This is the conclusion to The Solution to Empty-Suits in the Board Room: The “Hacker Way” of Management – Part One. This second part discusses possible applications in e-discovery of the Hacker Way ideals of Boldness, Openness, and Values. Part one has already covered Impactful and Fast. Both parts are a followup to my blog, “The Hacker Way” – What the e-Discovery Industry Can Learn From Facebook’s Management Ethic, and my LTN editorial, Vendor CEOs: Stop Being Empty Suits & Embrace the Hacker Way.
My LTN article on Empty Suits in the boardroom anticipated the keynote talk at ILTA by Scott Klososky, reported in LTN by Monica Bay in Are You a Dead Leader Walking or Driving With Your High Beams? Apparently many are now able to see that most of the emperors of e-discovery have no clothes, that the suits in charge do not know how to properly manage cutting edge, high-tech companies. Klososky’s advice seems compatible with the Hacker Way credo that Facebook’s CEO, Mark Zuckerberg, and I endorse. In his Dead Leader Walking speech Klososky is reported by Monica to have advised the ILTA audience:
[T]o avoid being “in the middle of the pack. It’s not safe. You have to be willing to bleed a little.” Take the “alchemist role, be creative and innovative. Ninety percent of business intelligence is to be creative and innovative,” he said.
Here is Klososky’s colorful slide from this part of his presentation.
Also check out the summary of Klososky’s presentation by VQ, entitled ILTA 2013: Technology Darwinism. They quote Klososky as saying:
The need to adapt to technology is no longer a technology thing – it’s about survival.
Klososky went on to explain what he calls Technology Darwinism, which occurs when, as the VQ article puts it:
[T]he pace of technology innovation is faster than the speed people adapt to new tools and methods, creating a technology risk gap. This gap might lead to a complete restructure of the market – and the survival of the fittest, i.e. firms who manage to adapt to the new market conditions. When the speed of change in a law firm is lower than the speed of change in the industry, a technology risk arises, which impacts the firm’s service relevancy, client connections, brand reputation and talent acquisition.
Klososky went on to describe what he calls a Technology Inflection Point where new technology changes an industry so dramatically that there are winners and losers. The winners thrive and prosper whereas losers enter into the “death spiral”. He gave several corporate examples, including Kodak, that made money until the year before it filed bankruptcy. VQ reported Klososky’s belief that:
[M]any law firm leaders, refuse to fully understand and act on the fact that the firm is almost dying. As long as the firm makes money, many law firm leaders seem to think that everything is fine and that they are so successful that there is no need to apply new technologies.
Klososky’s advice is well-aligned with the Bold and Fast contours of the Hacker Way discussed in part one of this article. As Zuckerberg’s puts it in his explanation of the Hacker Way, “The riskiest thing is to take no risks.” Now onto the other key pointers of Bold, Open and Values.
Who wants to hire a mousy lawyer? Nobody! Timid and lawyer are two words that should never go together. Yet for most AmLaw 100 law firms today, they do, at least when it comes to e-discovery. For a law firm to be bold, they need to do what my law firm did, and others have done. They need to hire outside attorneys who are already skilled, and they need to make a full commitment to these attorneys and what they bring to the table. The e-discovery experts should be provided with authority to make a real e-discovery team, not just design a marketing ploy. In that way law firms can keep improving and can build a truly effective law firm for the 21st Century.
As Zuckerberg explained in his Letter to Investors:
The Hacker Way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete. They just have to go fix it — often in the face of people who say it’s impossible or are content with the status quo.
If a law firm is satisfied with the status quo, they will not invest in e-discovery. They will be happy with their empty suits. That is, until the hacker led firms start to eat their lunch. Law firm management needs to be bold, to go all-in for e-discovery. They need to hire full time specialists. It does not work to simply ask a few lawyers in the firm to dabble part time.
Timid, halfway, band-aid measures do not work in any complex endeavor, including e-discovery. You have got to go either all-in, or all-out. The days of a law firm setting up a marketing type e-discovery department by sending out a few of its attorneys to CLEs, and then posturing them as experts, are long gone. It takes bold all-out efforts. Again, you need to look beyond this year’s profits to the long term viability of the firm.
E-discovery commentator and consultant George Socha is also leery of poser type law firm practice groups. In an LTN article, True Grit: Four Models to Rein in E-Discovery Costs, George is quoted as saying that most law firms:
[C]ontinue to be marketing groups more than anything else. I continue to see that most lawyers at firms with putative internal EDD practice groups either do not know those groups exist or do not use them. Firms ought to do a better job of taking control of EDD, at least for those clients who lack the wherewithal to take on EDD themselves. Firms seem unwilling, however, to make the initial and on-going investments needed for that to happen.
How many of the AmLaw 100 law firm’s have bona fide e-discovery practice groups? That is the true litmus test for bold management, a test which most firm’s fail. It bears repeating: timid and lawyer are two words that were never meant to go together. Be bold law firm managers. Be a mighty mouse, not timid rat. Go all-in with e-discovery and insure the future prosperity of your firm.
As to vendors, you must also be bold, willing to take a chance, willing to lead, not just tag along with the changes sweeping the industry. Stop trying to milk your outdated products for all they are worth. Get rid of your old products instead of just adding a few minor enhancements each year. Shorten your new product cycles. Invest in research. Made bold moves, big moves. Get rid of the empty suits in your boardroom and go with bona fide hackers. See Vendor CEOs: Stop Being Empty Suits & Embrace the Hacker Way.
Bold vendors are already embracing the future of artificial intelligence, already building new types of active machine learning software. They are abandoning the old linear review models, and focusing on the SMEs, not the contract reviewers. They understand that the future is the Army of One review team, not hordes of contract lawyers. They understand how AI can change the law, can bring down the costs of review while at the same time improving quality. They are bold enough to act on this understanding, bold enough to pioneer new products.
I have been challenged by a few of my readers on my use of the term AI, artificial intelligence, in connection with the new search algorithms. They think it is a misuse of the word. They may be right in so far as some types of TAR are concerned, namely technologies that are not based on active machine learning. But for me, when I refer to the new search algorithms, the bold software that is rocking the world of e-discovery, I am referring to the active machine learning based software. Active machine learning is a type of machine learning. To quote Wikipedia:
Machine learning, a branch of artificial intelligence, concerns the construction and study of systems that can learn from data. For example, a machine learning system could be trained on email messages to learn to distinguish between spam and non-spam messages. After learning, it can then be used to classify new email messages into spam and non-spam folders.
Moreover, the generally accepted definition of AI is:
The study and design of “intelligent agents” where an intelligent agent is a system that perceives its environment and takes actions that maximize its chances of success.
This is what I mean by AI. The predictive coding software of some bold vendors use this kind of machine learning. The methods that I promote are also sometimes called by information scientists semi-supervised learning. You train the agent on relevancy using active machine learning. You give it this limited, but often very complex and nuanced intelligence. The now intelligent agent then perceives its environment, which is the corpus of documents, and applies its intelligence to analyze and rank the documents to maximize it chances of success. Success is defined by measures of recall and precision in locating the documents you want, or as information scientists like to say, meeting the information need of the searcher.
Admittedly, we are still in the early design stages of AI agents for e-discovery. I know that our programs today will look primitive in a few years. (So will everything else as the pace of change and improvements continue to accelerate.) But the first vendors out there with smart AI agents already have a huge competitive advantage. Those stuck in hyped-up keyword searches, which is just 1960s technology with better interface and faster execution, will go the way of the buggy whip manufactures, the way of the Blackberry. You can blame their timid management for the inevitable decline.
Vendors need to be more open about their profits and their black boxes. Got some special mojo? Then patent it like the rest of the technology industry does, and protect yourself that way, instead of by over-use of trade-secrets. Software vendors, open up your black box! Show us the secret sauce and you will go a long way to building trust. No, we do not want to see the actual code. That kind of sauce should be kept secret. The code would not mean anything to us anyway. But explain the science. Tell us how it works, like Jason R. Baron and I attempt to do in a general way for all of this type of software. See: Introduction to Guest Blog: Quick Peek at the Math Behind the Black Box of Predictive Coding. Move beyond mere marketing hype. Offer real training to go with the software. Be more open and candid in what your software can and cannot do.
Lawyers also need to understand that openness builds trust. That is why transparency is now a key component to the new paradigm of discovery cooperation. The way to walk your talk in cooperation is by disclosure. How did you go about preservation? How did you go about finding the documents requested? Use the tools of sampling. Make aggressive disclosures so that you can support your proportionality arguments, otherwise you may lose, even though you have a strong position. That is what happened in the Pippins case, which the defendant later won on the pleadings. Pippins v. KPMG LLP, 2012 WL 370321 (S.D.N.Y. Feb. 3, 2012) (Judge McMahon):
[T]he record before me is devoid of information necessary to conduct such an analysis. . . . KPMG refused to allow Judge Cott, or Plaintiffs to examine even a single hard drive to ascertain the “benefit” of preservation, so there is nothing in the record before me to inform any decision. . . .
In short, KPMG is hoist on its own petard.
The petard here was KPMG’s refusal, no doubt upon advice of counsel, to make disclosure, to be open.
As Judge McMahon went on to explain:
I certainly do not intend to reverse Judge Cott’s Order on the purported ground that he erred by concluding that KPMG failed to demonstrate that preserving the hard drives was unreasonable. Frankly, the only things that were unreasonable were: (1) KPMG’s refusal to turn over so much as a single hard drive so its contents could be examined; and (2) its refusal to do what was necessary in order to engage in good faith negotiations over the scope of preservation with Plaintiffs’ counsel, in purported reliance on an order of this Court that it interpreted unreasonably. It smacks of chutzpah (no definition required) to argue that the Magistrate failed to balance the costs and benefits of preservation when KPMG refused to cooperate with that analysis by providing the very item that would, if examined, demonstrate whether there was any benefit at all to preservation.
KPMG’s attorneys here were bold in their litigation conduct, but not open. As a result their actions were seen as chutzpah. Judge McMahon earlier detailed some of the failures to be open that caused him to affirm the Magistrate’s earlier controversial ruling:
KPMG, hiding behind the stay of discovery, insisted it could not produce even one hard drive for inspection by Plaintiffs. It also refused to respond to any question regarding the content of the hard drives, furnish Plaintiffs’ access to any hard drives, inform Plaintiffs whether the data on the hard drives might be derived from other sources, or discuss the costs of possible alternatives to preserving the data on the hard drives. Instead, KPMG made a series of “take it or leave it” offers, and sought to have Plaintiffs agree that KPMG only had to preserve a smaller sample of the hard drives without giving Plaintiffs the opportunity to review the contents of any hard drive(s) first.
Old school, hide-the-ball, “take it or leave it” approaches do not work in e-discovery. Both lawyers and vendors alike have to learn how to be more open. This is difficult I know, especially for attorneys who must by ethical dictate keep their client’s secrets at all costs. But it is possible, especially if the equally compelling ethical duty of candor to the court is given proper weight.
Building social value is no longer an idealistic pie-in-the-sky dream. It is an effective business strategy. It is an especially effective strategy for professions such as medicine and law, occupations that by nature have a higher calling than just making money. Lawyers serve their clients and the law. It is a dual task, and if there is conflict between the two, the law must always prevail. That is why we have an extensive code of professional conduct. That is why discovery works.
The ethical codes of the legal profession embody our values. They provide a solid guide to the conduct of our services, our noble quest for truth, justice and liberty. The ethical codes require all lawyers to be competent, and, if faced with a legal task wherein they are not competent, such as e-discovery, to bring in other attorneys who are. Model Rule 1.1 states:
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.
Management that embodies legal values will provide real and extensive training to its lawyers. It will take steps to ensure their competence. Vendors should do the same and ensure its customers know how to properly use the new tools they offer.
Legal ethics also requires diligence, a task that is impossible unless you actually know what to do and when to do it. Model Rule 1.3 states:
A lawyer shall act with reasonable diligence and promptness in representing a client.
Again, this mean training, helping professional know what to do. Diligence also often means fast action, just as the Hacker Way dictates. This is emphasized again by Model Rule 3.2 that requires lawyers to expedite litigation:
A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.
It is also built into Rule One, which requires all other rules of civil procedure to be interpreted to allow for just, inexpensive, and speedy adjudication.
Our values also require candor towards the tribunal, the judges. Candor means openness and complete honesty. It is a core value that may never be broken under any circumstances. Should it violate your duty of loyalty to your client, you are required to withdraw from representation, rather than ever be dishonest and closed or deceptive to the presiding judge. Model Rule 3.3 states:
(a) A lawyer shall not knowingly: (1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer; . . . (3) offer evidence that the lawyer knows to be false. . . .
Live by this rule. It trumps all others.
Our values as lawyers also requires fairness to the opposing party in litigation and fairness to the opposing counsel. This means, among other things, that games of hide-the-ball are forbidden. This does not mean that you should provide evidence harmful to your client that was not requested, or not relevant, or that you are not legally required to produce, such as privileged information. But if it was requested, is relevant, and you are legally required to produce it, it is unethical not to do so. If the client refuses to do so, you should withdraw. Model Rule 4-3.4 states:
A lawyer shall not: (a) unlawfully obstruct another party’s access to evidence or otherwise unlawfully alter, destroy, or conceal a document or other material that the lawyer knows or reasonably should know is relevant to a pending or a reasonably foreseeable proceeding; nor counsel or assist another person to do any such act.
Our system of justice, based as it is on attorney directed discovery, depends on voluntary attorney compliance with these values.
In the United States, like the rest of the civilized world, citizens have a fundamental right to justice, to due process. If it costs too much to discover the truth, they are deprived of that right. If only the rich can afford to find the truth needed to do justice, then the values we have worked so hard to develop in this country, and the world, will be destroyed. We cannot let that happen.
Lawyers and judges must take the proportionality principle very seriously. We must innovate and constantly improve our methods to control the costs of e-discovery, to make it affordable to all. Vendors have a key role to play in this process of cost containment too. They can and must work side-by-side with law firms to keep our litigation just, speedy and inexpensive. That is how we can all work together to build social value in e-discovery.
We can all learn from the Hacker Way that has been implemented so successfully by Facebook and other Silicon Valley companies Facebook’s five goals and three methods provide good advice to all, even to senior lawyers wrapped up in e-discovery who may think they already know it all. There is always room for improvement, for growth. Those of us who are hands-on everyday in e-discovery know this to be true.
The legal profession does not usually take advice from 27 year-olds, but that is part of a meritocracy. If a young associate is right on a point of law, they are right. Their age does not matter. The law has always striven to be a meritocracy, so this is really nothing new. We should take advice from wherever it comes, if it is good advice, if it has been proven to be sound. The success of Facebook, Google, Apple and others is proof enough for me. Code wins arguments, so too does success.
Try the Hacker Way. Be bold, be fast, be open, go for maximum impact and be true to your values. If you live these values, and manage an enterprise guided by this ethic, you will attract the top talent in the field. Your management will inspire. You will not be just another empty suit focused on next quarter’s profits. You will be a true leader. You could be the next Steve Jobs. Oh yeah, and you will make a lot of money for yourself and your company in the process. As Zuckerberg says: we don’t build services to make money; we make money to build better services.