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Why matter mobility management should now be a key competence for law firms

Law firms need to get better at matter mobility for two reasons: it’s happening with increased frequency, plus poor matter mobility management can have significant negative impacts on the firm, as Chris Giles explains.

Why is there more matter mobility now? Several factors are driving the increase. The first is that ever since 2008, corporate clients are much more cost-conscious and in pursuit of the best available deal. They will now hire and fire external counsel much more frequently.

Second, lawyers are choosing to move firms more often, mainly for one of two reasons: either they’re ambitious for more challenge and reward, or their aspirations are for less. The former cohort will have found that they’re now practicing at a time when talent is well recognized and remunerated, firms are jostling to secure the best people, and there are lots of attractive opportunities to move firms.

Meanwhile, the pandemic has caused the latter cohort of lawyers to revisit their priorities and seek a better work-life balance. Lockdown also demonstrated the extent to which working from home was completely possible. Many lawyers are now seeking (or demanding) more flexibility, sparking more lateral movement.

All that said, perhaps the largest driver of increased matter mobility is heightened competitiveness among law firms. Firms have learned that they can accelerate their growth via the systematic recruitment of established lawyers—or whole teams of lawyers—who can bring across a significant number of clients and allow firms to provide a full-service offering. Hence why most large firms have appointed Chief Talent Acquisition Officers. This type of aggressive lateral hiring has become a well-recognized route to quick growth that isn’t going to go away any time soon.

Given this backdrop of permanently increased matter mobility, what then are the issues and the key governance considerations that firms should pay attention to? Helpfully they can be neatly divided into the challenges of offboarding, and those of onboarding—and firms should have policies, systems, processes, and procedures for both.

Management of offboarding

The bad news is that offboarding is the sticky end of the lollipop. It promises negligible upsides and a lot of unrewarding and unremunerated work, which should only be triggered by the receipt of a client transfer request. However, often the first the firm knows about anything happening is when a lawyer gives in their notice or a client transfer request is received. At this point, the lawyer may submit a list of the firm’s clients that they expect to take with them.

The keyword here is “expect”. It’s very often the case that a defecting lawyer, or team of lawyers, will overestimate the number of clients that will follow them to the new firm. So, caution should be exercised. In addition, remember that the firm continues to have a contractual relationship with the client by virtue of the engagement agreement and that throughout the transition period, clients are still entitled to competent and unimpeded representation.

Administering client mobility

Law firms are obligated to pass on all client materials on receipt of proper authorization from the information owner (the client). However, this is less straightforward than it might first appear. The first question to be answered is, “Does the client owe us money?” If the answer is “Yes”, the firm needs to use discretion on how to proceed.

The next step is the retrieval or extraction of the client’s material. This will likely reside in both electronic and physical media. The former will probably be in several different repositories and systems including a document management system (DMS), File Shares, Outlook, SharePoint, and potentially, a host of other systems.

Meanwhile, physical records can take several forms—videos, photographs, blueprints, audio tape recordings, and paper files and folders. They can reside in the firm’s office, or in the basement, or are perhaps distributed among several offices, nationally or internationally, or in off-site warehousing or archives. All physical and electronic materials must be gathered and made available for appraisal.

The appraisal process is about deciding which materials will be sent on, copied, destroyed, retained, or culled. The appraisal should include all the materials that relate to active matters and recently concluded matters, but the firm ought also to have a retention and disposition policy that ensures that when materials reach a predetermined age— depending on the jurisdiction or other factors, including OCGs—they are securely destroyed. The firm should also be checking on specific retention requirements, preservation of litigation holds, or pending destruction orders.

Materials must then be sifted to remove all billing information, including engagement letters and anything else confidential to the firm or competitively sensitive, including information on matter management. Firms should also excise emails exchanged internally about the client. All content should be examined to ensure the removal of anything with the potential to embarrass the firm, including bad language or derogatory remarks. Bear in mind that however this appraisal process is conducted, it’s worth structuring it in systems that are as user-friendly as possible for the lawyers and information governance staff doing the review.

It will also sometimes be the case that materials should be copied. This is the case where the firm is retained as co-counsel in a matter, or for their own defense, in the case of an impending malpractice action, since the incidence of clients suing their own (former) lawyers is also on the increase. However, the firm should only keep data that it has a legitimate reason to keep.

In addition to a policy on who should be making these decisions, it’s also important to be clear about who exactly will be tasked with enacting these decisions, necessary to have procedures, systems, and processes that ensure the firm’s policy on matter transfers is upheld—including approvals, chain of custody, and security.

Next, consideration must be given to how and when materials will be transferred. Electronic material needs to be encrypted and uploaded to a place where it can be securely downloaded by the onboarding firm. It would be great if the whole exercise could be completed in a few days, but in reality, it can take several weeks—if not months—to track down dispersed data, evaluate it, decide on its fate, and enact that fate. The probability is that materials will be sent piecemeal: electronic files in days, possibly, but physical files more likely in weeks.

Finally, the firm needs to keep a record of the decisions made and the actions taken in respect of all the materials it has assembled.

The challenges of onboarding client data

The first challenge of matter mobility for onboarding firms is the wait for the client’s data to be received and cleared. Delivery may well be piecemeal, and on an uncertain timeline, since the offboarding firm will likely feel no great urgency to facilitate its successor’s/competitor’s success.

The second challenge of onboarding is conflict checking and holding the data received in an interim space while conflict and other onboarding checks are gone through.

This delay has the potential to increase tension between IT and governance on the one hand and lawyers on the other. Upon transferring to a new firm, lawyers will want to start proving themselves by posting billable hours as soon as possible; and will equally want to keep their transferring clients happy by immediately dealing with their matters. The firm will also want to get its relationship with its new clients off on the right foot by showing them some early love and attention.

Understanding the data

At the point in which the firm is confident it can accept the new client, the next step is understanding the large volumes of data that are being transferred: the formats that electronic data are held in—from Word documents and emails to Excel spreadsheets and PDFs—and the systems they’ve come from; the volume and types of physical data.

Then the data must be ingested into the onboarding firm’s systems—which has its own complications. One consideration is that each document will have a unique number and author—but these aren’t part of the new firm’s systems—often it becomes about managing how the new data is pushed in the onboarding firm’s DMS. The firm will have to allocate a new client matter number and potentially a differing folder structure for the content so that the new data is ingested successfully and in accordance with the receiving firm’s structure. And all the while fee-earners are screaming to get access to their clients’ data.

Merry-go-round

It’s a pity that matter mobility is becoming more common, because, all told, it’s a costly business for law firms. The cost of senior lawyer time alone is considerable. In addition, firms are exposed to business, compliance, and reputational risks (and fines) if something goes wrong, for example, the wrong information falls into the wrong hands or data privacy laws are breached.

The way forward must surely be to make the processes of mobilizing matters easier for everyone. The ideal might be to agree on a standardized approach covering the business decisions, technical requirements, and risk aspects of exporting and ingesting data, taking into consideration the technical and organizational challenges and conflicts. This would streamline the process and result in a better client experience.

For now, firms should seek out solutions that automate as much of the work as possible and streamline the rest with workflow wrappers that manage processes and authorizations and make it relatively easy for senior lawyers to review content. Matter mobility is a growing challenge for firms. The time has come to take it seriously and get some help.