Wednesday, December 11, 2013

Document Review Today: "Lower Costs, Faster Cycle Time, Better Leveraging of Technology, and Higher Quality"

"World-Class Project Management 
Process Engineering"

Yesterday, I made a short posting recognizing the impact on me (Wow!) of some recent research found here on the dramatic shift in the BigLaw staffing model over the last 25 years.  Interestingly, my experience as a BigLaw associate in 1985 corresponds to the time when BigLaw relied on a highly leveraged triangle staffing model, in which associates out-numbered partners significantly.  Most of those associates performed the grunt work I describe here.  

Today, I quote at length from Williamm D. Henderson's article:  Three Generations of U.S. Lawyers: Generalists, Specialists, Project Managers, 70 Md. L. Rev. 373, 384-85 (2011).  It describes the increasingly dominant approach to document review and management using technology and specially trained professionals.  The system offers corporate clients better management of document reviews for litigation or due diligence.  It offers these powerful clients a quicker service at lower cost and with higher quality.  I have not reproduced the footnotes, with the exception of one at the end of the quote.
My second example of game-changing innovation came to my attention when two principals of Novus Law LLC visited my Project Management class to talk about their business." Novus Law, which was started less than five years ago, specializes in reviewing, managing, and analyzing documents for litigation, investigations, and transaction-based due diligence. Prior to that, the principals (who have M.B.A. degrees, not law degrees) led the business process outsourcing practice at PricewaterhouseCoopers. There they spun-off and reengineered the nonstrategic work processes of several Fortune 500 companies, making them much more efficient and profitable using the exact same workers that would have otherwise been laid off. When those spinoffs were eventually sold, the principals looked for another promising business opportunity. After two years of patient evaluation, it took them one day-yes, one day-to commit to using those same reengineering techniques in the legal industry. Why? Because in their review of industry data, never before had they witnessed such an enormous disconnect in perceived value between clients and service providers. 
In just a few short years, Novus Law has enjoyed considerable success in partnering with major corporate legal departments and AmLaw 200 law firms. Their work has been relied upon in complex civil, white-collar criminal, and major class actions and multidistrict litigation in federal courts. What is the value proposition for clients? Sixty percent lower cost than a traditional law firm and near perfect quality-far better than any large law firm with an army of top law school graduates. 
Although a small portion of the cost savings comes from using less expensive lawyers in the United States and abroad, the efficiency and quality is entirely a function of world class project management and process engineering. At Novus Law, reviewing, managing, and analyzing documents has been broken down into nearly 1,000 decision points, which are arrayed in an optimal order and collapsed into a smaller number of highly efficient steps using business practices found in accounting, aviation, healthcare, manufacturing, and other industries. In addition, the lawyers doing the work are given an engineered work environment that is optimized for comfort, efficiency, and mental accuracy. The heavy reliance on process is not just about speed and accuracy-customized knowledge management and intelligence gathering tools enable lawyers to better identify fact patterns that can drive the outcome of a case. Every aspect of cost and quality, including team communication and collaboration, is captured by a system of statistically driven metrics. Lawyers are exposed to a constant feedback loop on their own performance, which enables them to continuously improve. As they progress, they enjoy higher compensation. Remarkably, lawyers with as little as three years of experience have become shareholders in the firm. 
With the advent of e-discovery, which has exploded the scope of discoverable information, many large law firms have responded by building out litigation units that rely on either staff or contract attorneys, who are cheaper than the traditional associates paid on the $160,000 plus pay scale." From a distance, this BigLaw model looks safer than "sending your documents to India."" 
If the value proposition is just labor arbitrage, that argument may have staying power until all of the economies of using less expensive labor are realized. But Novus Law's real comparative advantage is a project management and process orientation that dramatically increases quality. Its process, quality, and knowledge management system, which recently won a global InnovAction Award from the College of Law Practice Management, enables its attorneys to collaborate on factual theories at the same time that [attorney-client] privilege review is being performed. This one-touch, multifaceted approach to processing information can supply the client with a basis for an early resolution or dismissal, which can further reduce the cost of litigation. 
The fact that Novus Law can measure and warrantee quality, and offer price certainty, endears it to large corporate clientele. This model does not require the pay scale of a developing country to be competitive. Yet, the fact that measurable quality is identical between U.S. and overseas attorneys suggests that more work is likely to head overseas in the years to come. These dynamics have enormous implications for traditional law firms, which will reduce the number of entry-level hires. This produces a general "graying" of the corporate bar and a large cohort of lawyers who will be less inclined to reinvent themselves. 
Here's the footnote on the quality issue:
This claim of quality is documented by taking a statistically-based random sample of work product and having a law firm redo it in an effort to identify errors. This firm's accuracy rate vacillated between 99.8% and 100%, whereas the typical Am Law 100 law firm hit 78% to 91%. E-mail from Ray Bayley, Chief Exec. Officer, Novus Law LLP, to William Henderson, Professor of Law, Ind. Univ. Sch. of Law (Feb. 2, 2011, 5:51 PM) (on file with author) (work product accuracy confirmed in e-mail). Because ethical sanctions often turn on erroneous claims of privilege during discovery, the benefits to the client or the lead outside counsel can be enormous.
Dec. 20, 2013 Update:  Good survey of technology trends in law here.  One trendspotter mentions Novus Law.

Dec. 21, 2013 Update:  For a good update on the "revolution" happening in the legal field see this blog posting.

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