Law Firm Survey 2012

Article by Drew Combs for American Lawyer







Despite uncertainty all around them, law firm leaders are optimistic about the year ahead, according to the American Lawyer annual survey. 

Leaders of the country's highest-grossing law firms are ready to put the recession behind them and embrace a cheerful narrative—if only the world economy will play along. In The American Lawyer 's 10th annual Law Firm Leaders survey, 75 percent of the 113 participating Am Law 200 managing partners and chairs described themselves as either somewhat or very optimistic with respect to their firms, a slight increase over 73 percent a year ago.

But financial instability in Europe, political and regulatory uncertainty in the United States, and the collapse of debt-laden Dewey & LeBoeuf remind them that the world can be a dangerous place. Seventy-one percent of respondents said they expect the economic recovery in the U.S. to either continue at its current plodding pace or slow down. (Only 29 percent predicted that the recovery would pick up next year.)

The results of this year's survey depict an industry that has moved on from the recession—one that has abandoned the large-scale cost cuts and personnel reductions that became commonplace in 2009 and 2010. But in the absence of a clear upswing in the overall economy (and subsequent increase in demand for high-end legal services), leaders of Am Law 200 firms have sought to maintain profitability increases by relying on small-scale tactics, such as capital calls, deequitizations, and increased use of alternative staffing models.

But despite the challenges, most respondents said they expect their firms to post increases to their bottom line in 2013. Nearly 32 percent expect partner profits to grow at their firm by more than 5 percent, up from 26 percent who said growth would top 5 percent a year ago. Forty-five percent expect profits to increase by 5 percent or less in 2013. 

The survey contained 59 questions covering a wide range of topics, including the U.S. and world economies generally, lateral activity, projected hiring by practice area and office, client relations, projected billing rates and profitability levels, discounting, and use of alternate fee structures. Full results are available at americanlawyer.com 

Top Six Tech Issues of 2012 for In-House Counsel

Article by Catherine Dunn, Law Technology News











Adam Losey Attorney for Foley & Lardner talks about the Top 6 Tech isues from 2012:

1. THE USE OF TECHNOLOGY-ASSISTED REVIEW AND PREDICTIVE CODING
The first case law on this issue emerged this year, with courts in New York, Virginia, and Louisiana greenlighting the application of computer analytics to discovery. And given how much money companies "waste" on discovery, says Losey, "it's really important to figure out ways to harness technology to do that better."

2. PRESERVATION AS A PRIORITY
Data preservation will only continue to come under the microscope, says Losey. He recommends that in-house counsel implement a document-retention policy that spells out procedures for collecting and preserving email and other documents when a lawsuit hits. He also cautions counsel to be consistent; if you use multiple firms to handle preservation, differing methods could lead to inconsistences.

3. EVOLUTION OF STATE RULES AND E-DISCOVERY PROTOCOLS IN DIFFERENT CIRCUITS AND DISTRICTS
"Local jurisdictions and some states are adopting new rules to deal with e-discovery issues," explains Losey. His advice: "Make sure that the people you hire are really up to speed on this — or else they could wind up really losing badly."

4. GENERAL.AWARENESS OF PRIVACY ISSUES AND STATUTES
There are plenty of potential blind spots when it comes to the many state and federal laws governing privacy. "If you're a company of any size, and you don’t have someone looking out for you on the privacy front proactively, you run a very serious risk of stepping on a landmine,” Losey says.

5. CYBERSECURITY AND DATA BREACHES
Frankly, most companies are terrible about digital security, because it's difficult to be secure," says Losey. One way companies can be vigilant is by hiring experts to test your network security. Losey also recommends opening up lines of communication between the legal department, and the IT department — including to those "who do the day-to-day grunt work," he says, since a crisis is no time to be making introductions between tech and legal. "If there's a data breach, it's the kind of thing that should come to the attention of in-house counsel."

6. THE BUSINESS AND LEGAL IMPLICATIONS OF SOCIAL MEDIA
Social media is presenting companies with a number of thorny legal and business issues — and companies shouldn't ignore the cyber-chatter. "It's a good idea for a company to proactively be looking online," says Losey. "What's out there? What are people posting about you?"On the business front, use the social media tools available to you to address negative comments. "A lot of companies do a really good job with that," says Losey. "But you don't want to not be aware that there's all kinds of bad press about you lingering, and you haven't taken an opportunity to respond."
In the legal domain of social media, keep an eye out for things like leaking of trade secrets — which could end up on an employee blog — and IP infringement happening via Facebook, Twitter, and the like. "If you're keeping general track of what's out there about your company, you're going to find out if someone's using your trademark," says Losey. "You're going to see if people are violating your copyright. And that's really important to know so you can stop it."

Technology-Assisted Review From the Plaintiffs' Side

Article by Henry J Kelston, Ariana J Tadler and Paul McVoy
for Law Technology News






For all the importance that lawyers place on being rational, they sure have a tough time when it comes to embracing technology.

We accept that a doctor can suture a human heart using a computer-controlled robot in an operating room thousands of miles away. We know that computers enabled NASA to land a spaceship gently on Mars after a trip of 255 days traveling more than 40 million miles. We have seen an "intelligent" computer win at Jeopardy against the most successful human players. Yet we resist public acceptance of the notion that computer analytics can, at least in large cases with masses of electronic data, identify documents relevant to a lawsuit more effectively than lawyers composing lists of keywords.

That the legal profession is notoriously slow to adopt new technologies is hardly breaking news. However, the resistance among current practitioners to even consider the use of technology-assisted review, especially in large complex cases, is a particularly confounding episode of techno-legal disconnect. Even more confounding is the resistance to engage in open dialogue about the possibility of using TAR to facilitate cooperative, efficient, and expeditious discovery.

It is clear by now that TAR, implemented correctly in cases involving large-scale document review, can significantly reduce the costs and burdens of discovery. The failure to consider and, in certain cases, implement TAR can no longer be justified given the demonstrated efficacy of currently available TAR programs in comparison to human review.  Attorneys who fail to inform themselves about TAR and consider its application in appropriate cases may impede rather than facilitate the just, speedy, and inexpensive administration of justice.
 

In the RAND study of e-discovery costs, the RAND Institute asked why, given TAR's "potential to reduce review costs without compromising quality," the technology is not being used by more litigants. After extensive interviews with key legal personnel at major U.S. corporations, RAND identified major factors inhibiting adoption of TAR as concerns about the adequacy of the tools to perform certain tasks, such as locating "smoking gun" documents or identifying privileged or confidential information, and the perceived risk of using an evolving technology in the absence of judicial guidance

There are other factors that may be impeding the adoption of TAR in litigation. RAND reported, for example, that "there may be concerns that, with disclosure [of the use of TAR], opposing parties might enlarge the scope of the demand due to a perception of lower costs." Of course, a party eschewing TAR for this reason may find the court unreceptive to the argument that the requested discovery would entail undue burden and expense because the party is using antiquated tools.

 

To provide excellent legal services in today's environment, deeper knowledge of TAR tools is essential, along with the practical experience to implement them properly. Not every litigator can be an expert in e-discovery technologies. But every litigator should know when to find one.

 

More Law Firm Mergers Ahead

Article by Debra Cassens Weiss, ABA Journal








In the last month, three law firms announced cross-border mergers


• K&L Gates is merging with Australian firm Middletons, creating a firm of more than 2,000 lawyers. The merged firm will have full financial integration and will carry the K&L Gates name.

• Norton Rose is merging with Houston's Fulbright & Jaworski to create a 3,800 lawyer law firm. The new firm will be called Norton Rose Fulbright.

• SNR Denton is merging with Salans and Fraser Milner Casgrain in a three-way merger. The new firm, which will be known as Dentons, will have more than 2,500 attorneys and professionals.

By the end of next year, predicts U.K. legal consultant Tony Williams, mergers will likely boost the number of law firms with $2 billion or more in revenues from five to 10.

Establishing new offices, rather than acquiring them in a merger, can be expensive, Williams points out. The cost of building a new office can cost between $5 million and $10 million a year, he tells the newspaper.

Lottery Litigation

Article by Debra Cassens Weiss , ABA Journal












Litigation over rights to office-pool lottery winnings has become so common that it has created its own set of case law, according to a University of Louisville law professor.

In an interview with the Louisville Courier-Journal, law professor Russell Weaver said it’s important for people who participate in lottery pools to take precautions in advance. “One thing you don’t want to do is end up in litigation,” he said. “Attorneys will eat up quite a bit of your winnings.”
Weaver advises the person running the lottery pool to photocopy the group’s tickets and distribute them to everyone participating in the pool before the drawing.

In a couple recent cases, lottery players had claimed winning tickets were purchased for themselves, rather than their group. The argument didn’t work for Americo Lopes of New Jersey. In March, jurors awarded Lopes’ five co-workers $4 million each after he won a jackpot valued at $24 million, the New Jersey Star-Ledger reported at the time. After taxes and fees, the plaintiffs were expected to take home about $2 million each.

The newspaper called the verdict “the latest cautionary tale involving lottery pools, pacts often based on trust and a handshake.”

DTI Acquires Fios, Inc.

The big get bigger.

Atlanta-based DTI said that Fios was purchased to gain clients and staff. Based in Portland, Ore., Fios also brings software development skills and workflow expertise to the DTI portfolio.

Terms of the current deal — which is DTI's third this year — were not disclosed. In September, DTI acquired legal staffing company Provius, based in Houston. In July, DTI bought computer forensics specialist Data Forté, of Los Angeles.

Law school enrollment continues its decline

 

 

 

 

 

Article by Karen Sloan, National Law Journal

 

 

 

If the halls of law schools seem a bit emptier this year, it’s not your imagination.

Approximately 8,000 fewer first-year law students will show up nationwide this year compared to two years ago, when enrollment reached an all-time high, according to the American Bar Association. This year’s numbers represent a 15 percent decline since then and a 9 percent decline since last year.

The ABA released preliminary enrollment numbers from its annual law school questionnaire—an unusual move that leaders said was prompted by intense interest in admissions trends.

1L enrollment fell by 3,751 individuals last year and by another 4,216 this year, according to the ABA. Three-fourths of the 201 ABA-accredited law schools enrolled fewer students this year. Of the 149 schools that havefewer 1Ls, 90 saw enrollment reduced by 10 percent or more. Forty-eight lawschools saw increased enrollment this year, but only 10 saw boosts of 10 percent or more. The ABA did not disclose results for individual schools.

It’s not yet clear how declining enrollment is reflected in the academic credentials of 1Ls; the ABA will not release median undergraduate grade-point averages and scores on the Law School Admission Test until the spring. For the first time, schools’ reported LSAT and grade-point-average data is subject to review by the LSAC to confirm its accuracy. That change came after two law schools were found to be inflating those figures, which helped to improve their U.S. News & World Report rankings.

Poor Computer Forensics Investigation Allows Casey Anthony to Walk

Article by Josh Constine




A jury might not have acquitted Casey Anthony of the ‘drowning’ death of her daughter if they knew she Googled “foolproof suffocation” on the last day little Caylee was seen alive. It’s the latest example of Google search history becoming evidence in murder case. But this time the digital footprints were found too late and the suspect has already been set free. Are police paying enough attention to browser history? Clearly not.

But this last week Orlando’s WKMG TV station reported that police had overlooked a key piece of evidence. Someone had Google searched “foolproof suffocation” from the Anthony family computer on June 16th, the day Caylee disappeared. A book about the case by Anthony’s defense lawyer Jose Baez had previously reported that someone made the search, but had the timing off. The book suggested Caylee’s father had Googled the murder method.

Now WKMG reports that search happened an hour later, after George Anthony may have already been at work, and that Casey is likely to have typed it in. If the mother had Googled a way to suffocate someone on the last day anyone saw her daughter alive, the jury might have concluded differently.

 Dusting for fingerprints and DNA evidence may always be critical parts of detective work. But as the ways we learn and communicate increasingly move online, forensics must evolve as well.

Hewlett-Packard Claims Autonomy Cooked Books

Article by By Evan Koblentz









http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202578977071


Hewlett-Packard Co. said Tuesday it will take an $8.8 billion write down related to its purchase of Autonomy PLC and alleged that Autonomy executives committed accounting fraud to inflate the company's value during the sale.

HP acquired the Cambridge, U.K.-based e-discovery and enterprise search stalwart in 2011 for $10.3 billion. In a statement,  HP said that "the majority of this impairment charge, more than $5 billion, is linked to serious accounting improprieties, misrepresentation and disclosure failures discovered by an internal investigation by HP and forensic review into Autonomy's accounting practices."

"HP launched its internal investigation into these issues after a senior member of Autonomy's leadership team came forward, following the departure of Autonomy founder Mike Lynch, alleging that there had been a series of questionable accounting and business practices at Autonomy prior to the acquisition by HP. This individual provided numerous details about which HP previously had no knowledge or visibility," despite acquisition due diligence provided by Deloitte and KPMG, the statement explains.

The news took the overall technology world and specifically the e-discovery industry by storm. The impact for Autonomy's customers and partners could be felt for years to come. Autonomy held 17 percent of the e-discovery market in Am Law 100 law firms in 2011, but that fell to just 4 percent in 2012.

Technology research giant Gartner Inc., in its May 2012 e-discovery report, noted that Autonomy is known for good technology but has poor service.

Someone has alot of explaining to do.

Bad Financial News for Large Law Firms

Article by Julie Triedman in AM Law Daily


Bad financial news continued for the legal industry Thursday, as yet another survey of large law firms showed demand for their services essentially flat through the first three-quarters of the year and revenue growth for 2012 likely to fall short of last year's single-digit gains. 

The Wells Fargo Private Bank Legal Specialty Group survey found that, on average, the 115 participating firms—a group that included 60 Am Law 100 firms, 40 Am Law Second Hundred firms, and 15 boutique firms—took in 3 percent more revenue during the first three quarters of the year than they did during the same nine-month period last year. Profits, meanwhile, were up just 1.5 percent. The findings were largely in line with a similar survey covering the first half of the year that Wells Fargo released in September. 

Wells Fargo's third-quarter report detected some other troubling trends, including declines in both billable hours and firmwide realization rates. Of additional concern: The surveyed firms reported that as of September 30, they were carrying balances on their lines of credit that were, on average, a third higher than they were a year ago at the same time. That, says Legal Specialty Group national managing director Jeffrey Grossman, suggests more firms than usual are relying on short-term debt to fund operations late in the year.

The Wells Fargo report, like those issued earlier this month by Citi Private Bank's Law Firm Group and Thomson Reuters's Hildebrandt Institute, found that in addition to seeing their revenue growth slow during the year's first three-quarters, firms continued to grapple with rising costs. On average, the firms surveyed by Wells Fargo saw expenses rise 3.7 percent, with nonpersonnel costs jumping 5.8 percent, and salaries—the largest line item—up 2.5 percent. 

The survey's findings, Grossman says, are more encouraging for a subgroup that includes about a dozen top-tier firms with profits-per-equity partner of $2 million and above. Those firms saw revenues grow 4.9 percent through the nine months ending September 30 compared to the same period last year, while profits rose 7.9 percent. On average, overall expenses within this elite group grew by 2.9 percent. 

More worrisome, Grossman says, is the survey's suggestion that firms are having trouble keeping their lawyers busy. Based on the number of hours billed as of September 30, equity partners at the surveyed firms are projected to work an average of 1,602 hours this year, or 1.7 percent fewer than they did in 2011. Nonequity partners find themselves in similar straits: Wells Fargo's survey estimates that they will work 1,530 hours on average this year—a 1.6 decline compared to 2011. That poses a structural problem, Grossman says, because the number of nonequity partners is growing at a time when they are being utilized the least. The nonequity tier at firms responding to the survey has increased 4 percent compared to last year. (Associates, meanwhile, are projected to put in an average of 1,768 hours this year, a 0.5 drop compared to 2011.)  

Among the top-tier group, however, equity and nonequity partners are all projected to work about the same number of hours, 1,734 and 1,733, respectively, both more than 100 hours above the survey average. (Associates at top-tier firms are projected to put in 1,787 hours this year.)

One way firms may be coping with the perfect storm of slackening demand, increased expenses, and falling realization rates is by raising their fees: Billing rates were up 3.4 percent through the first nine months of the year, and two-thirds of the firms surveyed said they plan to raise billing rates between 3 and 4 percent overall next year.

Fifteen percent of the firms surveyed by Wells Fargo Private Bank plan to cut partners in the first quarter of 2013, Reuters reports. The number is higher than the usual 5 percent typically reflected in the survey but lower than recession highs of about 25 percent.

Lawyers have specific duties with regard to e-discovery

Article by James Bernard, Michael Quartararo and Jason Vinokur

What are an attorney’s ethical obligations in e-discovery? This article lays out the responsibilities attorneys have when it comes to e-discovery.

Duty to Preserve ESI
Both in-house and outside counsel have an obligation to preserve documents relevant to a claim or defense that may lead to admissible evidence in the litigation. Counsel must make a reasonable inquiry, identify potentially relevant materials on a company’s systems and preserve those materials both: 1.) through physical sequestration of the discoverable material, including suspension of auto-deletion, backup tape rotation and record destruction policies, and 2.) by implementation of a litigation hold on the key custodians and information management personnel when litigation becomes reasonably anticipated. Few areas of electronically storied information (ESI) collection and production cause as much consternation as the duty to preserve, and with good reason. The failure to properly preserve documents has led to an award of sanctions in more than 230 cases in federal courts. But the key to avoiding problems is to bear in mind that the obligation is one of reasonableness, perfection is not required. Taking reasonable, timely steps to preserve will avoid problems down the line.

Duty to Collect ESI
A lawyer has an obligation to collect ESI (and, where appropriate, its associated metadata) in a sound and defensible manner. The duty ensures that electronic documents are collected properly and without spoliating information. This obligation does not require lawyers to become computer forensic experts, but practitioners should familiarize themselves with the correct procedures and employ forensic experts or professional litigation support personnel to supplement their knowledge if necessary.

Duty to Supervise
Lawyers are responsible for supervising nonlawyers throughout the e-discovery process. At least one court has held that lawyers are obligated “to sufficiently supervise or monitor their employees’ document collection.” Moreover, failure to adequately oversee outsourced or managed services, such as e-discovery service providers or contract review attorneys, could also result in sanctions. This duty is reinforced by the fact that an attorney is the one who signs discovery requests and responses, and that signature represents a certification that the requests, responses or objections are complete, accurate and not interposed for any improper purpose.

Duty During Document Review
Nowhere does a lawyer’s obligation to protect and maintain the confidences, privileged material and work product of a client come more into play than when reviewing ESI. The responsibility here is to review and produce relevant, nonprivileged material. But concomitantly, it means taking steps to avoid the production of privileged or proprietary information. If privileged material is inadvertently produced, Federal Rule of Evidence 502 provides some protection provided the lawyer “took reasonable steps to prevent disclosure” and attempted to timely retrieve the information.