COVID-19 Has Brought Unprecedented Upheaval to E-Discovery Industry
The economic and court-related slowdowns brought on by the coronavirus pandemic have led to e-discovery workforce cuts, business operations changes, and more. But some changes brought by the shift to remote work have had unintended benefits.
April 14, 2020 at 10:00 AM
10 minute read
The economic impact of the COVID-19 pandemic, particularly in the U.S. has been stark. Industries ranging from hospitality to retail to travel have seen layoffs and furloughs as an entire economy shifts to stay home. A report from consultancy McKinsey & Co. estimates that the U.S. economy may be in a state of recovery until 2023.
The legal world has certainly not been immune to these changes. A number of law firms and legal-related businesses have joined the rest of the economy in pay cuts, hiring freezes and layoffs. One would expect that these changes will still be flooding in over the next couple of weeks as well.
Over the next week, Legaltech News will be examining how these economic changes are expanding one step beyond corporate legal departments and law firms to their partners: legal tech companies. Whether it's in e-discovery, legal research, contracts and transactions, or a number of other technologies, this recession could have an impact that extends far into the future.
For e-discovery, while litigation has not fully stopped, the cumulative effects of court slowdowns have begun to be felt. Some companies have experienced layoffs and furloughs, while others have experienced missed payments from clients. Others have had to change plans, or rapidly accelerate preexisting rollouts, to accommodate new working conditions. But all those who spoke with Legaltech News agreed on one thing: The e-discovery industry will change as a direct result of the current pandemic.
|A Changing Workforce
Furloughs and layoffs certainly receive headlines, and e-discovery is no different. In late March, DISCO announced in a statement, initially reported by Austin Inno, that it made cutbacks to its workforce "to proactively address and reduce potential risk."
"The decision to reduce our workforce was made solely to offset a potential downturn in business due to the coronavirus crisis," the statement sent to LTN said. "We remain confident in our business strategy and our plans for ongoing product and service innovation, customer acquisition and long-term growth. Business will continue as usual, and customers will see no disruption to service due to internal changes."
Since then, other e-discovery companies have made similar cuts. On April 10, Bob Ambrogi of Lawsites Blog reported that Epiq Global has laid off around 200 employees, in large part due to the company's cyberattack, with other cuts to come. Sources have confirmed recent cuts to LTN, though not the total number of employees. Legaltech News has also confirmed that e-discovery company CloudNine has cut staff in recent weeks, with the total number of affected employees also unknown. Both Epiq and CloudNine declined to comment to LTN on workforce changes.
Other e-discovery companies have also taken cost-cutting measures in order to be proactive. Zapproved CEO Monica Enand told LTN that her company has instituted a hiring freeze, reduced executive team wages 20% to 30%, reduced her own pay to minimum wage, and placed some teams on furlough. The workers going on furlough are "functions for which there isn't business activity right now," such as field marketing or recruiting teams.
"We're able to take advantage of the government furlough program, which is great. They're able to stay a Zapproved employee, they get to stay on our health benefits, and they're filing for unemployment but don't have to look for a job. And they get to come back as soon as the business activity is back," Enand said.
Especially in an industry that has experienced constant growth over the past decade, the concept of downsizing is something new to e-discovery. Zapproved is among those companies that have experienced increasing interest from venture capital and private equity, most recently announcing a strategic investment from Vista Equity Partners in May 2017.
For the Portland, Oregon-based company, the economics of the pandemic is bringing a rapid shift. "It feels emotionally sad to disconnect from these people for a little bit, but the rest of the team is pulling as hard as we can to get back," Enand said. "When things get back to normal, we're raring to go."
Even those who have not had to make these tough decisions with current employees may face other workforce struggles the longer this pandemic continues. Haresh Bhungalia, CEO at Casepoint, said his company has not experienced layoffs or furloughs, but Casepoint has slowed down on hiring "a tiny bit." With the current state of remote work, he explained, simply bringing on new talent has become complex.
"It's not because of budgetary constraints, but moreso because of logistics," Bhungalia said. "If you're going to bring someone on, how do you onboard them? And culture's a big part of what we do. We'd be foolish not to look at cost containment, but we're not fully stopping hiring."
Bill Piwonka, chief marketing officer at Exterro, agreed that any process for bringing in new workers will shift during the current pandemic. He told LTN that while Exterro has not experienced cuts and is still looking at hiring, "the process is a little different. There's a lot more video interviews than in-person interviews."
"I've been working closely with one new hire in the sales department, and there's been a lot of IMs and video conferences and emails," Piwonka added. "I feel like I know him on a personal level, and I've never been in physical presence of him. I wouldn't say challenges, it's just a new norm."
|Time to Be Productive
Even with a changing workforce, however, there may be some indication that the move to employees working remotely could have a lasting effect on the industry.
Multiple e-discovery executives who spoke with LTN indicated that their employees are actually becoming more productive, not less, as a result of the current working situation.
Casepoint's Bhungalia was one of those who said productivity has actually risen, even with the Washington, D.C.-based company's employees all working remotely.
"As we all adjusted to work from home, I think that individuals went to a place that they were familiar with as a distraction from all the noise that's going on outside," Bhungalia said. "People—honestly, we don't necessarily like it, but they're just working more right now. And the efficiency of the hour has also gone up, because people don't have other priorities—you can't have other priorities, because you can't leave your house!"
Zapproved's Enand found a similar trend when tracking Zapproved's productivity metrics. The company was even able to launch its Digital Discovery Pro integration with Nuix ahead of schedule, she noted.
"The first couple of days were of course rocky, in the first week of figuring out what the heck was going on," Enand said. "But even as schools closed, and people were balancing child care, somehow everybody was able to keep going. … I was really impressed with our team. I just thought, 'Wow, that's pretty amazing that we were able to continue working and not really skip too much of a beat.'"
Roger Pilc, president of the legal solutions business at Epiq, similarly said the increased quality of remote work surprised him and Epiq's team. He said Epiq has seen increased document reviewer hours per week, improved productivity in terms of documents per hour, and the same or fewer quality errors.
"As we evolved in this, like anything new, it's uncharted territory or you're not quite sure what to expect."
So what is fueling this change? Joey Seeber, CEO of e-discovery provider Level 2 Legal, told Legaltech News that at his company, the pandemic has instilled a greater sense of employee confidence, bolstered by the trust placed in them by both company leadership and clients.
"Our culture and morale has probably never been greater, as strange as that would seem," he explained. "Much like us spending more time with our families, and our families are maybe getting stronger … the same is true for our company. We're in it together, and I've never felt that more than in the last two weeks."
And Seeber expects these sorts of relationships to continue even beyond the pandemic's expiration: "I don't know about you, but when somebody helps me with something that's really important to me, and it's at a difficult time, I remember that. Whether it's my banker or my lawyer or my accountant or my grocery store, when I know that I can depend upon that partner, that business associate, then that helps strengthen those relationships."
|Upping the Pace of Innovation
When it comes to the e-discovery process itself, e-discovery providers have already been transitioning to the cloud and other remote technologies in waves. But the mass move to remote working has accelerated those processes to a new degree in a way that could be permanent, e-discovery executives said.
"I really believe that for the most part, the war between on prem and SaaS has been fought, and the battle's over," Exterro's Piwonka said. "But there's always a few laggards that are still uncomfortable with a SaaS solution, and I think that's going to be more and more difficult."
Pilc at Epiq called it "acceleration by necessity." As Epiq itself needed to convert 1600 document review attorneys to be able to work remotely, and Epiq's clients needed to undertake similar changes, gradual shifts suddenly needed to become much more urgent.
"The big picture to us is those plans that already started a year ago are now into hyper-acceleration mode, both in terms of our own digital transformation and also helping our clients transform. … There's nothing like necessity to drive you to do good things faster."
At Level 2 Legal, the pace was similarly quickened. The company had already been instituting a secure remote work plan for foreign language attorneys working on project basis. But when the rest of the company's employees suddenly needed to work remotely as well, Seeber said, "We really just multiplied that times a hundred."
"We've been preparing for it for the last four years; we just didn't know that this was what we were preparing for," he added.
Customers may be realizing that they similarly need to make these preparations, Casepoint's Bhungalia explained. "A number of clients are realizing that having an on prem install becomes a dependency in a time like this. You still have to administer, you still have to maintain it and all of that other stuff. And you may not be set up to do that remotely, whereas the cloud architecture allows you to do those things."
As a result, many conversations in the e-discovery community may not be about current jobs at all; given the rapid shift to remote, that ship may have sailed.
"The conversations we're having with our customers isn't so much about the current arrangements, other than making sure everyone's healthy and fine," Bhungalia said. "But I think that customers are trying to figure out, the pace of business still needs to be maintained, how do I maintain that in the current environment and whatever the new norm may be?"
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