Integration & The Digital Pipeline

A common refrain among AM Law 200 attorneys is that they have nothing to fear from alternative legal service providers because (1) “bet-the-company” work will always be the domain of top tier law firms and (2) their firms only do bet-the-company work.

That argument is based on the following premises:

  1. Legal problems can be neatly categorized as bet-the-company legal problems or commodity legal problems
  2. Only AM Law 200 firms are capable of solving bet-the-company legal problems
  3. Solving bet-the-company legal problems is more profitable than solving commodity legal problems

In an earlier post (here), I directly attacked the second premise by pointing out that “many large law firms generate the majority of their revenue by billing hours on important but relatively common work.” Therefore, the argument that law firms have a competitive advantage against alternative providers because they only do bet-the-company work must be false.

I now realize that my critique was incomplete and somewhat wrongheaded. It was incomplete because it failed to question the implicit assumption underlying all of the premises listed above. It was wrongheaded because it failed to take into account the difficulty of the questions that arise from that implicit assumption.

In my critique, I was unconsciously assuming that a legal problem can be neatly categorized as “bet-the company” work or “commodity” work. I now realize that I was analyzing the problem at an inappropriate level of abstraction.

When a legal problem is evaluated at a high level of abstraction, it is easy to categorize it as a bet-the-company legal problem or a commodity legal problem. In litigation, if the potential liability exceeds some arbitrary dollar threshold (i.e. it is large relative to the client’s ability to pay) then it is a bet-the-company problem. If the potential liability is below that dollar threshold then it is a commodity legal problem. To some extent, this analysis makes sense. If the total liability is low then it is not worth spending a large amount of money to solve the legal problem. However, macro analyses, by definition, ignore important details. Total potential liability tells us nothing about how difficult it will be to solve the legal problem. Additionally, it tells us nothing about how much the client values each task involved in solving the problem.

Is every legal problem with high potential liability difficult to solve? Not necessarily. Is every legal problem with low potential liability easy to solve? Not necessarily.

Even so called commodity litigation involves strategic decisions that can significantly influence the outcome of the case. On the other hand, even so called bet-the-company work, requires tedious tasks that involve absolutely no strategic legal judgment. Exhibit A – reading thousands of e-mails and categorizing/organizing them for later reference. Exhibit B – creating privilege logs for all those documents.

Give the right task to the right person. That is the core idea driving the “New Law” movement. Why ask lawyers to perform tasks that do not require legal training? Frankly, I agree with that sentiment. No one wants to spend their entire legal career doing mindless discovery work. But here’s the rub. Is doing all of those tedious tasks necessary to vigorously defend or prosecute a client’s rights? Consider what David Boise has to say on the matter:

Q: What do you suppose accounts for your success and, obviously rare, ability with judges and juries?

A: {David Boies} I think part of it is to maintain my naturalness with them. I think they sense when people are being artificial. And I am not. I think that partly it’s preparation – – I do a lot of work to get ready. It’s not always apparent, how much work goes into preparing for trial. It’s a huge amount of work. A lot of very tedious work. And so, I think a lot of what happens in trial – – I am ready to take advantage of something because I have done the preparatory work. People looking at it from the outside will say: “he’s seizing the moment – – he is seizing something extemporaneously.” And they would be right. But what they won’t understand is how much work went into preparing somebody to be able to seize that moment.

Q:  Is your preparation tedious things like reviewing documents? Preparing witnesses? Preparing your own performance?

A: Yes. – Well, its reading documents. Interviewing people. It’s not unlike the work of a journalist. You spend an awful lot of time researching things, reading things, interviewing people that tell you almost nothing. It’s like panning for gold. You have to wash away a lot of sand before you find gold nuggets.

Q: In some of the largest anti-trust cases you can’t got through thousands or tens of thousands of pages of documents yourself, right?

A: Well, thousands. Maybe not tens of thousands.

Q: Thousands you will review yourself?

A: Yes. I will read – – In the Microsoft case, I personally read every line of every exhibit that either we offered into evidence or Microsoft offered into evidence. I knew every one of those exhibits. Some lawyers tend to push that [i.e. the decision of which exhibits to enter into evidence] down to the more junior people. I want to make that decision myself, because what I am doing is – – I am crafting the story that the judge or the jury sees.

Q: But at a certain point you have to rely on your troops to do some initial triage, right?

A: No question about it. Litigation is a team sport. Nobody can practice law, the kind I practice, alone. You’re dependent on dozens, in some cases, lawyers.

An overzealous proponent of unbundling legal services might argue that all work which doesn’t have to be done by a law firm should be outsourced to a non-legal service provider and performed by non-lawyers. In light of David Boies commentary, such a belief is obviously incorrect. There are advantages to having an integrated system where one firm is handling the work from start to finish. Although much of litigation is tedious work that does not involve legal judgment, it may be the act of working with the raw materials that allows lawyers to really add value by “crafting” a cogent story buttressed by legal arguments that will convince the final decision maker that their client is right.  This masterful command of the material may not be achievable if all of those tasks are done exclusively by an LPO vendor without any law firm involvement.

The benefits of integration and controlling the entire work flow have been cited by companies at the forefront of the “New Law” movement.

Q: Previous guests on this program have said that Axiom is not just handling a piece of an M&A Transaction, it’s actually doing whole deals – in and of themselves. That surprised a lot of people when we did that interview.

A: {Mark Harris} . . . One of the things that you learn pretty quickly, when you get your head stuck into the challenge of delivering transformational solutions is that you have got to be able to exercise leverage over the end-to-end work stream to really make a difference. And so it’s not impossible that we would be involved in a component of a transaction that has been unbundled from the law firm and Axiom will handle that. But there are a lot of situations where we are brought in and we execute against the entire work stream. – – M&A is an area where we do that occasionally, that is also an area where it can be inappropriate to use Axiom end-to-end and perfectly appropriate to use a law firm. So it really depends on the area we are talking about.

Interestingly, Boies and Harris’s comments resonate with each other. To practice law at the highest level and in a manner that is most beneficial to the client, one should adopt an integrated model.

The power of Axiom’s tech and processes need to be wedded with the legal judgment and oratory prowess of lawyers like Boies. It is counterproductive to view law firms and alternative legal service providers as competing factions that one must choose between.

In my view, law firms and alternative legal service providers must be allowed to merge and become unified organizations in which lawyers can perform the tedious tasks but do so in a manner that doesn’t bankrupt their clients. That is where the tech and processes of alternative providers come in.

But the integration cannot stop at the “vendor” level. Clients must become more integrated with their legal service providers. The primary reason “washing away the sand” is so tedious (and therefore expensive because it is paid for on an hourly basis) is that many companies keep their information in a format that cannot be easily accessed, processed and analyzed. As a result, the client and the law firm spend a tremendous amount of time engaging in activities that are ultimately nothing more than information transfer. The client tells the law firm that it has a legal problem. The law firm tells the client that it needs X,Y,Z information to assess the situation. The client manually searches its electronic databases for ESI, copies it and then gives it to the law firm. The law firm then re-loads that information into its E-discovery platform and proceeds to organize and analyze it. Finally, the law firm advises the client on what to do. Couldn’t this entire process be eliminated if the law firm had direct access to the client’s IT systems? Better yet, what if the law firm had software that could automatically and continuously copy and organize important business information that is frequently utilized and requested in litigation?

We have reached a point where businesses need to give their law firms and their alternative legal service providers a direct digital pipeline into all of their business systems. Law firms need access to all financial data, employee data, e-mails systems, phone systems etc. This will significantly aid in prospectively diagnosing problems. It will also make the discovery process far more streamlined.

Disruptive Legal

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