It’s a trend that Jim Neath noticed before he departed his position as an associate general counsel and global head of litigation at British Petroleum.
“The electronic portion of complex discovery today is taking up a higher and higher percentage of the overall cost of defending litigation,” Neath said in an interview about why he took his new position at a consulting firm that applies data analytics to legal work.
He said a gap exists: Corporations want to run their legal departments more efficiently, but broadly speaking, lawyers, both in-house and at law firms, have been wary of embracing technology when it comes to data review. He boiled this down to a still tepid faith in technology and the conservatism of the profession.
Instead, many lawyers rely on “hundreds and hundreds of humans” to review their data at a much higher cost -- multiples -- of what it would cost to oversee a small team of skilled computer experts and lawyers to review the same data, Neath said.
“That’s the space I’ve entered into having seen at BP how the market for legal services has changed and seen the gap,” he said, about his new position as president of Clutch, the data analytics division within the legal consulting firm Morae Global.
One prominent example of the rising costs of discovery: Chevron is seeking $32 million in fees it claims it has spent during more than two decades fighting a lawsuit filed on behalf of Ecuadorian villagers who claimed the oil company was liable for contaminating Amazon forest. Chevron’s law firm Gibson Dunn & Crutcher,claims that $18.9 million of that amount went to discovery.
Clutch, which Neath used while working at BP, aims to help legal departments organize their data. They review data for discovery in litigation, due diligence in transactions, for compliance officials interfacing with regulators, and lawyers conducting investigations.
Data review services aren’t commoditized, he said, meaning there are no standardized fees. Instead, each case presents unique circumstances, Neath said.
“At our company we get very much into the content of what is being analyzed,” he explained. “It’s not just keywords, it’s content specific. And we bring our knowledge of the regulated industries involved. It’s a service business, not just a bits and bytes or a computer server-size issue that is being offered.”
“It’s how to take data and turn it into actionable facts, which lawyers can use,” Neath added.
Discovery has traditionally been handled by law firms though, and while some law firms have developed internal units that apply analytics to conduct data review, he said he thinks they’ll stop trying to compete in this space.
“My own view is they will come to see high end computer analytics as not their core competency,” said Neath.