Best Corporate Services - 2011

Best Corporate Services - 2011LegalEase wins an award for the 4th year in a row
This is getting to be a habit - a good one. LegalEase has been recognized once again for providing best of class services to its clients. Its just an indication that our clients mean a lot to us. A huge thanks to the clients that made this happen and if you haven't so far, go ahead - get your piece of sweetness!

Attorney Support ServicesComplete projects and close cases with confidence. Award winning services.--
The most innovative pricing plan for legal support
http://www.legaleasesolutions.com
Best Corporate Services - 2011
Best Litigation Support Provider - 2010

The rat race has ended …. (well there are alternatives)

Lawyers today have an option, to work at top law firms, have lower billable hour targets, have a life and opt out of the rat race. A recent article in the New York Times highlighted how large law firms have been setting up operations in lower cost semi-urban centers across the States for lawyers who can apply for a ‘career associate’ position. The career associate position will accommodate lawyers who will take on a lower billable hour target and never get on the partner track.

Law firms today are morphing (finally) into how successful corporations operate. There are a few who can bring in the business, manage the firm and perform at the executive level. There are others who are content to practice their profession and don’t require the i-need-to-be-a-partner aspiration as a prerequisite.

This model has some clear advantages. This alleviates the reverse pyramid effect that plagues many midsized law firms where the number of partners to associates tends to grow, having more and more partners do a lot of the work, affect client acquisition and retention and leading to an eventual implosion of the law firm .

The downside to all of this, lower pay grades for career associates, which directly affects the attorney’s ability to service the large law school loans they usually inherit with the degree. Maybe it’s time that law schools reassess their fee structures and look at ways to reduce the cost it takes to become an attorney.

So the market continues to change with law firms reducing billable rates, alternative and flat fee billing arrangements, career associate positions being introduced, legal outsourcing and technology, all playing influential roles in shaping the future of the legal industry. It will be interesting to see how quickly, if at all, a highly insulated industry reacts to the market pressures being put on it and if it has the wherewithal to transform into a lean efficient and effective machine.

So things are getting better…… really?

The AM Law Daily recently reported that April saw an increase of 1500 legal jobs. This combined with the New York Times  article on the American Lawyer report that there is significant growth in 2010 over 2009 seemingly puts the attorney market back on track.

Some other statistics from the American Lawyer report include

• -          4% increase in law firm revenues
• -          profits per partner went up by 8.4%.
• -          Baker McKenzie came out top with $2.1 billion in revenues
• -          Wachtell, Lipton, Rosen & Katz declared $4.3 million in partner profits!

So with all the challenges in the economy the big law firms are seemingly steering their way into profitability and growth.

Meanwhile, Hildebrandt  released a report on May 6^th 2011 that Big Law continued to feel the effects of the economic crisis in 2010, with;

• -    Almost 2,900 fewer lawyers working (in 2010) for the largest 250 firms than the year before. 
• -        And those losses are on top of the 6,600 lawyer decline in 2009.
•      Also, the Economist reports “Clients became keener to query their bills—and to demand alternatives to the convention of charging by the hour, such as flat, capped or contingent fees.”

So how does one grow revenue, increase partner profits? Cutting 9,500 attorney jobs may be one way. All in all, Big Law has reacted swiftly by cutting jobs, driving overall hourly rates down and creating alternative billing arrangements for their clients. This has obviously started to bear fruit.

Technology Reaching Into The Courtroom

The New York Times recently featured an investigation of how technology -- especially online searches -- is shaping jury selection.

One striking part of the article is how reticent attorneys and jury consultants were to even speak to Reuters Legal on the subject.

"Ten law firms and five jury consultants declined requests from Reuters Legal to observe them building juror profiles, many saying they weren't sure judges would approve."

"Lawyers don't know the rules yet," said John Nadolenco, a partner at Mayer Brown in Los Angeles. "It's like the Wild West."

But while few are talking about it on the record, it's clear that this is a topic begging for official guidelines.

"Jurors are like icebergs -- only 10 percent of them is what you see in court," said Dallas-based jury consultant Jason Bloom. "But you go online and sometimes you can see the rest of the juror iceberg that's below the water line."

While most agree there is a lack of hard and fast rules as of now, one firm did provide access.

Alabam's Wooten Law Firm allowed Reuters Legal access as their paralegal "scanned Facebook, MySpace and Twitter, and used Google searches to find jurors' names on the websites of government agencies, school boards, local companies, and sites that contain property records. Links to each site were assembled in a spreadsheet."

In terms of precedent, a New Jersey Superior Court judge did bar counsel from googling potential jurors in the courtroom because the opposing counsel had not brought laptops to court, ruling that use of the internet provided "an inherent advantage regarding the jury selection process."

However, appellate judges held that the trial judge had improperly prohibited the online research, writing that the "playing field was, in fact, already level, because Internet access was open to both counsel -- even if only one of them chose to utilize it."

As the article summarizes, "the federal courts so far have not addressed the issue of online vetting of jurors, and just two states, Missouri and New Jersey, have said it's acceptable in some forms. But judges and lawyers, even in those states, still seem to be grappling with the practice."

Payment of Attorney’s Fees to Putative Trustee from the Trust under Texas Law

Question : Can a trustee, whose standing as trustee is being challenged by a beneficiary of the trust, use trust assets and income of that trust to pay for its defense of that suit? 
Short Answer: When the suit is to defend the trust property and a trustee acts reasonably and in good faith, the trustee may get reimbursement for the litigation expenses from the trust assets.  However, when defense of the suit does not benefit trust property, such as expenses related to litigation resulting from the fault of a trustee, the trustee cannot get reimbursement for the litigation expenses from the trust assets.
more...

Additional 2011 Projections

Last week we looked at legal market projections from Hildebrandt Baker Robbins in their 2011 Client Advisory.

That report also contains additional data compiled by the Citi Leaders Council Survey and Thomson Reuters.

The Citi Leaders survey comprised 48 large law firms and found:

• Respondents project using AFA's for 15.4% of their firms' revenues in 2011, up from 12.9% last year.

The Thomson Reuters survey polled the leaders of 78 large law firms last year as part of their Legal Executive Briefing and found:

• 96% of respondents indicated they expect increased use of AFAs during the next three years.

• 89% forecast increased use of pre-matter budgets.

• 71% expect increases in their use of teams to manage matters/projects.

• 61% percent expect increased use of contract lawyers.

• 55% expect increased use of non-lawyer project managers.

• 43% expect an increase in the outsourcing of routine legal activities.

These are significant expectations for evolving business models, and the Hildebrandt Client Advisory summarizes these projections with this:

"We fully expect that the experimentation with new service delivery models and new pricing strategies that we have seen over the past couple of years will continue and expand in 2011. Thus, we believe that firms will continue to focus on project management skills and other techniques for improving efficiency, including the outsourcing of legal and non-legal aspects of their work and the use of technology to automate workflows and to reduce the number of staff required."

Re-Thinking The Service Delivery Model

Professional services and firm management consultants Hildebrandt Baker Robbins released their 2011 Client Advisory for the legal market.

Their comprehensive surveys highlight perceived legal trends in 2010, as well as the trends they believe will impact the market this year. Their discussion of Management Challenges opens with two telling paragraphs:

"Much has been written over the past two years about the changing delivery model for legal services and the need for firms to re-think their underlying assumptions about work processes, pricing, infrastructure, and administrative support. While some of the bold predictions of revolutionary changes in the structure and work of firms have no doubt been overblown, there is no denying that the market is changing and that some firms are beginning to use the redesign of their service delivery models to good competitive advantage."

"As Mike Dillon, the General Counsel of Sun Microsystems has observed, “The reality is that we are in the early stages of a seismic shift in the traditional cost and delivery model for legal services. I see it every day in my interactions with the law firms that support us and in my discussions with peers at other companies.”

The report notes that while the billable hour is still considered the "normal" model, "there has clearly been a noticeable increase in the use of AFAs (alternative fee arrangements) and the evidence suggests that this trend will continue in coming years."

The Hildebrandt survey encompassed more than 200 companies, and looked at 2009 actual number along with expected 2010 numbers and found:

• 41 percent indicated they had used contractually fixed fees in 2009 for up to 10 percent of their outside legal work.

• 20 percent also reported they had used contingency fees for up to 10 percent of their outside legal work.

• 19 percent indicated they had used value or incentive billing.

• 8 percent stated they had used portfolio pricing (i.e. the use of fixed fees for a series of projects or cases or for projects occurring).

• 61 percent projected an increase in the use of contractually fixed fees in 2010.

• 55 percent projected increased use of value or incentive billing.

• 45 percent projected increased use of contingency fees.

• 36 percent projected increased use of portfolio pricing.

The Hildebrandt survey certainly seems to indicate that alternative models have moved beyond simply gaining traction; they seem now to be part of the permanent landscape.

Five Forces

While Richard Susskind's book "The End of Lawyers?" is always a hot topic when discussing trends in the business of law, Mark Gerow makes a compelling argument in Law Technology News that the market forces Susskind describes were first outlined by Michael Porter's "Five Forces" back in 1979.

"Five Forces" detailed the following market forces that impact any industry (not specifically law) as:


Within this context, Gerow highlights how these forces are effecting the current state of the business of law.

• "Clients have more bargaining power due to increased options for sourcing legal services (both geographically and in terms of method of delivery.)"

• "The threat of new entrants has increased in certain segments due to globalization."

• "The threat of substitute products (such as outsourced e-discovery) has increased."

• "Rivalry within the industry is high due to the barriers of exit (a law firm can't choose to switch to healthcare services if the legal market becomes too crowded, it must "stand and fight".)"

It's interesting to view the legal industry through this broader lens, crystallizing the impact the internet has had in increasing competitive pressures on a legal industry that had been largely insulated from theses dynamics in the past.

The E-Discovery Balance -- Technology And The Legal Team

Last week we looked at the role of some software technology in e-discovery, concluding that while software is an important tool, it is not a substitute for attorney participation.

Freelance writer Jason Krause wrote an interesting piece last month for Legal Technology News that delves further into the burgeoning studies being conducted to try to determine that optimal balance between technology and human activity in large scale data collection.

Krause highlighted the Text Retrieval Conference (TREC), an initiative co-sponsored by the National Institute of Standards and Technology (NIST) and the U.S. Department of Defense. One of TREC's missions is to encourage research in information retrieval based on large text collections.

According to Law Technology News, "for several years now, the Text Retrieval Conference Legal Track has tested different types of computer searches to create industry best practices for searching electronic records in litigation. In 2008, the project added a new investigation into the role of human researchers in improving the search results from computers, called the Interactive Task."

"Dan Brassil, manager of Linguistic Technology with H5 says, "Computer algorithms are getting better, but they will never get the same results as when there is a person in the loop or human intervention is part of the search process. The question is where the humans fit into the picture."

"Researchers in the TREC project are discovering there are roles that are best provided by machines and those done by human beings. "We use humans to do what they are very good at, which is to make nuanced judgments in specific cases," says Brassil. "But they are not so good at judgments across a lot of documents. People get tired, allow inferences to creep in, and you never know what a person will say in terms of consistency. That's where machines come in."

While the test groups employed fundamentally different approaches (e.g. using complex questionnaires to refine the up-front search scope vs. employing a computer-based learning tool to rank responsiveness), the TREC researchers concluded:

"Machines should do the grunt work of review, but members of a legal team need to:

• Consider scope, timing, and nature of the request to determine what approach may work best. Think about whether there is time to gradually seek every responsive document possible, or if a more targeted approach is needed.

• Identify the custodians who understand the documents in a collection and discover what they know about those documents.

• Capture the language from responsive documents and incorporate it into search terms that approximate the language actually used.

• Continually perform control checks. If responsive documents are not being found, reconsider and refine search strings.

Unfortunately, there is no definitive answer about the division of labor between man and machine. But the TREC topic authorities noted that teams that failed to think ahead about how to define relevant documents and relied on computing power to find documents fared the worst. "It's well understood that human review and machine review have limitations," says TREC Legal Track researcher Gordon Cormack. "In the next few years we hope to find the balance between them that mitigates those natural flaws."

E-Discovery Software

Last year, The Wall Street Journal reported on a BTI Consulting Group survey indicating that large companies intend to spend more than 7% of their litigation budget on e-discovery this year.

The ABA Journal cited the article, noting that:

"The right software can help reduce the number of documents needing attorney review, helping save money..."

For example, Morgan, Lewis & Bockius used “predictive coding” software made by Recommind Inc. to review millions of pages of documents in less than a month.

Cisco recently started utilizing the same software.

As Recommind explains, Predictive Coding is "a patent-pending technology and workflow which automatically analyzes, prioritizes and codes all documents in a collection as part of litigation or regulatory or internal investigations."

However, as the Recommind site also explains, predictive coding is not a replacement for attorneys.

It is simply a more efficient addition to the sorting component of the workflow and documentation process -- a process that still requires attorney review and analysis, which is itself an area abundant with potential added efficiencies and cost savings.