Articles Posted in Non-Law Firm Costs

The website of SDD Global sharply criticizes the “P” in LPO. The services provided by companies in that sector go beyond assembly-line repetition. Dare I say to the practice of law? I quote extensively because the point is well made and the appropriateness of other descriptive terminology compelling:

“The term, “LPO,” for “legal process outsourcing” … is apparently a media invention, first appearing in 2005. It derives from BPO, or business process outsourcing. But to the extent that the word, “process,” suggests standardized, commoditized, easy-to-replicate tasks that can be performed without a lot of education, much less professional training, it is a misnomer for the legal outsourcing or legal services KPO (knowledge process outsourcing) industry. Typing a medical transcription, or answering calls based on a script, is a “process.” On the other hand, legal research, legal analysis, or drafting complaints, contracts, patent applications, or legal briefs, is not a BPO-like, commoditized “process.” Those are legal services, even if they do not amount to “practicing law,” which can only be done by the supervising, licensed attorney (often in-house corporate counsel) who reviews the services that so-called LPO companies provide.

That is why many in this industry do not refer to themselves as “LPO” companies. One company uses the phrase, a “provider of global legal and patent outsourced services.” Another refers to itself as a “premium legal services company.” Others refer to their “Legal Knowledge Services” or “Offshore Legal Services.” Still another has adopted the label of “legal services organization.”

Yes, a pit tongue in cheek as there came to mind an image of law departments cutting down the overgrowth of costly patents, and law departments – like St. George slaying the dragon – eliminating shell corporate entities that sap money but add no value. The image shifted to law departments slashing the number of law firms they use and others that reduce the number of their standard contracts, a form of pruning. Less is more.

Each of these pruning operations aims to save company funds and to improve the effectiveness of a function: intellectual property, corporate secretarial, or the legal department, respectively (See my post of Nov. 13, 2005: Dow Chemical abandoned patents; Feb. 4, 2008: cost per entity maintained; Sept. 19, 2008: control by general counsel over newly-created corporate entities; Oct. 24, 2008: database to get control over corporate shells; Feb. 19, 2010: Orrick Herrington and Cisco’s entities; Dec. 3, 2010: Financial Times honorees and convergence of law firms; and Aug. 17, 2010: Microsoft simplifies its contract portfolio.).

The Wall Str. J, Nov. 23, 2010 at B6, cites data from a research and consulting firm regarding expenditures by the 1,000 biggest US companies on e-discovery. They are expected to spend about $1.3 billion in 2010. According to the cited report, that expenditure equals 7.1 percent of their litigation spending, up from 5.2 percent five years ago (a rise of one third, or something like 4-5% a year).

Being methodologically prissy, I wonder how many law departments keep track of e-discovery as a line item. Or are the metrics submitted based on guesses, impressionistic and influenced by the roar of industry hype?

Might it also be that the rise reflects a proportionate rise in how many documents are available electronically? In other words, the increase may match the workload, but spending on non-electronic discovery of hard-copy documents may have dropped off.

Relish this juxtaposition from an article about electronic exchanges between purchasing companies and selling providers: “Increasingly, companies trade in services, too, placing bids for legal and janitorial work, for example.” The dirty truth is ought.

Seriously, are we going to see a surge in online auctions and electronic procurement of law firm services? The NY Times, Nov. 21, 2010 at BU3, promotes the vastly increased scale and capabilities of companies such as Ariba and CombineNet. Ariba’s network links about 1,000 buyers and 300,000 sellers. CombineNet may not be as sprawling but it is “a specialist in complex transactions.”

My crystal ball says that online purchases of even moderately sophisticated legal work loom far off in the future, if ever. But more general counsel may venture to seek fixed fees by electronic for a for routine work, willing to test a new method of obtaining better prices, accepting that multiple firms have equivalent capability, wanting to streamline the competitive bid process.

The NYSBA J., Oct. 2010 at 36, discusses in an article on law schools several industry-wide changes general counsel can agitate for to benefit the profession (See my post of Nov. 1, 2010: broad initiatives of general counsel.). The third change startled me.

General counsel should “pressure state authorities to let non-attorneys officially provide the kind of work they need and have needlessly and traditionally been overpaying licensed attorneys to do – like discovery, expert witness preparation, patent filing, and similar tasks.” Written by a law school professor in an article about how law schools need to change and keep up to date, this shotgun line, blasting away at the fundamental economics of the bar, made me blink.

Huge swathes of what associates currently do could shift to non-attorneys if you reason the way the author does. Why not reason that way, particularly if the consumer of those unregulated services is an in-house lawyer who can make judgments about quality and value (See my post of Sept. 21, 2008: “qualified legal purchasers” as a concept.).

Right after reading about the vast number of trees (pages of paper) we consume in offices (See my post of Oct. 7, 2010: 8,333 pages per tree.), I read with fascination about some innovative techniques to preserve ink and save the environment. For example, simply using thinner-lined typeface such as Century Gothic requires less toner or ink to form characters than the Microsoft Outlook default of Arial (which I am using!). As explained in the Economist, Sept. 4, 2010 at 9, some fonts these days even punch tiny holes in the letters to reduce ink up to 25 percent. Software can make the fonts look perfect onscreen but revert to Swiss cheese during printing.

A low-tech save covers the tiny window in toner cartridges with a piece of tape so that the optical sensor thinks the cartridge is full. Wait for streaks to appear on your printed pages. Duplex printing also has its advocates. The final idea from the article is very simple: in your signature line on e-mail ask recipients to “Consider the environment before printing this e-mail” (See my post of July 7, 2009: printing and printers with 6 references.).

Ron Denton, Manager of Legal Businesses Services at ConocoPhilips, explained one of the steps his law department had taken to reduce discovery costs. Speaking at a DataCert conference (Generals of the Revolution), Denton said that they had created the position of document discovery coordinator. “This professional takes charge of document production internally and selects and manages appropriate third-party vendors, such as electronic discovery providers.” Certainly a sound idea (See my post of May 3, 2008: internal discovery teams with 8 references.).

The new position, and other efforts related to e-discovery, Denton said had reduced his company’s document related discovery costs by an astounding 60% (See my post of Sept. 8, 2010: costs of e-discovery with 11 references.).

One generic estimate for the number of sheets of paper produced per tree is 8,333 (meaning paper without a significant amount of recycled content). This statistic comes from the J. Assoc. Legal Writing Dirs., Fall 2010 at 195. For dramatic illustration, the author took data from 2008 for the more than 61,000 appeals filed in federal courts. After eliminating some of the appeals and making some assumptions, the conservative estimate was that those appeals consumed 8,233 trees, the equivalent of more than seven acres of deforestation.

Your law department should calculate how much virgin paper it consumes each year and translate that into trees felled. To borrow from Joyce Kilmer’s well-known poem, “I think that we shall never see a printout pretty as a tree.”