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.

At the time, clients asked us to handle this work because we already had litigation or other types of attorneys working with them, and they appreciated our model: providing talented attorneys a different way to practice law, emphasizing professionalism but eliminating so many of the strings that go along with the traditional practice, and allowing modest rates, experience and competence to drive cost savings. So as I digested the conversation with the CEO, everything became lucid: Why can’t we bring our approach to the discovery process, of which document review is a component? Why can’t we do it differently and better? That commitment built a foundation of success, and our Discovery Division has expanded many times over in recent years.

It comes down to this: If the attorneys understand where documents and data fit within any case, and understand the importance a piece of evidence can have to a deposition, summary judgment motion or even the crux of the case... they provide more than just the cursory review of documents. They provide legal expertise and have the ability to participate in virtually any phase of the discovery process. They exercise judgment and discretion, they review and analyze; they have a solid understanding of any case and how what they are doing fits within the strategy. Our attorneys may not take the depositions but they are in a great position to work with those who are. They aren’t just a seat in a massive room, but a valuable team member working within a well-planned structure that capitalizes on their experience and ability to contribute.

This results in providing value throughout the discovery process, not just for one component or a heightened focus on lowering a “per seat” cost. As we’ve stated before in this space, the hourly rate of the attorneys is important in achieving cost savings, but issues such as experience, leadership, technological flexibility and execution are equally important when looking at value and savings over the life of an assignment. So when we combine the talent and cost practicality of our attorneys with processes that are continually being improved and evaluated, a thorough understanding of technology and the various options that exist, a focus on lowering costs by dramatically reducing data and gaining efficiencies, working across multiple stages, maximizing resources on a repeatable basis and treating attorneys with professionalism, it equates to a better, consistent, less expensive and value-driven work product.

I would love to travel back and ask that CEO about costs over the life of an assignment, the flexibility to choose software that’s right for a particular data set, implementing review efficiencies, quality control protocols, best practices and early case assessment initiatives. I would ask him if their attorneys choose to practice with his company, whether they communicate with outside counsel about case strategy, depositions, motions and other aspects of the discovery process. Whether thought is put into the environment and teams in which people work together. I would ask how they do a better job for their clients on the next assignment, about the metrics they use to track results and about the other litigation phases on which they assist.

All of these issues differentiate discovery from document review, and all of these issues speak to value versus cost.

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.

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.

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.

Yet, when one says outsourced I still believe there is a caveat … are you building relationships with the outsourced attorneys? Are they part of your team? Counsel On Call attorneys choose to work with our company, this is the way they choose to practice law. They were with us before the economic downturn and will be with us when it passes. Thus, we have experienced and well-credentialed attorneys who work with the same client, in-house legal departments or law firms, for years. The cost savings are staggering and the value received is real – someone who knows you, your business, your issues, and possesses the skill to get the job done correctly, and who is available to work whenever you need. This value and flexibility makes them integral to the team’s success. The word “outsourced” doesn’t necessarily capture that sentiment – it’s almost a divisive word. But that spoke of the wheel is equally important when building a cohesive legal team with well-defined roles.

All of this being said, one of the most common questions I get is, “So, how does it work?” Many people simply don’t know where to begin, which is easy to understand. Labor is often the No. 1 expense for our clients, so it’s good to start by assigning value to that enormous expenditure:

  • What are you getting in exchange for the money paid?
  • What are your in-house attorneys doing? Is that a good use of their time based on the total amount being paid?
  • Could you have someone else do some of the lower-level work and free up your in-house attorneys to do more complex matters?
  • What are you paying outside counsel to do? Are you getting real value for the money paid?

To the last questions regarding outside counsel, often the answer is “yes,” but more often is it “sometimes.” The implication is that things can be done better, or more efficiently, or more cost-effectively. So once this bridge is crossed, it becomes a matter of shaping a new, collaborative approach between in-house counsel, outside counsel and Counsel On Call attorneys working together in the best interest of the client.

Assuming times stay tough for a while longer, in-house counsel aren’t simply going to be able to continue sending things to their traditional outside law firm for reasons like, “that is what we have always done” or “we just do not have the internal resources to get it done.” The stakes are too high and there are proven, high-quality and cost-effective ways to accomplish the same tasks. Most involve collaboration, and there are numerous “pain-free” ways to implement this approach. Like the client I was meeting with the other day, I too believe this is the future model for in-house legal departments (and, quite honestly, law firms ... but that’s a topic for another day).

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.