ILTA 2012 Part 3 – Some market observations

This is the third of five posts about ILTA 2013. The preceding one ended with the observation that there was much to gain from just talking with people. That may include application-specific tips, ideas about department organisation or training, and pointers to things to try and avoid. This post covers the mood of the conference. Where are we going as an industry?

Part of the point of talking to so many people is a kind of crowd-sourcing of opinion. What is the mood? What developments are coming up? What are the lawyers asking, and are their clients asking anything different? It was quite interesting being in the same venue as the conference of three years ago because that somehow evoked the mood of the time. People were handing round their CVs that year, either already unemployed or hoping to jump ship because they could see water at the gunwales. The talk then was of clients deferring litigation, collecting data and stockpiling it against possible future action; there were rumours of bankers and shareholders who were putting in more money because they stood to lose so much if the company went down. It rather coloured the mood of that year’s conference.

This year felt different. After a while in this game you get to see behind what the mouth says and at the often rather different message coming from the eyes or from the tone of voice.  Using that rough-and-ready approach, I would say that there are a few players in this market who are doing very well, many who are just keeping afloat and will pull through, and a few who won’t be here next year (you don’t need to be very clever to make such an observation in a recession; the bit which counts is that some are doing very well). There are rumours of at least one significant acquisition – by “significant”, I mean that a major player will buy a strong but smaller niche player to give it new markets and not merely talent and client lists.  I suspect that quite a lot of the conversations going on around the Gaylord were between providers rather than involving clients – not the desperate circulation of CVs as in 2009, but quiet hints of greener grass or of a willingness to move if the terms were right.

That said, there are good people without jobs and good jobs for whom no obvious candidate can be found. It is not just shrinkage or growth which explains this – work is shifting away from its traditional hands as clients either take more work in-house or send more out; one of the paradoxes of the time is that both seem to be happening at once as different organisations – clients, law firms, government departments and providers – cast around for better solutions for their particular priorities, cheaper ways of getting their work done or service offerings more aligned with their clients’ perceived needs.

The mood was oddly buoyant – “oddly” because aside from a few companies, it is not clear to me that many providers feel in sight of the sunny uplands. The fact that some do feel that suggests that the work is there but falling into fewer hands, reflecting a market preference for certain technologies and for limiting the number of providers with whom companies deal. This is presumably one of the factors driving consolidation at the providers.

We are perhaps beginning to see changes in the way providers price their services, one which parallels to some extent what is happening to and at law firms. Richard Susskind has said of the latter that most of the fee changes at law firms come down, when properly analysed, to shaving a few percentage points off the old rates; to some extent, that has been true of providers as well. Clients obviously want lower rates – who does not?  What matters just as much, perhaps, is more predictable and transparent pricing models – see the Quick ILTA Wrap from eDiscovery Journal’s Barry Murphy on this (and see eDJ’s Greg Buckles’ ILTA 2012 Technology Roundup for a summary of some of the provider news). As Barry also points out, there is increasing interest in managed services – I had lunch with David Cowen of The Cowen Group who expounded on the back of a napkin the points which Monica Bay has summarised in her article Cowen Group Forecasts Surge in Managed Services at Law Firms.

It is no bad thing that some of the heat has gone out of the discussions about predictive coding because we might see some light in its place. Somebody observed to me that the majority of lawyers will wait cravenly for others because they lack the guts, the initiative or the understanding to evaluate new things for themselves. The rise of predictive coding, he said, had perhaps made lawyers more ready to consider clustering or whatever it was they shied away from last year. If that is right, we need some brand-new development to come along quickly to make predictive coding more acceptable.

Many of those who reject or ignore it, I suspect, have not bothered to try and understand its implications – except, possibly, to develop an inchoate fear that it will take their jobs away. We desperately need clients to take the initiative here and to challenge their lawyers both on the use of modern technology and on questions of information governance. If the lawyers were made to identify properly the savings on the one hand and the risks on the other, then they might start thinking about it before just shouting “Preserve! Preserve!” like Daleks stuck on a loop ; for now, they get away with burbling on unchallenged about sanctions.

Note: I have not watched Dr Who since about 1965, but it then featured the Daleks, malevolent mechanical creatures armed with sink plungers, whose sole conversational gambit was to cry “Exterminate! Exterminate!”. The Daleks were, according to one web site, “..born without any ability to feel compassion or pity and were motivated only by hate, fear and an implacable belief that they were the superior creatures in the Universe.” Their inventor, Davros, predicted that they would “mutate into immobile organisms”. Their principle weakness was their inability to climb stairs, so that they were stuck on the level they were at. For further information, read Richard Susskind’s new book, Tomorrow’s lawyers: An introduction to your future when it comes out shortly.

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About Chris Dale

I have been an English solicitor since 1980. I run the e-Disclosure Information Project which collects and comments on information about electronic disclosure / eDiscovery and related subjects in the UK, the US, AsiaPac and elsewhere
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