We had pleasure of meeting up with a lawyer in a medium sized Minnesota law firm recently and learned that firm uses no dedicated document review system for the vast majority of its client matters.

As a result, a document review at the law firm that might take 8 hours with a dedicated document review system takes the lawyers at this law firm three or four times that. And, if the case is active in Month #1 and then is inactive for Months #2-5 (or even, in some cases, inactive until Year 2), the institutional memory of the results of the document review is not well preserved and is seriously degraded by the passage of time. In other words, in Month #6 (or Year 2), the firm has to spend more time marshaling the documents than it would have if it had used a dedicated document review system in the first instance.

Different Minnesota Litigator readers might have different questions. Some might ask, “What do you mean by a ‘dedicated document review system’?” Others might ask, “What’s so nauseating about a law firm’s not using a dedicated document review system as a matter of course?”

What is a “Dedicated Document Review System”?

When we refer to a “dedicated document review system,” we mean a software system where discovery documents (case-specific documents collected from clients, adversaries, and third parties) are stored in a discrete storage system and the software system allows for: (1) multiple means of searching (“find all PDFs,” “find all emails from Jones,” “find all instances of the word, ‘confidential,'” etc. etc. etc.), (2) coding (where documents can be tagged/flagged as “hot,” “cold,” “damages related,” etc. etc. etc.), and (3) editable attorney notes tied to specific documents or computer files in the data-set.

Some readers will undoubtedly point out that the second and third capabilities can be achieved with post-it notes and adhesive flags, which is obviously true. But aren’t the short-comings of these solutions equally obvious? You cannot access post-it notes and flags electronically. You cannot copy documents with post-it notes and flags very easily. They fall off. And, in year 2, is Attorney 2 going to remember what a blue flag is supposed to mean?

Further, the post-it/flag solution is a very distant second-best solution without the first listed capability (multiple means of searching), which the post-it/flag solution fails to address.

What’s So Sickening About a Law Firm Not Using a Dedicated Document Review System?

For law firms that do not use dedicated document review systems systematically, as we said above, a document review that would take 8 hours with a dedicated document review system takes the lawyers (or paralegals or interns) three or four times that.

This, in turn, means more money for the law firm than competing law firms who invest in dedicated document review systems.

It is this kind of “profitable inefficiency” that makes our legal system expensive and goes to explain to some degree why it is held in contempt by many. This is a form of market failure, defined as “a situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.”

Some readers might argue that sophisticated consumers of legal services would surely be aware of this inefficiency in their law firms and, they might argue, the inefficient providers, over time will be punished by the market.

It is far from clear that this hope is well-placed. Undoubtedly, some large companies with multi-million dollar legal fee budgets and entire departments of in-house lawyers might have outside counsel best-practices guidelines and the like; some of these might require dedicated document review systems in their outside law firms, at least for large-scale litigation. The vast majority of consumers of legal services, however, have neither the sophistication nor the bargaining power to ensure such efficiencies.

For all matters involving a certain (quite small) number of documents, LEVENTHAL pllc uses a dedicated document review system. We do not bill our clients for it. It is overhead, i.e., we view it as part of the cost of doing business. This means that we make less money and provide better services than competitors who don’t use any dedicated document review system.

And, finally, a reader might ask, “If a dedicated document review system costs your law firm more money and results in your making less money, what are you doing and why are you so stupid?”

In our view, being a lawyer, providing legal services, is and must be different from selling most services in our economic system. Like all lawyers, we hope and expect to earn a good living practicing law but, ultimately, that is not what the job is about. The job is about interpreting and adhering to the law in both actions and words for the protection of individuals, business concerns, or for the sake of desirable ideals (language adapted from here). Lawyers owe their clients fiduciary duties, including a duty of loyalty. By definition, in our view, ethical lawyers cannot have the single goal of profit. We can only hope that offering the best services at the lowest cost is taking the long view and, over time, will pay off.

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