Bob Rowe, the new lead of Huron Legal, says companies are taking a closer look at legal department spending these days, an area that until recently was mostly insulated from company-wide belt tightening measures. One particular area rife with cost-cutting opportunities is the document discovery process. Rowe estimated that the old way, discovery alone could represent 70 percent of the costs associated with a big legal case. Rowe says new technologies are allowing lawyers to focus on being lawyers, and save bundles of cash in the process.
Consulting: What are some of the challenges facing legal departments today?
Rowe: If you're a general counsel you're facing some severe cost control issues. As most people who have been in the industry over the last decade have seen, it used to be the legal department was considered somewhat separate from other cost centers, but now you see procurement stepping in and treating the legal department like any other cost center, making demands in terms of cost control and those types of constraints. At the same time you're seeing risk rise, so we've been trying to address those both from a cost containment and risk reduction aspect. The economic downturn simply accelerated those issues. They were always present, but now you're seeing general counsels being held responsible not only for the outcome of the case or investigation but doing it in a cost-effective manner.
Consulting: What are clients demanding?
Rowe: I would call it the supply chain. You've got the law department, but a lot of that spend is not within the department itself. You're dealing with law departments with upwards of 300-400 law firms they're using at any given point. We're getting called in to say, how can we create a more streamlined program, come up with alternative pricing models and come up with a way to engage those law firms? Similarly you've got electronic discovery costs that keep mounting. Digital data just keeps growing, people don't seem to be getting rid of it. We're in a unique position, frankly, because we can do the law department consulting piece, working with headcounts, supply chain issues, but also extend into other areas that have serious expenditures such as electronic discovery.
Consulting: Trace the evolution of the discovery process to its current point?
Rowe: If you were to go back 20 years to when I first started practicing, the law firm was the owner of all litigation activities including electronic discovery. Then what you saw is the rise of companies that would handle the electronic discovery piece, meaning going and doing the collection, processing and most importantly the review, which has traditionally been housed with the law firms. On that what we've seen is the rise of these managed review companies like ours, which look for ways to circumvent the use of humans to do document-by-document review. So the technology over the last couple of years to identify similar categories or substance matters of documents and remove them in a statistically valid manner. We put our product on the market almost a year ago and we're starting to see some real traction with our clients using it.
Consulting: How much data are we talking about here?
Rowe: When I talk to people about how big is the data, anecdotally, 10 years ago we were talking gigabytes, couple years later we're talking terabytes, now some clients are throwing around the term petabyte. When you're talking petabytes, you're talking quantities of data that outstrip the library of congress. It's incredible. This is one company, by the way. So you can imagine why they're like we can put 100 attorneys on this at an incredible cost that would take a year to do, or reduce that by at least half using technology. Attorneys are always slow adopters of technology I've found, but cost needs are driving this so severely that I'm finding them more receptive to these types of solutions.
Consulting: How has technology changed the discovery process?
Rowe: I liken it to returning lawyers to their true practice of law. When I practiced in the 90s, we would practice law but also have services relating to photocopying or scanning documents, handling digital data. Most lawyer business models were very familiar with the billable hour; cost was not really an issue as much. When you're dealing with areas and services where it's not the practice of law, you started seeing cottage industries pop up that was their core competence. The review piece constitutes about 70 percent of the entire cost of all those activities. So if you have a $10 million project, which is not uncommon these days, you're looking at $7 million in review costs. And that's if you're using outsourced review. Obviously if you're using attorneys that number can double or triple given the high rates they charge. So companies were looking for the sweet spot of cost savings. Before the digital explosion, these costs were more in line with the other costs of litigation. Lawyers are great at lawyering, but that doesn't necessarily extend to other areas of core competence. By focusing simply on one area such as review you can generate a lot of efficiencies and lower costs.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.