Technophobia alive and well and living offshore

By | 2nd July 2010

In the June 24th edition of The Economist there appeared an article entitled “Passage to India”.

This was not a reference to the E M Forster story written in the 1920s, which uses the trial of Doctor Aziz accused of raping Adela Quested on a visit to the Marabar caves to produce a trenchant commentary on the sometimes awkward relations between India and the British Raj some quarter of a century before Independence. This was a story about the growth of legal outsourcing with a subsidiary strap line proclaiming “Companies and law firms are turning to India for cut price legal services”.

Much has been written recently about the growth of legal process outsourcing and in a piece entitled A cunning plan  [7th April, 2010]  I mentioned that, on the back of outsourcing legal work to Indian lawyers at CPA Global thereby saving 20% of its legal costs, Rio Tinto’s general counsel Leah Cooper had jumped ship to join CPA as its strategy director.

A number of high profile outsourcing contracts have been signed by law firms with household names such as CMS Cameron McKenna, Osborne Clarke and Simmons & Simmons. The LPO industry in India is predicted to grow from $146 million in 2006 to $440m this year and $1.1 billion by 2014.

With Indian based lawyers charging around $50 per hour for their services against the $400 charged in this country, concerns about quality and confidentiality appear to have taken second place to considerations of cost and cost cutting. Equally, others have raised the fear that lawyers in this country will never learn to “cut their teeth” if the work they traditionally do is outsourced to Delhi. Leah is dismissive. She says “I hear that every day and my response is I didn’t learn a thing as a baby lawyer digging through boxes in a storeroom. We may have to rethink how our lawyers are trained.”

Despite my status now as a non practising lawyer, I retain a considerable affection for my chosen profession and it has been one of my enduring concerns that many lawyers are failing to keep up with the fast moving world of e-discovery, the changes in the practice directions, the new cases and the improving technology which can assist law firms to retain their influence over the course of a piece of litigation for a client. Too often, I fear, the lack of expertise or knowing where to turn for help is in danger of driving the client to bypass the lawyer and turn to an expert, with the result that the lawyer only gets to see the papers after decisions have been made about review.

Leah may well have a point when she says we will have to look at how lawyers are trained. Lord Justice Jackson also urged the profession to have some training; echoing Tony Blair’s mantra of education, education, education!

It must be legitimate to ask how long will clients be prepared to go on paying for lawyers to educate themselves at the clients’ expense?

But what do I make of this apparent rush to outsource? I am not sure how widespread it is despite the high profile announcements and I am going to see if I can conduct some research in the marketplace to see how deeply law firms are engaged in this process or at least are thinking about it.

In the meantime, I wish to strike a note of caution! Indeed I am prepared to be a little provocative.

It will doubtless be argued that there are considerable cost savings to be made by using the undoubted expertise of well trained lawyers based in India where the costs of providing the infrastructure to support them is a fraction of the same cost in the West. In our current economic straits there is irresistible pressure from clients to drive down the costs of legal advice and if law firms can deliver aspects of the preparation of a litigation case at a reduced cost by using Indian based lawyers, everyone is a winner. It creates jobs in India and the law firms can present a lower bill to their clients. This in turn will satisfy the bean counters back at the ranch and the clients may even be more inclined to contemplate other and better litigation, if they can see it is not too expensive.

But is this all an illusion? What is actually happening? Why is it thought to be a sensible move to spend a good deal of time and therefore money instructing lawyers in a different jurisdiction to understand enough about a complex case and the issues involved only for the bulk of the review to be re-exported back to the UK for an experienced and expensive lawyer to carry out a review?

Let’s imagine a typical scenario. A law firm is consulted over a piece of litigation which involves a considerable amount of electronic documents. When I say considerable I do not mean that the case has to have terabytes of data but it should have more data than can be comfortably handled manually using paper. The partner and associate involved have to decide how they are going to advise the client on the strengths and weaknesses of the case early on so that a strategy can be devised either to settle the case as soon and as cheaply as possible or to defend the case robustly ( with many other possible outcomes in between!).

They are tempted by what they have heard about legal process outsourcing and decide that they should engage one of the LPO companies to assist. In order to provide instructions to the outsourcing companies the lawyers have to understand enough about the case to ensure that sufficient information can be given to the lawyers in India to carry out the review exercise efficiently. Assuming they do so the lawyers in India then return the reviewed documents to the instructing solicitors, who then have to conduct their own review of what has been reviewed together with the next stage of disclosure or witness statements, etc.

It is conceivable that this process will result in a saving of cost but it is also possible that unnecessary extra costs will be incurred.

What if the instructing solicitors were to work smarter in the first place? They might not need the outsourcing lawyers at all, they could deliver results to their clients more quickly and they will dramatically reduce the risk that their client decides to cut them out of this early pass review process altogether next time round.

The technology to enable lawyers to do this is here. It is readily available and there are people out there willing to train lawyers to use it.

Let me give you a real live example from our recent experience!

A law firm identified around 70,000 documents which were responsive to a series of agreed keywords and was faced with the problem of how to review these in a two week period. At a cost of approximately £7,000, Equivio Relevance was used to prioritise the documents for review with 1800 documents selected as a statistically significant sample. The remainder of the documents were ranked from 0 to 100 where 0 was totally irrelevant and 100 was totally relevant. The lawyers decided that they could skim read around a third of the total that fell below the 30% relevant ranking, leaving time to carry out a more detailed review of the higher ranked documents. Despite these decisions, it was clear that there were insufficient resources to complete the task in the limited time available. It was agreed that the review would be outsourced offshore where 30 reviewers were engaged on the task at short notice. Even so, the reviewers only managed to conduct a first pass relevance review of half of the documents at a cost to the client of £15,000. The process was much slower than anticipated on account of differences in understanding the issues offshore and the fact that there was no dedicated team of lawyers sitting around carrying out the review together and able to discuss issues as they arose. In the event, most if not all of the documents that were reviewed offshore needed a second and in some cases a third pass review to resolve issues of consistency and privilege. The net result was that the UK based lawyers ended up reviewing pretty well all the higher ranked documents at least once and 8 people were involved in the process! I can guess at the expense but have no actual figures to share with you!

The conclusion to be drawn in that particular case is that outsourcing provided little or no benefit and no savings to the overall project.

This is not in any way intended to denigrate the process in general but serves merely to illustrate that not all outsourcing is automatically the answer to your prayers. In that particular case, an efficient application of the relevant technology in the UK and a review based on the results of that application would have cost significantly less than the outsourcing and would have delivered a better and more reliable result.

There is a danger that the recent increase in LPOs is replacing one problem with another. The legal profession appears to be overcoming its xenophobia but is in danger of not overcoming its technophobia; xenophobia in outsourcing to another jurisdiction with all that may mean in terms of quality control and confidentiality and technophobia in the sense of an unwillingness to get to grips with the technology available or engage with an expert to help them master it.

Sadly if the technophobia is not overcome too there is a real risk that clients will no longer be prepared to pay lawyers to do something at which they are not expert and will engage others in the process thus cutting out the lawyers from a vital part of the work they traditionally do as litigation advisers and managers!

In short, xenophobia, pretty well sorted! Technophobia, not much progress yet and danger signals ahead!