Changing conditions will mean seeking new comfort zones.
Over the past 10 years, the cost of hiring an army of temporary attorneys for document review has fallen precipitously. In some markets, it’s now 40% cheaper than it was in 2005. If you factor in the explosion of “on-shoring” these temporary workers by moving the hiring to cities with a lower cost of living (Nashville, Detroit, Minneapolis, the entire state of Ohio), the cost savings approaches 70%.
For law firms, taking advantage of these falling rates has allowed them to cut the overall cost of document review projects for their corporate clients. It has also allowed them to continue to structure these document reviews the same as they did 10 years ago, while claiming massive cost savings.
This trend has run its course.
First, rates for hiring temporary attorneys are no longer falling. Within the major metropolitan regions, rates have stabilized or begun to creep up. Meanwhile, the low cost markets are saturated with managed document review shops, creating localized demand that undermines the ability to deliver the promised rock-bottom rates.
Second, some temporary attorneys are engaging in a cost/benefit analysis of their own. Over the past two years, multiple lawsuits have been filed against employers (staffing agencies) and their supervising law firms. Many have yet to be fully adjudicated. To say these suits are futile and only a nuisance underestimates their impact. Each affected law firm has spent untold energy and innumerable hours addressing internal processes related to these armies of temporary attorneys. The resulting solutions are so inconsistent that there is no best practice – just different practices that firms are hoping they’ve got right – to minimize cost and risk, maximize work product, or attract more clients.
Furthermore, these employment suits are indicative of the mindset of these temporary attorneys: it’s better to take a chance on a one-time payout and risk being blackballed from the industry than to endure current conditions. If these lawsuits are the tip of the iceberg of frustration these temporary attorneys feel, what might this say about the quality of their work product? An ancillary part of this development is an increased effort on the part of temporary attorneys to unionize – an effort that, if successful on a local or a national level, will effectively eliminate the realized cost savings for document review that gave rise to the creation of these jobs in the first place.
These lawsuits over the status of employment are in addition to the challenge of managing an army of temporary attorneys, documented in multiple cases, where poor or even negligent work product gives rise to malpractice suits (e.g., J-M Manufacturing Company, Inc. v. McDermott Will & Emery, California Supreme Court, Los Angeles County, Central District, Case No.: BC 462832). It’s surprising that with less risky and more cost-effective approaches available, so many law firms continue to use a document review solution that subjects them unnecessarily to such headaches and potential liabilities.
Finally, the glut of attorneys available for document review is going away. We hit “peak attorney” in 2013-2014 with the graduation of the final outsized class of law students, so the decline in law school applications and admissions will gradually shrink the number of new lawyers hitting the market each year. Combined with the natural migration of attorneys to jobs outside of the practice of law and document review, this is a rapidly diminishing workforce. It’s simple economics – law firms will not have the option to hire the same army of temporary attorneys at the same low price or with any selectivity based on past performance.
The individual partners and associates confronted with our evolving legal marketplace are beginning to realize that they can no longer rely on an economy of temps to provide a competitive advantage over their neighboring firms. Ten years of easy living is giving way to a new era of intellectual calisthenics as they consider alternatives to the liabilities and frustrations of a review effort more and more misaligned with their firm’s goals.
Many alternatives are not new to the market, but have only been embraced selectively. They include moving document review work offshore to maintain old workflows but still provide cost savings to clients; testing new workflows—including technology-assisted review—to cull much of the data so that the review army can be slimmed down to a mere regiment; and embracing advanced technologies and processes that eliminate first pass document review entirely, allowing a focus on more substantive review with internal resources or specialists.
Senior associates and partners that have yet to question and evaluate their own document review workflows may be tempted to test the new technological waters as part of a trial run, while still hanging on to the old “hire an army of temps” approach. But to act like the last 10 years of stagnation wasn’t exactly that – a period of willful ignorance of technological alternatives enabled by the falling price of human capital in the legal profession – is to ignore the rapidly accelerating adoption of innovation we are now witnessing. To stay at the forefront of winning and keeping corporate clients, and to effectively manage the risks and liabilities associated with the delivery of superior client service and value, lawyers must realize that trial runs are the equivalent of putting on your jersey when everyone else is already sprinting down the track.
There are a lot of experts and thought leaders that can act as your own personal trainer, offering alternatives that can effectively replace your army of temporary attorneys. If you don’t know whether your firm is discussing alternatives, be the first to get off the couch. Being a proactive partner or associate has set many a career on an upward trajectory. And if you don’t have the right experts in your Rolodex to see you through to the other side, ditch the Rolodex. Or at least look beyond it: there’s a whole other world out there.