This spring, H&T's site underwent a complete re-design with significant updates -- including an integrated blog. We're excited about the results, and will continue to blog on discovery issues at hardingerlaw.com/news.
Thursday, June 23, 2011
We've Moved!
This spring, H&T's site underwent a complete re-design with significant updates -- including an integrated blog. We're excited about the results, and will continue to blog on discovery issues at hardingerlaw.com/news.
Friday, March 12, 2010
Do “All-In-One” Document Review Vendors Violate Fee Sharing Rules?
Corporate America’s determination to reduce litigation costs has led to increasingly aggressive attempts to save money during the discovery stage of litigation. For years, companies have been moving away from the traditional model of linear document review by Big Law associates. These efforts have led to numerous innovations in review technology, review processes, and billing arrangements. One of the most significant results of this focus on minimizing costs has been the emergence of so-called “all-in-one” document review vendors.
These companies are generally large, publicly-held companies that offer a variety of services in diverse industries such as economic analysis, forensic accounting, legal staffing, health care consulting, and other information/technology areas. As part of newly acquired or developed “E-Discovery” or “Document Review” practice areas, these companies now employ attorneys and data processing specialists to offer “one stop shopping” for clients who are looking to pay less for the legal services.
Many of these vendors offer cutting edge “document review centers” which they claim to “combine technology with efficient processes all in a secure environment.” The result, they say “is an integrated review process that is substantially faster, more accurate and less expensive than more traditional review services.” Some of these centers are so large that they offer individual workstations that number in the thousands.
In employing attorneys and marketing their legal skill and credentials, these companies claim to “provide comprehensive attorney review and document management solutions for legal matters to both corporate clients and law firms across a diverse group of industries.”
Indeed, these firms are not just offering contract attorney staffing; some of them boldly promise to “run every aspect of discovery management and document review with as much or as little involvement as you require.” They offer to assume responsibility for “comprehensive project planning,” “on-site review team instruction and management,” “ ongoing, thorough quality checks,” and "privilege log preparation.” They offer “seasoned attorneys” with “applied expertise in complex litigation, discovery management, and e-discovery…” Essentially, these companies are offering to handle both the legal and non-legal aspects of the review.
Yet, these companies are not law firms.
So, the question must be asked: Is there any rule prohibiting lay corporations from providing legal services to clients?
The simple answer is “Yes.” There is a longstanding ethical restriction on non-legal entities providing legal services to clients. It is rooted in the “Fee Sharing” prohibition adopted in practically all jurisdictions and articulated in the ABA Model Rules of Professional Conduct Rule 5.4, which states in relevant part:
The comments to these rules explain their purpose: “These limitation are to protect the lawyer’s professional independence of judgment… [and] also expresses tradition limitations on permitting a third party to direct or regulate the lawyer’s professional judgment in rendering legal services to another.”
In other words, the rule prohibits corporate employees from providing legal services to clients because of the fear that their nonlawyer bosses would interfere with their independent legal judgments. Remember, lawyers have a fiduciary relationship with their clients that are governed by bar rules and legal ethics established by their licensing jurisdiction. Nonlawyer shareholders, directors, and managers have no fiduciary responsibility to their customers, no standardized professional obligations, and no explicit duty to serve the best interests of their customers. Their only duty is to maximize profits.
In the case of document review performed by all-in-one vendors, these issues are not mere theoretical exercises-- the specific concerns raised by the fee sharing rules are decidedly at issue here. Ownership of the profit-driven vendor will be trying to maximize margins wherever it can. This may manifest itself in the form of pressure to aggressively increase revenue or cut overhead. If the all-in-one vendor is using an hourly billing model, the nonlawyer owner/manager may be pushing to collect too many documents, over-code the documents, set-up overly redundant systems, etc. If the all-in-one vendor is billing on a per-unit basis (per page, per GB, etc) it may be pushing its attorneys to review too quickly, skimp on quality checking, etc. Admittedly, law firms may be subject to the same temptations, but at least they have the ethical rules and bar governance in place to monitor and enforce their fiduciary duties.
Yet, given the financial pressure to cut costs, it is entirely understandable why many companies may be tempted by the fancy facilities and aggressive pricing of all-in-one document review vendors. However, the client needs to be fully aware that the legal work being performed by these vendors is not being done with the independence of judgment and fiduciary relationship that the client should expect from its attorneys, and in fact, may be being performed in violation of long established ethical rules.
These companies are generally large, publicly-held companies that offer a variety of services in diverse industries such as economic analysis, forensic accounting, legal staffing, health care consulting, and other information/technology areas. As part of newly acquired or developed “E-Discovery” or “Document Review” practice areas, these companies now employ attorneys and data processing specialists to offer “one stop shopping” for clients who are looking to pay less for the legal services.
Many of these vendors offer cutting edge “document review centers” which they claim to “combine technology with efficient processes all in a secure environment.” The result, they say “is an integrated review process that is substantially faster, more accurate and less expensive than more traditional review services.” Some of these centers are so large that they offer individual workstations that number in the thousands.
In employing attorneys and marketing their legal skill and credentials, these companies claim to “provide comprehensive attorney review and document management solutions for legal matters to both corporate clients and law firms across a diverse group of industries.”
Indeed, these firms are not just offering contract attorney staffing; some of them boldly promise to “run every aspect of discovery management and document review with as much or as little involvement as you require.” They offer to assume responsibility for “comprehensive project planning,” “on-site review team instruction and management,” “ ongoing, thorough quality checks,” and "privilege log preparation.” They offer “seasoned attorneys” with “applied expertise in complex litigation, discovery management, and e-discovery…” Essentially, these companies are offering to handle both the legal and non-legal aspects of the review.
Yet, these companies are not law firms.
So, the question must be asked: Is there any rule prohibiting lay corporations from providing legal services to clients?
The simple answer is “Yes.” There is a longstanding ethical restriction on non-legal entities providing legal services to clients. It is rooted in the “Fee Sharing” prohibition adopted in practically all jurisdictions and articulated in the ABA Model Rules of Professional Conduct Rule 5.4, which states in relevant part:
A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice for a profit, if (1) a non-lawyer owns any interest therein…(2) a non-lawyer is a corporate director or office thereof…, or a nonlawyer has the right to direct or control the professional judgment of the lawyer
The comments to these rules explain their purpose: “These limitation are to protect the lawyer’s professional independence of judgment… [and] also expresses tradition limitations on permitting a third party to direct or regulate the lawyer’s professional judgment in rendering legal services to another.”
In other words, the rule prohibits corporate employees from providing legal services to clients because of the fear that their nonlawyer bosses would interfere with their independent legal judgments. Remember, lawyers have a fiduciary relationship with their clients that are governed by bar rules and legal ethics established by their licensing jurisdiction. Nonlawyer shareholders, directors, and managers have no fiduciary responsibility to their customers, no standardized professional obligations, and no explicit duty to serve the best interests of their customers. Their only duty is to maximize profits.
In the case of document review performed by all-in-one vendors, these issues are not mere theoretical exercises-- the specific concerns raised by the fee sharing rules are decidedly at issue here. Ownership of the profit-driven vendor will be trying to maximize margins wherever it can. This may manifest itself in the form of pressure to aggressively increase revenue or cut overhead. If the all-in-one vendor is using an hourly billing model, the nonlawyer owner/manager may be pushing to collect too many documents, over-code the documents, set-up overly redundant systems, etc. If the all-in-one vendor is billing on a per-unit basis (per page, per GB, etc) it may be pushing its attorneys to review too quickly, skimp on quality checking, etc. Admittedly, law firms may be subject to the same temptations, but at least they have the ethical rules and bar governance in place to monitor and enforce their fiduciary duties.
Yet, given the financial pressure to cut costs, it is entirely understandable why many companies may be tempted by the fancy facilities and aggressive pricing of all-in-one document review vendors. However, the client needs to be fully aware that the legal work being performed by these vendors is not being done with the independence of judgment and fiduciary relationship that the client should expect from its attorneys, and in fact, may be being performed in violation of long established ethical rules.
Friday, October 9, 2009
Accountability Can Not Be Outsourced: Real World Advice for Supervising Document Review
Federal Rule of Civil Procedure 26(g) states that, “Every disclosure . . . and every discovery request, response, or objection must be signed by at least one attorney of record in the attorney's own name . . . By signing, an attorney or party certifies that to the best of the person's knowledge, information, and belief formed after a reasonable inquiry. . . it is complete and correct as of the time it is made . . .”
In the last few years, the legal community has been bombarded with an explosion of discovery vendors who are rapidly expanding the scope of their services. Many of these staffing agencies and consulting firms now offer “end-to-end” discovery services that go way beyond the mere furnishing of contract attorneys or document review software—they now including non-discreet services such as the “management” of the entire discovery process.
What does this mean for the attorneys and clients who purchase these all-inclusive services with respect to the federal and state discovery rules? Can the attorneys just sit back and wait for the production discs to be delivered to their desks? The answer is a definitive “no.”
The American Bar Association and all of the state and local bar associations who have examined the outsourcing issue all arrive at the same conclusion: outsourcing is permissible as long as the attorney of record remains responsible for the work performed and rigorously supervises those performing the work. Unfortunately for the practitioner, none of these bar opinions attempt to tackle the crux of the issue by articulating a clear definition of what constitutes adequate “supervision.”
So, as the attorney of record, how do you maintain actual control of the discovery process and remain genuinely accountable for the work done by the outsourcing vendor? How do you confidently certify that, to the best of your knowledge, the work done largely by someone else is complete and correct?
Stepping in where the bar associations have fallen short, we have developed a list of rules to follow for attorneys who wish to outsource part of the discovery process while still meeting the high level of professional responsibility imposed by the ethics rules. We hope that this information provides some concrete guidance to practitioners on the specific topics in which the bar association decisions have remained vague.
1. Do Not Hire A Substitute Supervisor – All of these newly emerging document review vendors offer “project managers” or “team leaders.” But hiring non-attorneys to oversee the daily operations of a legal document review is highly suspect. If you hire someone to supervise or manage your project, you are either not taking full responsibility yourself, or the client is paying twice for the same services. (Remember, if the company you hire is not a law firm, the supervisor they provide is not lawfully rendering legal advice, even if they have a JD). It is OK to hire an administrative assistant to help with some of the staffing, organizational, or logistical details, but that person should not have any supervisory authority over the discovery team or attempt to answer any substantive factual or legal questions.
2. Know Your Case and Know the Law – It may seem obvious, but if a document review team is relying on you to teach them about the case, you have to know the facts and the applicable case law well enough to accurately convey it to your team. In addition, you must know the ethical rules and regulations regarding outsourcing in your jurisdiction. The oft-cited ABA Formal Opinion 08-451 regarding outsourcing is a useful guide, but may not be controlling in your jurisdiction. For example, in the District of Columbia, more specific guidance can be found in DC Court of Appeals Rule 49, DC Committee on the Unauthorized Practice of Law Opinions 6-99 (June 30, 1999) and 16-05 (June 17, 2005), and DC Rules of Professional Responsibility Rule 5.4.
3. Know the Technology – As attorneys, this step can be one of the most daunting. The simple truth is that the technology used by our clients, courts and opposing counsel in the discovery process is an inescapable aspect of practicing law today. Any experienced discovery attorney can tell you that minor technological gaffs can dramatically impact the substance and quality of your document production. As a supervising attorney, you cannot simply rely on the skills of your vendor to get the job done right; you have to be able to confirm their work every step of the way.
4. Personally Select Your Team – Staffing agencies do an excellent job of providing a convenient pool of potential contract attorney and paralegal candidates. However, as the person ultimately responsible for the work completed by the team, you should review the resumes, interview and select the team personally. In some jurisdictions, like the District of Columbia, the staffing agency is prohibited from the final selection and supervision of the review team (see DC UPL Opinion 6-99). Throughout the process, you must also maintain the authority to hire and fire as you see fit.
5. Personally Train Your Team - You should take responsibility for training the team in person, even if the review team is located across town or across the globe. Resist the urge to do a “quick start” training with a slim list of bullet points, key words or ideas. If you are not ready to perform a more substantive training session, you are not ready yet to begin your review. A genuine supervisor will train the review team thoroughly in an interactive forum.
6. Give the First Assignment to Yourself – Someone who has never played a musical instrument would not make a good conductor. Similarly, in order to be a credibly supervisor on a document review, you have to get some hands-on experience. Depending on the size and scope of the review, sit down and code documents yourself for an hour, a day, a week or even a month. Are the review parameters reasonable? What is a reasonable speed at which the review team should be working? Do you need to update or revise the training materials drafted before the review? There is no substitute for rolling up your sleeves and doing the work you expect others to do for you. The knowledge you gain during this step will greatly increase your credibility with your review team and is the only way you can honestly assess the work they do for you.
7. Design Tracking and Status Metrics - Using your experience in reviewing and coding documents, what are the expectations that you have for your review team? What is the slowest acceptable rate of review? Is there a pace that would be too fast? How will you calculate accuracy? Almost all review software will automatically generate reports regarding number of documents coded in any given time period and allow for a comparison among team members, but the important part is how those reports are interpreted. And as a supervisor, you will have to design these metrics with consideration of the discovery deadlines and review objectives set by trial counsel and the court.
8. Maintain Constant Contact with Your Team - There are many good excuses that attorneys give for not working directly with their review team: too busy with other responsibilities, not enough physical space close to the office, or fear of leaving their office for an extended period of time. However, there is absolutely no way to credibly and effectively supervise a document review team (especially a large team of anywhere from 10-100 attorneys) without physically seeing them every day. As an illustration, assume you have a team consisting of 15 reviewers working approximately 50 hours a week (a relatively small project in the world of e-discovery). That team is working over 3,000 hours per month. Do you really think that you can adequately oversee 3,000+ hours of work by stopping by for an hour or two a few times a week? As a supervisor, you really should make the commitment to be with your team full-time, and probably even more.
9. Conduct Extensive Quality Checks and Make Adjustments Accordingly - On one hand, the quality checking phase is incredibly simple, right? If you’ve selected a top-notch team and trained them well, they will not make many mistakes and the supervisor can review a handful of random documents and pat himself on the back for training the team so well. Unfortunately, that is not how document reviews work. No document review has ever been accurate and consistent from the get-go. It just does not happen; there are too many unknowns at the beginning of a project. (Let’s face it, lawyers, if we knew all the facts at the beginning, and where to find the important documents, the discovery phase would be a mere afterthought.) Furthermore, as the case develops, issues and strategies change, priorities are revisited, new players emerge, etc. Readjusting is inevitable.
The hard part is not just checking to see if there is a problem, but getting that problem fixed and making the necessary adjustments to steer the team in the right direction. This critical step absolutely cannot be outsourced. If you are not quality checking and adjusting your review on a constant basis, you are not genuinely supervising your project.
10. Personally Review and Approve all Discovery Related Invoices – You may have multiple vendors assisting with discovery tasks such as document collection, processing, hosting, software, staffing agencies, etc. The supervisor should not blindly approve bills and pass them through to the client. Rather, the supervisor should have personal knowledge of the charges, be able to confirm that they are both reasonable and accurate, and be ready to take full responsibility in the event that any questions arise. At a minimum, the supervisor should be confirming that each task is being performed at an appropriate bill rate, and that the hours being charged for such are reasonable and necessary.
In summary, as the attorney of record, you have been retained to certify that you personally have performed a reasonable inquiry and, to the best of your knowledge, are making complete and correct discovery disclosures. The vendor assisting you will never be willing nor able to sign their name to anything. Therefore, the supervision of a discovery project can not be ignored or outsourced to non-attorneys. The attorney who neglects her job as a discovery supervisor is not only shirking her ethical duties, but is exposing herself and her clients to enormous risk. In today’s world, conducting discovery may include taking advantage of a wealth of resources offered by staffing and technology vendors. But, the attorney of record is always ultimately accountable.
This blog was written by Julia Hardinger, co-founder of Hardinger & Tanenholz LLP, a unique Discovery Counsel law firm that specializes in all aspects of discovery, including the end-to-end management of large-scale document reviews. This blog is the personal opinion of the author and not intended as legal advice.
Wednesday, July 8, 2009
Are Unlicensed Document Reviewers Violating DC Ethics Rules?
Hardinger & Tanenholz has recently fielded questions from several contract attorney candidates who are not admitted to the DC Bar regarding their eligibility to perform document review work in DC. Specifically, there seems to be genuine confusion about whether it is necessary to be admitted to the DC Bar, or whether admission to another state is sufficient.
The answer is, in general, contract attorneys performing document review must be admitted to the DC Bar.
The unauthorized practice of law is governed by District of Columbia Court of Appeals (“COA”) Rule 49, and we encourage all attorneys seeking to work in the District to read it. In 2005, the COA’s Committee on the Unauthorized Practice of Law (“UPL”) issued an opinion stating that Rule 49 does, in fact, apply to contract lawyers working within the District (see http://tiny.cc/OP_16_05). The Opinion held that, in general, all contract attorneys performing document review must be admitted to the DC Bar.
Specifically, the Committee opined that even if a contract lawyer is performing work that is similar to or overlapping with work performed by paralegals, such as first level document review, the attorney is engaging in the practice of law “if the person is being held out, and billed out, as a lawyer . . .” (16-05 at 5).
So, what to do if you are a contact attorney not admitted to the DC Bar, but you want to work in DC? Opinion 16-05 urges all contract attorneys who are engaging in the practice of law to seek admission. It warns, “Failure [to apply for admission] may jeopardize the lawyer’s ability to continue to practice law in the District on a contract or other basis. Failure to do so also places the lawyer in jeopardy of discipline in jurisdictions where the lawyer is admitted . . .” (16-05 at 7).
If you are not admitted to the D.C. bar, there is nothing keeping you from working as a paralegal or law clerk, even if you are admitted to practice law in another jurisdiction. Simply make your bar status very clear to anyone with whom you have professional contact, especially your employment agency and the legal service provider who will be supervising your work. You must never hold yourself out as an attorney in DC if you are not a member of the DC Bar, even if you are fully-licensed in another jurisdiction. (See Rule 49). Remind your employer that you should not be held-out or billed out as an attorney.
Finally, we encourage all contract attorneys to read the ethical rules and relevant UPL Committee decisions (http://tiny.cc/UPLWebsite) and take full responsibility for their own professional conduct. Attorneys should not risk their bar standing by relying on the representations of employment agencies and law firms that may or may not be fully aware of the applicable ethical rules.
This blog was written by Julia Hardinger, co-founder of Hardinger & Tanenholz LLP, a unique Discovery Counsel law firm that specializes in all aspects of discovery, including the end-to-end management of large-scale document reviews. This blog is the personal opinion of the author and not intended as legal advice.
The answer is, in general, contract attorneys performing document review must be admitted to the DC Bar.
The unauthorized practice of law is governed by District of Columbia Court of Appeals (“COA”) Rule 49, and we encourage all attorneys seeking to work in the District to read it. In 2005, the COA’s Committee on the Unauthorized Practice of Law (“UPL”) issued an opinion stating that Rule 49 does, in fact, apply to contract lawyers working within the District (see http://tiny.cc/OP_16_05). The Opinion held that, in general, all contract attorneys performing document review must be admitted to the DC Bar.
Specifically, the Committee opined that even if a contract lawyer is performing work that is similar to or overlapping with work performed by paralegals, such as first level document review, the attorney is engaging in the practice of law “if the person is being held out, and billed out, as a lawyer . . .” (16-05 at 5).
So, what to do if you are a contact attorney not admitted to the DC Bar, but you want to work in DC? Opinion 16-05 urges all contract attorneys who are engaging in the practice of law to seek admission. It warns, “Failure [to apply for admission] may jeopardize the lawyer’s ability to continue to practice law in the District on a contract or other basis. Failure to do so also places the lawyer in jeopardy of discipline in jurisdictions where the lawyer is admitted . . .” (16-05 at 7).
If you are not admitted to the D.C. bar, there is nothing keeping you from working as a paralegal or law clerk, even if you are admitted to practice law in another jurisdiction. Simply make your bar status very clear to anyone with whom you have professional contact, especially your employment agency and the legal service provider who will be supervising your work. You must never hold yourself out as an attorney in DC if you are not a member of the DC Bar, even if you are fully-licensed in another jurisdiction. (See Rule 49). Remind your employer that you should not be held-out or billed out as an attorney.
Finally, we encourage all contract attorneys to read the ethical rules and relevant UPL Committee decisions (http://tiny.cc/UPLWebsite) and take full responsibility for their own professional conduct. Attorneys should not risk their bar standing by relying on the representations of employment agencies and law firms that may or may not be fully aware of the applicable ethical rules.
This blog was written by Julia Hardinger, co-founder of Hardinger & Tanenholz LLP, a unique Discovery Counsel law firm that specializes in all aspects of discovery, including the end-to-end management of large-scale document reviews. This blog is the personal opinion of the author and not intended as legal advice.
Tuesday, June 30, 2009
Thinking about Outsourcing? 5 “Other” Questions to Ask the LPO
There is no doubt that Legal Process Outsourcing (“LPO”) companies have become a major force in the document review services market. A recent article from the Washington Business Journal cited an ABA Journal finding that there are currently about 100 LPO companies operating in India alone, and projects the industry to approach 4 Billion in revenue by 2015. Thus, it is not surprising that there has been much written about the most effective ways to evaluate and/or utilize these companies. Typically, commentators have focused on issues relating to security, privacy, confidentiality, privilege, as well as the logistics of performing litigation document reviews in a foreign country. We present here 5 less obvious questions that companies should consider before taking the LPO plunge.
How much money am I really saving?
By most accounts, the number one benefit of hiring an LPO to review your documents is to save money. Estimates vary widely, and the LPO’s themselves have not been shy about promoting the magnitude of their cost savings. A quick Internet search reveals the following cost saving estimates from various sources: “30%-70%,” “roughly 50%,” and “60% - 90%.”
Where are they getting these numbers?
One answer may be that they are simply comparing the hourly billable rate of their local document reviewers to more expensive US counterparts. But to whom, exactly, are they comparing their reviewers? Its easy to calculate a 90% cost savings if you are comparing a $300/hr AMLAW 100 associate to a $30/hr reviewer in India. But is that the proper comparison? Fewer and fewer US reviews are being performed by the expensive big-firm associates. It is much more common— and a much fairer comparison— for reviews to be performed by some type of lower-cost staff or contract attorney. Even in big cities like NY and DC, contract attorneys can be hired from staffing agencies in the $50/hr range, slightly more if special languages or technical skills are needed. These same attorneys can often be hired directly in the $35/hr range, and (sadly) at even lower rates during this current recession. Craigslist postings even reveal offers for US contract attorneys for as low as $20/hr. Most foreign LPOs offer their reviewers in the $30 range. US paralegals can often be obtained from staffing agencies in the $25/hr range. Thus, the analysis of “how much cheaper?” depends greatly on the who you selection as the standard for comparison..
In addition to the question of “to whom” should LPO reviewers be compared, you should also raise questions about the “what” the LPO is claiming to be cheaper than. In comparing costs between potential US attorney reviews and potential LPO reviews, you must always compare apples to apples. Many LPOs are only willing or able to perform basic, first-pass review for potential relevancy or potential privilege. Often, the “potentially relevant” set then needs to be sent to domestic attorneys for final relevancy calls, issues coding, confidentiality review, or final privilege review. The costs of these extra levels of review must be factored in when comparing the LPO review to a comparable review by licensed US attorneys who may be performing those “second-level” tasks during their initial review. Because work sent back to the US for higher level review tends to be performed by associates rather than contract attorneys, even a small amount of documents being re-reviewed greatly increase the total cost of the LPO review.
Finally, when dealing with the issues of cost, clients should always demand transparency from their vendors and counsel. It is reasonable to ask how much of the reviewer rate is being allocated between salary, overhead, and profit. A December 2008 article from Asia Legal Business News noted that the annual salary for an Indian LPO attorney starts around $6,000 per year. That roughly translates into $3/hr. So, your comfort of being charged a lower review rate for an LPO reviewer might quickly dissipate if you realize that 80-90% your fee is comprising overhead and vendor profit. Once you are aware of an LPO’s markup (or domestic vendor/law firm’s), you are better able to negotiate the best price for those services.
Thus, when evaluating the “cost savings” claims by LPOs, you should always ask them to clarify to whom and what they are comparing their costs, and also insist that any assumptions or benchmarks they are using are transparent and appropriate.
How does discovery work in the host country?
One of the primary benefits promoted by LPOs is that their attorneys are well-educated and well-trained, and might even provide superior performance to US lawyers and paralegals. For example, in a March 2009 article of the Massachusetts Lawyers Weekly, outsourcing consultant Stephen Seckler noted that India has “a large pool of highly educated law school graduates who have studied common law and have a strong command of the English language.” Similarly, KPO Consultants comments on its website that “Attorneys in India are familiar with the law doctrines (sic) as Indian legal system is similar to the legal systems of the UK, US, and also Indian legal training is conducted solely in English.”
Having been to India and met with and trained LPO document review attorneys, it is undoubtedly true that they are well-educated, intelligent, and focused. What is unclear from the above-cited quotes is how well to they understand the US discovery process. Simply saying that they are familiar with “common-law” or “similar” legal systems is insufficient. Having a Common Law system just means that the rule of law is based on judicial interpretation of case law, rather than solely on legislative or executive action. While this is useful background in working on US cases, it does not provide any insight into whether foreign attorneys have any legal training or experience with the US system of voluntary discovery and large-scale litigation document reviews. So, before you merely accept the fact that LPO reviewers are “attorneys” and familiar with the US legal system, delve further into precisely the type of discovery and document reviews that occur in their home country. You may find that with respect to the important roles of relevancy, privilege, confidentiality, etc., you are starting at square one.
What are the licensing requirement in the host country?
In the US, licensed attorneys must (1) graduate from a law school accredited by the ABA, (2) pass a bar examination in the state in which they wish to practice, and (3) remain in good standing. If the LPOs are touting their reviewers as “attorneys,” you should find out what are the requirements needed to achieve that status in the host country. Is there a governing body, like the ABA, that accredits schools? Do standardized tests need to be passed to qualify as an attorney?
Moreover, many LPOs like to promote the fact that they only hire the best and brightest local attorneys. SDD Global’s website provides a typical claim: ”Work is done by top law graduates and experienced lawyers and/or former law professors from some of the best legal outsourcing companies, law firms and law schools in India.”
When claims like these are made, its best to ask them to explain the basis for their characterizations. What do they mean when they use terms like “top graduates” and “top tier schools” ? Is there some type of published ranking system? What separates the top schools or students from the lower ranked ones? Are there ongoing CLE requirement like many those of US jurisdictions?
If having foreign reviewers be “attorneys” is an important factor in your decision process, you should learn exactly what that term means for those reviewers.
How are the outsourced attorneys to be trained for your case?
Even when LPO reviewers have a solid legal background and outstanding English proficiency, there is still the issue of who is going to teach them the language of your company, case, or industry? There obviously needs to be some transfer of information from the client to the LPO. Before signing on, you should obtain a clear understanding of how the LPO plans on learning that information and instilling it in their reviewers. Is the client responsible for providing that training? Is outside litigation counsel going to do it? Is the LPO itself capable of providing that training? Do they have experience in drafting manuals and other reference aids? These are all issues that should be discussed in detail before a decision on using an LPO can properly be made.
Who is responsible for the supervision of the outsourced attorneys?
Similarly, who is responsible for supervising the document review? In August 2008, the ABA rendered Formal Opinion 09-451 that said the outsourcing trend was “salutary,” but that outsourcing attorneys have the burden of ensuring that “tasks are delegated to individuals who are competent to perform them, and then to oversee the execution of the project adequately and appropriately.” How are these duties to be discharged?
Are you performing the supervision? Is your litigation counsel? Is it permissible to “outsource” the supervision of the review to the LPO? For whomever is providing the supervision, what systems are being put in place to accomplish it competently? Will the outsourcing attorney have somebody on-site to manage the reviewer? How will information be exchanged between the review team and the litigation team/client? Should domestic attorneys be engaged specially to oversee the project? Addressing these types of issues will help ensure not only that the outsourcing attorney’s ethical obligations are met, but also that your case is being litigated efficiently and properly.
Conclusion
Engaging an LPO is a huge proposition, entailing potentially huge risks and rewards. Be sure to ask the right questions so that you can make a fully-informed, responsible decision as to how to staff your review project.
David Tanenholz is the co-founder of Hardinger & Tanenholz LLP, a unique Discovery Counsel law firm that specializes in all aspects of discovery, including the end-to-end management of large-scale document reviews. http://www.hardingerlaw.com/
How much money am I really saving?
By most accounts, the number one benefit of hiring an LPO to review your documents is to save money. Estimates vary widely, and the LPO’s themselves have not been shy about promoting the magnitude of their cost savings. A quick Internet search reveals the following cost saving estimates from various sources: “30%-70%,” “roughly 50%,” and “60% - 90%.”
Where are they getting these numbers?
One answer may be that they are simply comparing the hourly billable rate of their local document reviewers to more expensive US counterparts. But to whom, exactly, are they comparing their reviewers? Its easy to calculate a 90% cost savings if you are comparing a $300/hr AMLAW 100 associate to a $30/hr reviewer in India. But is that the proper comparison? Fewer and fewer US reviews are being performed by the expensive big-firm associates. It is much more common— and a much fairer comparison— for reviews to be performed by some type of lower-cost staff or contract attorney. Even in big cities like NY and DC, contract attorneys can be hired from staffing agencies in the $50/hr range, slightly more if special languages or technical skills are needed. These same attorneys can often be hired directly in the $35/hr range, and (sadly) at even lower rates during this current recession. Craigslist postings even reveal offers for US contract attorneys for as low as $20/hr. Most foreign LPOs offer their reviewers in the $30 range. US paralegals can often be obtained from staffing agencies in the $25/hr range. Thus, the analysis of “how much cheaper?” depends greatly on the who you selection as the standard for comparison..
In addition to the question of “to whom” should LPO reviewers be compared, you should also raise questions about the “what” the LPO is claiming to be cheaper than. In comparing costs between potential US attorney reviews and potential LPO reviews, you must always compare apples to apples. Many LPOs are only willing or able to perform basic, first-pass review for potential relevancy or potential privilege. Often, the “potentially relevant” set then needs to be sent to domestic attorneys for final relevancy calls, issues coding, confidentiality review, or final privilege review. The costs of these extra levels of review must be factored in when comparing the LPO review to a comparable review by licensed US attorneys who may be performing those “second-level” tasks during their initial review. Because work sent back to the US for higher level review tends to be performed by associates rather than contract attorneys, even a small amount of documents being re-reviewed greatly increase the total cost of the LPO review.
Finally, when dealing with the issues of cost, clients should always demand transparency from their vendors and counsel. It is reasonable to ask how much of the reviewer rate is being allocated between salary, overhead, and profit. A December 2008 article from Asia Legal Business News noted that the annual salary for an Indian LPO attorney starts around $6,000 per year. That roughly translates into $3/hr. So, your comfort of being charged a lower review rate for an LPO reviewer might quickly dissipate if you realize that 80-90% your fee is comprising overhead and vendor profit. Once you are aware of an LPO’s markup (or domestic vendor/law firm’s), you are better able to negotiate the best price for those services.
Thus, when evaluating the “cost savings” claims by LPOs, you should always ask them to clarify to whom and what they are comparing their costs, and also insist that any assumptions or benchmarks they are using are transparent and appropriate.
How does discovery work in the host country?
One of the primary benefits promoted by LPOs is that their attorneys are well-educated and well-trained, and might even provide superior performance to US lawyers and paralegals. For example, in a March 2009 article of the Massachusetts Lawyers Weekly, outsourcing consultant Stephen Seckler noted that India has “a large pool of highly educated law school graduates who have studied common law and have a strong command of the English language.” Similarly, KPO Consultants comments on its website that “Attorneys in India are familiar with the law doctrines (sic) as Indian legal system is similar to the legal systems of the UK, US, and also Indian legal training is conducted solely in English.”
Having been to India and met with and trained LPO document review attorneys, it is undoubtedly true that they are well-educated, intelligent, and focused. What is unclear from the above-cited quotes is how well to they understand the US discovery process. Simply saying that they are familiar with “common-law” or “similar” legal systems is insufficient. Having a Common Law system just means that the rule of law is based on judicial interpretation of case law, rather than solely on legislative or executive action. While this is useful background in working on US cases, it does not provide any insight into whether foreign attorneys have any legal training or experience with the US system of voluntary discovery and large-scale litigation document reviews. So, before you merely accept the fact that LPO reviewers are “attorneys” and familiar with the US legal system, delve further into precisely the type of discovery and document reviews that occur in their home country. You may find that with respect to the important roles of relevancy, privilege, confidentiality, etc., you are starting at square one.
What are the licensing requirement in the host country?
In the US, licensed attorneys must (1) graduate from a law school accredited by the ABA, (2) pass a bar examination in the state in which they wish to practice, and (3) remain in good standing. If the LPOs are touting their reviewers as “attorneys,” you should find out what are the requirements needed to achieve that status in the host country. Is there a governing body, like the ABA, that accredits schools? Do standardized tests need to be passed to qualify as an attorney?
Moreover, many LPOs like to promote the fact that they only hire the best and brightest local attorneys. SDD Global’s website provides a typical claim: ”Work is done by top law graduates and experienced lawyers and/or former law professors from some of the best legal outsourcing companies, law firms and law schools in India.”
When claims like these are made, its best to ask them to explain the basis for their characterizations. What do they mean when they use terms like “top graduates” and “top tier schools” ? Is there some type of published ranking system? What separates the top schools or students from the lower ranked ones? Are there ongoing CLE requirement like many those of US jurisdictions?
If having foreign reviewers be “attorneys” is an important factor in your decision process, you should learn exactly what that term means for those reviewers.
How are the outsourced attorneys to be trained for your case?
Even when LPO reviewers have a solid legal background and outstanding English proficiency, there is still the issue of who is going to teach them the language of your company, case, or industry? There obviously needs to be some transfer of information from the client to the LPO. Before signing on, you should obtain a clear understanding of how the LPO plans on learning that information and instilling it in their reviewers. Is the client responsible for providing that training? Is outside litigation counsel going to do it? Is the LPO itself capable of providing that training? Do they have experience in drafting manuals and other reference aids? These are all issues that should be discussed in detail before a decision on using an LPO can properly be made.
Who is responsible for the supervision of the outsourced attorneys?
Similarly, who is responsible for supervising the document review? In August 2008, the ABA rendered Formal Opinion 09-451 that said the outsourcing trend was “salutary,” but that outsourcing attorneys have the burden of ensuring that “tasks are delegated to individuals who are competent to perform them, and then to oversee the execution of the project adequately and appropriately.” How are these duties to be discharged?
Are you performing the supervision? Is your litigation counsel? Is it permissible to “outsource” the supervision of the review to the LPO? For whomever is providing the supervision, what systems are being put in place to accomplish it competently? Will the outsourcing attorney have somebody on-site to manage the reviewer? How will information be exchanged between the review team and the litigation team/client? Should domestic attorneys be engaged specially to oversee the project? Addressing these types of issues will help ensure not only that the outsourcing attorney’s ethical obligations are met, but also that your case is being litigated efficiently and properly.
Conclusion
Engaging an LPO is a huge proposition, entailing potentially huge risks and rewards. Be sure to ask the right questions so that you can make a fully-informed, responsible decision as to how to staff your review project.
David Tanenholz is the co-founder of Hardinger & Tanenholz LLP, a unique Discovery Counsel law firm that specializes in all aspects of discovery, including the end-to-end management of large-scale document reviews. http://www.hardingerlaw.com/
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