges – along with policies for litigation holds -- were discussed at length during DS1.0, summaries of which can be found here. We’re also looking forward to updates on the implementation of successful protocols from attendees during future discussions and at Discovery Symposium 2.0, and we’ll post updates as they become available.

Legal Budgeting: It's The New Black

Remember your days as a law firm associate when you were told the exact number of hours you must bill to receive a bonus? You focused your attention on the research memo, brief or closing binder at hand and only looked up to count up your weekly hours to make sure that you were hitting your billable quota. You didn’t pay attention to your receivables or whether the partner wrote off your time (you’d worry about those business-related matters later, perhaps during your 7th or 8th year of practice when you were up for partnership), because you knew that if you met that magical 2200 hours at the end of the year, your annual bonus was as good as deposited in the bank.

However, for corporate in-house counsel (and even those same law firm associates just one year later), those days are quickly fading into the rearview mirror. We are now entering the Golden Age of Legal Efficiency -- meaning that an attorney now needs equal expertise with Lexis, Westlaw and Excel.

Budgeting is a huge part of in-house counsel’s struggle for legal efficiency. There is no endless supply of revenue coming into the legal department; there are no bottomless pits of outside counsel spend. Every dollar is under a microscope these days; the ends must justify the means; and we all must do more with less – all points echoed in an article in Metropolitan Corporate Counsel magazine. This trend has had a notable effect on all facets of the legal profession: as an attorney or legal services provider, you better understand your client and know the actual cost of your services in order to survive this tightening of the belt.

Litigation is a great example of the legal-efficiency trend because it’s an enormous line item for many in-house departments. There is so much more data available to in-house counsel now that it has become relatively easy to break down costs and identify areas of savings throughout process, particularly in the discovery phase. The number of documents to review, processing costs, software platforms, attorneys’ review rates, hourly bill rates . . . these all are areas for significant cost savings. And when in-house counsel focuses on getting the work done properly and efficiently, it causes all of his or her partners/vendors to budget properly or risk losing the business. With everyone on the same page (or spreadsheet) and keeping an eye of the bottom line, it helps the client budget for future matters more accurately and to make prudent business decisions on every piece of litigation going forward.

The point is that there are many items that can now be budgeted that previously weren’t observed with a honed eye. You want to charge $200 per hour for your associates to conduct the review? That’s fine, but show me the actual benefit, don’t just pitch me on the law schools they attended. You want to use your preferred hosting company? OK, but give me the cost analysis. You want to handle our litigation moving forward? Give me detailed estimates on all the costs involved and explain to me how you’re going to make our process better and less expensive for the next case.

The emphasis on budgeting is by no means specific to discovery. Due diligence, trademark and copyright, contracts and employment matters, among others, are each just as conducive to scrutiny. It is no longer good enough to simply say, “Sure, we have great attorneys who can handle these cases” or “We can do that for one-third what you’re accustomed to paying.” The service providers who are differentiating themselves are the ones who demonstrate, “Yes, we have the experienced attorneys who can handle these cases. Here’s how many hours we expect it to take, here’s the data to back that up, and here’s what we can do to make it work for your budget.”

Transparency in budgeting and in project execution are here to stay. It is a much better starting point for many clients, or should I say the only starting point. I recently read an article where a senior partner at a large multinational firm in D.C. stated, “I’m not really interested in the business of the law,” explaining that as lawyers focus more on the bottom line their role as a trusted advisor diminishes in value. Well, in my opinion, it’s possible to do both – serve as a trusted advisor, while also recognizing and planning for the costs involved in the legal representation. And if you don’t believe me, just ask an in-house attorney – most of them have to do it every day.

Two Words For E-Discovery Savings: Less and Faster

There’s a very good post on Clearwell's e-discovery 2.0 blog, "How To Reduce Electronic Discovery Costs," that breaks out the discovery process into sections of potential cost savings. It’s a good overview and it’s evidently the first part of a series.

The post reinforces a few of the issues we’ve discussed here, mainly that to reduce discovery costs, you should focus on trying to review less data and review that data faster. There are a couple of recent examples I’d like to share that show just how much money can be saved in implementing this approach.

First, a client called with what seemed like a good-sized matter – more than 70 gigabytes of collected ESI that needed to be reviewed and produced on a tight deadline. The reality was that the data had not yet been processed, culled, or de-duped; so we immediately knew that there were opportunities to dramatically reduce the amount of data to review. The combination of the right technology (coincidentally, it was Clearwell’s early case assessment tool), the right hosting company and good project management paid off on that case. The original 70 GB was reduced to less than 5 GBs of data that required review – a 93% reduction. Our team of attorneys was able to complete the review of this data within days versus weeks and the law firm was able to meet its production deadlines at a fraction of the cost of traditional methods. Success stories such as these are very common when it comes to reducing data.

The other example is a client whose discovery we’ve handled for the last 12 months. We have project managers and several attorneys dedicated to their matters, and what we’ve seen is that with each matter that comes in the door, the process has become increasingly efficient. Because the review and quality control workflow had already been mapped out, and because the team was already familiar with the client’s data, and the project manager had established relationships with the company’s internal IT contact as well as the company’s preferred review software vendor, those usual start-up measures and learning curves are consistently avoided. The result has been a repeatable process, a shortened timeframe to begin the review and higher review rates once the review begins; in fact, review rates on the first matter were more than double what the company was accustomed to and have increased an additional 50% from the first matter to the most recent. The best result was that the client saved more than $1.5M during this handful of matters.

These examples show that if you have the right processes in place, the knowledge and expertise of the right technology, and the relationships with superior hosting companies and vendors, you can save the time and expense of reinventing wheel for every matter.

Leadership on a Matter -- It Matters

The main subject matter of this blog is to discuss best practices or recognize innovative happenings in the legal profession; despite our best efforts, it’s sometimes difficult to stop for a second to write about something or want to write about it when it seems promotional of our company. I considered this yesterday as I was reviewing the status of an interesting new assignment we’re working on, and there are a couple of items I felt were worth discussion here. So here we go ...

Just last week, a team of approximately 20 Counsel On Call attorneys and paralegals -- working remotely from five different cities across the country -- began a project in which they are assisting a corporate client by reviewing and updating all of its vendor contracts before the end of the fiscal year. Each is a great attorney with significant contracts experience in the client's industry (I think the average is around seven years of experience), but what is especially noteworthy about this matter is that several boundaries have been knocked down. It truly is about good lawyers wanting to work with good lawyers, trusting a process and not necessarily taking the road most traveled. The focus is on communication, not location; the qualifications of the attorneys, not the name of the place where they work; and the track record of the leadership and management of the team, not just the bullet points on a resume. This results in the client's ability to get the work done efficiently, access a much larger talent pool and keep a tight hold on costs.

Specifically to the latter point – and we have certainly learned a lot from our work in the world of e-discovery in this regard – good project management and team leadership are essential. Anytime there are this many people on a team, multiple work sites, and tight deadlines, it is imperative to have a strategy in place and implement it. That sounds easy, but I think anyone who has been involved in team-based assignments understands that it takes a great project manager and/or team leader to pull this off. There are always changes; there is always troubleshooting; it is never a completely smooth ride. You need to be able to have a core strategy that can move forward without getting derailed when adjustments are needed. The leadership on the matter matters, and that’s why I'm very proud that we have a great group of leaders who can handle these types of assignments and make our clients’ lives easier.

There’s certainly more than one way to skin a cat, and it’s exciting to be a problem solver in that regard.


In the summer of 1986, Congress found itself in the grip of confirmation hearings for a new Chief Justice and a new Associate Justice for the Supreme Court of the United States. Warren Burger had retired to (ostensibly) serve as chair of the Constitutional Bicentennial Commission; Justice Rehnquist was nominated to move to Chief and Antonin Scalia to take the junior-most position on the Court.

I watched those hearings with much interest, not knowing at the time that later that year I would become one of the Court’s newest hires. I would assume the role of Staff Counsel shortly after Chief Justice Rehnquist took on his new position.

In times like these, I’m often asked about the confirmation process and what I remember of those “battles” in the mid-80s and about the atmosphere in the building (“Was it abuzz? Was it the only topic of conversation?”). During my three-plus-year tenure in the Staff Counsel role, I witnessed two additional battles – calling them “hearings” is a misnomer – that of Robert Bork (unsuccessful) and of Anthony Kennedy (successful). If I remember correctly, Douglas Ginsberg (poor guy) never made it to the hearing stage. Anthony Kennedy is sworn in as a Justice of the United States Supreme Court on February 18, 1988. Chief Justice William Rehnquist administers the oath and Kennedy's wife Mary holds the family Bible as President Reagan looks on.
Of course the justices never said anything about the hearings or the nominee; even Justice O’Connor, who often rode to work with me because we lived near one another, was mum on the topic. The closest I ever got to a statement about the hearings was a comment on Bork’s notoriously scraggly beard. The court staff, exhibiting its historically insular nature, was similarly quiet. No one wanted to be on record commenting about a potential new boss, or probably more accurately, you simply did not discuss those matters at work.
Judge Robert Bork
Law clerks were another matter entirely and the regular Thursday evening casual get-togethers were often filled with analysis and opinions when a nominee was being vetted. I also attended an anti-Bork rally – solely to observe – and stayed out of sight in the back for fear of being seen or worse appearing on the news, a potential employment-ending event I'm sure. (The button I snagged at the event remains one of my favorite political mementos, however.)

Since my years there, the Court has almost completely transformed. Judge Sotomayor’s hearings are the ninth confirmation event since my time there and I have been caught up in the drama and pathos of each one. Here are a few things I’ll be looking for during the hearings:

  • Will anyone ask questions about any of the thousands of decisions she has authored or is this all about speeches, personal matters and grandstanding?
  • How she will explain the statements that are currently all over the mainstream media?
  • What role, if any, will her ethnicity and gender play in the hearings?
  • Will any of the senators discuss her diabetes and other potential health issues?
  • How will the Committee function without the normally verbose Joe Biden?
  • I just want to watch Arlen Specter. From top dog to lowest-ranking democrat, there has got to be something of interest there.
  • Sen. Sessions was passed over for the Federal Bench in 1986, in part for being “racially insensitive.” Will this shape his questions? Will we be able to tell?
  • What will be the most asinine line of questions and the easiest lot?

I’m ready for this bit of political theater and suggest you soak it in as well. We could see a couple more opportunities in the next few years, but who knows? I say don’t miss the chance.

It seems, if you believe the pundits, that Judge Sotomayor may soon be Justice Sotomayor. No one can predict what kind of Justice she will be and those who try may be surprised (see: Blackmun, Stevens, Souter et al). One thing is certain if she is confirmed: she will be assuming one of the most select and revered positions in our nation. I wish her Godspeed.

Recap: Creating Your Own Discovery Team

This is our final recap from Discovery Symposium 1.0. If you would like more information on the event or to inquire about attending in 2010, please email us.

As more corporate legal departments are looking to bring discovery in-house, this panel was of keen interest to attendees.

What was very striking was how the panelists – an incredible group of leaders who really know about bringing matters in-house and managing the discovery process – have truly become knowledgeable about their respective companies’ IT departments. They're very familiar with IT -- something that likely could not have been said of most attorneys even just a few years ago. This sheds a little more light on the demands of the discovery process today.

Even though each of the panelists work within a large company with substantial IT departments, it was clear that the best practices they brought with them could apply to companies of any size. Creating a team often means including legal, IT, human resources, operations, outside partners – whoever touches the company’s data on a regular basis. And this team helps guide and monitor progress from through collection, production and review.

It’s also worth mentioning that the attorneys on this panel have collectively saved their companies tens of millions of dollars on the discovery process in a relatively short period of time. Talk about demonstrating the value of the legal department ...

Creating Your Own Discovery Team
Panelists: Senior attorneys from Fidelity Investments, Cox Communications, Hospital Corporation of America (HCA), Georgia-Pacific
Moderator: Candice Reed (Executive Director, Counsel On Call)

Summary of Dialogue
IT staff is critical to the team as well as representatives of other departments specific to your business. Know the people on your team; trust them. Know where the data is located. Know your systems. Trust your company knowledge, which surpasses that of a law firm.

The discussion began with a statement: E-discovery is a management task. Those in charge of discovery cannot be afraid of technology, must serve as traffic cop and coordinator, and need to be a “techie” who can talk to lawyers. When choosing members for your discovery team, it’s about 1) Having the right people on the team, and 2) Trusting your own judgment that you have put the right people on the team. One panelist said her team meets weekly.

Another panelist said she received incredible pushback from her outside law firm when she decided to build a discovery team in-house. Her team includes attorneys with employment and patent experience, a paralegal, representatives from the IT department, as well as a person from the legal department dedicated to e-discovery (who has since been moved to another department and not directly replaced). The team meets once a month.

Another panelist put her team together when in-house e-discovery experience quickly surpassed that of the company’s outside counsel. The core team consists of her, representatives from the IT department, as well as an outside consultant. Other team members are attorneys with commercial, labor, and insurance experience and representatives from Records Retention. Since three-quarters of her company’s corporate employees are members of the IT department, it is important to have everything IT-related documented – how the department is organized, who reports to whom, detailed protocols, and the location of specific data. This information also is in the company’s E-Discovery Manual, which is constantly updated. Due to an increasing number of matters, the panelist wanted to create a “thoughtful and consistent approach to review.” After each project, the team would discuss what data was collected, what part(s) of the process worked and what didn’t, and even examined the overall cost. Perhaps most importantly, they looked at what could be done to make future matters cost-effective. In order to better predict future costs, her company partnered with Counsel On Call, whose team handles several parts of the company’s discovery process, to find a software vendor that would do just that.

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Recap: Working With My Law Firm(s): The New Dynamics

This was probably the most animated session during the two-day event - maybe it was the cocktail reception and songwriter's night that was to follow.

More likely, it was the issue at hand. The in-house attorneys in the room were all under at least a minimal amount of pressure to contain costs, and everyone had clearly examined their outside counsel relationships recently. The panelists had each taken different steps to modify their relationships with outside counsel, and each seemed to be pleased with the direction these relationships were heading.

Working With My Law Firm: The New Dynamics
Panelists: Senior attorneys from International Paper, SunTrust Banks, CVS Caremark
Moderator: Candice Reed (Executive Director, Counsel On Call)

Summary of Dialogue
Themes: Make your voice heard with outside counsel; We hold the power; We often know more about e-discovery than law firms do; Law firms need to budget/plan and work with the vendors we choose

Panelists began the session detailing how they, and many in the legal profession, believe that the law firm model is broken. The dialogue with the audience began immediately once this subject was broached, and many shared anecdotes about their relationships with outside counsel.

With that framework, one panelist said it’s important for a law firm – even firms you’ve been working with for years – to know you will walk away if their pricing or services are not inline with your needs. His department has moved to bidding out all of its work, and every law firm knows that there are at least two or three other firms bidding – and this has changed the way law firms look at the company (in a positive way). It has not changed the quality level of the work they receive (also positive).

Another panelist took this further and stated that involving her law firm in the decision-making process on the company’s e-discovery was not the best decision. The firm’s e-discovery committee was not up to the task, they did not have a disciplined approach and said that no matter who reviewed the company’s documents (namely: discovery attorneys), they were going to re-review them in order to sign off on the agreement.

Panelists them reiterated that in-house counsel must be willing to say, “Give me what I want” and stand up to law firms when necessary.

One specific anecdote that was shared with the group involved a recent conversation with a law firm partner, who was leading a company’s litigation strategy. The attendee loved the value he was getting from that partner, even at $500 per hour. But what he did not like – and what he wanted the partner to understand – was that along with every hour in that partner’s time came another $600 per hour in two junior associates a paralegal.

Another panelist said that we are in an evolutionary period right now, and that law firms must get their value proposition in order. He calculated that his company pays its in-house attorneys $150 per hour; if a law firm associate is doing work for his company, it needs to be at that price or less or it’s not worth it – they will do it in-house or use another vendor. Another panelist said a good practice is to staff a department at 80% of volume at $150 per hour.

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Recap: Software Decisions Good and Bad

It was clear from the onset that attendees were eagerly awaiting this panel, and that Mr. Efkeman, Mr. Lisi and Mr. Stout were the right attorneys to answer the questions before them.

There was great dialogue between the panelists and the audience, as many attendees were either currently in the software platform analysis process or considering purchases for their in-house dpartments.

Session II: De-dupe, Near Dupe and Being Duped: Software Decisions Good and Bad

Panelists: Senior attorneys from FedEx Express, Fidelity Investments
Richard Stout, Director, Litigation Support Division, Counsel On Call

Moderator: Dennis McKinnie, Executive Director, Atlanta, Counsel On Call

Summary of Dialogue
Themes: Review less data, and do it faster; Establish a good relationship between your legal and IT departments and ensure both are speaking the same language; Purchasing software is costly, and those decisions should be carefully considered, especially in an environment in which there is much consolidation currently -- but a purchase can save time and money in the long run; “Try before you buy.”

The panelists agreed that limiting the amount of data to review was paramount to containing costs. They spoke about the importance of Early Case Assessment (ECA) tools, specifically mentioning Clearwell and Trident (by Wave, a de-dupe/culling tool).

As ways to reduce discovery time and costs, Richard Stout (Counsel On Call) echoed the dialogue about reducing the volume of data to review and discussed how to review the data faster. Implementing the right technology and correctly managing the process are central; the volume of data to be reviewed can be reduced by implementing a Comprehensive Records Management Program (including an effective document retention policy), targeting the collection (searching key custodians, date ranges, specific terms), culling and de-duping data, and using ECA tools. Mr. Stout also mentioned companies with project managers available 24/7 as an important factor in selecting software.

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Recap: Retention and Holds, Preservation and Collection

There was a lot of very interesting dialogue at Counsel On Call’s Discovery Symposium, and one (overarching) topic clearly on the front burner was retention, holds and the collection/preservation of documents -- and the internal processes and logistical challenges surrounding these often laborious tasks.

This will be one of our longer summaries from DS1.0’s four main sessions; more will be posted Wednesday.

Good Policies for Retention and Holds; Standards of Care in Preservation and Collection
Panelists: Senior attorneys from Equifax, FedEx Express, Hilton Hotels
Moderator: Anne Whitaker (Vice President, Counsel On Call)

Summary of Dialogue
A properly developed retention program can be a useful tool for reducing the cost associated with document review and other discovery-related matters. The preservation of appropriate data is one of the most pressing issues facing litigation managers today.

Panelists discussed eight basic steps to developing a program that is reasonable, defensible, and practical:

1. Identify when the preservation obligation begins.

Every company has different needs that must be addressed.  One panelist said a preservation obligation may begin with, for instance, an internal employment investigation. It does not begin when a claim is filed for lost goods. Another company begins the process if there is intent to initiate litigation. The in-house attorney asks, “Is this meaningful? Credible?” It’s a judgment call.

2. Determine what ESI (electronically stored information) must be preserved. 

The main question to ask is, “What do we need in order to win or defend this case?” A map of the IT landscape is needed; therefore, a close relationship must be developed between legal and IT and a common language between the two established. It is also important to define “necessary business records” and in some companies’ legal holds, this term is defined and a list of triggers provided (such as an EEOC charge or knowledge of a complaint filing). Another panelist mentioned that custodians must be identified prior to determining what ESI must be preserved and posed the question of whether companies ask custodians to “give him what they’ve got” or if it is sometimes better to retrieve materials.

In terms of what goes into a hold, one panelist said that two pages is too long for a litigation hold, and to be concise (but possibly attach the subpoena to the hold just to be sure to cover all bases). Several panelists suggested including "warnings" in the holds, such as "do not share any information in this hold or you will be in violation of company policy" or something to scare custodians into compliance. Another attendee suggested web-based training for custodians prior to being subject to their first litigation hold.

3. Who is in charge with respect to technology?

Staff from IT, security, and legal are involved, but most agreed that someone from IT manages the effort. All processes and procedures are in writing in order to keep communication consistent. Important to be consistent.

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DS1.0 - Day 2 Begins

What a day yesterday was here at the Discovery Symposium in Nashville - my brief posts here can't do it justice. The programming ended with an incredible discussion about the new dynamics of working with law firms ... Brian Edwards (SunTrust), Brian Cadwallader (International Paper) and Jennifer Molinar (Caremark) share some incredible insight and experiences with the group, and not surprisingly this led to a very spiritied discussion. Possibly the most interesting tidbit was regarding the bidding out of every significant matter; Brian Edwards spoke about how beneficial this has been and how his firms understand that SunTrust will walk away if they aren't getting the price/services they're after. The group was intrigued by this and asked several pointed questions.

Some of us (namely me) are probably still a little groggy after enjoying the evening's songwriter's night ... Don Schlitz, who has penned 24(!!!!) No. 1 hits, was kind enough to entertain us. Don is a friend of one of our attorneys, and his wife is also an attorney -- so he had a steady stream of lawyer jokes ready for us, which is always fun.

I'll post more later today...

Everyone is on their way home now, probably somewhat exhausted after another substantive day to close out the Symposium ... we started with a powerhouse panel -- Sue Dyer (HCA), Marty Mazzone (Fidelity Investments), Heather Munday (Georgia Pacific) and Kristen Weathersby (Cox Communications), moderated by Counsel On Call's Candice Reed -- discussing how to create your own discovery team. Over 2.5 hours, these women really broke down how their processes work, who is involved, the challenges they've faced, mistakes they've made and what's most important. Each panelist was asked "If you're just now starting to assemble your discovery team, what would be the first thing you would do?" The unanamous answer was "identify the person in IT who is going to be by my side throughout this process and make things happen." These women were very, very impressive as a group and individually, and as I remarked to someone: "You can see we have some great resources to learn from here at Counsel On Call." We were really pleased that so many people got to hear the information/opinions that we have access to every day.

And that seemed to be a common theme ... our post-event survey responses indicated that there haven't been many (if any) events like this one, that the program was relevant and informative, and truly in the 'best practices' mindset. My biggest takeaway is that in-house attorneys are genuinely excited about the value they can provide to their company in the discovery realm, and many shared some great stories about the reactions they've received when showing the cost savings of the processes they've implemented.

A great event all around ... we'll post some of the best practices that were discussed during the event soon.

Live from DS1.0 ...

Greetings from the packed Discovery Symposium!

If you're not follwoing Dennis McKinnie on Twitter, you can do so here: Dennis will tweet periodically from our meeting site and is leading a panel shortly.

I will continue to update this post today and tomorrow as interesting tidbits arise, so please check back and refresh your screen.

1:15pm CST
Our keynote speaker at lunch was Cheryl Mason, VP of litigation at HCA, who is incredibly knowledgeable about the litigation process and its role at HCA. She detailed how HCA's approach -- when they started to really create solutions regarding e-discovery several years ago -- was to create a defensible process, not necessarily a perfect process. And even if HCA's process isn't perfect, it is kept in the perspective of what is best for the company -- and where e-discovery fits into its priorities. Her level of knowledge and her calm deameanor are 'points of light,' as COC President Jane Allen says.

We're getting into the Retention/Holds & Preservation/Collection panel now with attorneys from FedEx, Equifax and Hilton Hotels. More updates soon.

4:15pm CST
We just finished the 'Software Decisions' panel, which I was very pleased to be a part of. Leading/directing the dialogue were Edward Efkeman (FedEx Express) and Mike Lisi (Fidelity), who have both been tasked with handling vendor relationships with all types of software companies. What was most striking -- and probably most encouraging for our guests, many of whom are at different stages of their software selection processes -- was that both FedEx and Fidelity were able to demonstrate a high level of value to their companies in going thru the processes. They clearly knew a lot about dozens of vendors, their capabilities, and how they could help their respective companies. They each spoke about the value of the IT department and good project managers -- and not letting information beyond their firewall. 

There were probably 25 questions from the audience, so this is obviously a hot topic. We'll have to post a more thorough recap next week.

The 'Working With My Law Firms' panel is off and running, then it's off to the Country Music Hall of Fame for what promises to be a great songwriter's night. More to come. 

Discovery Symposium 1.0 Promises To Share Best Practices

Next week, we will have the pleasure of welcoming 35 senior in-house litigation managers, representing 25 companies, to our home base in Nashville for the inaugural Counsel On Call Discovery Symposium 1.0. It’s very exciting for us, as it provides the opportunity to get several of our clients in a room together and talk about best practices in discovery and litigation support.

We tried to limit the event to about 30 attorneys to foster a healthy environment for exchanging experiences, and we’re pleased that the demand has been so high. It's a great program – discussing all areas of discovery – that is completely led by the attorneys who are in the trenches and dealing with these challenges on a daily (hourly) basis. We’re proud to be by their side, but in this instance we’re merely facilitators and believe that’s going to help generate the best possible dialogue among some of the brightest minds in the in-house profession.

Here are a few of the session titles:

  • “Good Policies for Retention and Holds; Standards of Care in Preservation and Collection”
  • “De-dupe, Near Dupe and Being Duped: Software Decisions Good and Bad”
  • “Working With My Law Firm: The New Dynamics”
  • “Creating Your Own Discovery Team”
  • “Budgeting for E-discovery: Not a Pipe Dream”

We will likely produce a recap that shares some of the best practices discussed during the event, and if you’re an in-house attorney interested in reading it, please send us an e-mail and we will add you to the distribution list. Also, based on the response this year, we are considering opening up the event to non-clients in 2010 (event will be in Atlanta or Boston), so please indicate if you would like to receive information when it becomes available.

And if you like Twitter, we’d recommend following Dennis McKinnie, formerly a general counsel of two publicly traded companies, formerly with PoGo’s IP litigation group, and a past Staff Counsel to the Supreme Court of the United States … he’s been the Executive Director of our Atlanta office the last four years, and he just got his Twitter account up and running and will tweet during the program. Dennis is well-known for his txt/Blackberry skills, so we’re going to put him to the test.

Richard Stout will also post on this blog from the event, so don’t forget to check back May 13-14. Subscribing to the blog (on the right side of this page) is the easiest way to make sure you don’t miss an expanded update.


Is That Thunder In The Distance?

There’s an interesting phenomenon happening in the litigation arena right now: nothing.

Well, that’s not entirely true. There is plenty going on, of course, but the sour economy has put a different spin on how litigation is being managed. Cases are not marching in lock-step with a normal timeline. For instance, some companies are putting everything related to a piece of litigation on hold until they are required by time, or the case itself, to act. And action this time around is preceded (in most instances) by a lot of anxious planning and budgeting.

Now this isn’t anything new – many companies have longstanding policies not to act on litigation until forced to do so. It’s often a cash-flow-versus-workflow approach. However, I am seeing a palpable sense of hesitancy with regard to litigation and case management. Companies are taking an ‘I’ll believe it when I see it’ stance, whether it’s regarding the various stimulus measures and burgeoning economic turnaround, or the stability of a company and their department's budget, or any number of other things. That attitude is impacting case management. These companies know that eventually they are going to have more work (i.e. revenue), but they simply do not want to spend the money now, when times are tight, addressing litigation matters unless they have to.

All is not dour under this approach. One great side effect is that companies are taking this time to create, refine or institute their approach to e-discovery for when the storm finally does come. If their ducks aren’t already in a row, they are briskly walking toward the line.

We’ve participated in dozens of planning or strategy meetings that are seeking to solve the bigger issues: how to create repeatable discovery processes, how to budget discovery costs, the software tools to use, the action items surrounding a litigation hold, the data collection and management process, analyzing the benefits of early case assessment tools, and creating processes that facilitate collaboration with outside counsel and all their legal vendors, among many, many other issues.

All of this is ultimately focused on cost and efficiency, of course. And it’s never too early to make that a priority – or in some cases, it’s not too late.

Maximize Resources, Achieve 'Value'

You can’t scan a legal rag nowadays without seeing an article predicting the end of the billable hour, or the revamping of the business of the practice of law, or some other projection of how the practice is going to look at the end of this recession. Some insights are better than others, like the recent article about in-house departments requesting their outside counsel to reduce rates or present an alternative fee arrangement. Patrick Lamb’s commentary on the matter on his blog also really drew my interest – I think he hits the nail on the head.

Undoubtedly there is some room for firms to reduce rates and I believe, in time, the market will bear that out (I love the anecdote from a lawyer who told Susan Hackett at ACC that $700/hour was a “suicide” rate). But what’s more central – and the article skims over this while Patrick calls attention to it – is that hourly rates are really only a small part of the equation and that efficiency and quality are the key elements. I'd add one more factor to this cost-saving/value formula: maximizing resources.

Based on hundreds of conversations I’ve had with in-house attorneys in recent months, there really isn’t as much pushback on the partners’ high hourly rates. Sure, clients would like them to be lower, but they also understand you have to pay for great legal counsel. The real problem is at the associate level, where it’s much tougher in some instances to defend the value received. In many cases they’ve turned to smaller or regional firms to get the rates they seek across all levels.

But where we’re seeing in-house departments achieve budgetary success is in conducting an audit of the work that needs to be done and overlaying that with the available resources. Here’s a rudimentary example of how the process works for a fictional department that has (only) three operational units: litigation, contracts and labor and employment:

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How E-Discovery Has Helped Legitimize Contract Work

Nine years ago when we started Counsel On Call – we celebrated our anniversary on April 3 -- we had to work our tails off just to get a courtesy meeting with a client. We spent a lot of time in those meetings addressing uninformed stereotypes about contract lawyers who ‘couldn’t get a job in a real firm’ or were ‘too lazy to do the work.’ After talking in detail about the quality of our attorneys and how they simply didn’t want the big firm life, or had another interest they wanted to pursue in addition to practicing law, or wanted to spend more time with family, we started to get beyond those initial hurdles. Realistically, most everyone we met with knew an attorney that fit our model.

I’m glad to say that many of these prejudices have dissipated over the last decade, and I’m especially pleased to see that so many talented attorneys now choose to practice law in a non-traditional way. It’s more rewarding that clients recognize this as well. Most of our clients refer to our attorneys as Counsel On Call attorneys, or employment attorney, bankruptcy attorney, corporate attorney or discovery attorney … there is certainly more awareness that not every great lawyer works in a “permanent position” within a firm or in-house. It’s helped us get to the pressing matters at hand – ways we can provide our clients with effective business solutions that incorporate low-priced, experienced and highly qualified attorneys.

So what was the tipping point? This is difficult to say. First, the attorneys who have worked with Counsel On Call the last nine years have helped change the perception of our clients. Second, once clients started working with our attorneys, they realized how easy it really was, and how much value each attorney offered. Third, our clients were willing to share their experiences with others – most of our business has grown through referrals.

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What Technology Can't Do

There’s an interesting post on In-House ACCess about Alan Turing’s ‘Turing Test,’ the mathematician's theory that a computer's “intelligence” is based upon the number of times it can fool a human into mistaking it for another human.

In his book, Fooled By Randomness, Nassim Nicholas Taleb argues that the converse is also true -- a human's “intelligence” can be determined based upon the number of times he or she comes off sounding like a computer. Taleb’s argument is that so much of what we say -- especially in business -- means nothing. In-House ACCess’s Larry Salibra argues that the same is especially true in the legal profession.

Most of us would agree that effective communication requires more than just words; it involves eye contact, physical expression, empathy, thought and sincerity . . . all of those things that computers cannot bring to the table (and much of which is expressed more effectively in-person than by phone, e-mail or text messages). If the bedrock of the business and legal professions is communication – and if this is how we understand our clients' concerns and discuss ways of addressing them – then shouldn't we be doing a better job at it? Shouldn't we be bringing something more to the conversation than what a computer can type on a page? How do we include the human element in today's fast-paced, technology-driven, information-overloaded world?

Perhaps it goes back to building relationships . . . meeting with people face-to-face and learning more about them and their businesses than what merely appears on their website bio pages. In this day of conference calls and web meetings, nothing replaces the opportunity to sit across the table from a client and truly start to delve into the challenges that he or she is facing and how the services or products you offer may help address those challenges (or how they don't). These open and honest discussions help build the relationship and make it easier to effectively communicate, which leads to better client service – and better business and legal professionals.

I typically find that it is much easier to get to the heart of the matter quicker in face-to-face meetings with clients (call me old fashioned). I also find enjoyment in the personal connections that we make during these meetings -- even when they are all about business. I chose to enter the legal profession to help people solve their problems; I have found that I have a similar purpose as a businesswoman, and I know that I am much more effective in working towards this goal when I have a relationship with my clients. After all, that relationship is something that no computer can emulate – no matter how smart it is.

Podcast Available: How In-house Departments Can Save 20%

In-House LegalLegalTalk Network's In-house Legal program has asked Counsel On Call to participate in three podcasts. The first of these is available now: 'How In-house Departments Can Save 20%,' featuring Jane Allen. Jane discusses different areas of savings and different approaches -- and debunks myths about what has to happen to cut 20% out of a legal budget.

The other interview on the podcast is Rees Morrison from the Law Department Management Blog, who provides good insight into the challenges legal departments are facing.

The show is also available on iTunes for free download - just search for 'in-house legal.'

Jane's interview starts at the 12:35 mark and runs approximately 10 minutes. Subsequent shows in the three-part series will focus on e-discovery and the rest of the discovery/litigation support process, as it is certainly an area we're speaking to a lot of clients about. We hope you'll listen in and let us know what you think.

Podcast: How A Legal Department Can Save 20%

Jane AllenJane Allen, Counsel On Call's president & founder, will appear on LegalTalk Network's In-House Legal podcast next Tuesday, Feb. 24, with host Paul Boynton. The topic: 'How in-house departments can save 20%.'

The show can be heard and/or downloaded (free) by visiting LTN's website or on iTunes by searching for 'in-house legal' starting on Tuesday. 

Here's a summarized excerpt from a question about the common reaction from in-house clients when learning that significant budget cuts need to made:

"Often the first reaction involves gut-wrenching thoughts about cutting staff and getting rid of outside counsel. We like to sit down and walk through the ways the 10-20% savings can be achieved without making wholesale changes to the department ... There is always going to be work that should be sent to outside counsel. There is always work that should be done by in-house attorneys. And there is typically a middle ground of work that can be done by really talented attorneys at rates less than $100 an hour ..."

We hope you'll set a reminder and are able to listen in at some point next week.


Alternative Fee Arrangements Gain Traction

Recently, the National Law Journal (NLJ) reported that Burger King Holdings Inc., is just one company asking its outside legal counsel to consider "alternative and creative billing" methods in responding to the company's request for proposals -- further evidence that the billable hour is losing popularity among corporate clients who are under mounting pressures to cut outside legal fees. (Another NLJ article this morning also discussed the need for alternative billing models.)

Burger King has negotiated a variety of alternative fee arrangements with its outside counsel, according to the NLJ, including fee caps, blended rates and monthly retainers. Other companies, as well as the American Bar Association and the Association of Corporate Counsel, also are calling for the demise of the billable hour, saying it “breeds inefficiency and is driving up legal costs." A number of law firms are heeding the call to abort and are offering flat fees, success fees and contingency fees. One such firm offering its clients a "smorgasbord of fee options," as mentioned in the article, is Valorem Law Group. Interestingly, Valorem cites the use of Counsel On Call attorneys as one of the reasons that it is able to provide its clients with so many alternative and cost-efficient options.

We applaud Valorem's progressive and straightforward approach with its clients. We have a similar mindset – if our clients see value in working with us, we want to provide solutions that work for them -- whether those solutions include great attorneys, remote work, tested and repeatable processes or alternative billing arrangements.

Another note: For those of you in Tennessee and the surrounding area, I would like to invite you to an upcoming CLE sponsored by the Tennessee Bar Association this Friday, February 6, at 9:00 a.m. (CDT). As part of this CLE, a panel of in-house corporate counsel, including Michael Zylstra with Cracker Barrel, Sue Dyer with HCA, and Debra Enderle with Willis North America, will discuss what creative ways and alternative fee options they have utilized in an effort to reduce their legal budgets. Register here.

Document The Legal Savings

Most of us are facing uncertainty unlike anything that our generation has ever experienced. This manifests itself in several ways for our clients, many of whom are being told to cut positions and budgets (20% seems to be the "magic" number). Several are being told that they cannot fill vacant positions. Salary freezes are common. And the amount of attention paid to legal cost containment has reached an unprecedented level.

One of the reasons I started Counsel On Call in 2000 was because I felt there was space in the legal profession for great attorneys do what they enjoy -- good legal work -- at low rates, to be able to practice remotely, and provide a more flexible approach to meet the needs of clients. In the best of financial times, there are benefits to this approach; today it is even more relevant.

As our company and the profession has evolved, I have witnessed several in-house colleagues move from simply managing outside counsel -- often at firms where they used to practice -- to the mindset of setting and managing budgets and really scrutinizing the value received for the money spent. We have worked with many of these individuals who now understand how and why the "three-legged stool" -- outside counsel, in-house counsel, and Counsel On Call -- works so well together.

Here is my point: This year, many of our clients -- both in-house and law firm partners -- are being asked to cut even more, regardless of how well they have been doing on this front in recent times. This is making lawyers feel like they have to demonstrate their value like never before.

Understanding those pressures is the first step, and historically we have provided our clients with reports containing various items that enable them to respond to financial concerns, including accurate metrics that can be used in future budgeting. Over the past few months, we have added a few things to the report. One simple addition is that we now include the money spent and saved by working with Counsel On Call. This single step provides our clients the data needed to demonstrate the value they provided to their clients throughout the year or on a particular matter.

As with many matters we already track – whether it’s an attorney’s review rate or determining an accurate amount of time needed for a complex matter – this seems like a very natural and easy step to take. By regularly documenting the cost savings we’re providing in a straightforward manner, hopefully we’re enabling our clients another avenue to objectively demonstrate the value they bring to their company or clients.

Cost Cutting and Shifting Paradigms

We all know the economy is in the doldrums, but I thought it would be helpful to drill down a little bit to focus more on the legal sector and how it really impacts all of us -- and show why our company is positioned at the fulcrum of the coming change.

Here in Atlanta, we began to see a change beginning in May 2008. It began slowly with a change in complexion of some large projects, mainly with some of our law firm clients who were seeing less transactional work; some of the work our attorneys would normally handle was being handled by their associates. That was soon followed by an increased interest from several large, corporate clients to discuss ways COC could help them to bring their legal costs down. This reached a fever pitch in the late fall as the pressures of budgeting season came to bear. So, much has been made in the last six months – specifically over law firms merging, collapsing, or falling on hard times -- in reality the process truly began filtering down at least a year ago.

We have also seen these budgeting pressures reflected in the number of articles appearing in legal publications that discuss money saving alternatives. One of the most popular is coverage of the use of LPOs (legal process outsourcing) in India. There are pros and cons, and the coverage has been pretty balanced. There have also been articles discussing the wave of smaller firms that are holding rates at 2008 levels or, in some instances, cutting them. And finally, there is no shortage of articles that talk specifically about what law firms are doing to address the current economic climate both internally and for their clients.

It is safe to say that the emphasis on cost containment/reduction will continue for some time, and I think we have reached the tipping point our industry has been waiting for. It's hard to see it now, but this is going to be very good for our profession; I have been incredibly impressed with how many of our law firm clients are truly trying to make changes to meet the needs of their clients, especially concerning costs. As law firms jump on board -- and more opportunities emerge to work collaboratively -- the work product will be better and the client will be happier.

Unfortunately, many of these changes will come too late. The pressures being placed on legal departments by CEOs, CFOs and shareholders -- and sadly in some cases the bankruptcy court -- will be too much, too fast, to accept a change in direction. But ultimately, a multitude of changes will occur in the next several years over how legal services are delivered. We all must accept that these changes are coming and do everything we can to make sure the changes that are implemented by our clients are well-considered and strategic.

There's Value In Listening To Your Clients

The economy has unquestionably put a hit on the legal profession. That being said, there is an ever-widening disconnect between large law firms and their clients. Case in point:

  • Roughly 75% of corporate general counsel say that their law departments are facing budget cuts next year, with an average cut of 11.5%, according to a survey by legal industry consultant Altman Weil.
  • However, while most corporate in-house counsel are struggling to cut their legal costs, the online ABA Journal Weekly reports that more than 70% of large law firms are increasing their billing rates again this year (by an average of 4.3%).

Certainly these are some of the reasons that 65% of corporate counsel say that they plan to bring more legal work in-house in 2009. Now more than ever before, if you’re not discovering ways to save your clients money, there’s been a serious breakdown in communication.

'Fundamental Transformation' in the Legal Profession

“This car is leaving with or without you.”

I almost could hear my mother’s voice in my head as I read an article in last week’s ABA Journal Weekly Newsletter reporting that the legal profession may be on the cusp of a "fundamental transformation." While many law firms have experienced increasing profitability over the last two decades, they now are being forced to lay-off associates and other staff as their work (and revenues) dwindle. According to Richard Susskind, legal futurist and author of The End of Lawyers?, this change is being promulgated by law firm clients, who are becoming increasingly more sophisticated and discerning when farming out their legal work.

Legal costs are a line item that is an easy target. While other departments of many corporations have benefited from the use of new technology and efficiencies for years, a legal department’s MO has remained relatively unchanged – until recently. Susskind explains that clients now outsource much more of their legal work and are forcing their traditional law firms to collaborate with other legal services firms and vendors. He even suggests that there could be a trend internationally towards more non-lawyer management of legal businesses, which would likely result in the integration of online legal services and the automatic generation of documents.

Many clients, who remain anxious about sending their legal work overseas, are turning to domestic businesses like Counsel On Call to provide attorneys at a fraction of the hourly rates of traditional law firm lawyers. And, unlike law firms, we are accustomed to integration and better positioned to offer flexible, tailored solutions to corporations interested in taking advantage of new technology and efficiencies. As Susskind says, "clients [now] see that legal services can be delivered more cheaply, efficiently, quickly, and to a higher quality using new methods and business models."

That being said, often the toughest question to address is “I know I have to cut costs, but how do I actually do it?” It’s difficult to know where to start, but that’s where we come in. I have been meeting with a lot of in-house department heads and GCs in recent weeks, taking an hour or two to go over spending and budgets and identifying areas where we can create savings and efficiencies in 2009. If you do the same, it will undoubtedly be the most profitable time you spend all year.

Just remember, you’re driving the car. We’re there to make sure it’s a good ride.

End of an Era?

One year short of 100. That's how long there has been a Powell Goldstein on Atlanta's legal landscape.

On January 1, 2009, however, PoGo will become Bryan Cave-Powell Goldstein. And then exactly one year later, Powell Goldstein will be dropped from the firm’s name. Gone forever.

It’s certainly a sign of the times. PoGo has a great name in the South and Bryan Cave is in expansion mode; we’ve certainly seen similarly reasoned deals throughout the country over the last few years. As the shape of the law firm market continues to change – whether it’s via merger, acquisition or collapse – more of these familiar (and often iconic) local and regional firms will cease to exist, at least in name. It will certainly take some getting used to.

I joined PoGo in 1989 after a four-year stint as Staff Counsel at the Supreme Court of the United States, and although I only spent six years of my 25+ year legal career there, my feelings for the place run deep. Some of my best and dearest friends are attorneys that shared with me that first that day in September of ’89. For more than seven years after my time with PoGo, the firm represented the software company where I was GC, and my associations at the firm certainly grew from that experience as well. I found my best mentors there.

Almost all of us have left the firm and moved on, but there is still something about those times that continues to bond us. When we get together there is always some talk of the firm and what’s been going on. I’m sure those conversations will continue after January 2009, but I can’t imagine calling the firm by its new name – it’ll always be PoGo to me.

Change Is Upon Us

Last night’s events were inspiring from both sides of the aisle – from a gracious concession speech to the throngs of people assembled in Grant Park to the videos of long lines outside the voting halls. Democracy is a wonderful, humbling thing. It was also especially fitting that the last message of the night bound the campaigns of both candidates and took a collaborative step towards the future: It’s time to work together for change.

As that message and those images have stayed with me, and as I jumped back into a busy Wednesday, it all became especially poignant. The legal profession is braving new challenges every day. We are facing an uncertain economy. Many are neck-deep in changes right now, and many are bracing for hard times ahead. There’s an endless supply of tough decisions to make. Yet, I believe that in our profession -- if we can work together with an eye to what is really best for the client and/or the profession -- positive changes will occur.

So I’m especially eager to find new ways to help clients and the attorneys who work with our company. Let’s figure it out together, because there are multitudes of ways we can all have success, whether you’re a law firm partner trying to create new revenue streams or a GC trying to stop the revenue from streaming out the door. Problem solving is what we enjoy and strive to do -- it plays a central part of the process of change.

Taking More Work In-House

Given the state of the economy, it has been no surprise to find a host of recent articles concerning cost-cutting among corporate legal departments. Everything is on the table, including reductions in fees charged by outside counsel.

An Oct. 22 article (subscription) in Atlanta’s Fulton County Daily Report captured the ongoing discussion through quotes from several prominent GCs and legal department heads regarding various ways they are reducing costs. Almost every one of them mentioned “in-sourcing.” Robin H. Sangston, vice president and associate GC of Cox Communications Inc., offered a comment that many of the GCs echoed:

We have used a variety of approaches to controlling legal fees, including: bidding out 'commodity-type' work, moving work from higher-priced large firms to lower-priced smaller or boutique firms with lower overhead, using contract lawyers, implementing e-billing with our billing guidelines ... Given the state of the economy and the impact on almost all businesses, I would also expect that many companies will not entertain rate increases for next year.

The sum of it is that more and more work that would normally be the purview of outside counsel is being done in-house and costs are being reviewed closely; and the use of contract attorneys certainly fits well within this evolution. There are more flexible billing options and work arrangements and with the sheer number of talented attorneys leaving the traditional practice, the quality of the work performed is excellent.

What other measures are you taking today that you weren’t a year ago? Are these changes temporary or permanent in your department?