Not all people are attorneys but all attorneys are people, at least, until now. The US Justice Department has just approved the use of software to review documents for the Anheuser-Busch NV and Grupo Modelo SAB, a Mexican company.
As the governmental agency awaits documents to scrutinize from the two corporate entities, it has given the green light to use software to determine which are necessary for the merger, rather than gaggles of lawyers. Human beings, according to the Justice Department, aren’t irreplaceable when it comes to document review.
What’s astounding about this decision is that is changes the long standing practice of firms hiring an army of contract attorneys and legal temps, who over the last decade, average compensation ranging from $25 to $40 per hour. But now, industry experts estimate the cost for clients at just over $1 per document.
Not a Mainstream Phenomenon Yet
Though the US Justice Department has approved the use of software to review the documents in this particular case, the practice remains unorthodox. Only a few judges have allowed counsel to use data-review software in litigation, and legal teams remain cautious about incorporating the technology in their practices, though such software can find key entries in literally millions of documents in a fraction of the time.
That time honored practice might be changing as companies seek to reduce legal costs when entering into a merger, seek bankruptcy protection, or foray into new ventures.
Justice Department officials have requested the beverage companies turn over strategic plans, marketing and pricing information. The agency likewise is asking for competitive data from Constellation Brands, which would purchase certain assets that would available as part of the merger.
In order to fulfill the Justice Department’s request, attorneys for the two companies have identified in excess of a million documents that would have to be reviewed prior to being handed over.
Those documents, in part, were manually reviewed after being run through an automated software program, a practice which was approved by the agency’s antitrust division. The process was repeated a number of times until both the companies and the Justice Department agreed that the software was accurately identifying the most relevant documents. The software, developed by kCura Corporation, is a client of the US Department of Justice.
After the process was over, the beverage conglomerates delivered hundreds of thousands of documents to Justice Department antitrust investigators who are now reviewing the materials.
That newfangled practice saved the two companies about 50 percent of what it would normally cost to review such a large amount of documents. “Something that would easily cost three, four, five million dollars, you can do in the range of one to two,” Warren Rosborough told the Wall Street Journal, a partner at McDermott Will & Emery LLP who represented Constellation and Crown Imports.
As a result of the document review, Grupo Modelo and AB InBev agreed to sell Grupo’s entire U.S. business to Constellation. The Justice Department has dropped its challenge to the beverage merger, which clears the way for Anheuser-Busch to acquire the 50 percent of Grupo Modelo it didn’t already own.
A Cautious Foray
Though the governmental oversight agency approved the use of software for this merger, it still shies away from outright endorsing the practice, though it uses such technology when reviewing investigative documents internally. Commonly referred to as “predictive coding” the software used by the Justice Department has been leveraged in the past.
A spokeswoman declined to comment on the case but said the antitrust division “has worked with parties who choose to use this new technology in complying with the division’s civil investigative requests,” she wrote in an email.
Justice isn’t the only government agency using such technology. Both the Securities and Exchange Commission and the Federal Trade Commission have used like software, though those agencies are more guarded about the technology, which is evolving.
The Wall Street Journal could not confirm whether or not that the SEC used predictive coding in enforcement matters, as a spokesperson declined to comment on its use. The FTC has approved use of such technology in a case-by-case basis, a spokesman said told the WSJ, but declined to give the news agency any further details.
A Glimpse into the Future of Predictive Coding
Though this technology is not yet in widespread use, its popularity is indeed growing, which is due to the fact that court rulings have given legal teams the go ahead in civil cases, in litigation last year.
But experts aren’t convinced of the digital magic. One firm is comparing the results taken from predictive coding and documents produced after human review. “More often than not, you’re trying to learn your case through the documents, and how will we substitute that function of learning from the documents when you’re using predictive coding?” Carla Walworth, a partner at Paul Hastings LLP told the WSJ.
Skeptics like Ms. Walworth caution that even though the technology might be able to outpace humans, it lacks the ability to identify key nuances, which could be indispensable to a case.