Even before the onset of the global financial crisis in 2008, in-house legal departments and their outside counsel were under considerable pressure to do more with less. The great recession exacerbated this pressure and led to a surge in the exploration of innovative legal services delivery models, as well as changes in the sourcing and deployment of legal resources. A new legal ecosystem emerged in which, alongside outside counsel and the corporate legal department, legal process outsourcing (LPO) began to play a crucial role in the reengineering and cost effective delivery of legal services. While initially the focus was on the labor arbitrage benefits available from outsourcing certain routine legal tasks to lower cost locations, such as India and the Philippines, the LPO industry has matured and transformed itself over the last few years.
Today LPO is no longer a pure labor arbitrage play. It is an operating model combining a best-practices framework, with process efficiency, quality control and enabling technology at its core. While some might argue that technological advances, especially automation that reduces the human labor component in the delivery of legal services represents a threat to LPO, nothing could be further from the truth. It is the LPO industry that has embraced and incorporated technology into virtually every element of its legal services delivery offerings including assisting and advising corporations and law firms on the selection and implementation of enabling technologies. It is the LPO industry that continues to push the envelope and redefine the art of possible in the legal field, providing expert consultants who can weave together advanced technologies as an integral thread in overall legal process transformation.
It is indisputable that developments in technology-assisted document review, automated contract meta-data abstraction, deal rooms, e-billing software, data analytics, knowledge management and document assembly technologies are speeding up or significantly reducing the need for manual labor in legal services. Technology is an incredible enabler. Those legal services providers, be they law firms, LPOs, or other types of professional services firms, that embrace technology are positioned for success. This article will present a number of examples that demonstrate how advances in technology and LPO are closely aligned as the demand for innovative solutions continues to heat up in the legal services market.
E-Discovery and Document Review
The days are quickly fading in which huge teams of attorney reviewers tackle hundreds of thousands – or millions–of seemingly unfiltered documents.
Some industry commentators would have you believe that there is an “us versus them” battle for supremacy between advocates of inefficient, overly costly manual document review and the knights in shining armor that are technology-assisted review (TAR)and predictive coding. The rationale for these dour predictions about the role of human review seems predicated on an extreme hypothesis that pits computers against humans with little consideration for practical realities. Unlike staffing firms, which are essentially providers of warm bodies, the leading LPO providers have long been proselytizers of TAR workflows and have been constantly developing, testing, and refining these very workflows to deliver smarter and less costly review processes. Not only do these LPOs invest significantly in developing cutting-edge proprietary technology in support of TAR, they also have an understanding that that these tools are not appropriate for every scenario and, in recognition of this, they maintain close relationships with best-of-breed third-party developers.
The choice for corporate clients is no longer ‘should I employ a TAR/predictive coding workflow?’ but rather ‘when should I employ it, and which technology and workflow best suits my needs?’ Utilization of these tools is not always even about reducing the size of the overall document corpus, or finding the proverbial “smoking gun” evidence. LPOs deploy these technologies in a variety of ways, such as to support a quality control process. The LPO industry, being both expert and technology agnostic, is best placed to provide the insights their clients need to help them choose and deploy technologies wisely.
Corporate Transactional LPOs do not restrict their embrace of technology to just the litigation support field. In the corporate transactional world, the first port of call in any engagement involving the location, and then review and extraction of information, from a volume of contracts (often triggered by the implementation of a contract lifecycle management system, or following an acquisition, or as a response to an audit),should be to determine whether technology can assist. There are tools that can be utilized to locate and collate contracts stored on hard drives, file shares, network drives and various software platforms. Once the contracts are located, these tools can index the files and render any text as fully searchable using optical character recognition (OCR) technology.
Once the contracts have been collected and converted to searchable text, the requisite information that is important to the business needs to be extracted from each contract. While historically, the process of extracting data from volumes of contractual documentation was a manual one, this is no longer the case. After contracts are made text-searchable, automated meta-data extraction and categorization technology can be used to speed up the process and reduce the costs associated with traditional manual contract review. The technology does this by effectively auto-triaging contracts based on certain business rules (e.g. exclusion of expired, duplicate, unsigned or immaterial contracts), grouping like-contracts together and prioritizing the most critical contracts for review. Once the contracts have been categorized, the software can then automatically extract information or metadata. However, it is the combination of legally trained human resources and technology that provides the most effective end-to-end solution. Frequently, the software in and of itself cannot extract every single piece of data that is important to the business, and, for the data that it does extract, instituting a manual quality control process ensures the work product is of the highest quality.
Legal Spend Analytics
The area of legal spend analytics is another example where technology can be utilized to support a more cost-effective and reengineered delivery of legal services. By leveraging best-in-class data analytics technology and specialized visual techniques, one can analyze and then present historical e-billing data to help a corporate legal department achieve overall legal spend reduction. By digesting, analyzing and then presenting in dashboard format the intelligence gleaned from legal invoices, it is possible to benchmark outside counsel and vendor performance. With access to the right data, one can create online dashboards and business intelligence reporting that provides in-house legal and finance teams with updates on outside counsel spend, breakdowns of matters by firm/practice area/timekeeper, savings opportunities, performance against budgets, benchmarking and many other key metrics.
Knowledge, as they say, is power, and by utilizing software-enabled data analytics and dashboard reporting, corporate legal departments are empowered to revisit the entire gamut – the identification, selection, retention, management, cost and evaluation – of their relationship with outside counsel and other legal services providers. The end-game is one where resource allocation planning is optimized, ensuring that the right technologies and the right legal professionals, based on a combination of expertise, cost and availability are assigned to the delivery of the requested legal services, given the type and complexity of the matters at hand.
A corporation’s need for outside legal services is based on a number of factors, such as the geographic location of the work in question; the strengths and weaknesses of various legal services providers in handling different practice areas; whether the provider has a local, regional or national footprint; the complexity of the work in question; and of course the ability to automate, among other things.
Out of all of the different stakeholders providing legal services within the new legal ecosystem, it is the LPO providers that have the deepest experience deconstructing and reengineering legal processes using Lean and Six Sigma techniques, applying best practices and flexible resources, and optimizing the mix and utilization of technology. It is the LPO providers that have the demonstrated expertise to analyze which aspects of the work done by lawyers, paralegals and support staff add value and which should be eliminated, automated or delivered by alternative resources. As the rollercoaster of legal services innovation and technological advances continues to pick up pace, not only will LPO providers be along for the ride, they’ll have front row seats.