Michael do RozarioPartner, Head of Legal Technology Solutions

CORRS CHAMBERS WESTGARTH

Scott Mozarsky Regional Managing Director

VANNIN CAPITAL

Adam SilvermanManaging Director

VANNIN CAPITAL

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VANNIN CAPITALLEGAL TECHNOLOGY IN DISPUTE RESOLUTION: TRENDS, EXPERIENCES AND THE FUTURE

A fundamental principle of commercial dispute resolution in many jurisdictions is that it should be conducted with a view to the dispute being resolved in a just, quick and efficient manner, as much as the circumstances allow. Third-party litigation and arbitration funders have clear incentives to explore with the law firms that they work with, or the litigants that they fund, embracing legal technology to achieve case efficiencies and solve problems that often arise in the context of a dispute.

According to BDO’s recent Law Firm Leaders Survey, 95% of UK-based managing partners and senior partners said their investment in tech would increase over the next five to ten years, with 75% expecting this investment to be “substantial”. Legal technology is an ever-evolving world which is empowering the legal profession and, in particular, the conduct of litigation and arbitration.

The proliferation of legal technology means that there is not often a single “best” solution. In addition, it is important to remember that legal technology does not need to be considered separately from the technology that is used in the particular litigant’s business or which is deployed generally within an industry. Any fit for purpose technology can potentially make a difference in the efficient conduct of dispute resolution.

In this article, we examine with Michael do Rozario, Partner and Head of Legal Technology Solutions at Corrs Chambers Westgarth, the state of the art in eDiscovery ‒ given that the most significant use of technology in a disputes context is in the discovery space – as well as looking at other available and emerging technologies that may be relevant to the successful running of litigation and arbitration.

LEGAL TECHNOLOGY IN DISPUTE RESOLUTION: TRENDS, EXPERIENCES AND THE FUTURE

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Discovery

Every major jurisdiction has court rules, practice notes and/or guides for the efficient handling and exchange of discovery in electronic form. Such practices are also common in the context of international arbitration where guides – such as the IBA Rules on the Taking of Evidence in International Arbitration – provide a valuable resource to help parties and arbitrators deal with the issue of document production, and expressly encompass the production of electronic documents.

The eDiscovery industry is a mature part of the legal technology market place. It has existed in one form or another for as long as computers have formed part of the workplace, and has been a recognisable industry since the 1990s.

Initially, early providers of eDiscovery solutions focused on providing electronic platforms where electronic data could be stored in a single place and reviewed by multiple users. Providing for an “efficient” document review process was the primary objective.

However, with the never-ending explosion of data and electronic communications being created, it quickly became clear that efficient eDiscovery required significantly more than a platform and process for reviewing documents.

The formation of the Sedona Conference Working Group 1 on Electronic Document Retention and Production and the publication of the first edition of The Sedona Principles in 2003 allowed for the clear identification of the basis upon which eDiscovery should evolve. The Sedona Principles and the Electronic Discovery Reference Model that formed from those principles, has shaped the basis for most of the rules and practices around at least the common law world.

With an internationally accepted and consistent framework in place, a strong market has developed offering more advanced technology to assist with the identification, collation, storage, review and production of electronic evidence. According to some reports, the global eDiscovery market is currently worth at least US$20 billion.

The state of the art in the eDiscovery market is focused on making eDiscovery a “smoother” process that is more connected with the needs of the lawyers in the case. The key areas of development have been in the use of cloud-based storage and processing, the use of visual analytics to group and relate documents to each other and the development of machine learning and artificial intelligence (AI) algorithms that assist reviewers to make relevance and privilege decisions.

Leading eDiscovery software has moved away from the “traditional” linear review of documents and now offers an array of technological advanced functions that help speed up the eDiscovery process and improve the output. These include:

• detailed review analytics covering issues such as reviewer accuracy, reviewer pace, real-time reviewer activity;

• automatic identification of “hot docs”, “smoking guns” and legally privileged material;

• identification of key phrases within documents and the creation of conceptual “maps” based on relationships between words;

• interactive data visualizations to identify relationships and custodian communication patterns;

• transcription of audio / video files;

• translation of foreign language content;

• automatic redaction of sensitive data such as phone numbers, social security numbers and bank account information; and

• real-time case collaboration allowing documents to be acted on by multiple people simultaneously.

ACCORDING TO REPORTS, THE GLOBAL EDISCOVERY MARKET IS CURRENTLY WORTH AT LEAST US$20 BILLION.

VANNIN CAPITALLEGAL TECHNOLOGY IN DISPUTE RESOLUTION: TRENDS, EXPERIENCES AND THE FUTURE

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Cloud computing

The transfer of eDiscovery processing and review to take advantage of cloud architecture is likely the most significant development of recent years. The step change in terms of cheap and efficient storage, ubiquitous web access and scalable computer processing power is significant. Leading Australian law firm, Corrs Chambers Westgarth, was one of the pioneers in this field, moving its entire processing and eDiscovery platform into the cloud between 2012 and 2016. The move has enabled Corrs to reduce the significant costs of storage for clients and provide a faster, better and more stable service. It is now common for Corrs to process 1 TB of client data in a day, meaning that client data is available for analytics and review much faster than was previously considered possible.

Additionally, cloud storage has significantly decreased the costs of eDiscovery for clients, with storage costs within a platform decreasing from around US$40/GB/month to about US$20/GB/month for average matters, with costs lower than US$5 available for very high volumes.

The other obvious advantage of conducting eDiscovery on cloud platforms is that, increasingly, that is where business data is stored. The ability to quickly locate and process data is increased by the removal of the traditional friction associated with extracting data from a server, then uploading it onto another server for processing and review ‒ cloud to cloud file transfer is far more efficient.

Other advantages are less obvious but just as profound; for example, Amazon Web Services (AWS) and Google Clouds (among others) offer low cost, highly capable plug-in services for translating documents, transcribing audio or video files and de-duplication of files. AWS’s Textract, announced in late November 2018, is expected to quickly make its way through to the eDiscovery space, improving the quality of the text searching and data extraction needed for advanced analytics and machine learning.

Analytics and technology-assisted review

Another significant advance is the adoption of analytics and technology-assisted review (TAR) as part of a court or tribunal sanctioned discovery process.

These tools allow a break from the traditional linear reviewing process by focussing on the most relevant documents first. Analytics refers to the use of technology to move from Boolean keyword search and hit counts as a method of identifying relevant groups, to the use of several data points including metadata, content searching, concepts and objective information. For example, the Nuix Ringtail platform offers analysis of documents in a visual (graphical) format that allows visualisation of social networks, concept clouds, e-mail threading and gap analysis.

TAR uses machine learning algorithms to predict the likelihood of relevance of a document to a given set of issues. This process is also referred to in the industry as “Predictive Coding.” In practice, TAR significantly reduces the amount of documents that need to be manually reviewed, by applying a learning model, and then ranking the documents according to their likelihood of relevance, so that documents that are unlikely to be relevant need not be reviewed or can be reviewed using less expensive resources. Maura R. Grossman, a research professor at the University of Waterloo in Ontario and principal of Maura Grossman Law in New York, has been using and studying TAR since 2009. In a widely cited paper published in the Richmond Journal of Law and Technology in 2011, she and Professor Gordon V. Cormack showed that TAR could meet or exceed the performance of lawyers in conducting document review tasks. Grossman notes that “with an effective TAR process, a legal team can review a small fraction of the document collection and do a better job than a team of contract lawyers or junior associates reviewing the entire collection.”

Increases in quality and recent successful use cases have seen TAR achieve growing acceptance by practitioners, courts and tribunals in several major jurisdictions over the last five years.

95% OF UK LAW FIRM PARTNERS EXPECT INVESTMENT IN TECH TO INCREASE OVER THE NEXT 5-10 YEARS, WITH 75% EXPECTING THIS INVESTMENT TO BE SUBSTANTIAL.

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Platforms to bring all of this together

The major discovery software providers are now offering cloud-based eDiscovery platforms that combine storage and review with analytics, TAR and “workflow management”.

For example relativity claims that its Allegory platform “brings modern technology to the practice of litigation” by “[connecting] all the pieces of a litigation or investigation”. Thomson Reuters claims that its Case Notebook product is “a centrally accessible and searchable litigation case management software that helps you organise, analyse, and share essential case information”.

Nuix claims that its Ringtail platform implements “end to end discovery… helping you uncover better evidence faster and to quickly integrate it into your case strategy” and “is designed for scalability in data volumes and number of users, and will give you extensive visibility and control over your eDiscovery tasks”.

There has been significant consolidation of eDiscovery over recent years and we will continue to see major platforms investing in new efficiencies.

However, the authors also expect to see new platforms taking advantage of cloud technologies that will challenge existing providers on speed and cost. As already alluded to the cost charged by platforms for processing and storing data has already halved in the market in just two years and will continue to decrease as data volumes grow. We expect platforms to offer efficient data management as part of their future solutions, to lower the overall cost to clients. Additionally, many of today’s platforms are arguably constrained by their underlying use of outdated technology, which makes it challenging for those platforms to deal with multiple terabytes of complex data.

Clients generate and use data in ways that were simply not contemplated even ten years ago; for example “data lakes”, which underpin corporate big-data analysis, are a key investment priority for many companies. As clients generate and keep an exponentially growing amount of data, the ways in which platforms store, search and present documents will need to be re-engineered. We expect to see leading platforms move to or develop infrastructure that are specifically designed to handle large sets of distributed data, possibly in-situ.

Some of the other key areas to watch include whether generalist AI and machine learning platforms (for example those offered by AWS, Google Cloud, IBM, Microsoft and others), or generalist company based big-data analytics tools, will overtake specialist eDiscovery platforms, leading to the ability to conduct analytics and TAR directly on client data without needing to extract and process it.

Legal strategy analytics and automation

Another developing area of legal technology focuses on understanding and analysing publicly available data to assist in making strategic decisions within a dispute resolution context.

This new generation of technology specifically leverages legal data and analytics to provide insights into, for example: the likely duration of a case (from case filing to final judgment/award or enforcement); how judges or arbitrators are inclined to rule on a particular issue; whether a judge or arbitrator has a tendency to rule for plaintiffs or defendants; the types of damages or remedies a court or tribunal has awarded for a particular cause of action; and even the past decision making of opposing counsel.

The range of data that is now being sliced and diced is becoming progressively more novel. For example, in the US, one legal analytics company recently publishing data on judges following interviews with lawyers, covering factors such as temperament, demeanor, natural proclivities, knowledge and decision-making speed. There are also services which can provide information to lawyers on how jurors might vote by searching through, for example, public records and social media posts.

Using this statistical based approach can arguably increase the chances of making decisions which result in favourable outcomes. However, some view this “prediction” software as unreliable in the same way as many investments products come with a warning that past performance is not an indicator of future outcomes.

In addition, major corporates are now using analytics to aid their selection of lawyers. For example, in previous years, it was often difficult for a company faced with a dispute in a jurisdiction in which their experience was limited or non-existent, to procure competent local counsel to advise them. Large international law firms may have had a network of local counsel to recommend to their clients but otherwise it may be that a smaller firm, or a company’s in-house counsel, would have to rely exclusively on pre-existing relationships or word of mouth. Technology seeks to bridge this gap. Analytics enables choosing counsel to be a more scientific process. Software – such as Bloomberg Law, Bodhala, Lex Machina and Monitor Suite – allow in-house teams to screen proposed litigation counsel when determining which law firm to hire for a new case. This may allow litigants to access a deeper pool of lawyers to find less well known, and/or less expensive, lawyers and firms, who have the relevant experience.

ANALYTICS ENABLES CHOOSING COUNSEL TO BE A MORE SCIENTIFIC PROCESS.

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AI in legal research

Another significant advance has been the use of machine learning to simplify the legal research process. Platforms such as Judicata, ROSS Intelligence and Ailira use natural language processing to take a query and then intelligently search case law to find the relevant precedents. Those organisations join traditional giants, Bloomberg Law, Thomson Reuters and Lexis Nexis, all of whom are investing tens of millions of dollars in AI each year.

These platforms offer a significant advantage over traditional Boolean based searches, and are able to identify that a case is relevant to an issue, even if the language in the search term is not present in the particular case. The other significant advantage offered by these platforms is data visualization, which enables users to view connections between cases and find outliers that better position them to advocate on behalf of their clients.

Online dispute resolution technology

Renowned legal technologist, Professor Richard Susskind, recently commented that, “I have no doubt that the work of courts around the world will increasingly be conducted online. Here indeed will lie the key to providing greater access to justice”. The cutting-edge world of online dispute resolution (ODR) technology has been gaining traction in many jurisdictions over recent years.

THE WORK OF COURTS AROUND THE WORLD WILL INCREASING BE CONDUCTED ONLINE - HERE LIES THE KEY TO PROVIDING GREATER ACCESS TO JUSTICE.

VANNIN CAPITALLEGAL TECHNOLOGY IN DISPUTE RESOLUTION: TRENDS, EXPERIENCES AND THE FUTURE

ODR covers a huge spectrum of ideas and applications related to digital and online dispute processes. It seeks to re-engineer fundamentally the dispute resolution process – common examples include: online case initiation whereby parties or their representatives are able to commence proceedings by filing relevant documents via an online platform; online courts and tribunals which consist of electronic platforms allowing judges or other arbiters to determine disputes without the need for in-person hearings and to conduct hearings by video conferencing; virtual mediation rooms which allow parties to conduct private mediations without needing to be physically in the same location; and, in some cases, automated assessment of the issue between the disputants and the negotiation of an agreed resolution, including by “blind bidding” (whereby systems accept confidential settlement offers from parties and determine what is acceptable to both parties) or by use of AI-type systems which calculate outcomes that lead to the maximum satisfaction of parties.

The introduction and use of ODR technology has traditionally been more commonplace for dealing with the efficient resolution of low-value civil claims. This has much to do with e-commerce giants, such as Amazon and eBay, building and offering their own ODR platforms since the late 1990s and thereby creating fast and fair redress for consumers in e-commerce transactions. It is reported that eBay and PayPal process more than 60 million cases a year online using Squaretrade, a peer-to-peer ODR system.

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“Smart contracts” are a byproduct of blockchain technology. They are essentially “self-executing” contracts which automatically trigger once the smart contract’s conditions have been met. The conditions are written in code (rather than contained in the provisions of a standard contract). Once the pre-programmed conditions have been met, the contract automatically triggers, each party receiving any agreed-upon compensation upon its execution. For example, once an employee and employer satisfy the conditions of a smart contract between the two parties, the employee receives payment.

Blockchain and smart contract technology is being implemented across a range of industries, for example, to more efficiently and transparently enable real-time international payments; automate insurance policies; maintain shareholder transactions and corporate records; verify the chain of custody of real estate; track the sourcing and distribution of supplies across supply chains; and maintain trademark and patent databases. Economists project that blockchain and smart contracts could significantly alter the financial system.

Whilst blockchain and smart contracts may well create a technological paradigm shift, the technology is still in its relative infancy. Indeed, MERL Tech (a technology research body that monitors trends in emerging technology) recently reported that it investigated a sample of high-profile blockchain startups but found scant or no evidence of these companies actually delivering any sort of functional products or services. In any event, we expect to see a growing trend of disputes arising out of the use of this technology. Vannin Capital has already been involved in assessing “crypto-litigation” for funding.

In disputes, blockchain technology will potentially cut through many of the evidentiary issues associated with a transaction. The creation of a permanent unalterable record of the material details of a transaction will minimise the need for a large amount of evidence. At the same time, we expect that litigation about the use of blockchain and the rules that ought to apply to widely used public blockchains will be a growing area of demand.

The future

There is every reason to be excited about the future of legal technology in a dispute reolution context. The challenges created by explosion of client data and the lack of transparency and efficiency in the market are continuing to be met by innovative ways of accessing, analysing and presenting that data when a dispute arises. At the same time, the use of data (or ‘big data’) seeks to: improve the accuracy of decision making; help lawyers and clients to focus on the key issues and (hopefully) be right more often; ensure cases are run as just, quick and cheap as possible; and improve litigation and arbitration outcomes. That is welcome news for law firms, funders and litigants alike.

Whilst many of the newest technologies are yet to prove their effectiveness, and the economics of putting this tech into practice on a wide scale are not necessarily favorable yet, the legal technology industry will continue to innovate and grow at a rapid pace.

There has never been a more exciting time for the legal technophiles among us.

VANNIN CAPITAL HAS ALREADY BEEN INVOLVED IN ASSESSING “CRYPTO-LITIGATION” FOR FUNDING.

In more recent years, however, there appears to be a shift towards harnessing the technology to higher value and more complex commercial disputes.

Most of these technologies are a natural step forward on what is already happening in legal practice. For example, courts have been receiving evidence and conducting administrative hearings by telephone, video-conference or even by exchange of e-mails, for most of the 21st century.

The advantages of ODR technology are widely accepted, but there are certainly contrasting views when it comes to whether hearings ought to be face-to-face or conducted virtually. There is a well understood body of case law that applies to applications to take evidence remotely and the success of those applications usually depends on the type of evidence to be taken. Technology is bringing new factors to this consideration however; for example, some consider cross-examinations as being equally effective whether conducted in person or virtually whereas others point to how body language and other non-verbal clues may be artificially enhanced by computerisation to the detriment of the process.

Blockchain and “smart contracts”

Blockchain is being hyped as the next big technological “disruptor” for law firms, businesses, financial institutions and all manner of public and private institutions and organisations.

For the uninitiated, blockchain is essentially an electronic ledger of transactions which is maintained, verified and updated by multiple users on an open (“distributed” or “peer-to-peer”) network as opposed to being the responsibility of a single central authority (ie, a bank). At its simplest, each transaction on the ledger is recorded in a “block” in such a way that each block in the “chain” of transactions is linked to the one before and the one after (and so are tamper-proof). The main cited advantages being security, accountability and eliminating the need to reconcile disparate ledgers. Blockchain is the underlying technology on which cryptocurrencies, like bitcoin, are built.

VANNIN CAPITALLEGAL TECHNOLOGY IN DISPUTE RESOLUTION: TRENDS, EXPERIENCES AND THE FUTURE