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This year’s Global Litigation 50 report focuses on a subject that has never been more topical – the inexorable rise of technology across all stages of the litigation process. Providing clients with a service that is as fast as possible, of the highest quality, rigorous and yet still cost-effective is of paramount importance to the world’s top law firms.
This is why the commercial market for these services is booming – and why over the past decade, and particularly the past three to five years, leading litigation practices have been driving forward a plethora of tech-enabled initiatives to enhance the delivery of their legal services to clients.
This year’s edition of The Lawyer Global Litigation 50 contains dozens of examples of cost-effective innovations from the leading litigation practices. Frankly, firms have no alternative. Clients are demanding this approach and rivals that aren’t law firms are increasingly providing it. The choice facing the big names is stark: change or die.
The smoking gun
Most of this year’s top firms agree that when it comes to technology, the most compelling area of the litigation process relates to disclosure (or in the US, discovery). For years, firms have used machines to help narrow the scope of this pre-trial process, sifting through what may be millions of documents in the hunt for a ‘smoking gun’.
DOES TECH EQUAL LOWER FEES?
How much cost savings did in-house lawyers report as a result of primary services adviser using technology?
2% said 31-50%
50% said 0%
But as Berwin Leighton Paisner’s (BLP) head of strategic client technology Bruce Braude points out, more recently the machines have been getting cleverer.
“Predictive coding is a subset of e-discovery and in some ways the more exciting part of it,” says Bruce Braude. “Over the past 10 years, all firms have been responding to the growing volumes of data. Our approach is we keep e-discovery in-house throughout. We use FTI’s platform, Ringtail, and think the marriage of tech and lawyers in-house is best.”
What about the client’s preference? Braude says he doesn’t have a strong sense that they have a preference. “They’re concerned with the output rather than the model,” he adds.
Only last year, the first use of predictive coding in a High Court case took place in the UK (the Pyrrho case, which ultimately settled). According to Jon Fowler, a predictive coding expert at Navigant, its use in the UK is now “really taking off”.
“We’re currently working on six live cases and we get requests for information from around half a dozen firms a week,” he says.
Craig Earnshaw at FTI says that the increased use of tools such as predictive coding highlights how law firms in general are more willing to use technology in litigation these days. “The comfort levels of lawyers with the technology is also dictating its use,” he adds. “There’s no doubt that the use of predictive coding in a disputes context is garnering a much higher degree of acceptance post-Pyrrho. It’s another tool in a litigator’s armoury.”
CHINA AND TECHNOLOGY
The use of technology to facilitate litigation is not a major theme in China yet, partly because labour remains relatively cheap, meaning there is less of an obvious driver. In addition, few of the software and AI solutions so far adopted by global firms are able to process in Chinese. Most of the preparation work, such as document review and discovery, is still carried out by legal assistants, paralegals and lawyers.
However, a few trends have emerged in the judiciary system.
In most cases, claims in China need to be lodged in person at the court. It can take months, if not years, for a court to review documents and evidence before deciding whether to accept or reject a case. As part of the country’s juridical reform, new rules dictate that courts must file all cases lodged with them. This will inevitably result in a surge in cases filed with Chinese courts.
Following the change, a small number of courts have pioneered new ways to make the process faster for lawyers and claimants. Shanghai Pudong People’s Court, for example, has developed a ‘self-service’ electronic filing platform that allows claims to be filed via mobile phones by scanning a QR code. The procedure takes as little as 15 minutes.
Faced with an unprecedented number of cases that continues to grow rapidly, Chinese courts are looking at using internet technologies to improve the quality and efficiency of judicial services and judgments. There has been a drive to use cloud-based technology and big data to harvest useful information and produce analytical reports to assist judges in handing cases.
Backed by the Supreme Court, Tianping Big Data Technology company was established in October 2016 to lead the way in building a big-data platform for the country’s judicial system.
Chinese litigation boutique Tian Tong has piloted Wusong, its own big data system, which tracks all published judgments by the Chinese courts and mines data to produce analytics. As well as providing quantitative analysis on lawyers, such as who has handled the most cases in a particular sector or court, it helps predict the outcome and potential damage of different type of disputes in different courts with different judges.
Increasingly a growing toolkit of interesting (or as one lawyer puts it, “fun”) options such as predictive coding – many powered by some version of machine learning or artificial intelligence – have begun to emerge.
In particular, firms are widening their use of technology to help project manage litigation. Applications range from the simple organisation of data relating to basic pleadings, contact details or court dates, to innovations that reach well beyond mere access to information, such as risk trackers and status trackers for witnesses.
According to Earnshaw, law firms are looking at alternative, largely tech-driven methods of litigating in response to pressure from in-house lawyers and clients to deliver projects more quickly and cheaply.
“Clients are asking their law firms, ‘Why should I engage you on this mandate?’” he says. “The willingness to use the new tech that is out there could be a differentiating factor. We certainly see it as such.”
Predicting the future
The benefits of tech extend beyond increased efficiency, however. One area that is the focus of much academic and commercial research is predicting the future outcomes of litigation.
A machine-learning study led by Daniel Katz, a law professor at Chicago’s Illinois Institute of Technology, confirmed in May that it is possible to use historic data to predict, with a high degree of accuracy, the decisions of the US Supreme Court.
Just as Garry Kasparov’s defeat by the IBM supercomputer Big Blue sent shockwaves through the chess world in 1997, and in the same vein Go world champion Ke Jie’s loss to Google’s AI-powered player AlphaGo this year highlighted the power of the technology, so, at least, this development has a similar potential to disrupt the litigation model.
Katz’s study used the Supreme Court Database, which has case data stretching back to 1791, to predict any justice’s vote via an algorithm. The model outperformed humans, predicting more than 240,000 justice votes and 28,000 case outcomes over nearly two centuries (1816-2015) with 70.2 per cent accuracy at the case outcome level and 71.9 per cent at the justice vote level.
As Katz puts it in the study, “our results represent an important advance for the science of quantitative legal prediction and portend a range of other potential applications”.
LITIGATION AFTER BREXIT
This year’s Global Litigation 50 report offers some tantalising glimpses into the future direction of the world’s disputes market, courtesy of the largest litigation and arbitration practices on the planet. And while most firms say that several of the longest-standing areas of disputes such as financial services-related matters will continue to bear fruit, Brexit-related issues are now firmly on the horizon.
“Following the Brexit result there is a degree of future uncertainty about the detail of how clients will seek dispute resolution, including because much may depend on trade negotiations,” says Akin Gump. “We will see an initial boom for lawyers working for the government on treaty negotiations and advising on business about law changes. But in the long term we could see money and court time being wasted on disputes over whether a case should be heard in an EU country or the UK. At present this does not happen due to the treaties in place which were made over the past three decades.”
King & Spalding argues that current work aimed at the reorganisation of financially troubled European lenders, “part of a global process in which the financial community is at last coming to grips with non-performing loans”, may be exacerbated as Brexit becomes imminent.
“Long-term we could see money and court time wasted on whether a case should be heard in an EU country or the UK”
“In the same vein, we have begun to see contractual parties testing their supply chains as Brexit has increasingly become a reality and we expect to see disputes increase between contractual counterparties as a result,” adds the firm.
Mayer Brown adds that if Brexit is complete by spring 2019, this may trigger certain claims in England and other jurisdictions “as contracting parties explore the potential impact of a UK withdrawal on their existing relationships”.
The full report highlights several other currently busy areas of work. Freshfields Bruckhaus Deringer, for example, reports seeing “a significant increase in antitrust litigation, white collar investigation and corporate criminal enforcement activity and global arbitration across sectors”, while Clifford Chance confirms that arbitration continues to be prolific in the construction sector, “in particular in relation to shipbuilding”, as well as in the energy and mining sectors.
Kirkland & Ellis reports seeing “tremendous activity” in competition, restructuring-related litigation, securities and enforcement, government and internal investigations, and intellectual property in the US, as well as in the energy and retail sectors for London and CEE. From a regional perspective, Greenberg Traurig says Latin America remains a disputes hotspot, with Argentina’s entry into global capital markets leading to a growth in disputes, adding that litigation is also likely to rise in Brazil and Venezuela due to political instability.
“We expect to see Singapore to continue to grow as a dispute resolution centre, not just serving Singapore but as a regional hub for Southeast Asia,” adds Greenberg. “We anticipate more disputes emanating from natural resources industries and firms in Africa.”
Purpose-built tools to predict the outcomes of cases already exist in the wider legal market, and their number is growing. Probably the best-known litigation data mining business is Lex Machina, which LexisNexis acquired in November 2015. This was originally focused exclusively on IP litigation and is used by about half of the top 100 US law firms, along with multi-nationals such as eBay, Google, IBM, AstraZeneca and Nike.
Josh Becker, CEO of Lex Machina, said at the time of the sale that “the only thing inhibiting our entry into other areas of the law is access to content”.
Other marriages of content and technology have also caused a stir in the market, notably Thomson Reuters’ collaboration with IBM Watson in October 2015. Many lawyers see the two deals as obvious signposts for the legal market.
Since LexisNexis bought Lex Machina, it has been widening its scope, branching out into other areas of law and pursuing a strategy of acquiring and developing other businesses in related areas. In the process, it is creating an ever-larger data set that in turn should improve the accuracy of its predictions.
“Judges can look at this data and say, ‘Shoot, do I really have these tendencies, do I really rule in these ways?'” – Jeff Reihl, LexisNexis
“What we’ve learned is that you can’t just make a prediction without showing the data behind it,” says LexisNexis chief technology officer Jeff Reihl. “We acquired it and now we’re integrating it into the rest of our portfolio. And it’s expanding. There’s no doubt it’s starting to change behaviour.
“All the information is very transparent and easy to get to. We think it’s even having an impact on judges, who can also look at this data and say, ‘Shoot, do I really have these tendencies, do I really rule in these ways?’ People are definitely stepping back and saying, ‘Wow.’”
Guessing games
Clearly this trend has the capacity to have a significant impact on the work of top law firms.
“Currently if you’re a client, you go to your barrister who makes a guess of the potential outcome of a case based on experience,” says BLP’s Braude. “Over time, the accuracy of the technology will develop as more court data becomes digitised.”
Another trend that is directly related to the ability to predict the outcomes of cases, and is particularly close to clients’ hearts, is the use of technology to help predict the costs of litigation and provide greater certainty over fees. This is an increasingly hot topic not only among clients, but also the growing roster of third-party funders of cases.
“Litigation funders are increasingly demanding costs and outcomes predictability so they can weigh up the odds of backing them” – Nick West, Mishcon de Reya
As Mishcon’s chief strategy officer Nick West says, litigation funders are increasingly demanding costs and outcomes predictability on cases so they can weigh up the odds of backing them. If litigation funders know the amount at stake, plus how much it would cost to win if the case goes to trial, that would tell them how much they could achieve.
“It’s just a maths equation to figure out the size of the pot,” says West, underlining the link between the recent rise of technology and litigation funding. “It’s one of the factors driving changes in technology, definitely.”
FEES AND THE MYSTERY OF THE MISSING LEGAL TECH SAVINGS
In the occasionally fraught relationship between in-house lawyers and their external counsel, there is one constant: fees.
An overriding consideration in recent years has been the drive by clients to cut the level of fees charged by outside counsel while retaining the same level of service. Technology does, or should, loom large in this equation.
But there are worrying signs for any law firm that believes it is meeting this demand. Virtually everywhere else in the global economy, technology has been the key driver in reducing the costs of a service. But according to the exclusive research carried out by The Lawyer for this year’s Global Litigation 50, it has so far failed to have a similar impact on the levels of fees charged by law firms to their clients.
We asked in-house lawyers to tell us the level of cost savings that the technology provided by their primary legal services adviser had helped them achieve over the past 12 months. A resounding 50 per cent said zero (see results, right). Just 2 per cent of clients surveyed said their primary legal adviser’s use of technology had helped them achieve cost savings of between 31 and 50 per cent on their most significant matters over the past 12 months.
However, the survey did confirm that clients are achieving at least a degree of cost savings thanks to law firms using technology. For 7 per cent of respondents, those savings are as high as 20 per cent, while for another 40 per cent (20 per cent for each answer) the savings were between 6 and 10 per cent or up to 5 per cent.
We also asked whether respondents’ external legal advisers generally billed for the costs of technology on a matter as a disbursement or wrapped it into the overall fee. Two-thirds (67 per cent) said the costs of technology tended to be part of the overall fee.
But when asked which of these two options in-house lawyers would prefer, 51 per cent chose a disbursement. However, only 14 per cent said they had asked their external legal advisers to separate out the technology provision element of a disputes matter. The overwhelming majority (86 per cent) said they had never done this.
Law firms seeking reassurance that clients view them as ahead of the Big Four accountancy firms in technology terms will be disappointed by The Lawyer’s survey results. Just 7 per cent of respondents thought the top law firms were ahead of the Big Four. Meanwhile, 30 per cent thought law firms lagged behind the Big Four and 25 per cent thought they were about the same.
UNDERSTANDING WHAT’S AVAILABLE
Technology is revolutionising the way lawyers practise their trade. To deliver the greatest value to their clients, lawyers must know about the latest in litigation technology.
There is little doubt that technology is right at the heart of litigation; you would be hard pressed to find a dispute or investigation currently being handled by a top-tier firm representing a multinational corporation that isn’t taking advantage of litigation technology.
The reasons for this are simple: on one hand, almost every dispute will require electronic communications or documents to be searched and reviewed, and on the other, corporations are demanding the delivery of every greater efficiencies from their legal counsel. And with large litigations often requiring millions of documents to be searched, technology can achieve significant cost savings for clients.
The endorsement of predictive coding by the English courts in last year’s landmark Pyrrho Investments case, which saw algorithms sift through over 3 million documents of potential evidence, has opened the floodgates to the use of machine learning in the document review process, while the next generation of predictive technology, Continuous Active Learning, is already being adopted at a rapid pace.
As a result of these developments, the expertise that corporations, and their counsel, seek from legal technology providers is also changing. This is partly driven by the development of internal capabilities within corporations and law firms to handle the more straightforward electronic evidence issues, and partly by the increasing variety of digital evidence. In some cases, it may be enough to review the e-mail accounts of a couple of individuals, whilst others may require trawling instant messaging, social media, apps on mobile devices, and backup tapes of systems decommissioned ten years ago.
The increasingly globalised nature of disputes, the rise in the likely sources of evidence, the availability of technologies to efficiently search and review documents, and the challenges posed by the increasingly complex web of data protection legislation are all driving demand for strategic advice as to how to navigate these issues in a dispute or investigation.
Technology has disrupted countless other industries, and its effect is widely being felt now in the legal profession. Yet technology on its own isn’t enough. You also need smart people. A future that combines people, processes and technology, both inside the corporation, and through their legal and technology advisers, making the handling of investigations more efficient, will bring the greatest benefits.
Craig Earnshaw, senior managing director, FTI Consulting
This is an extract from The Lawyer Litigation 50 2017, produced in association with FTI Consulting. For information on purchasing the report please contact letitia.austin@centaurmedia.com or gilberto.esgaio@centaurmedia.com
