Practice management | Disruptive technology is changing the future of legal IT

Information technology and outsourcing in the legal sector is fundamentally changing the way that law firms perform their work and the very business models they operate. The drivers behind this change is a combination of growing client awareness of available technologies, a new generation of lawyers comfortable with technology and an economic climate that demands greater a focus on reducing costs.

These factors have brought significant changes in a variety of legal activities, from online due diligence in mergers and acquisition projects to the use of legal process outsourcing (LPO) firms rather than law firms for contract drafting. Electronic disclosure is another area in which the rapid development of new technologies has meant the way in which law firms approach the underlying process has changed forever.

Through the widespread digitisation of the workplace, document management technology is evolving to help meet the burgeoning demands placed on litigators resulting from the volume and variety of documents involved in today's cases and disclosure exercises. Historically, even the largest of cases would only have involved a few thousand documents in a handful of formats from paper to email. This paradigm differs greatly from today's litigation where the most straightforward case can require the interrogation of terabytes of data, and corporations are expected to consider text messages, online social media postings, audio, video and data on personal devices.

Today's litigation professional is expected to understand and access all of these varying formats and systems in a defensible manner irrespective of the increasingly complex and international nature of corporate IT infrastructure. Corporate data storage no longer follows the geographic locations of those who need to access that data, so emails for an employee in one country may be stored on a server located in another jurisdiction entirely. Added to this are further complications caused by the existence of documents in a variety of languages and the increasing outsourcing of IT functions to service providers.

Finding, extracting and then reviewing information from these sources for disclosure purpose is an extremely complex and time-consuming task, and hugely expensive if approached in a traditional manner. The private sector has responded to this issue with a wide range of technology solutions, designed to allow the user to identify, collect, search and review electronic documents faster and more cost efficiently than ever before. Even so, the costs remain so high as to make some litigation disclosure exercises disproportionate to the damages at issue, a position at odds with the courts' ?overriding objective.

Courting disaster

The increasing recognition among the judiciary and wider legal community of the cost and complexity of modern disclosure exercises has had the effect of prompting the courts to address the issue. The new Civil Procedure Rule 31.5a came into effect on 1 April 2013, and requires the parties to litigation to discuss and agree the scope and cost of the e-disclosure exercise before the first case management conference.

The new rule also imposes a duty on the parties to disclose what technology and techniques they will be using to undertake the e-disclosure exercise. This will enable the judge to determine at the outset what the appropriate scale and budget of the e-disclosure process should be and ensure the proposed spend is proportionate with potential damages. Costs are unlikely to be awarded for money spent on disclosure beyond the agreed budget, so it is now essential that litigants and their lawyers understand the nature and scope of the e-disclosure process well before they arrive for the conference, and come prepared to defend their proposed strategy.

This new focus on the use of technology to achieve lower costs naturally brings the conversation round to what role or value the human can bring to the process, especially if either side is advocating the use of newer technologies rooted in conceptual or classification methodologies and workflows.

The people factor

The key to a cost-effective disclosure exercise is to reduce the amount of human time that needs to be spent on reviewing documents. Technology can help to assess, prioritise, categorise and sort electronic documents before delivering a potentially relevant document set for manual review, thereby saving hundreds of man hours that would otherwise be spent scrutinising irrelevant material.

The Holy Grail in e-disclosure is to enable the technology to not only pick out documents for review, but also to evaluate what they 'mean' and how likely they are to be relevant to the matter at hand. This process, known as either Technology Assisted Review or predictive coding, is already being used today. E-disclosure exercises utilising predictive coding are already being accepted by courts in the United States and the same will inevitably come true of English and Welsh courts.

Predictive coding is a highly sophisticated process that applies algorithms to identify the 'meaning' of a document, find relationships between documents and then assign a relevance score for documents in the context of the issues of the case.

The process works by taking a sample set of documents, having one or more subject matter experts (SME) review this sample set for specific criteria, and then leveraging the decisions of the experts coupled with the predictive coding technology and workflow to categorise the un-reviewed population of documents. The process may be run a number of times, with multiple iterations to refine the process. Once the entire population is classified, then subsequent workflows using human reviewers will be implemented to ensure the accuracy of the classification and that all documents have been properly quality checked to avoid inadvertent disclosure of, for example, privileged documents.

Variations of this kind of technology are already in wide use across other industries and contexts, such as by online retailers analysing your shopping habits to make further recommendations, or by search engines. In the legal sphere, for large scale disputes and regulatory information requests, the potential cost savings compared with traditional techniques can be enormous. While human input will always be necessary at various stages of the process, the more of the work that can be automated and compared to the human decisions, the more cost-effective - and indeed accurate - the exercise will be. It can be equally argued that to fully leverage the strength and value of these 'new tools', a complex workflow must be designed and implemented utilising comprehensive checks and balances comprising both technical and human quality controls. As well as the law, tomorrow's lawyers will need to master a variety of new skills, including project management, statistics and process design.

Risks and rewards

While the ultimate savings are clear, new technology is expensive. At a time when levels of legal fees are under pressure, it is understandable that many law firms are reluctant to make significant new capital investments to bring this technology in-house. However, the issue facing law firms in respect of e-disclosure is that clients now expect their advisers to be able to provide access to the latest technology - and to provide proof that they can do so.

Regulators too have woken up to the potential of technology to enable companies to respond more rapidly and comprehensively to requests for information and in some parts of the world - notably the US and Australia - are becoming more demanding as result.

Consequently, many law firms are opting to invest in accepted modern technologies and methodologies to run smaller-scale projects, but outsourcing more complex undertakings to specialist providers with whom they can partner to deliver the required savings at a lower risk, and with lower capital investment. These partners can assist not only with the actual project itself, but also by providing crucial information and experience to facilitate the CPR 31.5a budgeting and scope negotiation as well.

As clients and lawyers become more familiar with how e-disclosure works, court challenges to the processes and technology employed will become common. Lawyers need to invest the time now in learning enough about the technology to select a reasonable approach to e-disclosure, and defend their chosen processes. The risk of getting it wrong and exposing a client to an adverse costs order is too great to ignore.

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