Tales from the trenches: the explosion of e-discovery document review projects in D.C. and NYC

We have received a fair amount of questions from staffing agencies, legal technology vendors, law firms, and in-house counsel on the surge of D.C.-based and NYC-based document review so we thought we’d update our list

17 June 2018 (Paris, France) – The D.C. Metro area and NYC Metro area have seen e-discovery document review projects explode over the last few months. We have not seen this spike since the “Glory Years” that spanned (approximately) 2002 to 2004 when the telecom merger/demerger madness plus a spike in Pharma reviews had us posting, on average, 10-15 projects a week on the D.C. Metro job lists. Pay rates were $35-38 per hour. Law firms and agencies were subsidizing contract attorneys for travel from Philadelphia, Chicago and in some cases Denver to staff the reviews.

Then things subsided and (as we wrote back in 2009) law firms and corporate counsel saw an opportunity to cut their bills/its costs with respect to e-discovery. Review expenditures were prohibitive, particularly in high-cost regions like D.C. and New York where the cost for document reviewers on a contract basis was higher than elsewhere in the U.S.

-32 new projects in D.C.

-20 new projects in NYC

-12 in Philadephia

These are straight “English language” reviews. We’ll get to non-English language reviews further down in this post. And these reviews range in size from 5 reviewers to 75 reviewers.

In D.C. the average hourly rate had crept up to $33-34 but this week will ramp up to $35 on two new, large reviews. Most projects now also pay OT for 40 hour+ projects just to attract reviewers.

In NYC the average hourly rate had crept up to $32. And, as in D.C., most projects now also pay OT for 40 hour+ projects just to attract reviewers.

One continuing trend: almost all agencies/vendors are now stating hourly rates in their posts. As we have advised agencies, most reviewers will skip applying to posts without the hourly rate because:

Granted, many agencies do not post rates because they do not want to tell competitors what they are paying. Or they are all still bidding on a project which happens a lot so they “fish” for reviewers before they have the project.

2. Reasons for the surge: the Federal government, silly

a. M&A

Obviously the AT&T/Time Warner/Disney/Fox lovefest has sucked up a lot of reviewers. But as we learned at a S.E.C. workshop two weeks ago, corporate mergers and acquisitions in the U.S., small to large, have spiked:

1985: 2,300

2017: 15,300+

Correct. Not all these M&As are subject to review but a large portion are so it explains the surge in document review projects and the dearth of reviewers available for projects.

Most antitrust and merger document review work has remained in the D.C. and NYC markets. We have spoken with D.C. and NYC law firms whose focus is antitrust/merger and they have told us that D.C. and NYC contract attorneys are often more familiar with the applicable practice issues and concepts that need to be resolved in such work so it does not pay to “farm shore”.

But this also raises a pain point with us: the arcane system whereby contract attorneys “conflict out of” document reviews. This was glaring apparent in D.C. very recently with the infamous Aetna/Cigna/Express Scripts merger where scores of contract attorneys conflicted out. We received 100+ emails from members detailing the conversations/responses from the agencies/law firms involved.

NOTE TO THE POMPOUS FATHEADS AT SEDONA: quit with your stifling academic conversations about proportionality and computer assisted reviews and come visit the trenches. Solve this conflicts stuff. It makes no sense for e-discovery contract attorneys.

b. Other Federal government work and litigations

There are many Federal government investigations outside of SEC/FTC work, plus a boatload of financial services litigation reviews, and other civil litigations that have hit D.C.

c. Growing Federal government contractor e-discovery positions

We have seen a large growth in Federal e-discovery jobs, mostly in D.C. but with many in Atlanta, Chicago, Los Angeles, Kansas City, San Francisco. These are obviously taking a lot of Posse List members off the market. These jobs are offered by numerous staffing agencies and legal vendors on behalf of Federal government contract vendors, but also directly via Federal government agencies (we now have 18 Federal agencies posting jobs directly with us in addition to their postings via USA JOBS postings). These range from paralegal positions/law clerk positions to attorney positions and they pay anywhere between $24 and $45 an hour and involve document review work, due diligence review, and assorted litigation support assignments.

3. Corporate counsel/law firms try to solve the “saturation problem” in D.C. and NYC

The Posse List has reached a stature whereby we often receive calls from attorneys at law firms and in-house law departments asking about the demand/pay rates in certain markets. Most understand the D.C./NYC market surge and inquire about other U.S. markets. We never answer the question “We wanted DC or NYC but the agency cannot seem to staff it. Where should we move the review?” But when asked about a specific market … “What have you seen in Pittsburgh?” … we provide the information. There are numerous smaller metropolitan areas where pay rates are lower but the number and quality of contract attorneys is just as high.

At a recent IQPC corporate counsel workshop on e-discovery, one general counsel noted:

We are always re-thinking our cost-saving strategies, and expanding it to ask not only who is performing document review, but where. Yes, we have focused on the developing use of AI technologies and CAR [computer assisted review]. But when it comes to brute force review … and even CAR … we are accepting the fact that the location of the contract lawyers is irrelevant. The quality can be found all over the U.S. We do prefer D.C. [for merger reviews] although there is nothing really magic about the D.C. contract attorney pool. That type of talent is all over the country, in lower-cost regions. But in many, maybe most, cases our firm’s office is in D.C. or NYC so it is more convenient to have the review there.

4. Non-English reviews are a special case

For awhile, non-English language review work dominated the D.C. market. That trend has backed off. Over the last three years at one point we were posting, on average, five non-English language review projects to every English language review project. Now it is more like a 2:1 split.

But this market is also undergoing big changes as corporations begin to use deep linguistic analysis platforms like Bitext for multi-language content which reduces the need for armies of reviewers.

And staffing agencies have joined the bandwagon as machine translation progress has transformed the market so that even small to medium-sized LSPs (language industry professionals) can enter the market. Not every corporation is using deep linguistic analysis platforms. So there are opportunities.

Demand is also growing specifically for non-English review for video and audio and relatively few people have this skill and are in high demand. There is particularly high growth in languages used by emerging markets such as Asia and Africa because of trade growth which had led to trade litigation.

POSTSCRIPT

The following is not directly related to the e-discovery document review points we made above, but we thought we’d throw in a few comments from a recent Gardner (you know, the “We-Have-A-Magic-Quadrant-For-Everything!!” company) on outsourcing, plus a few notes from a recent New York Times article about the subject:

• The growth of offshore software work is slowing, to nearly half the pace of recent years. Salaries have risen in places like South Asia, making outsourcing there less of a bargain.
• IBM, one of the country’s foremost champions of the offshore outsourcing model, has announced plans to shift more work back to the U.S. and will hire 25,000 more workers in the United States over the next four years.
• The nature of work is changing. It is becoming very local. As brands pour energy and money into their websites and mobile apps, more of them are deciding that there is value in having developers in the same time zone, or at least on the same continent.
• The offshore industry is not imperiled. But from 2016 to 2021, the offshore services industry will have average yearly growth of 8 percent. The rate in the previous five years was 15 percent.
• Domestic sourcing is here to stay, and it’s going to grow rapidly.
• Key take-away: offshore services companies still excel at maintaining the software that runs the essential back-office systems of corporations. But today, companies in every industry need mobile apps and appealing websites more, digital “cognition” more, which can be made smarter with data and constantly updated. That software is best created by small, nimble teams, working closely with businesses and customers on the same time zone, or reduced time zone differentials – not shipped to programmers half a world away.