Law firms and the cyclical nature of litigation, investigations, and dispute resolution
By Vince Neicho, vice president, legal services at Integreon
The nature of litigation is such that it remains constant regardless of the economic environment. In simplistic terms, it appears that in good times litigants sue because they can – and in bad times they sue because they have to. Add to that the tendency for regulatory authorities to respond to economic pressures by introducing, strengthening or relaxing regulations by which corporates and banks trade and interact (or not) with each other and it can yield a healthy pipeline of disputes and investigations work for litigation departments. Thus, litigation departments tend to flourish during the extremes of boom-time, as well as during recession. In my experience, it is during the bad times that litigators are particularly busy and profitable.
Of course, the current COVID-19-induced economic downturn is unprecedented in terms of its nature and devastating effects on markets around the world. In the coming months, and possibly years, as the world strives to get back to “normal”, we will see enormous opportunity for litigators as corporates and banks seek to re-establish themselves in the new economic world and salvage what they can from frustrated contracts and the confusing and fast-changing regulatory landscape.
So will it be full steam ahead for litigation departments when we come out of lockdown?
Not necessarily. Having spent most of my career in the litigation department of Allen & Overy – a multi-disciplinary, global magic circle firm – I have seen many recessions and market collapses and every time have witnessed enormous increases in the demand for elite commercial legal advice and a spike in litigation and investigations (regulatory and internal). So, on the face of it, happy days for litigation partners? Well yes, but the problem is that litigation is but one cog in the huge machine and at the same time, other key areas of the firm – corporate, banking, capital markets, real estate etc. – may be experiencing a dearth of new client instructions.
Most markets will be quiet and nervous – not the time for speculative mergers and acquisitions; quiet on the conveyancing and property front; pressures to reduce legal spend in an emerging or prolonged recession. This will place huge pressure on the firm as a whole to take a good look at its finances, operating costs and strategies.
The result is that at the very time litigation departments are looking to expand and boost resources to cope with their increased workloads, firms as a whole are tightening the purse strings, imposing recruitment freezes – or even worse, streamlining headcount – and looking to cut or at least restrict all running costs. This is, of course, most frustrating for the litigators. Many firms have already imposed salary freezes – often a first step to more drastic measures.
For in-house legal departments at corporate or banking institutions, the challenge is to find a way of reaching the desired result at minimum cost, utilising law firms as necessary, but with reduced legal spend. Of course, there can be no compromise on quality or accuracy.
There is a solution. Help is at hand.
Ten years ago, I led my firm (with the full support of the partners) down the innovative path of outsourcing legal document review. Over the years, the once new approach has significantly matured. Together with the adoption of powerful analytical technology, I am very pleased to see that many law firms and their clients have realised the advantages available and are now far more amenable to engaging with ALSPs, such as Integreon.
This means that litigation departments are now able to scale up their document review capabilities (whether for fact-gathering, litigation or investigations) without challenging recruitment freezes or headcount restrictions. At the same time, they retain and boost their revenue-earning opportunities by concentrating on other areas of their clients’ needs. In working together with their ALSP partners, law firms will be availing their clients of first class services, at scale, whilst still under their complete control. Likewise, in-house corporate legal departments can benefit from much reduced costs when embracing an outsourced document review process.
How does it work?
Based on the approach taken by Integreon, the way it works is as follows:
- The client (law firm or corporation) engages with the ALSP to provide legal document review services – be it for fact-gathering, litigation, arbitrations, investigations or any other discipline which requires the review of documents or data.
- As the ALSP focuses on document review and is not distracted by other aspects of the eDiscovery process, it will work with one of its partners or the client’s preferred eDiscovery provider to prepare and host the data.
- There are a number of review models available, but the following example is based on Managed Document Review.
- Having agreed timescales, cost, etc., the law firm (or client legal department) will produce a briefing protocol for the outsourced review team – much the same as they would have done with their historic review teams. The ALSP experts will be available to contribute to the drafting of the protocol to ensure that it is framed in such a way as to get the best from the review team.
- Once finalised, the instructing lawyers will review the protocol with the ALSP review team. The team will have read the protocol in advance and team leads/project managers will have the opportunity to ask questions to gain a better understanding of the review task ahead.
- Once the review is underway, a short calibration exercise will take place over a few days, whereby selected documents will be presented to the instructing lawyers with suggested coding decisions to ensure that the review team and instructing lawyers are thinking as one.
- There will be regular communication between the ALSP project manager and instructing lawyer. The project manager will also lead a comprehensive quality control exercise with senior members of the review team to ensure that protocols have been applied consistently throughout.
- Reviewed and quality control-checked batches of documents will be released by the ALSP to the instructing lawyers, who will then carry out an agreed level of sampling of the review work product, feeding their findings back to the project manager as necessary. This ensures that the review team applies a consistent and accurate approach to the remainder of the review set.
- Once the sampling demonstrates the quality and serves to gain the confidence of the instructing lawyers in the review team’s work product, the legal team can conduct any subsequent review of the document set that might be necessary.
In addition to significant cost savings, efficiency gains, and the ability to scale resources as needed, clients do not have to divert their already stretched key personnel from other tasks to conduct a document review. Instead, they can rest assured that the review will be carried out by a review team whose members are fully focused on a single task and free from other distractions, such as attending to other aspects of running the case or investigation.
How best to prepare?
To aid the need to scale-up quickly and at a time when lawyers are pulled in all directions to determine merits, strategies, resources etc. for a particular client or dispute, there is much to be said for engaging with your preferred ALSP off-matter. That way, you can assess and get comfortable with their principles, pricing, work ethic etc. in a less time-pressured environment. You can also save time by agreeing the paperwork (NDAs and other contractuals) in advance of a specific instruction.
Ongoing innovative, exciting and productive legal work is obviously a continuous interest to me, my colleagues and probably most of the people who have read this far! However, of far more importance is of course the wellbeing of our families, friends and ourselves. I do hope that all of my amazing network of friends and colleagues, amassed over 45 years in the legal profession, are safe and well. Tragically, the chances are that by the time we are through with this awful virus, we will all know of someone who has sadly succumbed to, or been seriously affected by, it. My heart goes out to all those people as does my thanks to all the key workers who put their health and wellbeing on the line to get us through this – health, care workers and beyond Thank you and stay safe.
Post script: Consistent messaging
Since drafting this article, I note two related articles and comments that deal very well with each of the law firm retraction and litigation boom issues I have mentioned.
First, former Allen & Overy senior partner, David Morley, gives a typically honest and transparent insight into how senior management at key law firms might approach things:
Having seen at first-hand how David applied the principles he advocates back in the dark days of the financial crisis back in 2008, I can vouch for how, whilst making incredibly tough and wide-ranging decisions, David retained the trust and confidence of the workforce at large and came out the other side leading a firm excellently placed to assist its clients in rebuilding their practices.
Second, wise comments by Greg Wildisen of Panoram on Guy Pendell’s piece in The Times on the likely surge of litigation ahead of us. Greg is absolutely correct – this time it will be the same, but different! The same in that the litigation floodgates are likely to open, but different in that, this time digitisation will play a major part in how services are delivered. It is no longer a question of whether the legal profession will embrace technology, but how they will.
Vince joined Integreon in June 2017 as an expert legal solutions consultant, with a focus on law firms and corporate legal departments engaging in e-disclosure, e-discovery and document review. Prior to joining Integreon, he was with Magic Circle law firm Allen & Overy for 42 years, where he set up and led their global litigation support / eDiscovery teams. In this role, he assisted key clients from many sectors with the design of innovative, defensible systems, processes and solutions to meet their discovery and document management obligations.