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.

Less Than Happy Holidays For Associates

The outlook gets grimmer for associates, as several sources highlight their rough road.

As we previously discussed, The National Law Journal last month reported a 1.5 percent drop in the total number of associates at the country's 250 larges law firms.

Last week, the AmLaw Daily reported on the latest Robert Half Legal Hiring Index, in which seven percent more respondents said their firms intend to add jobs in the first quarter of 2011 over the the fourth quarter of 2010.

That would appear to be good news, except for this caveat:

"Fifty-two percent of respondents reported difficulty in finding skilled legal professionals. According to Volkert at Robert Half, this suggests that while law firms and legal corporate departments may have openings, they are mostly interested in candidates who are currently employed."

To dampen the outlook even further, simply being an employed associate doesn't seem to mean what it used to. The ABA Journal recently wrote:

"Some associates who managed to avoid layoffs now lack the exposure and experience of their peers from three to five years ago."

According to that article, the unexpected consequence of the recession is that many associates who retained their jobs spent the last two years doing "pro bono work and marketing", resulting in an unprecedented lack of real experience.

"Across the board at leading law firms in Chicago, Los Angeles and New York City, there are associates who haven’t gained the experience compared to years past, says Sheri Michaels, a partner at legal recruiter Major, Lindsey & Africa in New York City."

Which leads legal recruiter Amy McCormack to observe yet another potential change to the business of law:

"The dearth of experienced associates is even more reason for firms to abandon traditional class distinctions and evaluate junior lawyers on actual experience and legal skills."

Moneyball for Lawyers?

The November issue of National Jurist featured an article by University of Indiana law professor William Henderson advocating big changes in the way law firms assess which candidates to hire and train, and that article has prompted quite a bit of discussion.

The Wall Street Journal says that Mr. Henderson "pokes a variety of holes in the way big law firms have gone about their hiring for decades and decades — essentially luring the folks with the highest GPAs at the top 15 or so law schools."

The ABA Journal reports that Henderson's company, Lawyer Metrics, will apply a "Moneyball" approach to help quantify what qualities partners seek in an associate (referencing the best selling book about Oakland A's General Manager Billy Beane, who introduced a revolutionary statistical-based method of evaluating baseball prospects).

Henderson himself writes as an example that, "In 2007 and 2008, 46 percent of all entry-level associates at an AmLaw 100 firm were graduates of a Top 14 law school . . . Yet, during this same period, 39 percent of lawyers promoted to partner were from Top 14 schools. Further, as of 2009, only 35 percent of general counsels for a Fortune 500 company had graduated from a Top 14 school. This suggests that the advantage of higher test scores and academic pedigree diminishes rather than compounds over time — at least for partnership or general counsel positions."

Steven Harper at AmLaw Daly voices concern that Henderson's data-driven approach won't account for "politics and luck."


The Moneyball analogy is apt if Henderson is taking a bottom-up approach -- since Billy Beane first looked solely at unbiased statistical data and then taught managers and scouts a new way of assessing talent based on the data.

However, if as AmLaw Daly reports, Henderson's approach includes asking partners "about what values and traits they want in their lawyers", then his method is a top-down approach that is the exact opposite of Moneyball.

The goal should not be to assess the data in light of what partners already think they want.

If Henderson really wants to act as Billy Beane would, he needs to assess the data and then tell partners what they should want, even if what they should want is very different than what they think they want.

Thomson Reuters Embraces Legal Process Outsourcing

Thomson Reuters announced last Thursday that they'd aquired a leading legal outsourcing company, Pangea3, in a move that according to the compnay:

"Gives Thomson Reuters a leadership position in the fast-growing legal process outsourcing market."

Reuters' press release notes that:

• Peter Warwick, president and chief executive officer of Thomson Reuters Legal, said legal process outsourcing will be key to helping law firms and corporate legal departments be more responsive and cost-effective.

• The acquisition is true to their mission to help the legal system perform better, every day, worldwide; we will now bring to the legal marketplace a responsive, high-quality, transformative resource for a broad range of legal support work.

• This is particularly important as law firms and general counsel adjust to the realities of the 'new normal,' where efficiency, quality and responsiveness are paramount," he noted.

• The LPO marketplace is growing at more than 20 percent annually and projected to exceed U.S. $1 billion this year.

The ABA Journal reported that:

"Thomson Reuters already has about 8,400 employees in India, but this would apparently be the first time the company would be providing legal services themselves, rather than just legal information and consulting services to law firms and other legal providers. The move into providing legal services – and, at least in a small way, competing with its own legal information clients – comes at an interesting time, as the United Kingdom readies to allow companies to invest in law firms next year."

It is definitely an interesting development, but one that is clearly consistent with the Reuters' strategy "to develop world-class information, software and workflow solutions for legal professionals around the world."

Because legal process outsourcing fits squarely under the heading of "Workflow Solutions."

The New Normal

The ABA Journal is hosting The New Normal, an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, and Patrick Lamb, founding member of Valorem Law Group, about the changes occurring in the delivery of legal services.

The phrase "New Normal" describes how technology and global competition are creating a new normal of relentless change, and this past discussion focused on the next wave of value demands from GCs.

According to the article, from GCs perspective, they are now coming from a place where "most things we buy are getting cheaper while law is getting more expensive."

Which leads GCs to question how can law firms can "say you’re putting our interests first when you don’t realize global competition could put us out of business if I don’t manage every aspect of my operations more efficiently?”

We've discussed the ACC Value Challenge before on this blog, but now according to its chairman, Mike Roster, “25% in cost savings for 2011 is the new target."

Roster continues, "I've spoken to many top GCs and this is what they're planning to get to next year, and it's achievable. And by trying to get there, they’ll actually do a better job.”

The New Normal wondered if a goal of a 25% cost reduction would be a "catastrophe or an opportunity", and they postulated that in their experience "seeking modest, incremental improvements usually changes little; seeking dramatic improvements (which requires simultaneously redefining objectives, resources and constraints) often – but of course not always – leads to breakthroughs."

25% cost reductions in 2011 is no doubt an aggressive goal. It will be interesting to see how adamant GCs remain, and what tactics law firms ultimately embrace to tackle such a hefty directive.

Trends Gaining Traction in Bureau of Labor Statistics Report

The ABA Journal last week highlighted the recent U.S. Bureau of Labor Statistics Report that contained good news for paralegals.

But if you really look at the actual BLS Report, it is striking how the trends that have emerged over the last two years are now shaping projections for the legal job market.

According to the report:

• "Corporations in particular are expected to increase their in-house legal departments to cut costs. The wide range of tasks paralegals can perform has helped to increase their employment in small and medium-size establishments of all types."

There has been debate whether cost cutting is a trend during challenging economic times or whether it is the new reality, and this report seems to assume the latter.

• "Demand for paralegals also is expected to grow as an expanding population increasingly requires legal services, especially in areas such as intellectual property, healthcare, international law, elder issues, criminal law, and environmental law. The growth of prepaid legal plans also should contribute to the demand for legal services."

There has been no shortage of talk about alternative billing models, but it is noteworthy to see one gaining enough traction to factor into government labor projections.

• "Employment of paralegals and legal assistants is projected to grow 28 percent between 2008 and 2018, much faster than the average for all occupations. Employers are trying to reduce costs and increase the availability and efficiency of legal services by hiring paralegals to perform tasks once done by lawyers."

At the core of legal service outsourcing is the idea that some rudimentary, associate-level legal work can be effectively executed by lower cost regional or international lawyers. But this government report takes that idea one step further, implying that some functions can be delegated to non-lawyers, which is something clients may want to watch warily.

Corporate-Minded Law

September's ABA Journal has a feature story on the growing momentum of private equity legal-service companies taking market share away from the traditional law school model.

According to the article, "Backed by institutions, private investors and hedge funds, these entrepreneurs and financiers employ a growing legion of lawyers in the United States and offshore."

"Even though their enterprises don't counsel clients—they are prohibited from doing so by the ABA Model Rules of Professional Conduct—they are changing expectations about how legal services are priced and delivered."

The common denominator for these legal service companies' business models is the unbundling of traditional legal disciplines and then providing specific efficiencies.

• Some drive down costs by automating routine legal tasks.

• Others assemble dedicated teams of lawyers for in-house legal departments to draft simple contracts, review documents and conduct research.

• Still others use proprietary models to predict probable outcomes in complex commercial litigation, then contract to finance the most promising cases, freeing up corporate litigants' capital for other uses.

This emerging hybrid of lawyer-entrepreneurs "speak a language investors understand. Rather than profits per partner, they talk about market share and return on invested capital. They converse as easily about finance, technology and management as finer points of law. And their enterprises produce steady returns even when unemployment soars and stock markets tank."

The Return of Legal Rebels

The ABA Journal started their Legal Rebel's project last fall, with a manifesto announcing their commitment to innovation in the legal profession, questioning the status quo, and using technology to serve clients and society.

After an eight month hiatus, the Legal Rebels site looks to be back in the saddle, with profiles featuring a slew of innovative and off-the-beaten-path approaches to the business of law.

Included in the updates are:

• A young lawyer who purchased a 100-year-old firm on craigslist and is now thriving in a small town.

• Continued coverage of SoloCorps.

• The story of an ex-prison guard's path to law school.

• The need for bookkeeping skills in a solo practice.

• How the lessons of military intelligence apply to a solo practitioner.

Add these to the 50 existing profiles, which weigh in heavily on technology, and the Legal Rebels project remains an important look at the stew of ideas shaping the next generation of lawyers.

The Mobile Lawyer

Technology continues to tear down the walls of the traditional "office", extending the workplace beyond the horizon.

A recent ABA survey documenting the rise of telecommuting polled more than 850 attorneys and reports:

• 71% of ABA members surveyed telecommute

• Of those, 88% perform remote work from home

• 32% in hotels

• 21% in others’ offices

• 14% in public places such as libraries or courthouses

• 12 % in coffee shops and cafes

• A significant portion of that work being performed remotely is legal research (35%)

This last statistic is consistent with the type of work that is most successfully and efficiently performed remotely.

Attorneys are comfortable undertaking more rudimentary tasks like legal research and legal writing outside the "office" because it is background work that will later be integrated into a larger whole.

For the same reason, these are the types of work that are also most successfully outsourced to project-based, contract attorneys.

The foundation of legal outsourcing is apparent in the types of work attorneys are already comfortable having performed outside the office.

A Return To Business, But Not As Usual

We are an optimistic species.

The ABA Journal ran a recent article titled "Managing Partners More Confident, Expect Increased Legal Work".

The upshot of the article is that a recent survey showed that the "confidence index" of managing partners is at a three-year high based on a belief that the worst of the recession is behind us, coupled with an anticipated increase in demand for services.

However, the article then slides in one other bit of information, almost as an afterthought:

"Managing partners aren’t as confident about revenue increases as they are about an increase in demand. The reason is client pressure to discount fees or offer alternative billings."

That's one heck of a caveat.

The literal translation might be: "Business demand will return to normal, but "normal" might have been redefined in the interim."

An interesting parallel can be found in the recent Detroit Auto Show. We all know the automotive industry is the poster child for the economic challenges of 2008/2009, so it was interesting to read this one-two punch from a recent Reuters article:

"In 2009, we discovered we have a new competitor that we have never dealt with before, and it's savings," Jim McDowell, American head of BMW's Mini unit, told Reuters. "Anything that throws major elements of uncertainty in front of the consumer are the kinds of things that could depress sales."

Followed by:

"But ultimately sales will increase because the car fleet is getting older and older," he added.

The parallels between the industries are apparent: Demand will return, but the nature of the game has changed.

The lesson here is that the impact of 2009 is not going to gently fade away. 2009 seems to be solidifying itself as a bell that can't be un-rung.

2009 was traumatic enough -- the ground shook enough -- that our perspective seems to have irrevocably shifted.

Adjusting to Fewer Associate-Level Positions

As noted recently in the ABA Journal, many large firms are delaying hiring new associates, and some are putting their summer apprenticeship programs on hiatus altogether.

Obviously, though, a decreasing number of entry-level associate positions doesn't necessarily mean there is less associate-level work to be done.

That's why one of the major challenges facing firms today is reshaping business practices to accomplish associate-level work without charging clients senior-level rates.

One of the solutions many firms are turning to is the flexible use of off-site associates for legal research.

An example of this trend is LegalEase's own Research Pathfinder, a program that offers thoroughly researched breakdowns of all relevant case law, statutes and any other opinion, law review, and any secondary research related to a specific legal issue.

All within 24 hours and all for a $250 flat fee.

LegalEase's Research Pathfinder applies two levels of quality checks by U.S. attorneys to our network of global attorneys to provide the 24-hour turnaround.

You can view additional information on LegalEase's Research Pathfinder here.

Legal Rebels

The ABA Journal has started a new feature they're calling Legal Rebels. Their intent is to shine a light on the current transformation taking place in the business of the legal profession.

Obviously, they're preaching to the choir, as far as we're concerned.

The opening paragraphs from their new website frame it nicely:

In these times of great economic chaos lies great opportunity.

The legal profession is not just struggling through a recession, but also undergoing a structural break with the past. There is a growing consensus that the profession that emerges from the recession will be different in fundamental ways from the one that entered it.

Dozens of lawyers nationwide aren't waiting for change. Day by day, they're remaking their corners of the profession. These mavericks are finding new ways to practice law, represent their clients, adjudicate cases and train the next generation of lawyers. Most are leveraging the power of the Internet to help them work better, faster and different.

The Legal Rebels project will profile these innovators and describe the changes they are making. It will tell their stories in the ABA Journal, on this website and through a variety of social media channels using text, pictures, audio and video. The first of these profiles will appear here on August 25. Several will be added weekly through the end of November.

We're looking forward to keeping an eye on the Legal Rebels project.