The quarterly publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/11430
Law2020™ The Future Starts Now to endure an environment of increased downward pressure on rates. Indeed, over the next decade, one might predict the demise of firms that, like some since-lapsed newspapers, could not diversify their revenue sources. Those perished papers clawed ever deeper into expenses trying to maintain historic levels of profitability, without ever touching their 100-year-old business model. It is not at all difficult to imagine a similar picture in our industry. The Telescope and the Crystal Ball We can go much further than we have here in raising our hand to our forehead and squinting at the horizon in an attempt to identify productive paths to the future. ILTA’s Law2020 initiative will continue this effort, but we can also be hopeful that through the proven “power of the crowd” that is inherent in ILTA’s peer-to-peer model, Law2020 will bring to the task both a “telescope” to foreseeable events and a crystal ball to portend the future. The content in this issue of Peer to Peer will amplify these explorations in various ways. And the Law2020 sessions at ILTA’s annual conference in August will continue the effort. But expect much more in the years to come. Whether standing on a precipice or climbing out of a valley, we will look with clear vision at the path that lies ahead. ILTA Endnotes Note how limiting the term “reader” is. Newspapers cultivate “readership,” which brings to mind a paper spread out on the kitchen table, an image that has become — almost — an anachronism. 1 See for example, these articles by CLOs: Drive Better Alignment in Legal Services Mark Chandler, Senior Vice President, General Counsel & Secretary, Cisco Systems, Inc. (April 2008); Value-Based Staffing Practices: Focus on Communications Skills and Tools At AmerisourceBergen Corporation, John Chou, Senior Vice President, General Counsel & Secretary, AmerisourceBergen Corporation (March 2010);Yes, ‘Small Law’ Can: Alternative Fee/Value-Based Arrangements at Wolverine World Wide, Inc. Ken Grady, General Counsel and Secretary for Wolverine World Wide, Inc. (January 2010); Achieving Alignment Inside and Out: Portfolio of Legal Services on Flat Fee and Disciplined Internal Planning Process, Christopher Reynolds, Group Vice President and General Counsel for Toyota Motor Sales, USA, Inc.(September 2009); Creating Value By Selecting Strategic Practice Area Providers - Practices at GE Canada, Bruce Futterer, Vice President, General Counsel and Secretary, General Electric Canada (July 2009); ACC Value Challenge: The Driving Force Behind Value and Change, Jeffrey Carr, Vice President, General Counsel and Secretary for FMC, Technologies (February 2009); ACC’s Value Challenge: Re-Connecting Legal Costs to their Value, Laura Stein, Senior Vice President and General Counsel for The Clorox Company and ACC 2008 Board Chair, (October 2008) 2 Altman Weil, Inc. Report to Legal Management (January 2010); Altman Weil, Inc. 2010 Billing Rates Survey 3 Altman Weil, Inc. Report to Legal Management (January 2010); Altman Weil, Inc. 2010 Billing Rates Survey 4 5 Value Practice: Use of Tailored Six Sigma Methodologies at Seyfarth Shaw documents before a law firm associate for review, and we might expect progress at the rate of 200 documents or so a day. Let’s say that a day is ten hours and the associate’s hourly rate is $300. That means every 200 documents reviewed cost $3,000. Multiply that by 4,000 (800,000/200) and you get the astounding sum of $1.2 million. The sophisticated among us, and especially the vendors of certain review tools, might say that no one ever reviews entire document collections any more. Would that were so. The truth is, there are probably now underway hundreds, or even thousands, of such end-to-end reviews, some fraction of which probably involve only paper copies of documents). So, for this example, we’ll stick with 800,000 as the number to be reviewed. The point is, after all, to illustrate absurdity. To the direct review costs incurred here, you could well add tens or even hundreds of thousands of dollars in vendor costs to the raw review costs. In total, you might even approach $2 million for the Smithers review. And, mind you, that’s not to win the case; it’s not even to try the case — it’s just to do a review of Smithers’ e-mail! Add another 20 executives and salespeople on the Springfield NPP side, and perhaps an equal number on the other side (assuming a civil dispute) and you will have invested enough to start a nice-sized business. Indeed, a number of nice- sized businesses have been started around this feeding trough of e-discovery. You need only cruise the litigation aisles of a legal technology trade show to get a real sense of the money involved in this marketplace. The Problem and the Opportunity The business problem here is that the costs of e-discovery are completely out of scale to anything else emerging from the back office. I say the “back office” because these e-discovery costs produce no products or services from which business revenue may be derived. At best, they may protect a business franchise of one kind or another, but more often they are simply a cost of doing business, and a very, very large cost indeed. And herein lies the opportunity for law firms aiming to thrive through the next decade. The best of them will make this problem their own and wage war on it. They will innovate, scrap ineffective business models, rethink every process from start to finish. And they will undertake this challenge knowing that others at the edge of the law business — litigation support vendors, outsourcers, even venture capitalists — are taking aim at the same problems. The successful, those who thrive in 2020, will have endured a free-for-all throughout the decade and prevailed. Why undertake all this? It’s simple. The cost of e-discovery has the attention of the highest executives Peer to Peer the quarterly magazine of ILTA 49