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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.
 

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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.) 
 

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I will not attempt (or bore you with) analogies about architects and house building and e-discovery protocols ... but as rapidly as things change in the e-discovery world, it is increasingly important to provide clients prescient and valuable guidance and to build processes that are consistent and reliable. That’s why it’s my pleasure to announce that Barry Willms has joined Counsel On Call’s E-Discovery Division as Senior Attorney + Discovery Process Architect.
 

It's a unique title, but an accurate one. Barry spent the last 14 years managing discovery matters for two prestigious law firms, King & Spalding in Atlanta and Bass, Berry & Sims in Nashville. He’s overseen and directed large teams of attorneys and has consulted numerous clients on the tactical use of technology to improve quality control methodologies and results during reviews. His ability to design and implement efficient, repeatable e-discovery processes – along with his background as a great lawyer – synchs perfectly with our E-Discovery Division.
 

We’ve known and respected Barry for many years and have always been impressed by his forward thinking and knowledge of the issues affecting the discovery process. We are particularly excited about his expertise in the document retention arena – those “pre-discovery” issues many of our clients continuously encounter. But he is also the type of e-discovery expert that our clients seek for project management, creating and implementing protocols, and managing quality control for reviews large and small. With his addition to our corporate team, we’ve truly strengthened our ability to provide our clients services up and down the EDRM.
 

Barry will also provide another voice on this blog that we believe you will find informative and interesting. Please feel free to peruse his bio or e-mail him some suggestions for a post. No word yet if he has any advice on home building.

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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.
 

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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).
 

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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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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.
 

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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.
 

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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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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.
 

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I would say that’s been one of the things I’ve been able to do in my three years here at Fidelity that has undoubtedly saved the company the most money of everything I’ve done, and I would put that in the millions, easily."

- Martha A. Mazzone, V.P. and Associate General Counsel, Fidelity Investments, on creating a "three-legged stool" with Counsel On Call and outside counsel
 

As demonstrated on what's become a popular podcast for LegalTalk Network, Marty Mazzone is incredibly well-versed in the discovery process and data management. Her candid comments and detailed descriptions of how Fidelity handles the litigation process have been helpful to many in-house attorneys. 

We've had numerous requests for a transcript of Marty's podcast, and have pasted at least a partial version below... to listen to all of Marty's interview, including an in-depth discussion on data management, please visit LegalTalk's website or our Media Center.


Paul Boynton, LegalTalk Network: In addition to bringing some of this work in-house, are there other service providers other than law firms that have been assistance to you?

Marty Mazzone: Yes, that is key, actually. And this is not to be disparaging of law firms, not at all. But I do think that all of us – clients and law firms, and I was in the law firm for many years -- have to address this changing model.

First of all, there is the whole technology vendor world in e-discovery, and they can be extremely helpful and critical partners in a major e-discovery effort. There are also these groups that I would call something like “discovery attorneys,” or maybe at one time you would have called them “staffing groups,” but they provide high quality attorneys for an extremely minimal cost compared to the cost of law firms. And by using those groups to do your review and manage that in-house, you’re saving your law firm attorneys for building the legal defense.

So to me … I’m building my factual defense up over here with my in-house contract or discovery attorneys, and then I’m transferring the knowledge they’re gaining to our legal defense team out of the law firm who are writing our briefs … and that transfer of knowledge becomes a very important element in what I’m trying to do. But I definitely think that we can almost see a third leg to the stool now instead of a direct link just from client to law firm.

You’ve also now got an opportunity to get a good set of discovery counsel who will continue to work with my company case after case, who will know what I do, will know acronyms, will know leaders and so forth, and they’ll be able to dig out the facts.

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Themes from 2008 and before: Review data faster
Theme for 2009: Review less data

After a jam-packed three days of meetings, panel discussions, and visiting with software vendors from across the country at LegalTech New York, it wasn't difficult to discern the two primary objectives for cost savings in the e-discovery realm: (1) Review the data faster and (2) Review less data. These topics aren't new, of course, but in particular the level of discussion about reviewing less data has clearly reached a new level. 

Reviewing Data Faster

For the past few years, the latest technology trends were utilizing content analytic tools when reviewing data. Leaders in this area include Attenex, Stratify, Metalincs, and Cataphora. In our experience, content analytical tools have proven to be three to five times faster than traditional linear tools. The result: hundreds or thousands of attorney hours saved and thousands or millions of dollars saved in performing the review of electronic data.

The benefits of content analytical tools is now well accepted, so much so that traditional linear software tools have upgraded their platforms to include content analytical capabalities. Indeed, over the past year Content Analyst Company has announced strategic alliances with KCura's Relativity, Onsite's eView, and most recently iCONECTnXT.

Why is this so important, other than the obvious benefits of getting the review done faster? Because it makes the hourly rate of the attorneys less relevant. For a company deciding to conduct a review with an LPO and its low hourly rate, it doesn't necessarily mean it's going to be less expensive if an onshore company's attorneys can produce review rates that are two or three times faster, even if the hourly rate is double. So when considering this type of work, it's always good to ask the e-discovery company about the review rates their attorneys typically achieve -- it makes it easier to compare apples to apples. 

Reviewing Less Data

In addition to software platforms adding content analytical capacity to their arsenal, the major players are also focusing on the next-largest cost associated with e-discovery: the amount of data collected for review. In the majority of our visits with software review vendors, the common theme was that either their tool now had early case assessment features or they were in the process of adding to their platform. To that end, we had a chance to visit with representatives of Clearwell, Metalincs, Planet Data, and Inference, just to name a few.

In utilizing the technology for our corporate clients, we have seen the benefits first-hand. We have found that by processing through an Early Case Assessment tool that one or two attorneys can quickly and dramatically cull down the data to be reviewed (see our previous posts). In an instant, you can eliminate all e-mails that do not fall within the relevant time periods by performing advanced date searches and filtering those results.

The next step is to identify all sender and recipient domains related to the particular custodian’s files that you are reviewing. With this feature, the attorney reviewer can eliminate thousands of e-mails that clearly have no relevance to a particular matter based upon the sender or recipient information. For example, all e-mails sent from eBay, Travelocity, newspapers and other subscription-type services provide fertile ground to eliminate thousands of irrelevant e-mails across all custodians collected. The ability to search across all data, based upon domain names, also provides opportunity to quickly and comprehensively identify all communications to and from legal counsel. With one click of the button, a single reviewer can segregate as “potentially privileged” all of the documents originating from or involving legal counsel into a separate workflow for a second-level determination of privilege. In addition, by typing in the law firm name you can quickly and comprehensively identify all attorneys associated with that law firm and all e-mail accounts associated with that attorney that have been collected. This feature adds an extra layer of confidence that you are capturing all attorneys involved in a particular matter.

By spending a small amount of time on the front end with these early case assessment tools, it is very achievable to reduce the amount of data that requires review by an additional 25-50% over the initial 20-30% filtered through traditional automated culling processes (de-duplication, file-type suppression). The net result – huge savings with a potential total reduction of 50-80% of files that require review.

One of the most popular drivers of visitors to this blog are searches for 'early case assessment tools,' which on a much smaller scale illustrates how much this issue is in the collective consciousness of the profession. And why wouldn't it be? If there's less data to review -- and we can review it faster -- it's going to make achieving significant cost savings a lot more realistic.
 

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We often hear about the most important factor in creating a cost-effective e-discovery review: the review rate of the attorneys. Without question, the use of a content analytic review tool has greatly enhanced the ability to increase review rates for attorneys who know how to use these tools -- by 3 to 10 times versus a linear tool.

This improved productivity goes directly to the bottom line and dramatically reduces the largest component of the e-discovery cost structure: the attorney reviewer expense. Content analytic tools also greatly reduce the manpower and duration required for review.

Here’s where people often get stuck: The upfront cost of using a content analytic tool is (usually) significantly higher than that of a linear review tool. But as many have discovered, those upfront costs are typically recouped many times over by the end of a case because of the efficiencies that are gained in using a content analytic tool. The additional good news is that there’s a way to decrease the upfront costs by culling the amount of data needed for the review. These early case assessment tools are equally, if not more important, to the bottom line.

Early case assessment software platforms (such as Clearwell, Metalincs, and Autonomy’s Aungate Investigator & ECA, among others) enable corporations and law firms to dramatically and intelligently reduce the amount of data that needs to be reviewed. These programs offer a sneak peak at the data at a fraction of the cost of loading for review with a typical content analytic tool. In addition to standard culling methods like de-duplication and file-type extractions, early case assessment tools provide a means to develop legally defensible keyword searches, identify key players in the litigation (or more importantly identify non-players), and allow for bulk coding of clearly non-relevant materials or potentially privileged documents prior to loading into the review platform.

A quick example: A company's initial collection totals 300,000 documents for review. Using an early assessment tool, that number is dramatically reduced through de-duplication (20%), excluding privileged documents eliminates (another 10%), performing a multi-phrase keyword search (25%) and identifying the responsive data set (70%). The final number of documents to be loaded into the content analytic tool: 48,600 (or just 16% of the original collected documents).

Common volume reduction achieved through an early case assessment tool is 70-80% (the companies mentioned above have case studies on their respective websites that detail even greater reductions). The point is clear: reducing the volume of data, combined with the increased speed in which it can be reviewed via a content analytic tool, is a winning combination for corporations and law firms seeking to better manage e-discovery matters.

It’s always fun to be part of a meeting in which the realization sinks in that not only will the work product be better, but it will save hundreds of thousands (if not millions) of dollars.

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Sue Dyer has spent the last seven years in Hospital Corporation of America (HCA)’s 50-attorney legal department and, as Senior Litigation Counsel, has been on the front lines of HCA’s development of a national e-discovery approach and protocol, a ‘repeatable’ process from which the company is already seeing benefits.

The largest for-profit hospital operator in the U.S., HCA had $26 billion in revenue in 2007 and was #87 on the 2007 Fortune 500 list. Ms. Dyer was nice enough to speak with Lawdable about HCA’s litigation (and specifically e-discovery) initiatives:

Lawdable: Discuss how the management of the e-discovery process has changed in the last 2-3 years, and/or how HCA’s approach has evolved.

SD: We are light years ahead of where we were just two years ago. Even though we’ve been focused on e-discovery for several years, in the last two years we’ve spent a lot of time educating ourselves about our IT systems and the multitude of e-discovery products on the market. Our goals have included the development of accurate and cost-effective processes that are repeatable. We’ve identified partners that share our belief in collaboration and that can help us accomplish these goals and, as a result, we have been able to implement many initiatives in the last year. Our approach also evolves with the evolving law in this area and the development of available technology.

What we’ve seen is that, with a repeatable process, we are able to collect data from one e-discovery project that guides us on each subsequent project. The data collection also helps us to better predict the expense of subsequent and/or similar cases.

L: Talk about your e-discovery communication process (and what you establish) with outside counsel and other legal service providers. How do you manage the process?

SD: We are actively involved at the beginning of each project in order to get the team acquainted with each other, to identify the location of the effected data and to participate in the project planning. Due to our large geographic footprint, we work with a lot of

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All the discussion in e-discovery typically revolves around e-mails, and obviously that’s where the bulk of electronic communication takes place. But we can uncover some very helpful information from Instant Messaging, too.

Yes, that’s correct – all IM conversations can be collected and processed for review when using the right review software tool (and there are many good ones out there). That means all those employees who keep their Yahoo or AOL messaging open all day represent another significant source of data than can be classified as electronically stored information (ESI).

While there’s been a moderate amount of discussion about this issue, in many industries it has flown under the radar screen or been pushed to the side because it was seemingly too difficult of a matter to deal with properly. That’s not the case. A recent example: I managed a team of five attorneys that utilized Attenex software to review the e-mails and IMs of a corporate client. As a content analytic review tool, the challenge with IMs is that the slang used in texting is very distinct from normal communications and offers a different type of challenge when trying to organize these files by their concept. However, by segregating the IMs and combining them with advanced timeline and keyword searches, we were able to review the universe of IMs in context and with great efficiency. In fact, each reviewer averaged more than 3,000 document decisions per day (e-mails and IMs), which resulted in dramatic cost savings in reviewer expense for the client.

There are certainly some very robust tools that can make the IM part of the review go smoothly; the point is that it should not be forgotten (or avoided) in the process and to make sure your project manager is asking the right questions on the subject.

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Recently I participated in a conference call with a prospective client about a voluminous e-discovery assignment. The call involved all of the players: several of us from Counsel On Call, the corporate legal department and its outside counsel (a prominent East Coast firm). These collaborative meetings are occurring more frequently now, which is refreshing. 

This trend roots from the determination that most law firms were not created to handle today’s e-discovery, but are better positioned to oversee and manage the discovery phase of litigation at a macro level. The client wants to save money on the review, let the law firm manage the process, and have an efficient communications process -- so a team approach involving corporate counsel, law firm lawyers and companies that provide litigation support services is practically a requirement today. It is this collaboration -- and open communication from the assignment's onset -- that ensures an excellent work product, as all of the players are working at their best use from Day 1. The process is more efficient, quality control is central and it ultimately better serves the client's interest and goals. It’s a business-partner approach.

Buyng into this approach is a big step for a law firm to take, but a very necessary one because legal departments need real business solutions and cost containment. The days when a firm can justify the cost of 50 associates (at $250+ per hour) conducting a large e-discovery review are over. What was somewhat surprising about the conference call, however, was that the law firm was Counsel On Call’s biggest advocate, as opposed to viewing us as the competition. But it seems that many law firms realize -- some organically, some by necessity -- that developing quality partnerships can be an asset to their practice (and put them in a better position with their clients). The ABA also seems to recognize (and bless) this outsourcing trend, as its Standing Committee on Ethics and Professional Responsibility recently came out with Formal Opinion 08-451 outlining lawyers’ obligations when outsourcing legal support services.

Much like what this law firm coordinated (and what legal departments are insisting upon these days), it's always good to get everyone at the table together, bring all the challenges/issues out, and discuss the best possible solutions. We're seeing a lot more of this, and it's because a lot of money can be saved throughout the process by collaboratively hammering everything out on the front end.

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