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How Law Firms are Helping Small Businesses Save Big

Innovations in Process Control and Technology Enable Law Firms to Save Small Businesses Money

Written By: Mike Dolan and John Thickett

With the United States continuing to face severe economic challenges, law firms are slashing costs and reducing headcount to survive. Since January of 2009 law firms have laid off more than 9,900 employees including both attorneys and staff. The flurry of pink slips has been a wake up call to a once recession proof industry.

The legal profession is under a confluence of pressures that are causing law firms to change the way they do business in order to bring more value to their client. Pressures include clients demanding lower legal fees and better results, the unbundling of legal services to reduce costs, alternatives to billing by the hour, and the use of process control and technology to help reduce the most expensive costs of litigation.

Companies can no longer afford to pay $250 - $500 an hour to white-shoe law firms. One way GC’s and CFO’s look to cut legal expenses without compromising quality is to turn to smaller boutique firms that deliver specialized, unbundled legal services in a cost effective manner. Small businesses can also save additional dollars on legal expenses by asking their outside counsel to outsource routine document review and utilize new technology to manage electronic discovery. Firms that offer key cost saving methods are leveling the playing field for smaller business.

David vs. Goliath

Outsourcing document review is one of the most efficient ways to significantly decrease the cost of litigation. Law firms traditionally assign junior associates to conduct document review at the rate of $250 per hour, or more, compared to offshore document review which runs approximately $25 per hour. Significant profits are the key reason many law firms do not outsource document review.

Today with terabytes of data from e-mails, texting, computer files and instant messages under scrutiny, document review is now the costliest aspect of litigation. According to KPMG, approximately 58% - 90% of legal fees are spent on document review.

A real case “David vs. Goliath” story demonstrates the dramatic cost and outcome differences between old style document review and one based on solid process control principles. Several years ago, a small Texas-based software development company, “David” sued “Goliath”, one of the largest computer companies for intellectual property and trade secret infringement. A common problem when smaller companies take on big companies is the shear cost of legal action. Smaller companies cannot afford the crippling legal expenses and often end up walking away without justice.

This time was different; the company selected DiNovo Price Ellwanger & Hardy LP as their primary legal counsel, which directly engaged the services of Tusker Group, a document review service firm, and its dedicated team of India-based attorneys.

Tusker worked closely with trial counsel to provide them daily updates on the document review process. After 18 months the case was eventually favorably settled. “David” estimates it spent five to ten times less than “Goliath”, after Tusker found several “smoking gun” e-mails between “Goliath” employees buried among the 400,000 plus pieces of documents. It is highly possible that traditional document review might not have discovered these documents critical to “David’s” case.

Process Control and Technology Decreasing Legal Costs

Unbundling legal services by outsourcing allows law firms to focus on what they do best and increase efficiencies by delegating the more routine work to international outsourcing firms that specialize in document review. India continues to be the leader in outsourcing for several key reasons: it is the largest English speaking country with a stable workforce of attorneys trained in common-law and the country has, in the past decade, gained a reputation for its ability to leverage highly sophisticated technology. The right people, processes and technology are enabling outsourcing firms to provide high quality specialized services more efficiently and at a significantly lower cost than traditional law firms.

Best-in-class outsourcing firms utilize highly specialized software programs and process control similar to what might be used in the most efficient manufacturing operation to achieve best results. Software and technology are critical; outsourcing firms use different types of software programs depending on the case, timelines and desired results. Equally important are processes. Many of the processes used today in document review have been adapted from other information-based industries. They encompass powerful proven methods which achieve the same results each time they are applied. Processes should be continually refined by applying Dr. Deming’s statistical process control methods and Six Sigma to measure and improve quality and desired results. Well-managed outsourcing companies bring specialized resources not readily available in today’s law firms.

New technology and software have changed the way cases are won and lost. Discovery is one of the most critical and costly aspects of any legal dispute and, if not undertaken carefully, can result in costly sanctions and ultimately the loss of a case. Many times discovery can lead to early settlement, saving both sides time and considerable costs. Law firms and business involved in legal disputes can now capitalize on innovations in process and technology that are leveling the playing field.

About Mike Dolan and John Thickett

CEO Mike Dolan and CFO/CMO John Thickett founded Tusker Group in 2002 to specialize exclusively in advanced legal document review options to in-house and outside legal counsel. Harvard Business School graduates, each has helped multi-national businesses drive profits by integrating operations in low-cost countries like China and Mexico. Headquartered in Austin, Texas, Tusker Group provides the best quality and cost by integrating its India and U.S.-based operations with their clients’ legal teams.

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