Client concerns about legal cost and efficiency are becoming increasingly emphatic. Indeed, more than 90 percent of law firm partners in a 2014 Altman Weil survey said they think greater efficiency in legal services is a permanent part of the market—and the same overwhelming percentage has said so for the past four years the survey has posed the question.
What are law firms doing to respond? Some are ahead of the curve. Seyfarth Shaw and Clifford Chance are two firms focused on improving client focus with project management techniques borrowed from business and manufacturing. A third, Morgan, Lewis & Bockius, incorporates technology into legal practice to a unique and highly successful extent. In keeping with the theme of this inaugural issue of The Practice, each of these firms is attempting to do more for less.
A number of law firms are using project management techniques borrowed from manufacturing to improve internal processes and efficiency. Six Sigma is one such method. Pioneered by Motorola and GE in the 1980s and ’90s, the name refers to a statistical accuracy of 99.9 percent, or, put another way, a process that produces an error rate of just 3.4 in every million iterations. Six Sigma uses statistical analysis and a focus on client needs to improve process design and reduce error, while “lean” analysis reduces nonessential steps.
Legal Lean Sigma
Lean Six Sigma combines the methodologies of Six Sigma and lean analysis, and the process has taken on the name Legal Lean Sigma in the legal services industry. DOWNTIME is a mnemonic of eight kinds of waste, or muda—a Japanese word popularized by Toyota to refer to futile or superfluous procedures—lean analysis attempts to reduce:
- Nonutilized resources or talent
- Excess processing
Seyfarth Shaw is a pioneer in efforts to apply the Six Sigma methodology to legal practice. Partner Lisa J. Damon describes the firm’s process in the December 2013/January 2014 issue of Practical Law. The “SeyfarthLean” service model combines client interviews (called “voice of the client”), standardized trial process maps, and alternative pricing agreements. Such project management is becoming increasingly common: the firms Baker & McKenzie, Freshfields Bruckhaus Deringer, Sullivan & Cromwell, and DLA Piper have all adopted Six Sigma techniques to improve legal processes.
The UK firm Clifford Chance reported on its efforts to use Six Sigma—which it calls “continuous improvement”— in a white paper published in 2014. Even seemingly minor aspects of legal service can make an impact, the firm notes: when it examined its process for producing post-litigation reference books—the bound compilations of litigation and transaction documents prepared at the end of a case—it discovered cost savings of 60 percent, while the time required to produce each volume dropped by as much as 80 percent. Since the firm produces 1,500 volumes each year in just one of its offices, such savings are not negligible.
Overall, Clifford Chance has found continuous improvement analyses can reduce staff time by as much as half. In 2013, the firm saved time equivalent to about US $1.5 million by improving legal processes, and it has plans to train its entire staff in the methodology. The “deeper understanding” of legal processes that results from a careful continuous improvement analysis, the white paper notes, may “be a driver for a fundamental shift in the way in which law firms and their clients value and price legal services.”
Morgan Lewis is another standout in client innovation and efficiency. Launched in 2004, the firm’s eData practice is made up of partners, associates, and technology staff devoted entirely to the electronic aspects of legal services, from e-discovery to pre-litigation data management and information governance. The practice group is about equally divided between attorneys from a variety of practice areas—labor and employment, financial services, antitrust, intellectual property—and technology experts. All are certified in Legal Lean Sigma methodologies.
At eData, metrics closely track client discovery work, while the resources selected for each project are carefully tailored according to one of the practice group’s mottos: ‘Don’t offer a Cadillac when a bus token will do.’
The eData team leverages technology and process analysis across the entire spectrum of data-related legal services. Of the practice group’s 71 people currently working full time, more than half (41) are “technologists”—individuals trained to understand the intersection between technology and law and who structure the framework of day-to-day operations and provide management and technological advice. Metrics closely track client discovery work, while the resources selected for each project are carefully tailored according to one of the practice group’s mottos: “Don’t offer a Cadillac when a bus token will do.”
Pre-litigation, eData works with clients to develop an information governance strategy, a holistic approach to data life-cycle management that addresses the creation, storage, access, search and retrieval, security, retention, and disposal of records throughout an organization. Stephanie A. “Tess” Blair, lead partner for Morgan Lewis’ eData practice, notes that while 10 years ago the perspective of most organizations was to “keep everything,” many companies now find themselves buried in data. Information governance systems allow businesses to know where information is stored, as well as who has access to it, Blair says—aiding the satisfaction of legal and business obligations as well as facilitating discovery practices when necessary during litigation. Such a framework provides guidance about what to keep or discard, reducing unnecessary data retention while maximizing access to crucial knowledge resources within an organization. Its goal is to turn information into an asset of an organization, rather than a liability.
When e-discovery is necessary, eData deploys Legal Lean Sigma workflows and technology to streamline processes and reduce costs. According to Blair, the primary driver of e-discovery risk and cost is the often overwhelming volume of data created by litigation. The labor costs of document review can only be reduced so much via outsourcing or offshoring before compromising quality of work, but eData’s expertise in predictive coding and technology-assisted review defensibly reduces the volume of data requiring review and streamlines the discovery process by optimizing each reviewer’s time. The group’s use of technology allows it to come to grips with the cost-to-quality ratio inherent in the massive volumes of data produced in business operations as well as the potential burdens of e-discovery in litigation—meaning clients don’t have to choose between one or the other.
That, in turn, nets real value. When the group took over discovery for a high-tech company’s litigation portfolio, the group delivered first-year cost savings of 30 percent—a number eData says it will continue to better over time with continuous process improvement. Another pharmaceutical company saw cost savings of 50 percent when eData developed a tailored discovery strategy, replacing the inefficient “grab everything” strategy of its predecessor.
The group’s use of technology allows it to come to grips with the cost-to-quality ratio—meaning clients don’t have to choose between one or the other.
In fact, Morgan Lewis guarantees clients savings over their previous spending. Its efforts seem to have paid off: the practice group operates largely on flat fee arrangements, yet is among the most successful divisions at the firm. In addition, a 2014 survey of corporate counsel by BTI Consulting found Morgan Lewis ranked fourth in client service among law firms worldwide; eData in particular has been singled out among firms for its leadership in e-discovery.
When The Practice asked Blair what she thought clients valued most about her eData group, she of course noted the cost savings provided. But she also stressed the predictability, transparency, and even opportunities provided by integrating cutting-edge technology and first-rate legal thinking into data management and governance. More for less is certainly at the heart of that proposition.