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Friday, August 22, 2008

E-Discovery: making law firms earn their fees

A Wall Street Journal article (subscription required) points out an interesting side benefit of the latest e-discovery tools: reduction of low-value work for law firms. That is, not a benefit to the law firms, but to their clients.

First, some background. E-Discovery refers to the production of electronic documents during the discovery phase of litigation. As more and more corporate records are managed in electronic format, it becomes increasingly important to be able to search and produce these records in a timely fashion. Recent amendments to the Federal Rules for Civil Procedure (FRCP) made major changes regarding how companies must produce such information.

To serve these needs, software providers, such as Autonomy, as well as major vendors such as H-P, Xerox, IBM, and EMC, have been pushing e-discovery solutions that centralize information about an organization's electronic documents and facilitate search and retrieval of information when needed to support litigation.

The WSJ article points out that some law firms aren't happy about the new tools. Why? Because they allow clients to cut back on the amount of low-level billable hours that law firms assign to junior attorneys--tasks such as reading through boxes of paper documents looking for relevant information. The WSJ quotes Michael Lynch, CEO of Autonomy:
"The old-fashioned way of doing this was having a lot of lawyers doing a lot of simple things," he says. "You would literally have lawyers reading through things saying 'there was chicken for lunch.' You don't need lawyers to know it's a lunch menu."
Recent experience at Comcast is similar:
When outside lawyers working for the cable company recently requested thousands of archived documents for a court case, Genny Garrett, who is in charge of managing Comcast's records, found them by doing a search from her desktop computer.

The lawyers "were surprised," she says, that "they didn't have to wander around a warehouse" looking for records, a task that once generated big legal fees.
My view. Sound legal advice in a time of need is worth every penny. Nevertheless, a law firm's value is not in running up billable hours for clerical work that is better automated. Clients should welcome e-discovery tools as a way of focusing law firms on rendering legal advice instead of paper pushing.

On a side note, the Oracle v. SAP lawsuit has generated document requests from both sides for many thousands of documents and terabytes of data. It's a good example of the challenge of discovery in the information age. From my reading of court documents it appears that both sides are making good use of the type of e-discovery tools discussed in the WSJ article.

Related posts
New federal rules for discovery of electronically stored information (ESI)
Latest on the Oracle/SAP lawsuit

by Frank Scavo, 8/22/2008 11:18:00 AM | permalink | e-mail this!

 Reader Comments:

Frank: E-discovery reflects the natural collision of technology and legal practice. As an enterprise creates an ever-growing mountain of records, adversaries of course want access to it. Knowing that litigation and e-discovery are inevitable, I argue an enterprise can use technology proactively to make records more benign. You are a forward-thinking technology guy. What do you think? --Ben http://hack-igations.blogspot.com/2008/05/nix-smoking-gun-e-discovery.html
Frank: On my blog you asked: "I would love also to get your feedback on my main point--that e-discovery tools are eliminating much of low-value work that law firms typically do in manually searching paper files". I think it is too early to know whether e-discovery tools are reducing the hours billed by law firms. In the past 5 years e-discovery has been a bonanza for law firms, generating scads of new billable hours. Automated tools can indeed help to reduce the growth in billable hours, but e-discovery continues to explode because technology causes the quantities of records to grow larger every day. For any given kind of lawsuit, the quantity and complexity of relevant records typically available in August 2008 will be much greater than would have been the case in, say, August 2005. So even as tools help law firms wade through more records, the opportunity for low-level billable hours continues to expand! --Ben
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