Daily Archives: November 6, 2009

Glad To See I’m Not Alone On My “Don’t Be Dumb” Bandwagon

As my regular readers know, after the recession started, I tried my best to convince anyone who would listen not to be a dumb company until I was blue in the face. As I predicted, I wasn’t very successful (as I lost track of the number of companies who put new solution acquisition on indefinite hold and of the number of smaller solution providers that put new development on indefinite hold), but I was still glad to see this recent article in Industry Week on how leading companies will thrive after the recession which said that some companies will emerge in a downturn in a better position than their competitors and start to outperform them because they have a commitment to innovation and a drive to become immersed in emerging growth markets.

The truth is that without investments in innovation and new markets, growth will stall even as the economy rebounds. I understand that less business means less revenue which means less money in the corporate coffers, but this doesn’t mean you cut the innovation budget. If money is really tight, you reduce the innovation budget in line with other budget reductions, but you don’t cut it. You cut the non-essentials like the box at the ballpark, the Nascar sponsorship, the deadweight middle management, and — even though you’ll despise me for saying this — your bonus. I strongly believe that management should not get big bonuses during times of poor performance. (However, congruently, I also strongly believe that management should be entitled to big bonuses during times of record growth because I believe management bonuses should be based on the overall corporate performance they drive.)

The simple truth of the matter is that innovation must be a priority, no matter the economic outlook because the right innovation will drive growth even in a down market. The article gives two examples of companies, namely Snap-on Tools and Makita, whose sales are increasing because their products match what consumers want. If you can find a way to give consumers want they want with higher quality and lower cost, they will switch to you, even if your product is considered a luxury. Although they are more thrifty, consumers will still treat themselves in down markets — just not as often.

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Can Good e-Discovery Tools Really Reduce Your Legal Fees?

Or will they just instill over-confidence and end up costing you millions when you lose the case and have to pay a huge award for damages?

It’s a good question, and the first one I asked after reading this article in Integrated Solutions Magazine on how e-Discovery is not just for lawyers anymore. The article, which points out that Gartner’s recent report on E-Discovery: Project Planning and Budgeting 2008-2011 found that one gigabyte of data can result in $18,750 in legal review costs, makes a good point when it notes that outside e-Discovery can be very expensive. It also makes a good point when it notes that you’ll likely have to pay considerable legal fees regardless of the outcome of the case. But what it doesn’t ask is what happens if doing it yourself fails to turn up that one piece of evidence that could win the case for you? Even if you had to spend an extra 100K, that’s still a lot better than losing 1M, 5M, or even 10M!

While I loathe paying extravagant legal fees as much as the next guy for something I could do myself for much less than a big-name law firm will charge me, there’s a difference between writing your own contracts and trying to defend yourself in a trial where millions are on the line. And that’s usually where e-Discovery comes into play.

What I believe you should take away from this article is that modern e-Discovery tools are much more powerful, and much cheaper, than they were years ago and that it doesn’t cost your law-firm $200 an hour for legal review when these tools allow para-legals, who make less than $30 an hour, to do the initial culling which produces documents that are then reviewed by junior associates, who make less than $50 an hour. (And I’m being generous with both numbers, especially considering the number of hours new associates are expected to pitch in. There’s a reason some people think law firms keep the cot industry in business.)

Then, your procurement department should be using this knowledge to aggressively negotiating the amount you pay for each service performed by the law-firm. Force them to break down services on an itemized bill and insure that you don’t pay more than, say, a blended rate of $65 to $75 per hour for legal review (with the exact amount dependent upon your local market), just like you don’t pay 20c a page for copies or $500 an hour for basic services (like filings) that an associate can do for (significantly) less than $150. It might still cost a bit more than doing it yourself, but considering the cost of the risk that you will be mitigating, I think it’s worth it.

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