Corporate legal departments today are under immense pressure to continually evolve, improve and deliver more with less. The annual budget fairies demand reductions in spend year over year while the size, complexity, and data volumes within many legal portfolios continues to grow at an exponential rate. Over 246 billion business emails are sent per day, and tools like Slack and WhatsApp are increasing potentially relevant communication. To appreciate this growth, consider that the average corporation has 70 cloud-based collaboration tools with potentially relevant information, and corporate legal departments are spending an average of over $1.2M on disputes for every $1B in revenue.
Organizations like Corporate Legal Operations Consortium (CLOC) have helped move the dial for legal departments in effectively dealing with suppliers of legal services from law firms to technologists. Despite this positive shift, the ongoing need for transparency, control, and technology-driven efficiency and co-innovation has never been greater.
Luckily, there is a silver lining for practitioners facing this seemingly Sisyphean challenge: You do not have to go it alone. Emerging technologies and novel partnership approaches are re-empowering legal departments and driving efficiency despite the increasing digital burden. From collaborative co-innovation to interactive client advisory panels, cross-matter transparency, trend analysis, and scalable price modeling that's predictable each year, there are resources a savvy practitioner can use to take back the wheel.
Data variety, velocity, and volume are skyrocketing at a pace that even the most cutting-edge corporate legal department is struggling to keep pace with. New applications are being introduced (often via shadow IT) at a shocking rate, presenting new data sources — and risks — that legal departments constrained by annual budgeting are unable to support.
Collaboration tools like Slack and new short-form communication like text, WhatsApp, and Microsoft Teams are fundamentally impacting how corporate citizens communicate — and they are just the tip of the iceberg in terms of new communication. Add to this dozens of ephemeral messaging applications (self-destructing or encrypted messaging apps), which were designed to obfuscate and reduce digital footprints, web-enabled devices (the Internet of Things or IoT) and social media, and you can begin to understand the scope of the challenge facing.
Thankfully, there are organizations that devote substantial engineering resources and funding to the defensible extraction and visualization of these emerging data types. Rather than reinventing the wheel, many large organizations rely on strategic partners who already have developed these capabilities. In the event there is not a solution to support a specific data type, corporate clients directly present the needs to strategic partners and work with them to develop bespoke solutions.
The co-innovation does not stop with weird data types. Organizations are also collaboratively developing solutions for new matter-specific challenges they face. From post-breach personally identifiable information (PII) identification, parsing, and notification to privacy-driven needs resulting from GDPR and CCPA information requests, organizations are working hand-in-hand with key partners to find efficient ways to manage novel data requests evolving from new privacy and cyber obligations.
The virtuous circle of interactive and dynamic feedback
Much in the way that corporate legal departments need not go it alone, the same is true for their strategic partners. For meaningful advancements in user-centric technology and processes to be developed, organizations must foster a virtuous cycle of feedback and development with their strategic technology partners. Engineers and technology firms are reliant on and desperate for meaningful end user feedback on what works, what stinks, and what solutions they wish were in the market. Generating this dynamic involves an investment of time and a willingness to share the messy truth.
To foster this candid feedback loop at DISCO, we work closely with top users who have joined our Product Advisory Council (PAC), in regular meetings that include our executive team, DISCO legal practitioners, and product development. Now before you say “every firm has a client advisory group” and quit reading, what we have developed is somewhat different. Rather than coming to this meeting once a year and showing all the new widgets our engineers have been cooking up over the last several months looking for “oohs” and “ahhs,” we instead roll up our sleeves and hear what is wrong, what needs to be fixed, and what we wish was in the DISCO platform.
Rather than looking for a pat on the back, our team seeks candid, actionable insights that the PAC will hold us accountable for in the next meeting. From each PAC meeting, we have a list of “to-dos” prioritized by the group at large and woven into not just the roadmap, but the intermediate feature and modification efforts.
The resulting modifications and developments must be brought back to be battle-tested by the PAC in a timely fashion. This prevents our engineers from making solutions that are elegant from an engineering perspective but impractical for legal practitioners and allows us to quickly pivot as market needs evolve.
Appropriate alignment of objectives
There has historically been a foundational misalignment of objectives between many outside counsel, their similarly aligned business partners, and the enterprises that are footing the bill. A model built on volume of time spent and billed in lieu of outcome or task has created a perverse incentive to avoid efficiency, defer adopting better technology, and to bill at a high rate to drive up profits per partner (PPP/PEP).
This is not to say that any law firms were unethical or intentionally harming their clients, but rather that there were no external pressures to drive efficiency (like adoption of AI for low-value, repeatable tasks) or, alternative pricing models.. Partners and associates were afraid of innovating themselves out of a job. Thankfully, the 2020 Report on the State of the Legal Market: Fundamental Shifts Are Disrupting the Legal Market indicates the tides have shifted in favor of correcting this misalignment. Competition, efficiency and innovation are now key drivers for outside counsel.
Law firms are now being held to the same rigorous standard as any other corporate service provider, thanks in large part to the burgeoning role of legal operations and increased competition between firms. Outside counsel is increasingly adopting and leveraging technology to automate the mundane and reduce time and spend to evidence.
Budgeting remains an ongoing challenge facing in-house legal departments of any size that frequently have matters requiring ediscovery services. Traditional models of ediscovery pricing, modeled in the graph below, are both very lumpy and heavily front-weighted in a matter. This poses substantial problems especially when a major matter arises close to fiscal year end.
At DISCO we rely heavily on an all-inclusive, flat alternative fee model to ensure that our team is incentivized to find evidence in the most efficient manner possible, leveraging all of the industry-leading AI within our suite of solutions while providing predictable, easy-to-budget ediscovery cost points. Adopting this more predictable model allocates cost nearly evenly across the duration of a matter, allowing corporate counsel to more effectively budget and plan for discovery-related costs on an annual basis.
This also passes on significant benefit to the corporate client in the event a matter settles early (in particular pre-review phase) because the major cost overlay is not front-weighted. In traditional models, an early settlement would still incur the bulk of cost associated with collecting and processing data, whereas the flat-rate approach disperses the spend across the duration of a matter evenly.
Control the data sprawl and mitigate risk
Data sprawl is a very real and growing challenge facing enterprise today. From internal IT infrastructure to cloud-based collaboration and short-form communication tools to the five or fifty outside counsel that may make up an in-house legal department's stable of advisors, understanding where your data and the attendant risk contained therein may lie is no small challenge. Within the ecosystem of outside counsel, you also have to consider the handful or more service providers engaged by each firm that may be touching, interacting with, and potentially hosting your data.
One method of mitigating data sprawl deployed by some in-house counsel is to remove their outside counsel from physically hosting, transferring, or controlling their data. Rather than sending an FTP or encrypted hard drive to the law firm, corporations may engage directly with their technology partner, reducing the amount of data transfer in a matter and streamlining the workflow to get data processed and live in a review platform.
One benefit to this approach is increased visibility on a multi-matter basis while at the same time mitigating the risk of breach posed by “on the move” data. When you consider that in the first six months of 2019, over 3,813 breaches were reported, exposing over 4.1 billion records, at an average cost of $3.9M per breach, the incentives to mitigate cyber risk are immense. Breaches in the last few years at Am Law 10 firms and Big Four consulting firms highlight the vulnerability and lack of preparedness at even the most venerated organizations within an enterprises legal service provider ecosystem.
Reduce, reuse, recycle work product
An exciting area of co-innovation that appeals to enterprise in particular is in the reuse of work product and amplification of decision-making using cross-matter AI models. Being able to revisit the same custodians and data sets and start with some level of baseline knowledge was once thought of as a holy grail for corporate legal departments: highly desirable, worth investing time and money into, and potentially mythical in nature. Now cross-matter AI makes reusable work product a reality.
The final frontier that helps drive reduced time to evidence, cost savings, and predictability for corporate counsel in a meaningful way is fearless transparency. Rather than operating in the land of the opaque and guesstimating cost and time to evidence, corporations expect and are finally being given the insights they need to drive informed efficiency in their legal technology programs.
Platforms and technology partners today can offer a wealth of actionable intelligence for corporations:
- Speed and accuracy of reviewers
- Multi-matter insights about spend to budget
- Efficiency metrics for workflows and technology deployed
- Price transparency (eliminating death by a thousand line items)
- Granular efficiency metrics
- Matter over matter spend
- Detailed breakdowns of time to evidence
As corporate legal departments increasingly bring ediscovery spend decisions and operation in-house, working with a partner that is comfortable being on open book allows for areas of improvement and efficiency to be uncovered more quickly. Similarly, ineffective methods or processes can be modified before there is a significant impact on speed to insight or overall spend.
The game is changing. Find the right partner to ride the wave with you
The exciting news for corporate counsel in particular is that the cards are stacking your favor and the industry as a whole is seeing a shift towards greater insight, control, and efficiency. There are organizations that want to help shape this future with you and are willing to make the at time uncomfortable changes necessary to adapt to this future state of law. Do not be afraid to demand more from your partners as you make this shift.