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New Study From ILTA

Tue, 18 Jun 2013 08:04:46 +0000

PHOTO: All Rights, Microsoft Corporation

A couple of weeks ago at LegalTech West, ILTA (the International Legal Technology Association), the release of a new study about the impact of technology on the Legal industry was announced. The study certainly has a formidable name, the "ILTA Legal Technology Future Horizons -- Transformational Forces Project."

This study is intended to be the definitive study on technology in the legal practice, and will be released in the LegalTech London conference in November. It's certainly time to let lawyers know what other firms are (and are not) doing with technology, especially TAR (Technology Assisted Review).

Today, different firms are locked into very different practices, with some highly leveraging technology and other's that are decades behind. My own quick check for technology is to take a quick look around and see how many typewriter are still around. Not using a label printer for that envelope? Still using an envelope!?! You can learn a lot from a quick glance.

I'm eager to see what the study tells us, and I suspect that a lot of you will be interested to see if any game-changers show up in ILTA's study. Let's talk about this again in November!

DLA Piper: The Trap of Over Billing

Sat, 15 Jun 2013 19:22:52 +0000

PHOTO: All Rights, Microsoft Corporation

When you talk to the biggest legal firms in the world you hear a story that may be true or may just be one of these urban legends. The story goes that some years ago a bill from one of the largest law firms landed on the desk of an investment banker for sign-off. The banker was astounded by the size of the bill and called in executives from the legal firm. When the lawyers arrived in the banking conference room, the banker came in, slammed the bill on the table and said, "Have any of you guys ever heard of OUTSOURCING?!"

I've worked with both law firms and investment banks that have told me this story. I suspect that this basic plot has played out time after time, in different conference rooms. The reaction by law firms, especially those firms that drive a significant percentage of their revenue from Investment Banks, has been to look for alternative billing models and to outsource, especially in the area of legal Discovery and document review.

Now, DLA Piper, the world's largest law firm, has put billing front and center again with their excessive, and if you agree with some of the former DLA lawyers, unethical billing. Using terms like "churn that bill, baby!" and "That bill shall know no limits," you get the feeling that DLA is not placing the interests of clients first. Which is why one client is suing DLA in a $22.5 fraud suit.

Excessive billing for experienced lawyers is bad enough, but the New York Times article states that much of the billing came from junior-level lawyers that even DLA thought were inappropriate (and ineffective) saying: "Vince has random people working full-time on random research projects in standard 'churn that bill, baby!' mode." Churning is the practice of creating "make work" to raise billing. According to Cumberland School of Law Professor William Ross, churning "is an insidious problem in the legal profession."

DLA already has significant outsourcing programs. It looks like it's time for DLA, and a few of their peers, to automate or shift much more of the administrative work to outsourcing services. Let's see if DLA and other big legal firms, that claim to put the interests of their clients first, remember that when the send out the bill!

Social Media Outsourcing Crushed by... Rumspringa?

Wed, 12 Jun 2013 21:05:25 +0000

Social Media Outsourcing is HOT! There are too many sites and too many trends to track yourself. You want to be cool, and translating your coolness (or your product's coolness) into a media strategy requires some specialized skills. But coolness isn't just about you, its about your choice of sites.

In 2012, your strategy had to include Facebook, Twitter, and maybe LinkedIn. Then Facebook wen't public, in a very fiscally disappointing way, and lost a bit of its legendary cool. Even so, Facebook has so much name recognition that its attracting, well, the wrong type of user. Namely your parents, and your grandparents. If that's not enough coolness killing news, Facebook has now become the preferred social media site of... the Amish. Yep, the Amish. A community renowned for shunning cars, electricity and telephones loves to make it's digital debut on... Facebook! I'm waiting to see how Mark Zuckerberg spins that into higher revenue projections in his next Annual Report.

Managing your firm's message on media sites is enough of a job to want to outsource it. Having to keep an eye on each site to know when it is on the decline is probably more work that most firms can deal with. I can't say if Facebook will start shedding users today or a year from now, but it does seem to be a 3 to 6 year journey from exclusively ultra cool to way too popular to be cool. The clock is ticking on Facebook, so start outsourcing before you get stuck with managing your own social media migration.

More Disasters in Ohio

Wed, 12 Jun 2013 20:40:31 +0000

PHOTO: All Rights, Microsoft Corporation

I'm feeling uncomfortably prophetic these days. Ever since Hurricane Sandy I've been talking about everyone setting up an outsourced disaster recovery center or leveraging an existing outsourcing program to work as a disaster center. The super storm before Sandy was Irene, which hit in early August. The changing weather patterns means that storm prone areas could become super-storm prone areas.

In the last few weeks we are learning that this doesn't just include coastal areas, Tornadoes and other "super weather" in the middle of the US (or Europe) is also going to become more common and more violent. For corporations that means more frequent service interruptions, of longer duration. That's a lesson that was reinforced by the new tornadoes in Ohio. With two weeks, Oklahoma City and Moore have been hit twice by killer tornadoes.

Ads the weather gets warmer and the weather gets a power boost, we may be seeing even more weather disasters. It's time to dust off your disaster plans and see if you need to reduce your disaster risk. If you already have an outsourcing program, take a look and see if you can shift work to a nearshore or offshore site when there is a local disaster. Hurricane season just started on June 1st, so get ready!

Will New Immigration Laws End Outsourcing?

Sat, 01 Jun 2013 11:45:08 +0000

PHOTO: All Rights, Microsoft Corporation

Uhhh... no! The new immigration laws will have no impact on outsourcing. See you next week guys, when we discuss... what was that? You're wondering why there's so much smoke about this discussion with no fire? You want some details? Well, if you insist. Let's start with...

Why are the new immigration laws an issue? Well, we won't know what the real impact will be until a law is passed, but the item that is causing so much controversy is that some programs put the offshore guys, on shore, and the new laws may severely limit the number of visas for this purpose. This shouldn't be an issue for any well-designed program.

True, you might send someone from the offshore office to train the in-house staff in some skill that you don't know. Say, Six-Sigma, continuous improvement, how to use a new work tracking software, etc. Or you might send one of the vendors to a US or UK office to observe the culture and environment for a few weeks, to document tacit knowledge of the work that isn't in the process documentation. You might even have a sales or operational person stay for a few days to host a workshop or some focus groups to develop future projects. However, none of these functions would be impacted by the proposed changes in work visas.

The only thing that would be impacted by these changes, are bad programs. In a truly badly designed program you would fire local staff, have the vendor hire people offshore, move the offshore staff onshore (at sub-standard wages), and then leave them in place permanently. If a program did this, you not only create a very risky program, you probably violate labor laws, are in trouble with immigration, and almost surely have some co-employment issues.

Of course, the risk from breaking these laws and the reputational risks if (when?) this becomes a front-page issue has a far higher risk than any other possible way of solving whatever problem you had, be it cost, quality or capacity. That's why this isn't really a problem. After all, in a major corporation, it would be unthinkable that anyone would create a program as crazy as that. Ummm... except for those banks in Canada. They are certainly paying the price, publicly, now that their violations are on the nightly news.

I mean, aside from global banking firms, nobody else would be that crazy. YOU, my dedicated readers, have followed this blog closely and know that this is exactly the kind of program that you should never create. You would never be tempted by short term returns to try this hyper-risky outsourcing strategy. Would you?

Global Weather Change And Super Tornadoes

Wed, 22 May 2013 09:41:50 +0000

Just a few months ago I was writing about the Storm of the Century, Hurricane Sandy. Sandy was the second super hurricane to hit New York in just two years. The first hurricane, Irene, fizzled out just as it arrived and relatively little damage was done. Sandy lived up to its hype and shut down New York City. The last time I wrote about Sandy, I reminded everyone that when Irene struck in August, at the very beginning of the hurricane season, and that every needed to get their backup center plans ready, and to see if their outsourcing programs extra capacity to handle overflow in a disaster. And now we have an unexpected tragedy, the Tornado that struck Moore and Oklahoma City.

With all the attention on hurricanes, and even river flooding, little attention was paid to Tornadoes and other violent weather. If there is a message for us in Oklohoma, it's that our warmer weather is putting more energy into the environment, which in turn make violent weather more violent. Not every storm will be stronger, nor will it always last longer, and there many not even be more storms. However, we are going to see an overall upward trend of all these factors, and the most violent weather... the "events" of the century... are going to get worse. We're also going to see the "safe" areas within storm zones getting smaller.

Even in New York, there were always neighborhoods that took damage during big storms, but that's not where you would build a data center. There are areas in Manhattan that were never touched by Sandy, but it's a much smaller area than what was considered safe just days before Sandy. For planning purposes, any new data centers are probably going to be built at least a few blocks from the outer edge of the safe zone.

I asked it before, and I'll ask it again... where is your backup center or your outsourcing located? When was the last time you evaluated safety factors (weather, flooding, landslides, fires, power availability, etc.) for your centers? If any of your operations, including your headquarters, are in an area where the weather may be increasingly unpredictable or destructive, what are your plans? This is a question that is much better to ask before a disaster, than after one!

More Lawsuits than Ever!

Fri, 17 May 2013 09:38:18 +0000

Photo: © Microsoft Corporation

According to Legal Technology News, the volume of litigation is rising but the amount of money being spent is falling. LTN quotes Robert Ingato, general counsel at CIT Group Inc., said the drop in cost comes from better use of data to target how the money is spent. New York City is using the same idea to manage the cost of litigation by expanding the number of lawsuits.

Wait a minute... NYC is saving money by spending more time in court? Big corporations and municipalities are lawsuit magnets; they get sued often, and each case is expensive. For each case, a decision must be made if they fight, or settle. Every organization uses a different set of criteria to decide when to pay and when to pursue, but in the past, the criterion was based on very imprecise data. Senior decision makers might set the rules for pursue or pay based on their experience years (decades?) earlier, when they spent more time in the court than the boardroom. This outdated and arbitrary data has led to higher legal bills for clients and corporations.

Today, law firms are using databases that provide more precise data on the potential cost of a lawsuit, especially e-discover and document review costs. Cost data is then compared against the probability of wining or losing a suit, based on the specific metrics of the case. NYC is now pursuing cases that were once settled early in the process. However, a big part of the cost of litigation is discovery and document review, and these costs are driving the pursue or pay decision. But those costs are about to change.

Technology Assisted Reviews (TAR) are far more efficient and much less expensive. New standards and new court findings are moving the courts towards more TAR and fewer obsolete Linear (or manual) reviews. That will slash the cost of review, and move more municipal and big corporate lawsuits back into the court. Which means that staff lawyers can spend more time on issues of law, and more of the discovery / document review work can be outsourced. The combination of more lawsuits, and more e-discovery, there is going to be a boom in ediscovery firms that specialize in TAR.

Walmart Stands Alone In Bangladesh

Wed, 15 May 2013 23:14:38 +0000

In the last blog we learned that, after a series of well publicized industrial disasters, Walt Disney Company has decided to leave Bangladesh. Other major firms have decided that they are going to stick it out, and try to drive change in Bangladesh. However, different firms have decided to try different approaches.

A coalition of outsourcing clients from the US and Europe... including H&M, Benetton, J.C. Penny, Zara and the Gap... are working together to negotiate an agreement on fire inspections and building safety. This represents a historic example of industry negotiation, which shows that for all its problems, Bangladesh still has significant value to these retailers.

Walmart, the world largest retail store, is taking a very different approach. With 279 locations in Bangladesh producing goods for Walmart, they want to directly manage any changes and are committed to personally inspecting all manufacturing sites within six months. Unlike the industry agreement that the coalition is negotiating, Walmart's inspections carry the potential for contract cancellations.

Which approach is best? It depends on the company. Disney's decision to leave Bangladesh may be based on information that the public doesn't yet know about. However, merely leaving a country with problems without changing your approach to outsourcing won't make any lasting changes. The coalition approach may be the best for companies with a smaller investment in a country. Walmart's "take charge personally" approach makes sense for a massive outsource, especially after the supermarket scandals in Europe; supermarkets failed to personally test their "beef" products (or wanted to know their contents?), but easy to use DNA tests were available and were eventually used to expose the widespread use of horse-meat and other "banned" products.

Leave, do it yourself, or join the crowd... each is a legitimate approach. Depending on your needs, each approach may be the right one. But any approach to continue operating in Bangladesh, or any other country without robust and well enforced worker safety regulations, needs to include active management or monitoring. Otherwise, your firm just might end up on the cover of your favorite newspaper, in a story that you would have prefer to to have featured your competitors!

Disney Exits Bangladesh

Wed, 15 May 2013 19:13:46 +0000

The Walt Disney Company has decided that Bangladesh lacks enforcement for the basic safety regulations it needs for any location where they or a partner will conduct business. Disney is in the process of winding down production, and finding new locations for manufacturing. Is the problem Bangladesh, or are the repeated industrial disasters in Bangladesh a problem in outsourcing?

As stated in other blogs, the textile industry has a bad reputation when it comes to safety. In the US it was a textile disaster in New York City, the fire at the Triangle Shirtwaist Factory, that started the industrial safety movement a century ago. Just as the tragedy in Sandy Hook focused attention on the epidemic of gun violence in the US, so too did the death of nearly 150 textile workers galvanize a movement for safer working conditions. In Bangladesh, the building collapse has gained the most attention, but just a few weeks earlier 150 workers died in a fire, and a few days ago a smaller fire in another factory was fatal.

While the building collapse that killed over 1,000 works is understandably at the center of the discussion, fires have traditionally been the cause of large-scale industrial accidents in the Textile industry. Dust from fiber cuttings, flammable fabrics before they are fire treated, and storehouses filled with raw textile fibers all make fires easy to start if the facilities are not kept clear or do not have good fire safety features.

Disney's reaction is understandable, and it may be that the conditions in Bangladesh are too great for them consider other actions. However, if Disney is attempting to improve worker conditions, they might learn from the model that Apple is following in China. Foxcomm, the firm that manufactures the iPhone and other goods with the Apple brand, was abusing workers and underpaying them. Instead of breaking their contract amend moving the work, Apple continued to engage with Foxconn. Today, there are better working conditions and worker wages have nearly doubled.

Was worker safety the key to Disney's decision to exit Bangladesh, or will their procurement process just lead them to the next lowest-cost provider, in another country with weak worker safety laws? Keep reading this blog and find out!

Bad Outsourcing Cost Banking $45 Million!

Tue, 14 May 2013 22:12:27 +0000

The latest cyber crime is a $45 million-dollar bank robbery. This is one of the biggest bank heists in history, bigger than anything Jesse James or Butch Cassidy ever imagined a robbery of this size! It is also THE bank heist of the 21st century, because of it's blending of cyber and bricks and mortar techniques. Let's see how it all went down!

According to Fox News, these criminals gained access to the systems that controlled the credit cards for the two Middle Eastern banks, one of which was the National Bank of Ras Al Khaimah PSC. Armed with credit cards that were altered to have unlimited credit, teams of operatives around the world went to hundreds of ATMs and made thousands of withdrawals, filling duffle bags and backpacks with wads of cash. This virtual/reality project could have used a better HR department. The team members working the ATMs weren't very sophisticated. The team in New York was photographed at every ATM, and didn't bother with disguises or even covering their faces. Team NYC is already in jail.

What makes this story particularly interesting is the way the robbers could create "unlimited" credit cards. Rather than hacking through the bank's firewalls and taking control of the bank's servers, they had a different idea. They applied for jobs at ElectraCard Services, in India. The bank that were robbed had outsourced credit card services to ElecraCard. The robbers believed that it would be easier to get the access they needed to the credit card system if they wokred at the outsourcer, rather than the bank. Apparently, they were right!

Did the banks intend to transfer the rights to setting credit card limits to an outsourced credit card processing firm? Probably not. But when you don't examine your systems, or put the time you need into security planning when you outsource, or if you simply look for the lowest cost "total outsourcing" agreement you can find, you're looking for trouble. Or in this case, trouble is looking around the world to find you!