Monday, November 30, 2009

Published Article - UK Law Business Review

I wanted to share a recent article of mine that was published in the most recent edition of the Law Business Review - a publication of LexisNexis UK. This article was written to address the market disruption LPOs have caused within the legal services arena.

With the advent and increase in Legal Process Outsourcing (LPO), law firms are facing greater challenges in maintaining the broad spectrum of legal services historically provided to clients. LPOs and other outsourcers have already taken a noticeable share of the low-level support services and look to expand into more substantive middle-tier legal services. With each new service acquisition LPOs disrupt the business and profit models of firms.

The online article is in an "ebook" format so you may have to page through the magazine to get to Page 56 where the article "LPO: Friend or Foe" appears. Have a look throughout the magazine as there are a number of useful and interesting articles that provide an insight into the UK legal market.

Here is the link: http://www1.lexisnexis.co.uk/2008/magazines/2009/LBR/LBR_Winter%202009/LBR_eBook/flash.html#/58/

Wednesday, November 25, 2009

From Megamania to Expertopia: Four Scenarios for the Legal Profession in 2020

As I wrote two weeks ago here I will be detailing and discussing a unique and influential study that was conducted a year and a half ago. Here is the latest article.

Until recent years, changes in legal services arrived in slow-motion and were easy to handle. But today the future requires advance preparation, almost like an appearance in court. Market forces keep growing more complex and global events are accelerating. Corporate counsel, and especially their law firms, risk getting blindsided and having to catch up to the present.

Indeed, just over the last decade, litigation fees soared and companies began seeking to offshore and commoditize legal work. The consequences have been deeply disruptive. And as business uncertainties grow, legal practitioners face a constellation of new challenges that can spur or slow the growth of the companies they serve.

General Counsels are leaders, not just firefighters. They must not only maintain current performance, but enhance the productivity of their teams, reduce burdens to the company, and strategically plan for the future. So what will the legal future look like for corporations? The industry could consolidate, as financial services did. Or barriers may intensify specialization, somewhat as they have in healthcare. How can we identify such scenarios early and prepare for them, rather than coping after they arrive?

The Legal Transformation Study: Your 2020 Vision of the Future is a comprehensive analysis of these challenges, with a wealth of projections about the changing role of the GC, opportunities, and paths for preparedness. Its conclusions arise from an expert, wide-ranging examination of trends and variables facing the industry. To avoid blind-spot assumptions, study authors examined the spectrum of possibilities. They also looked at fields like HR, where metamorphosis has been swift and unexpected. The result is a quartet of novel, illuminating scenarios.

The Legal Transformation Study is a milestone toward this end. The future is all about uncertainties, but it concludes that two will likely dominate:

Meta-Uncertainty 1:
What Will the Legal Services Landscape Look Like? Will a few mega-firms rule the earth or will specialty shops prevail? Will we see a handful of Wal-Mart-type law firms or endless boutiques?

Meta-Uncertainty 2:
Will Regulatory Barriers Rise or Fall? Will state rule-systems grow more harmonious or more diverse, complex, and forbidding? The answer is unclear and companies can face impossible decisions. For instance, consider the EU data privacy initiative. Europe is a quilt of regulations on the confidentiality of Internet information and companies may have to choose between refusing EU data to a U.S. judge who has ordered it, or providing it and risking EU penalties.

In combination, the two meta-uncertainties yield four strikingly varied scenarios of the future. In two, the world is a jungle of rule-systems, with either the huge or the nimble prevailing. In two more, regulations grow uniform, with techno-giants or small, online firms flourishing. Each scenario describes a culmination, and the 2020 world will likely lie on the trendline, not at the terminus.


Scenario 1: Blue-Chip Megamania


This is the world of the one-stop megashop. Major economic blocs — East Asia, Europe, and North America — are vying so ferociously that protectionist walls have risen again. Only legal behemoths can break through them. About ten mega-firms sprawl across continents, and they offer the gamut of services: legal, forensics, accounting, research, litigation support. Far below lay tiny, highly specialized firms, of inconsistent quality.

Most GCs simply run a department of liaisons to the mega-firms. Choosing one is difficult. The buying gets diluted. A global, dominant firm brings numerous conflicts of interest for a potential client, and sharply narrows the buying field. The same forces also forge lock-in. Hence the GC faces the challenge of obtaining legal quality across the board, since the mega-firm may lack the expertise needed for, say, South America.

In many ways this is the environment we are in now. Law firms are spreading across the globe and seeking to penetrate the legal services market, both in practice and in process work. Suppose you are in patent law. If so, are you also in patent prosecution? If you are in patent prosecution, then are you in patent filing? Law firms are teetering on the edge of trying to own it all.

Scenario 2: Expertopia

Here, the world is also a patchwork of regulation-systems, complex and volatile. Yet now they actively thwart the mega-firms and a flotilla of speedy, agile specialty shops has arisen to negotiate the barriers.

This is the antithesis of Megamania. Gone are the general services of a law firm with 17 practice areas. Buyer choice increases dramatically — a mixed blessing. A global corporation now needs, say, different patent counsel in a string of countries. The GC engages the firms and soon is managing a swarm of outside attorneys.

Most GCs are now executive vice presidents and serve on the governance and compliance committees, since managing these providers has become critical. Yet, surprisingly, hiring among these myriad, highly competitive outfits is much easier. Companies just use Legal OnRamp or ACC ratings. Rating agency evaluations are validated by peers not paid-for listings so purchasers are able to better choose the appropriate counsel.

Scenario 3: Technolaw World


Globalization is at a climax and has proliferated. Borders have virtually vanished and regulations tend to align across nations. Travel is ultra-fast and easy. Free trade has led to unprecedented peace and wealth creation. All media have merged, and the wireless internet is now an ultra-fast, super-collaborative system. Ubiquitous video screens enable near-constant contact with others.

Mega-firms span the planet, but their role has changed. Since smart technologies now perform much of the lawyer’s former work, firms focus more on devising and selling software platforms. Attorneys remain but often their job is to create integrated legal/business processes, along with business experts.

We use the phrase ‘legal advice in a box’ and view the law as a technology deliverable. The human element is partially removed here, as lawyers become techno-lawyers. You can see bits and pieces of this happening right now. Whether it expands, contracts, or flatlines we have yet to see.

Mediation and arbitration have greatly increased. Damages are capped in tort cases. Losers in litigation pay the fees of the winners. As state regulations have declined, specialists in their byways have slowly disappeared.

This world is highly litigious and lawsuits can yield enormous settlements, but technology handles most of the combat. However, company preparation is critical and hence the GC becomes a strategic risk manager. GCs reduce costs through good outsourcing relationships, which tend to be strong and resilient.

Scenario 4: E-Marketplace

This is the doomsday scenario. The world economy has collapsed and nations have massively deregulated to prod it to life. The Internet helps struggling laypeople do much of the work of professionals, and legislation removes the need for legal credentials. Amateurs and aggregators assume key roles. Law is no longer a high-margin profession, given outsourcing and technology.

Since global harmony has led to similar rules, legal software proliferates. GCs buy services mainly over the Internet, through a Legal Facebook platform or other Web2.0 portal. Everything is online that can be. Heading a shrunken department, the GC works closely with the CIO and tends to focus on business-process planning, workflow analysis, and business-rule validation. In-house lawyers expand their role as educators and develop videos to explain legal procedures to non-attorneys.

The GC has little relationship with the providers. Price is the main concern, along with online ratings. At any hint of a problem or price change, the GC may find another provider.

This scenario represents a 180-degree turn away from relationships. Law is and forever will remain based on that trusted advisor concept. E-Marketplace takes that much of that out of the equation.

The Future of the Study


The Legal Transformation Study: Your 2020 Vision of the Future continues to evolve. This study was not a snapshot - it’s an organic living document.

In today’s world, where domino effects can begin in the far corners of the peripheral vision and foresight has never mattered more, the Legal Transformation Study confers a critical competitive advantage.

Monday, November 23, 2009

Strategies for a more Integrated Approach to Litigation Management

Increasingly, executives and corporate boards are realizing that their litigation “readiness” may be putting their organization at undue risk. Despite investing billions of dollar in processes and technology to locate, retrieve and produce required documents that are electronically generated and stored, only one in five companies characterized themselves as “well prepared” and felt confident in their ability to manage the risks associated with legal discovery. Of those with a Records Information Management (RIM) policy in place, confidence wasn’t high, with some 40% of companies surveyed indicating they failed to stringently enforce their own policies.

Widely considered to be the most costly and time intensive aspect of the litigation process, discovery is not something to be done piecemeal or in damage control mode. The risks are simply too high—and are escalating with recent court decisions. Yet, for too long, executives (and boards) have been willing to “roll the dice” as they have failed to make an integrated, pro-active approach to litigation management a priority.

A holistic or integrated approach to managing litigation challenges is as basic to an organization as a crisis management plan or a risk management plan. Yet, for too long, litigation management has been left out of the business process improvement push.

Parallel Processes
Litigation management is a process, not an endpoint. It needs to be viewed in the same way companies view their manufacturing processes, hiring or R&D processes, their risk management or crisis management processes. Like other processes that are so fundamental to a business’ operation, litigation management cannot (and should not) be isolated within the company’s legal department. The e-discovery process is pervasive—as it includes virtually any (and every) document or data set produced by employees in every division and department of the company.

The cornerstone of preparedness is thoughtful planning and training of key personnel backed by the right systems, including processes and technology to ensure efficiencies and streamlined communications. To be effective these elements must be coupled with regular review and updates to ensure the processes and policies in place remain relevant. With today’s rapid technology advances, keeping generation, retention and storage procedures for electronic documents current can be daunting.

As with crisis management, investments of time and resources must be made to audit, plan and map out processes. Many find this upfront investment in planning is directly proportional to the level of risk or exposure the company potentially faces. Minimizing business interruptions and potential damage to the company’s reputation are byproducts of successfully run processes. At the same time, having a robust readiness process positively impacts a company’s ability to expedite early case assessment—to determine which cases merit time and resources, which cases pose the greatest potential risk or liability.

Litigation readiness requires disciplined planning, thinking and a commitment to refresh policies and procedures to ensure changes in document generation, storage and management are always factored in. Without that careful pre-planning, the organization’s e-discovery procedures will not be defensible in court, exposing the company to added risks, sanctions, fines and potential obstruction of justice charges.

The amended Federal Rules of Civil Procedure (FRCP), which went into effect on December 1, 2006, had the same far reaching effects that governmental regulations such as the Sarbanes- Oxley Act (SOX) and the Health Insurance Portability and Accountability Act (HIPAA) had on businesses. In fact, the impact of FRCP may be even more widespread, since the requirement for an effective and disciplined electronic information management infrastructure is one shared by public companies as well as private businesses; in short, any business operating in the United States.

The demands of discovery require businesses to preserve any electronically stored information (ESI) that may be considered relevant evidence in a potential lawsuit. Fail to produce the requested documents and the consequences are severe, including monetary sanctions and potential charges of obstruction of justice.

Even ESI that was considered “not reasonably accessible” by the courts may be subject to discovery demands which, based on recent court decisions, are likely to continue to shift and change. Some companies operate under the misconception that having a document destruction policy in place is an adequate safety net. A basic “do this, then this” approach is not suitable since the legal requirements for document retention can vary widely from department to department. Finance teams, for example, are required to keep certain securities and filing document for a given number of months. And, perhaps even more challenging for companies to navigate is the onslaught of new technologies that are changing the very nature of documents—how they are created, accessed, used and archived. Additionally, the court’s view of reasonable or acceptable data management and retention policies is not a constant, or set in stone. It is changing as new technologies and processes come into use.

Companies today face a daunting challenge in simply keeping up with technology advances and understanding how those changes impact their litigation management processes. In the past, discovery was comparatively simple and straightforward: Ask for documents, get documents on paper. With rapid technology advances dramatically altering the landscape the need for Records Information Management (RIM) is ballooning exponentially. All employees within a company need to begin to understand this—and act accordingly. Much of what will likely become relevant discovery in the future will not, cannot, or should not be printed. Web 2.0, user-contributed data-driven sites and a host of other new technology solutions foster an environment where the data is more fluid or dynamic than ever before—yet that ephemeral data is still discoverable (see sidebar for the latest.)

And, just when a company has its litigation readiness policies in place, technology advances change the landscape again. New applications, including user editable websites (such as wikis), web blogs and instant messaging (IM), Twitter, Facebook, and groupware applications are changing the nature of what is—and is not—discoverable data. Meta data (or data about the data), for example, is the type of ephemeral data that could be required by the courts to produce, yet remains challenging for companies to track, preserve and archive.

Like crisis management, the success (or failure) of e-discovery planning will affect the entire organization. The process cannot be isolated or contained within the company’s legal (or legal and finance) teams. The discovery tentacles stretch into every area of the organization—and can quickly put a halt to day-to-day business operations. The pervasive nature of e-discovery, coupled with the rising levels of risk many corporate boards will find themselves in, warrants a senior team member from each of the company’s core functional areas may need to be actively engaged in the planning, testing and program refining process.

In recent years, closer integration of legal and technology teams has led to the adoption of innovative technologies that are transforming the way teams work, manage work product and respond to pressing legal issues. The next major challenge is for legal and IT to collaborate with other functional areas within the organization and work together to identify core legal and business processes that could help streamline the processes associated with document creation, management, and recovery. Providing the tools is a step forward. Streamlining the processes and supporting those refinements with the proper technology is a more integrated or holistic—and effective—way to approach the challenges.

Moving to a more integrated approach to litigation management—and by extension, the discovery process—will require corporate counsel to adjust their practices and adapt. They must collaborate, understand the technical aspects of the process and anticipate shifts in the landscape. Perhaps more importantly, they must demand the same from their outside counsel and their discovery partners.


Redefining the Document—and What is Discoverable
A core part of the challenge ahead hinges on the fact that the accepted term “document” is dated and conceptually misleading in context of litigation readiness and electronic discovery issues. Collection and review of voice, video, databases, and Internet-based communications all come into play. When addressing these types of data, the average person’s concept of a document--something that may be printed, read, and held in a person’s hand--begins to blur. Now companies need to tackle a wider (and ever expanding) set of data as part of the discovery process.

Although expanding the legal definition of a document to include electronic data creates the obligation to produce that data as part of discovery, courts offer no guidance on how that production should be carried out. It’s not surprising that the approaches and methods used to produce electronic data for discovery vary radically. With paper documents or even word processing files, the definition of document was clear and contained. The document was started, worked on, saved. There was a linear progression or structure. Adding one level of complexity—information about the document’s lifecycle—was still manageable. The challenge for companies today is that familiar structure no longer fits digital data, creating immense records management challenges.

Technology: Simplified Complexity
Exactly how new, more ephemeral data sources impact records and litigation management is not always at the forefront of the minds of those who select, pay for or implement new technologies like instant messaging (IM), collaboration software, data warehousing, ISP-hosted e-mail, and cloud or web-based applications. While each new solution presents an opportunity for improved personal productivity and corporate efficiencies, it also raises challenges (some still untested) relative to litigation readiness and e-discovery processes.

Issues relating to data dissemination and archiving are coming the forefront.

• How do you archive when the data is “live” and changes by the nano-second?
• How can data capture and regular deletion policies be enforced when employees begin saving emails to their local inboxes?
• How do you control the location of data with pervasive use of thumb drives, micro drives and other devices that enable employees to take data home, on the road—wherever and whenever they need to?

Some businesses are employing biometric devices (such as fingerprint recognition systems) to help control storage and transporting of data—but those devices are costly and add another layer of complexity for users and the IT teams supporting them. This is just the start of the IT / litigation readiness chasm. Oftentimes, since the consequences are still unknown or uncharted, engaging in a cost / risk analysis with IT staff and governance, risk and compliance (GRC) team members does not happen.

One of the key factors adding to the technology tangle is simply too much data—and too much of it being stored because the cost to do so is low, prompting companies to “just store it” rather than systematically review and purge. The reported average storage capacity of a company’s Windows NT servers is 43 terabytes—if those stored documents were printed, they would stack over 800 miles high. From a litigation readiness perspective, this data can begin to feel like dead weight.

New Direction
As with most complex business processes, the first step toward creating and documenting a streamlined, holistic approach in a discovery playbook is to document a detailed understanding of the current state. This is a fundamental part in shifting from a reactionary mode (or a crisis management mode every time a major litigation matter hits) to one in which a planned process is followed. It is also a fundamental step in developing a defensible process that is tailored to the business.

This initial step is a substantive one—and one that an increasing number of in-house teams have dedicated time to addressing. In a recent survey of over 350 corporate counsel, approximately 40% rated themselves as “proactive” when it came to litigation readiness; yet, only 26% acknowledged they had a discovery response workflow in place. Less than one-third (29%) believed they had appropriate processes in place for collecting potential evidence in a legally defensible manner.

The costs and time associated with computer based discovery can be greatly minimized with prior planning—upfront investments to conduct an audit, outline the processes and roles and responsibilities of key players will yield tremendous benefits over the long run. A clear first step for companies interested in improving their litigation readiness include:

AUDIT:
• Assess current approaches / sources for data generation/document creation, management, and retention. Document and map the current state -- what records are retained, what policies are in place, what systems and data structures exist (and where), what processes are employees following, what is being enforced—and what is not.
• Identify the key players and decision makers.
• Identify different levels of risk the current litigation management approach presents—and what actions and investments could be made to help mitigate those risks.

READINESS PLAN
• Define roles and responsibilities.
• Create a lexicon or terminology to ensure all involved have a common understanding of terms, decisions, risks.
• Set forth proposed policies and annotate with the team’s rationale; how were these decisions made, what trade-offs were considered
• Map out how the new / proposed records retention practices should be applied companywide
• Ensure proposed approach conforms with international standards
• Set forth an update or refresh plan to ensure plan (including all policies and procedures) remains current with technology advances and changes as well as changing court definitions on what is discoverable, and what is not.

Companies do not operate blind today when it comes to crisis management—virtually every Fortune 500 corporation has a plan in place that is reviewed and refreshed periodically. The same diligent planning should be applied for litigation management, which has the potential to escalate into a costly, cumbersome and potentially high risk exercise for the organization. Establishing best practices for data retention and preservation can help legal and IT teams (and the rest of the organization) address issues proactively. A constant refresh to ensure that policies and procedures are taking in to account technology advances as well as newly defined court interpretations of what is discoverable is an absolute must in order for a company to ensure its litigation readiness.


Litigation Process Reengineering

Business process reengineering (BPR) is process that corporations began to adopted in the 1990s—and one that continues today as teams assess their current practices and seek radical redesign of processes, better use of advanced technologies and more focused use of human capital.


A core component of business process reengineering is the active participation of cross-functional teams.


“By redesigning processes, by measuring and managing them, and by organizing around them, companies are able to achieve unprecedented and sustainable improvements in operating performance.” BPR approaches and thinking are new to many legal teams—yet, it is at the heart of what litigation readiness processes demand. Some advice from the “father” of reengineering, Dr. James Hammer (who passed away in Summer 2008) underscores the importance that BPR can play enterprise-wide. Remarks from the bestselling book “Reengineering the Corporation: A Manifesto for Business Revolution” that Hammer
co-authored with James Champy underscore the importance for all in the corporation to get involved and commit to a different way of working.

“I would advise anyone considering a reengineering program to confront early on the tough business decisions that such a transformation demands. Don’t assume that problems will get swept under the carpet or someone lower in the organization will make decisions for you. This ‘reengineering thing’ will not just happen. You have to vigorously attack the business issues and then actively demonstrate leadership from the top down.”
“Reengineering is not gone…the truth is, it never went away. Real businesses have been using reengineering assiduously to transform vast segments of their operations.”

Wednesday, November 11, 2009

The Future of Search (and the practice of law?)

Yesterday I attended the Ediscovery: Future of Search seminar sponsored and put on by Capital One. It was at their Northern Virginia headquarters and moderated by a slew of their in-house counsel.

To be honest but for the participation of Jason Baron and Ralph Losey I more than likely would have skipped this seminar. After all there are so many “ediscovery” related seminars that I find myself reacting in similar fashion that GCs do when they hear the word “ediscovery” – I shutter or roll my eyes with exhaustion. Nevertheless, this seminar was valuable and had nuggets of useful information and new perspectives. If a participant were new to the practice and process of ediscovery this seminar would have been invaluable to their education.

The highlight of course was the new video that Ralph and Jason premiered. If any of you are familiar with the “Did You Know?” videos that have been viral on the web and in many presentations over the last few years you will know what this may look like. In short, they pieced together some rather intriguing and thought provoking facts, comparisons, and predictions about where the future of data and search are going. Ralph had to manually manipulate the slides as this was a beta-version so to speak but I know that in talking to him later in the day he plans to have this as a self contained movie in short time. I believe their target release date is the next LegalTech in NY.

Back to the seminar. The range of topics and panels encompassed the spectrum of ediscovery and search. Some of the highlights included having Ellen Voorhees of the NIST explain the TREC project and some of the key findings and methodologies. Also, Judge Paul Grimm gave the lunch speech and discussed his 5 P's of effective search (Preservation, Processing, Privilege, Production, and Proportionality).

One of the more enlightening panels was the one moderated by Heather Bryden – Capital One’s ediscovery Director in which she asked questions to a panel of four law firm partners. The topic was on how to partner with IT and outside counsel to search ESI but the conversation veered into other areas of the processes and practices of law firms. Of note was that underlying sense that no one really wanted to address the realistic aspects of conducting a powerful and efficient search on data that would more than likely represent a significant reduction in time the firm would spend on review and search itself. The discussion had an academic feel to it rather than practical. I do not fault Ms. Bryden for not pushing on this and I do not necessarily fault the partners for avoiding this aspect. It was however a classic illustration of the difference between academic pursuit of change and practical pursuit.

It is an on-going debate that is thankfully growing in volume as to law firms’ incentives and interests in changing or getter better at processes at all. LegalOnramp is filled with this discussion and it is often brought up at Sedona Conference meetings too. Firms may talk to the talk but few are walking the walk.

When I mentioned this to Jason Baron in an email after the conference he reminded me of the Darwinian analogy to this. That is that the firm that looks to automate and deliver a quality process will win over the competition and the “old dinosaurs” at the firms who wish not to change will lose. Jason also pointed me to the Sedona Conference paper on Achieving Quality in the Ediscovery Process, specifically the executive summary. In part it states

“The legal profession is at a crossroads: the choice is between continuing to conduct discovery as it has “always been practiced” in a paper world — before the advent of computers, the Internet, and the exponential growth of electronically stored information (ESI) — or, alternatively, embracing new ways of thinking in today’s digital world. Cost-conscious clients and over-burdened judges are demanding that parties now undertake new approaches to solving litigation problems.

An excellent point to be sure. My problem is that I cannot wait for the glacial pace of evolution to take place. I am seeking change now and looking for others to do so. In the meantime I will continue my pursuit and also celebrate the likes of Bartlit Beck and Adams Holcomb – two firms that are not waiting to become extinct – they have already evolved.

Monday, November 9, 2009

The Legal Transformation Study - a framework for dialogue

In February 2008 a group of legal industry experts representing many facets of the profession published a collective work entitled “The Legal Transformation Study (‘LTS’).”* The aim of the LTS was to apply a future planning method called scenario planning to the legal profession and its ongoing evolution. Through the use of this scenario planning LTS explored what the legal profession could look like in the year 2020.

The substance of the LTS was based on interviews, research, analysis, and market findings as contributed and provided by many reputable individuals. Some of the participants included the likes of Jeffrey Carr of FMC Technologies, Mark Chandler of CISCO, Ward Bower of Altman Weil, Ed Breen of Tyco Int’l, Fred Krebs the ACC President, Justin Miller of DuPont – among other prominent opinion leaders and practitioners.

In early 2008 I was one of the first presenters of this material and its findings at a Corporate Responsibility Officer conference at the Union League Club in NYC. It was there that we began to witness the LTS becoming a useful tool to frame many of the current issues in the evolution of the legal industry. What we also realized was that the LTS would be relevant for years to come as we progress towards the year 2020 – the end date of which the LTS contemplates. From that moment until the year 2020 (and most likely beyond) the LTS would be used as a guide to not only frame discussion on change but also guide the dialogue and track the evolution of the legal industry. In short the LTS gave us a means to discuss change with our colleagues, clients, customers, and peers that expanded beyond mere guesses or conjecture.

In the coming weeks I will be discussing the LTS and its findings here. Rather than simply repeat and copy what is found in the study, I hope to explain the content in a way that engages the reader to think about what signs they see in the industry that could impact the LTS - validating or invalidating its scenarios as time progresses. From this I hope to contribute to the and findings of just how the legal profession is changing and perhaps not changing.

Another hope is that I will be able to coax or bribe others to contribute here or on their blogs or in other mediums. The LTS was a collective work not one person’s opinion and so it’s discussion and dialogue ought to be as well.

*Disclaimer: I am an Expert Contributor to this Study as well as one of the initial Sponsors.