PANGEA3 LLC

In the December, 2008 issue of the ABA Journal, the “flagship magazine of the American Bar Association,” there is a feature article about the anonymous life of a contract document review attorney in New York City:

Down in the Data Mines
A tale of woe from the basement of legal practice.

The anonymous author describes the bleak work environment and perverse incentives of lawyers living the document review life in New York and, presumably, elsewhere.

Aside from the unpleasant work environment and seeming lack of respect accorded to these attorneys, in-house counsel should be keenly interested in the perverse incentives under which such lawyers work.

The anonymous author describes how he makes “$35 an hour for the first 40 hours and $52.50 for each hour thereafter.” The economic incentive, then, is to work more than 40 hours per week, despite the fact that the 41st hour (or 51st or 61st) is no more effective than the 40th hour. It is difficult to maintain consistent high quality when attorneys are reaching for more than 40 hours week after week just to make more money.

Beyond this striving for overtime, however, is an even worse incentive. As the author says:

“The reality is even worse: If I review 100 documents per hour (a very fast pace), I get paid the same hourly rate as if I review 30. More-over, each project consists of a finite number of documents; so the faster I work, the sooner I am out of a job and need to start hustling for the next project.

‘Don’t work us out of a job,’ a veteran contract attorney once derided me in private after I reviewed too many documents on the first day of a new project. And the firm is usually OK with this attitude; in my experience, speed and accuracy have always taken backstage to billable hours.”

There is a better way.

Pangea3 has moved to a unit pricing model for document review. We charge by the document, the page and the gigabyte. Aside from absolute lower costs for off-shore review what are the benefits?

1. Incentives Are Aligned: We work for speed and accuracy, not project longevity. Because we don’t charge overtime, it makes no economic sense for us to artificially extend projects. Because we don’t pay our people overtime, it makes no economic sense for them to work inefficiently or past the point where they are working effectively.

2. Fixed Costs: By charging by the document, page or gigabyte, our clients can easily know the cost of a review before the review commences.

If you haven’t tried off-shore review, give us a call and we’ll show you how going off-shore, where our incentives are aligned with yours, can lower costs and increase quality.