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).
 

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).
 

The Client's Best Interest

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.