Vox stellarum

By | 18th November 2010

The party season is upon us already. Having concluded a week of festivities celebrating my birthday recently and fresh, if that is the right word in the circumstances, from the Millnet 15th birthday party at the top of the Millbank Tower with fireworks courtesy of the Mayor of London (thanks Boris!), my thoughts are increasingly turning to Christmas.

I can well imagine that many of you will groan at the thought of Christmas when it is only early November and I must admit that I agree with you whole heartedly. When I worked in Spain in the 1990s public displays of Christmas decorations and trees were reserved for the two and a half weeks leading up to Christmas Day itself following the double public holiday celebrating Constitution Day and the Feast of the Immaculate Conception at the beginning of December. There was no question of Christmas trees displayed in public places in September (I really did see one in a hotel reception in September a few years ago!) nor carols wailing out from tinny sounding speakers at all the weary shoppers in the malls.

I would not want my readers to think that I am all bah humbug in my Scrooge like mutterings on this page because I love Christmas but it often seems to come too early in this country and by the time December has arrived many of us are heartily sick of it, which is a great shame in my view.

No, the real reason for mentioning Christmas is that I feel an edition of my vox stellarum or Old Holloway’s Almanac coming on in which, for better or worse, I look at the trends emerging in the world of electronic disclosure and attempt to predict what is going to become important in 2011. Not that long ago I wrote about likely developments in the world of technology and e-discovery  [Squid and Cream, 2nd Sep, 2010] and thought I would get ahead of the game this year in setting out my thoughts about the coming 12 months.

Meeting regularly with litigation practitioners and working routinely with many of the significant technology developers in this field we are in a unique position to comment. In no particular order, therefore, here are my thoughts for 2011:

  • The introduction of Practice Direction 31B and the accompanying Electronic Disclosure Questionnaire is already providing real impetus for lawyers to address their approach to e-discovery. Solicitors are asking for seminars, barristers want to discuss the implications and Lord Justice Jackson’s exhortations for lawyers and judges alike to train themselves up in the subject is on many lips. The process has been assisted by the familiarity most lawyers now have with the growing number of judgments in which e-discovery issues have been considered (a summary of these can be found in the ‘resources’ section on the right hand side of this page but the obvious one to mention is the judgment of Master Whitaker in Goodale v Ministry of Justice). If that was not enough, the recent Pennsylvania case of McMillen v Hummingbird Speedway Inc with its ruling on the discoverability of log ins and passwords to social networking sites should have set the pulses racing.
  • Corporate clients continue to be cost sensitive when it comes to e-discovery and litigation generally. They are scrutinising law firm invoices more closely and expect law firms to adopt cost effective approaches utilising the latest technologies and outsourcing as appropriate. Increasingly, law firms will want to ensure that they present a coherent strategy to their clients for the efficient and cost effective handling of e-discovery and this will entail for most a better understanding of the problems e-disclosure can cause and the solutions which are available.
  • Off-shoring has been on everyone’s radar for some time now. Demand is growing steadily, if not spectacularly, largely as a result of the demand to reduce costs. However, many firms which have off-shored review services have had negative experiences as is shown by our recent survey [see LPO survey feedback, 24th Aug, 2010]. I believe that there is an alternative potentially hybrid approach whereby UK lawyers better leverage technology to work ‘smarter’ rather than off-shoring inefficient work practices such as linear chronological review. Our clients tell us that offering lawyer led review here in the UK at a competitive price is something they will readily embrace and we have already recruited a small team of legally trained interns for this purpose. I will have more to say about this in due course and we will be talking to our clients about this offering over the course of the coming weeks and months.
  • The latest technologies will gain wider acceptance and ultimately will start to be ‘proven’ in court. These will include automated coding, conceptual search, clustering, relevance etc.
  • Keyword searching audio files and even video will become increasingly common and proportionate. This will particularly apply for instance in the financial services sector where regulation generally requires all telephone conversations to be recorded and stored. This will also apply to CCTV recordings.
  • Arguments about what is or isn’t proportionate are shifting. Firms that don’t stay abreast of the latest technologies / services and pricing may find themselves at a tactical disadvantage where for instance they have opted on the basis of proportionality to ignore sources of potentially relevant electronic documents such as back-up tapes. As my colleague James Moeskops has remarked, “the fulcrum of proportionality is shifting rapidly!”
  • Justifiable inefficiency is dead! Innovative leaders within law firms in the UK are actively putting together strategies to gain competitive advantage which effectively requires a different approach to how their firms provide litigation services. They recognise that the ‘old’ way of approaching review and document management is high cost and inefficient whilst also appreciating that these services can constitute up to 40% of the turnover associated with billings for litigation and other forms of contentious legal advice. Accepting the possible loss of such revenue and continuing to provide an excellent service to their clients is the circle to be squared here. What is clear is that the old inefficient ways cannot be sustained – you will have to compete to survive.
  • Large corporates will increasingly take their e-discovery / litigation readiness capability in-house. Many of the software technologies used by litigation support service providers are also being acquired by corporates (such as Nuix and Autonomy Introspect). The ultimate objective of general counsel will be to ensure that their external law firms are handed the smallest possible volume of highly relevant documents (thereby reducing billable hours from law firms). I do not take this to mean that technology is taking over the roles previously filled by lawyers, but I do think that proper and timely use of technology will enable the lawyers to get on with what they do best ( and indeed are trained to do) which is to assess the issues and advise their clients accordingly. The technology is merely a tool and lawyers should not be frightened to us it. In many cases, they will gain advantage by doing so. Technology is making “generalist” legal skills redundant.
  • Email and other data archiving technologies will become increasingly important in enabling clients to manage the burgeoning volume of electronic documents. The prospects for this market including consulting services around litigation readiness, risk mitigation, data retention policies etc will see the largest IT services companies entering this market (IBM, Microsoft, Dell, Oracle etc). Readiness awareness / risk management means clients will be better prepared for disclosure.
  • Consulting and large accounting firms are starting to have a material impact on law firm hourly rate revenues by operating ‘upstream’ of the law firm in relation to investigation, risk management etc consulting and processing services. It would not be surprising for, say, a Big 4 accounting firm to partner with one of the leading LPO firms to provide e-discovery through to first pass review services supervised by appropriately qualified lawyers (Epiq recently launched a UK based outsourced legal review service. Huron, which recently bought Trilantic, are expected to do the same and, as stated above, we have already recruited a team of interns for this purpose).
  • Insurance companies who are ultimately incurring the e-discovery costs on many matters will eventually realise that they either need to appoint a preferred panel of e-discovery technologies / vendors or otherwise select for their panel only those law firms that demonstrate that they can undertake e-discovery efficiently.
  • There will be further consolidation and/or failures in the UK litigation support market. Firms most at risk are those that rely on relatively high pricing levels for software based processing and / or hosting services and those that don’t have a critical mass of business across a spread of clients and / or services. Although there will be buy outs (such as Grant Thornton’s recent acquisition of Legal Inc), in general I anticipate that large firms are unlikely to purchase smaller ones deeming it tactically preferable to poach staff and adopt an aggressive stance to pricing.
  • Hard copy requirements will persist for the foreseeable future. As the need for copy, print and scan diminishes it will become uneconomic for law firms to provide the services in house and they will therefore outsource to firms like Millnet or to facilities management firms (or a hybrid which Millnet proposes to offer as a service in the near future).
  • Law school graduates will expect to work for law firms that utilise the latest technologies and approaches to e-discovery. It will be considered detrimental for a junior lawyer’s career to be primarily focused on hard copy document management and review tasks such as manual sorting and copying, shuffling paper between files, reading substantially irrelevant documents, drafting lists or creating hard copy bundles.
  • The need for / cost of forensic imaging services will diminish as lawyers become better informed as to the requirements / relative merits of imaging and it becomes faster and more cost effective to index and extract electronic documents directly from backup tapes or email archives repositories.
  • Forensic, early case assessment, e-discovery processing and LSP software features will increasingly converge. We are reaching a point where the underlying features are substantially identical. Quality of service, price and usability of the user interface will be more important than features.

We are already seeing some or all of these things happening and my guess is that the process has some way to go. The message is clear: those lawyers who do not accept the need to offer their clients innovative solutions at a cost effective price will face substantial future difficulties.