Editor: One of the largest costs of litigation is document review. Tell us about yourself and how technology was harnessed to create a new approach to document review.
Rowe: I graduated from law school in 1990 and practiced primarily antitrust law in Washington DC for about 10 years, most recently with Howrey LLP. Antitrust cases routinely involve the review of many documents. We looked for ways to harness technology to address the mounting cost and accuracy issues.
In 2000, I left Washington and went to South Carolina to join two partners at Nexsen Pruet, LLC, who had also left Howrey. There we worked on a very large case involving the review of over ten million pages. The firm did not have the internal resources to handle this volume of documents. So, we took what we had learned during our DC days and applied it to meeting the firm's needs. We developed processes that enabled the firm to do document review in a manner that leveraged technology and reduced paper touches, to the greatest extent possible. The case settled, but what emerged was a concept that met a real need. By 2002, the electronic discovery age had hit litigation. Huge numbers of documents were being generated electronically and a better and more cost effective way of reviewing them was needed. Massive reviews on a billable hour basis were no longer cost effective.
What makes NEXTRA so attractive is that it couples the leveraging of technology with a unique financial model that jettisons the traditional billable hour approach. Instead, the client pays the lowest of three value measures: (1) a guaranteed capped cost quoted to you before the review begins; (2) an agreed upon blended rate that will not be exceeded; or (3) the total costs tracked by hourly rate of each time keeper. Using this approach, NEXTRA shares financial risk with the client and is incentivized to keep down costs and drive efficiency. These concepts are foreign to the traditional billable hour model. Finally, we developed objective metrics to establish our value proposition. This means that we can show the client the numbers and let them speak for themselves.
Editor: How do you leverage technology?
Rowe: There are two primary activities in document review. There is the analysis itself and then there is capturing that analysis into a database. It really is that second part where technology comes into play. What we do, for example, is we have duel screen monitors that are very large so the reviewer doesn't have to move the mouse up and down the screen to see a document. We customize review templates so that they are checking boxes or using clicks as opposed to typing. These are just a few examples.
We have found that when you couple best practices with technology, you save money. The best way to exemplify this is through a short example. We were working on a review recently involving ten million pages. Some of the folks on the client's litigation team wanted to include an activity that would on average increase the time looking at a document by about two seconds per page by requiring some typing and clicking. We were able to tell them that if you change the review template to do what you are asking us to do, it will cost the client $200,000. That is where our real expertise really comes through because we understand how database templates should look, how workflow processes should look and how to make monitors and the individual screens conducive to the review process. A lot of people when they call NEXTRA ask "What is your silver bullet? What is your technology?" It really is not any one thing. It is a focus on all the little things that individually add up to a big difference.
Editor: Tell us how you are able to get top performance at lower cost from your lawyer reviewers?
Rowe: It can be summed up in one word: "process." Let's assume you asked a very smart group of individuals with engineering degrees to build a car. Would those people really build a better car than folks who are on an assembly line and are part of a very efficient process? Who would you rather buy a car from? My personal view is I would rather go with a group that has a better "process" than focus solely on the resumes of the reviewers. Most large law firms focus on the individual reviewers and their pedigrees and not on the process that they are a part of. That is one of the fundamental differences between reviews run ten years ago and our approach. We do real-time quality control. We use statistical measures and look for red flags within those statistical measures that alert us to quality problems. Obviously everybody is an attorney. They have all been background checked. We then take the individuals and put them in a good process. That is our value proposition.
Editor: Tell us why you are an alternative to existing options.
Rowe: Before NEXTRA was available, a client had two options, either to go to a law firm or to hire a contract attorney. Unlike a temporary staffing company, NEXTRA has all of the resources necessary to implement a customized document review process. Operating like a boutique firm that specializes in document review, NEXTRA enables corporate legal departments and law firms to outsource the substantive aspects of document review to our state-of-the-art facilities. At NEXTRA we have a team of project managers whose only job is to understand the project, what the client's litigation team needs from the documents and whether a document is responsive or privileged. Our team not only puts the entire process together, but makes sure the work product needed by the litigation team is extracted from the documents on the first pass.
Editor: How is it that you are able to perform many of these assignments at fixed costs?
Rowe: In my view even though document review is subjective analysis, it is extremely capable of objective measurement. How quickly can a person read a document? How much time is required by the analytical steps? All of this can be measured and assigned a cost. This enables us to give our clients an up-front all-inclusive capped cost. It is not a fixed cost. Your price may be lower, but we guarantee that it will not be higher. We have an incentive to drive our clients' cost down because to the extent that we can lower the price below the capped cost, we receive what is called an efficiency bonus - which represents a small percentage of the savings that we are able to achieve for our clients. Our metrics are embodied in a document that we provide to the client at the end of the project called the NEXTRA Document Review Scorecard.
Editor: How do you handle conflicts and confidentiality?
Rowe: We practice law. We are like a niche or boutique practice. We comply with all of the normal conflict rules. We run conflict checks just like any law firm would to make sure there are no conflicts of interest. We are very sensitive to the privacy concerns and we assure confidentiality of all the information. All of the ethical canons are complied with.
Editor: Tell us about your new offices.
Rowe: The first facility was in Columbia, SC. In May of this year we opened Rock Hill, which is outside of Charlotte, and in August we opened the Raleigh facility. In September we are opening a facility outside of Miami. The Miami facility expands our capacity to about 200 attorney work stations. This expansion has been driven by client demand.
Editor: Do you ever use law students?
Rowe: Generally not, but the decision is driven by client needs. There are times when a client approves the use of law students for certain projects. There is a corresponding cost reduction as well, since they are not bar certified and/or graduates. We typically try to locate our facilities around cities that have lower cost structures coupled with the presence of law schools. By the way, we're not in the staffing business. Our temporary attorney reviewers are provided to us by a legal staffing company that we trust.
Editor: Is anyone else employing your pricing model?
Rowe: I have been told by our clients, which are typically Fortune 500 companies, that right now nobody is employing our pricing model. Based upon our benchmark studies, a client using NEXTRA can in many cases achieve a 50 percent savings as compared to more traditional document review options. These benchmark studies are available on request. Everyone else is still on the billable hour. See the chart on this page comparing the costs of the NEXTRA approach with the "billable hour" approach.
Published September 1, 2005.
