Utilizing A Technology Platform For Better Litigation Cost Management

Sunday, April 3, 2011 - 11:56

No matter the geographical location, industry represented, or organization size, litigation numbers have steadily increased over the past few years in terms of exposure and settlements. According to " Fulbright's 7th Annual Litigation Trends Survey Report," the most drastic litigation increases have been in the areas of employment, contract disputes and personal injury. In fact, in the second quarter of 2010, there was a 62 percent increase in employment lawsuits in federal courts. Many industry analysts were not surprised by the increase. An unpredictable economic environment and high unemployment numbers are known factors that spur employment litigation.

Even with discussions of economic recovery, more than 90 percent of the survey's corporate counsel respondents in the United States (U.S.) and the United Kingdom anticipate that legal disputes will increase or remain the same in 2011, and not just in the area of employment litigation. The Fulbright report also found that one in five U.S. companies and one in four companies with more than $1 billion in revenue cited tougher government regulation as a possible cause for more litigation battles in 2011.

While facing a business climate in which litigation is poised to continue on an upward spiral, general counsel are being challenged to reduce costs and at the same time improve legal operations and the quality of work delivered. The days of a legal department operating with a limitless budget are gone. In the legal industry today, success is determined not only by the final outcome, but also by the overall expenditures that were necessary throughout the course of the litigation.

Many law departments have found that tactics such as alternative fee arrangements or legal process outsourcing, while beneficial, don't go far enough when developing long-term cost-saving strategies, especially in the area of litigation.Defining a vision for the future involves an immediate and thorough transformation of the entire department's current legal service delivery model. For such a transformation to have a positive impact today and for the foreseeable future, savvy legal departments are seriously considering adopting a technology platform because of the expansive benefits.

A technology platform provides the foundation necessary to increase process efficiencies that will in turn decrease litigation management costs. A comprehensive platform, such as Datacert Passport, consolidates and integrates best-in-class market solutions from the platform vendor with those from complementary solution providers in areas like e-discovery and legal holds so the entire lifecycle of a litigation matter can be planned, managed and measured via one system. A solution that has such advanced integration capabilities and is equipped with the tools necessary to allow new applications to be configured based on the needs of a specific type of litigation, such as employment or contract, is referred to as an enterprise legal management (ELM) platform.

When utilizing an ELM platform, the entire legal team has access to the comprehensive information, statistics and business intelligence needed to more successfully manage entire legal processes, including litigation. ELM platforms provide considerable cost advantages because they allow the legal department to increase operational efficiency by consolidating and integrating all legal point solutions on a single platform; streamline reporting and gain more insight with business intelligence; and enhance collaboration internally and with outside counsel so that distinct components of the litigation process can be precisely assigned and managed.

Increase Operational Efficiency By Consolidating And Integrating All Legal Point Solutions On A Single Platform

A robust ELM platformhas broad capabilities. Implementing an ELM solution can simplify management of all aspects and stages of litigation such as case management, spend management, risk management and e-discovery.

Uniting all disparate applications onto a single platform allows data to be shared across the entire legal function. This level of data integration substantially improves visibility and enables the legal team to quickly access relevant historical information, easily review matter status, and proactively monitor spend against budgets on specific litigation. These actionable analytics, which directly result from use of an ELM platform, make the day-to-day responsibilities of the litigation team more proficient and optimize performance so that many of the time-consuming and redundant efforts that previously contributed to unnecessary spend and inaccuracies can be eliminated.

Streamline Reporting And Gain More Insight With Business Intelligence

A true ELM platform will have a business intelligence engine built into it as one of its core components. This means that business intelligence and reporting can be centralized for all applications built on or integrated with the platform, including matter and spend management applications, applications built by independent software vendors and clients' existing in-house legal applications, such as enterprise document management, legal holds, or e-discovery systems.

When all legal systems are integrated with a true ELM platform, like Passport, data can be shared seamlessly between them, allowing for consolidated reporting of all data. For example, a department that implements Passport with Datacert's legal spend and matter management applications, but uses a legal project management solution from a different vendor and an e-discovery system from a third vendor can aggregate data from all three systems into one report to examine areas such as the duration and costs of matters broken down by phase or task.

The business intelligence engine can also integrate other in-house data sources like the historical market database. Historical data, such as the average timekeeper rate by vertical or geography, can be directly related to a specific litigation that is already residing in the platform's matter management application. Pertinent considerations such as total spend for previous similar matters and/or prior success outside counsel can be carefully evaluated because the litigation team is equipped with insight into how matters were managed previously versus how they should/could be managed now. The in-house team can use this intelligence to implement best practices that boost efficiency and streamline processes for outside counsel so the litigation process can be managed at individual and aggregate levels. Cultivating a proactive strategy like this will generate cost advantages throughout the course of the litigation.

Enhance Collaboration Internally And With Outside Counsel

When litigation requires input from in-house and outside counsel, effective communication is vital. Without it, overall management throughout the litigation process can become unnecessarily complicated and more prone to inaccuracies. As a result, productivity diminishes, the volume of work increases, and higher litigation costs are the final outcome.

ELM platforms can reduce and sometimes even eliminate these predicaments for all parties. Because all applications are integrated in one location, real-time data is shared across the platform improving collaboration with inside and outside counsel on management items such as budgets, timekeeper rates, accruals, matter updates, etc. When information is transparent and responsibilities are clear, the repetitive and/or disjointed efforts that negatively impacted the efficiency of outside counsel responding to requests for information is improved, and time spent by internal resources are considerably decreased, thus reducing total litigation spend.

It is important to keep in mind that not all systems provide the same level of security. Although collaboration is imperative, it should not come at the expense of security. For example, some vendors' SaaS solutions allow their clients' external legal service providers to directly access the application and only rely on the application's internal security to prevent data security breaches. Passport, the only true ELM platform on the market today, provides much more robust data security measures. It was developed with Datacert's patent-pending Collaboration Portal, which supplies a secure pipeline and leverages advanced security technologies for the transmission of data and information between in-house and outside counsel. External legal service providers are prohibited from gaining direct access to the legal department's confidential legal database and data security is maximized. Passport's Collaboration Portal makes it so the law department benefits not only from the operational efficiency gains, but also from the heightened data security.

Ensuring Success Moving Forward

The economic struggles of the past three years have not only elicited an increase in litigation, they also have brought forth dramatic transformations in the global legal industry and in the technology supporting the industry. Legal business models have changed more in the past three years than in the past three decades, and the imperative for better cost management is driving this change.

The New York Times recently reported that the U.S. is the most litigious society in the world. Approximately $310 billion, or around $1,000 for each person in the country, is spent annually on tort litigation, which is orders of magnitude higher than any other country. Future success for litigation teams - and the departments and firms they represent - largely depends on their ability to confront rising litigation numbers by reducing the total spend necessary to manage them.

Implementing litigation processes that increase efficiency, use business intelligence for proactive management, and enhance collaboration between the internal and external litigation team, will reduce the impact to the bottom line costs. As a result, many departments are embracing the enterprise legal management strategy. While lawyers tackle escalating litigation exposure and simultaneously work to reduce total spend, enterprise technologies will continue to pervade the market as they are the critical component that shapes future legal and business success.

Mark Poag is General Counsel and Senior Vice President, Marketing, of Datacert.

Please email the author at mark.poag@datacert.com with questions about this article.