Initial reflections on ACC Boston: “brute force e-discovery”, budget cuts, a plethora of technology … and outside counsel

We are still in Boston (we had some post-ACC interviews to do today) and we have about 6 detailed posts to complete on ACC but we thought we’d post our initial reflections of the conference.”

First, a million thanks to Kim Howard, Marthea Davis and Robin Scullin of ACC for all they did to assist us at the conference.  They made the coverage so much easier for us.

As we said in our pre-ACC Boston post, there was a lot to cover.  There were  excellent panels on intellectual property, doing business in China, handling bankruptcy litigation, real estate practices, creating an in-house law department, pro bono opportunities for in-house counsel, HR and employment law issues, primers on trade laws, etc.  We covered a wide-range of these presentations and we will highlight our favorites in a later post.  Oh, and ACC made sure we all had the opportunity to stuff ourselves at breakfast, lunch and dinner.

We focused on themes we have discussed the last 1+ years:  what corporations must do to protect themselves/work through increased litigation, audits and regulatory investigations; the plethora of ESI and other legal-related technology out there for in-house law departments to consider; and managing/controlling ESI costs/needs.  And how corporations do all of this with budget cuts.

Note: many of these topics have been brilliantly covered by our colleague, Rees Morrison, and we will integrate several of his links in our more detailed posts to come.

So right now a few comments on the issues that affect and involve the majority of Posse List members — the issues we outlined above — each of which deserves (and will get) a detailed follow-up post in the coming days.

The following are reflections based on several presentations we attended in the formal program, a number of e-discovery/compliance/litigation ‘’roundtables” to which we were invited, and several “chats over drinks” with a number of GCs and AGCs we met.

“Brute force e-discovery”

A common rant from attendees:  why do so many ESI vendors think “one size fits all” in discovery and insist on a “brute force, shove it all down our pipe and you’ll be fine” approach?   Yes, GCs are sometimes confused by the myriad, disparate technology systems out there.  Plus the issue we have all discussed:  the consolidating of e-discovery vendors due to failures or buyouts (recurring comment at ACC:  “who will survive?  Who do we pair up with?”)

They know they must take back control of the process from outside counsel, both for cost reasons and piece of mind.  And those that have retaken control prefer vendors not wedded to a given technology but who are flexible, adaptable to a case, a situation.  (We’ll profile the vendors often mentioned by GCs and those they liked but in a later post).

They all mentioned “enterprise class products” because of the global convergence of audit, compliance, regulation, and risk.  Because the mantra was: cost and communication.  Give us technologies that make all our information “reasonably accessible and at an affordable cost …. help us close the gap between the technology out there and what we need”.

All the GCs and AGCs we spoke with said “our issues fall into three broad categories: litigation, investigation, compliance/regulation.  All our ESI is going to fall into those 3 areas”.   We talked about audit issues but most said that was a subset of compliance/regulation.

And (almost) everyone we spoke with said “we really need an ESI coordinator/ESI officer”.  They viewed their C-level suite as composing of the general counsel, the compliance officer, the finance officer … and outside counsel as a “shadow figure”.  But they saw the need for an ESI coordinator, mostly likely under the GC or the compliance officer.  It is why there is a natural inclination to turn to the IT department because these guys “talk the talk” …. even if (as many GCs admitted) they don’t really understand it.  But a well-versed ESI coordinator, under the GC or compliance, would work.

So, yes, all the GCs we spoke with acknowledged they must ensure compliance/risk/litigation is managed effectively, to make certain they can react quickly and more importantly, cost effectively when and if an issue arises.

And has there been a movement to bring in-house contract attorneys and computer forensics/ESI temps?  Yes said Verizon, and Reebok, and many others.

Note: we’ll have a more detailed post in a few days on the increasing trend we’ve reported on over the last year, the “pairing” of ESI vendors and staffing agencies (for example Huron/The Dine Group and Fios/Ajilon) as well as ESI vendors who have built their own project management/staffing component such as eTERA Consulting.   And we’ll comment on the proposed Adecco purchase of the MPS Group.  We recently met Patrick De Maeseneire, chief executive of Adecco, at a conference in Europe, who had a major role in the proposed acquisition.

In-house law department budget cuts: doing more with less

As has been the case with law firms, in-house legal departments have been forced to cut their budgets.  But with a greatly increased workload.  And it is due not just to the increase in litigation/investigations but because of regulatory/compliance issues.  As one GC told us, “we have more and more regulatory/compliance issues and we are seeing far more regulatory inquiries than in prior years … and we simply cannot cover it all”.  Worse are the “information requests” which seem to have tripled. 

Plus our old favorite, the Foreign Corrupt Practices Act (Mark Mendolsohn, deputy chief of the fraud division at the DOJ, was slated to be on the FCPA panel but he could not make it). 

That’s the dilemma:  in-house legal teams tasked with managing risk and responding to potential litigation with the constant pressure to reduce their budgets, leaving many firms in the unenviable position of having to identify and manage potential risk with less resource at their disposal, while the amount of data passing through any company is growing exponentially year on year.

So, what to do?  To cope with this increasing workload/shrinking budget, legal departments have turned to service providers and their in-house counsel.  And as we all know, this comes at a time when law departments have decided to reduce spending on outside counsel.  And it is fraught with difficulty.  As one AGC told us: “Knowing when to hire a law firm rather than handling a matter in-house is sometimes more of an art than a science”.

For some companies, the nature of their business or the composition of the legal team makes the in-house/outside counsel split easier to determine. A legal department may handle routine matters in-house and retain outside counsel for more complex issues, such as large-scale litigation or a merger. Departments that have attorneys with expertise in a particular area of law, may do both commodity and specialty work in-house. Still another way legal departments can allocate work is to think in terms of high-value versus routine or basic activities. Using this approach, the legal department in-sources certain tasks, such as routine contract work, to employees within the company who have been trained to follow a basic framework or template the department creates.

And legal departments are becoming more systematic about managing and directing this partnership. For example, legal departments whose companies are involved in litigation are increasingly applying uniform task-based management (UTBM) to their outside counsel’s activities. (Note:  UTBM is a series of litigation codes developed by the American Bar Association, the Association of Corporate Counsel and a group of major corporate clients and law firms coordinated and supported by PricewaterhouseCoopers.   We’ll cover that in a more detailed follow-up post).

There was also a lot of discussion about alternative billing, using smaller law firm/boutique law firms/solo practioners, all within the framework of the ACC Value Challenge (click here).  That will be a longer post.

Roadmaps to managing all that ESI

We’ll end this short “reflections” post with roadmaps.  There were several presentations devoted to “roadmaps” … and a large number of panels that incorporated roadmaps …for managing all of this e-discovery/ESI compliance.  We will try to summarize the kep points raised knowing this topic requires a loooong post so we can only brushed the surface:

1.  You need management commitment to compliance.  Once you have management commitment, you cannot turn back or relax.

2.   There are three key components that make up an effective e-discovery and compliance program:  governance, process, technology.

3.  A governance package sets organizational standards, processes and compliance rules for streamlining document-handling activities, providing ease of reference and reducing the amount of information you need to manage. A document and records governance package can consist of any number of policies and procedures, based on your organizational culture, external risks, infrastructure complexity and compliance impact.

4.  The most challenging step:  understanding how information is processed throughout its lifecycle.  Process also means change, especially as it relates to electronically stored information.  If you do not have individual, departmental or functional standards for describing how electronic documents and e-mail are to be indexed, retained or disposed, any imposed standards can change how you process information.

5.  You must you must you must conduct surveys and interview users by department or function to create a realistic picture of your complex enterprise. Only after you capture storage protocols and understand how information is currently cataloged or indexed can you begin to break down the silo effect of storing information.

         Note:  and therein lie the Four Horsemen of the Litigation Apocalypse:  chain of custody, spoliation, authenticity, metadata

6.   You need to manage your information proactively.  As one attendee put it: “your ESI is a core asset”. 

7.  Whether information is in a paper document, an electronic document or a record, it is potentially discoverable. Therefore, you need to capture information upon creation and manage it through its lifecycle to disposition.

8.  Technology is your friend.  It can help you.  Do not be afraid.  There are vendors (too many, alas) that can provide lifecycle management of ESI, capture ESI, and manage ESI according to your company policies for retention and disposition of information.

As we said, reflections in brief.  More to come.