How can we do this differently?

I am sent a fair number of press releases, although many of those who know I am interested in them seem to think that I acquire my information by some kind of intuition. Many of the PRs I do get add little to the sum of human knowledge. Many more, themselves worth following up, join a queue whose head they never reach. It is all a matter of timing. The upside to my refusal to do copy-paste journalism may be more reflective comment, but there are only seven working days in the week and a press release needs a wider context than merely its own news.

As I mentioned in a post last week (The right combination of skills at the best possible price) H5 dropped a press release into my InBox as I was writing an article about litigation lawyers dividing up cases and passing on the functions which they either do not do very well or cannot do cost effectively (or “cheaply” as the client would put it). I had in mind the marketing collateral, as well as the working benefits, of an approach which shifted the focus away from charging rates and towards placing tasks where they could be done best. The immediate context was outsourcing, for example of litigation coding and first-pass review, but I made the point that such a division of labour may be a marriage of equals rather than merely lawyers hiving off the unprofitable stuff and sending it down the food-chain. The H5 press release related to just such a marriage of equals, in this case between H5 and O’Melveny & Myers.

I will come back to the specifics of that in a moment. The marketing rationale is this: the clients cannot afford to employ expensive lawyers to do mundane tasks. They will pay well, even now, for good legal advice, for specialist skills, and for the strategic and tactical input which is the traditional role of the lawyer and which lawyers are good at. To that end, they will pay the lawyers to read the important documents, but they are increasingly resistant to paying them to just to find the damn things. Technology providers may not know much law, but they are good (some of them, anyway) at finding data. They, however, do not know what to look for. It seems obvious that the two sets of experts should join forces.

This happens all the time on an ad hoc basis. The lawyers get a new matter, realise (not necessarily immediately) that they cannot sensibly get their arms round the data on their own, and retain outside help. That may be both in the form of technology and in the form of hiring cheaper hands than they have on their own payroll. The problem is not that this does not work, but that each such exercise begins as if there had never been one before. Time and money drip through the floorboards whilst the formalities of the relationship and of the division of labour are established. Lawyers are pretty good at falling into teams and allocating rules and tasks between themselves. The mechanism of adding a barrister (to take a UK example) to the team is second nature. It is when they need other third-party help that the cogs seize up. It is this which is behind my oft-repeated suggestion that solicitors form alliances which enable them to bring litigation support services on board smoothly and without waste of time or money.

It was into this context that news of the alliance between H5 and O’Melveny & Myers LLP fitted neatly. Press releases are constrained within certain conventions and, however well drafted, rarely tell the whole story. I spoke to Richard Goetz , head of  O’Melveny & Myers’ 180-strong litigation group in Los Angeles, and Nicolas Economou, CEO of H5, whom I met in New York in February. I wanted to know how the arrangement came about, how it works in practice, and what reactions had been to the announcement.

Richard Goetz said that the initiative had come from O’Melveny and Myers. They had found H5 after months of due diligence and had worked with them on actual document productions. Their litigation speciality encouraged them to be thought-leaders and, as litigation costs mushroomed, they had asked themselves “how can we do this differently?”. They wanted an approach which would eliminate multiple passes at human review and achieve significant cost reductions with accuracy at least as good, if not better, as they (and the court) expected from traditional means.

The reaction from clients had been positive and the firm had fielded many requests to find out more as to how this approach will solve the problems. Nicolas Economou said that H5 were pleased with the reaction which O’Melveny’s clients had shown, and with the positive comment in the legal and technology press which seemed to suggest that the combination of skills made sense.

He made the same point as I have been making – that there are two different pools of expertise and that bringing them together on an ad hoc basis – that is, the way it is done not the principle – very often felt like reinventing the wheel. Often he said, there was little institutional memory in law firms or at their clients as to how things should be done. A company in H5′s position, performing the same functions multiple times in several cases, had a good institutional memory.

I suggested that this was a working example of Richard Susskind’s prediction that the provision of legal services would fragment into multiple roles and functions. Richard Goetz knew of Susskind’s theories but did not think that The End of Lawyers? (the name of Susskind’s book on the subject) was in sight, at least for firms with a practice like O’Melveny’s. There would always be a key role for lawyers, he thought, but large parts of the litigation process are not the practice of law and it was essential to think through how these might best be done.

Nicolas Economou, looking ahead five and ten years, thought that H5 would still be working under the direction of lawyers. The lawyers who will win, he said, will be those who focus on their core competency, and H5 would provide the scientific expertise necessary for search which lawyers are not trained to bring to the task.

Richard Goetz thought that advances in search technology and the devising of more efficient ways of managing the process have the potential to widen the pool of companies willing to engage in litigation and the number of cases which they will fight. Companies are necessarily selective about the cases which they embark on, and increased efficiency will allow more claims to be made. He countered my reference to the possible end of lawyers by suggesting a different evolution — the upshot may be an increase in the number of cases which his firm is offered and able to take on.

This bullish reaction is a step up from the rather defensive arguments which we usually hear even from those who are committed to the efficiencies of technology. Many lawyers set their sights only on not losing clients. Richard Goetz is prepared to think in terms of winning new ones, and not just by taking them away from other firms, but by increasing the willingness of companies to bring claims which presently lie on the shelf because of the costs. Merely cutting the charging rates may seem attractive to the clients, but it has obvious downsides to the lawyers. Many, of course, will find it hard to contemplate passing part of the litigation process to third parties.

O’Melveny & Myers are clearly not approaching this as a mere outsourcing exercise. They are instead offering a package of complementary skills with clearly defined functions falling where they can be done best and most efficiently. It sounds pretty compelling.

You may perhaps, see this as offering no parallel with your own situation. O’Melveny & Myers operate at the top end of the litigation market, and the size of their engagements and the resources which they can bring to them, put them in a league which is rather different from most. I have said this before, but it bears repeating. I think that this approach scales down very well. A relatively small commercial litigation practice could combine with a provider of litigation services and market their joint and separate skills. The selling proposition is what you might call “the economies of cohesion”.

Collateral benefits pop up all over the place. If the lawyers have a tested resource on hand to deal with discovery, their own permanent headcounts can be reduced – they can staff to the mean rather than for the spikes. Like any other business, litigation software and services suppliers are generally willing to trade margins for volume, that is, to offer lower costs in exchange for a steady and predictable throughput. There is no hiatus whilst the lawyers get quotations, agree terms of business, and get to know their litigation support partners, because it has all been done, and works to a familiar pattern between people who know each other. A firm can play in a bigger league than its own resources would suggest – a small firm with a big case can choose big allies to whom running big discovery is everyday stuff.

Richard Goetz offers two particular messages, as I see it – first that selling any litigation practice requires an answer to his question “how can we do this differently” and second the optimism to think that the objective is to win new business not merely to hang on to what you have.

As I have said, Goetz talked of “several months of due diligence” before O’Melveny & Myers settled on H5. He had in mind a long term and formal arrangement, but law firms should obviously be picky about their choice of provider, even if only a one-off job is contemplated. You don’t have time to do that when the instructions are ringing in your ears and the data needs collecting.

The new relationship between O’Melveny & Myers and H5 lies at one extreme; sticking a pin in the Yellow Pages because you need help today lies at the other. In between, lies the opportunity to make friends with someone whom you will want on your side when the shit hits the fan (my apologies to those of delicate disposition, but that particular expression is unbeatable) or when aiming to show prospective clients that your service offering really is different.

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