Changing Times In The World Of Document Review

Friday, July 1, 2011 - 01:00

In the first half of 2011, news of continued jobs creation and stock markets inching higher gave entrance to discussions of "recovery." Job growth in the first quarter exceeded 500,000 and marked the highest three-month gain in five years. As Q2 comes to an end, however, the job market appears to have stagnated and discussions now include more precarious terms, like "double dip," as the street awaits Q2 earnings. It should come as no surprise, therefore, that many companies are still holding tight to the purse strings, examining budgets for all teams closely, but especially those deemed "cost centers."

In-house legal departments are particularly vulnerable to this critique, as one of the few departments that can cut costs exponentially, yet still show an increase in year-over-year legal spend. This is largely a result of the difficulty in forecasting and anticipating large-scale litigation and discovery costs. With the proliferation of e-data, every document review has the potential to become enormous and therefore costly.

And while it's one thing to empirically accept that the data is growing exponentially, in order to truly understand what this means, check out this statistic cited in August of last year by former Google CEO Eric Schmidt: Presently, we create as much information in just two days as we did from the dawn of civilization through 2003.

Thankfully, as our ability to easily create and store data is expanding, so also is our ability to continuously cull this information. Whether through early case assessment or advanced search techniques, we are generally able to isolate between five and ten percent of the total data as relevant for review, eliminating the remaining 90-plus percent. While that's an enormous gain, there is still left a mind-numbing volume of data, requiring an enormous amount of resources, to review.

For years we have heard about the benefits of off-shoring as a cost-reduction tool, but because of many issues, both tangible and intangible, off-shoring has not become the new frontier of inexpensive talent that many predicted. On-shoring document reviews continue to be a proven, cost-effective resource for corporations and firms alike, allowing them to take advantage of the pay disparity between top-tier cities and more cost-effective locations.

So how does outsourcing the review work save money? More importantly, how does one "outsource" much of this review work without running afoul of ethics opinions or finding oneself involved in allegations of legal malpractice, similar to those in the lawsuit filed recently by J-M Manufacturing against McDermott Will & Emery?

The first question is an easy one in that it is fairly obvious, yet often discussed in hushed tones; many attorneys lack business acumen. They are often brilliant, possessing superior analytical skill, but with little-to-no business training or experience. Illustrative of this is that most law firms are built around the premise that the more you bill, the more the firm is paid. A model that most attorneys live by, yet one that fails in sustainability during a competitive economy. Indeed, the list of law firms that have closed their doors in the last four years, often with Ivy League and top-tier attorneys and litigators, is endless.While the practice of law is based on theory and principal, the business of law is not.

By looking at the review from a business perspective, there is no doubt that many efficiencies can be gained by treating the review as a project, or process, as it would in a more traditional business setting. Having a trained project manager or process engineer on the case, for example, allows work to be managed in a way very different from, yet complementary to, the way an attorney would approach the review.

Henry Ford, credited with modernization of the manufacturing process, first observed the factory-line model in a Chicago slaughterhouse, where each person along a moving "dis-assembly line" held responsibility for performing the same action repeatedly. The model allowed not only for faster production, but also improved accuracy, and inspired Ford to develop the first assembly line.

Consulting firms, outsourced solutions providers, and some advanced staffing companies have mastered this approach. A well-defined process at a basic level will look something like this, with each review possessing some unique deviations:

Define the problem . The project manger will work with you to define the project goals and help in creating the case overview manual.

Measure key aspects of the process and collect relevant data. Once the workflow and communication processes are established and the project begins, the tenured project manager will immediately begin to measure key aspects of the process and collect relevant data.

Analyze the data for process improvement. The project manager looks for cause-and-effect relationships that can improve production. For example, if I give Y reviewer all of John Smith's documents, Y increases output by X percent. Much like the assembly-line worker, grouping similar tasks by custodian or topic for the reviewer allows greater familiarity and ease, allowing the reviewer to make decisions more quickly.

Identify and address outliers. If there are discrepancies or disparities between reviewers' performance, the project manager will work to identify the root cause, ensuring that all factors have been considered. They will verify that the document sets are substantially similar when making determinations as to one individual's speed.

All of this leads to changes or improvements to optimize the current process based on the data collected using techniques such as design of experiments.

Closer Examination: A Managed Review Case Study

To improve process capability and efficiency, Special Counsel conducted a review experiment, which established a clear correlation in batching size and speed, and led to significant improvements in process. Twelve reviewers, all performing within a 1.0 percent deviation of review speed and 0.5 percent deviation of accuracy from one another, were split into three groups of four. Each group was given the same data set, but the size of the document sets within it deviated from one another. Group A was given documents in sets of 1000; Group B, sets of 500; and Group C, sets of 200. Over the course of two days, speed and accuracy of each reviewer was measured, demonstrating a correlation between the size of the document set initially distributed and the speed of the review.

On average, the reviewers in group A lagged behind those in group C by four full documents per hour. In effect, by merely changing the batching process we were able to realize improved performance that essentially results in a cost reduction of 6 percent.

It is through these same project management processes that the second concern of project control is addressed. An effective workflow and managed review is a critical component of an effective review process. Not only does it decrease tangible costs, but it also reduces risks significantly. Where in a legal document review a defect is interpreted as a miscoded document, the primary concern of both traditional and legal project management is that deviations from target are corrected before they result in a defect.

In J-M Manufacturing v. McDermott , for example, J-M claims they were owed a fiduciary duty that McDermott breached by failing to supervise the attorneys and vendors with whom they contracted to perform the review. J-M claims that McDermott's attorneys performed little spot checking of the contracted work, and further did not conduct any privilege review of the documents.

Bar associations in major markets across the U.S., including New York, California, and the ABA, have provided guidance that concludes that firms are able to off-shore legal work. Although open for interpretation, as many bar opinions are, they are generally in agreement and maintain that any outsourcing must be supervised by the attorney of record, preserve client confidences, avoid conflicts of interest, and generally bill the client only for the direct cost of outsourcing, with advance client consent in certain circumstances. Much like with the use of paralegals, an attorney reviewing the work of a non-attorney has the greater responsibility, having a sworn duty for "vigilant" supervision and understanding of the "business practices" of the outsourced firm.

Given the continued increase of discovery costs and the continued pressure on counsels and law firms to reduce costs, it is only logical that the outsourcing of commodity-based review work will increase. As technology continues to develop, there will be those who are proponents of machine-based automated review or human-less discovery, yet it is hard to imagine that a world with document production absent human sampling would be prudent. As illustrated by the allegations of J-M Manufacturing v. McDermott , relying solely on technology without a well-thought-out mix of random and targeted statistical sampling of the data set can be a dangerous premise.

To this end, the answer to streamlining reviews in a data-laden era is through smart process management. SightManager, a tool offered by Special Counsel, improves the efficiency of reviews by enabling project managers to conduct quality control from the outset. Through the implementation of quality control systems, project managers have been successful in modernizing the document review process, just as Henry Ford revolutionized manufacturing.

Chris Gallagher, Esq. is Senior Vice President for Special Counsel. For more information about Special Counsel or how managed review services like SightManager can help streamline your legal fees, call (800) 737-3436 or visit www.specialcounsel.com.

Please visit www.specialcounsel.com for more information.