Detroit-based full-service law firm Honigman, like many other firms, is grappling with a very active M&A market. The speed and volume of deals is forcing them to find new ways to support their deal teams and ensure that client needs are met.
Honigman’s response has included the establishment of Honigman Review Solutions (HRS), a team of attorneys specializing in due diligence that employs process and technology to more efficiently and cost-effectively execute the due diligence document reviews that are a critical part of most deals.
Sarah McCormick, the firm’s Manager of Client Value Initiatives and the operational lead for HRS, personifies the multidisciplinary aspect of this new approach to legal work. McCormick is a graduate of Michigan State College of Law, and through her participation in the law school’s Legal R&D program she developed an interest in the operational side of legal practice, including legal project management, alongside her core legal education.
It’s often said that innovation in legal practice is more than just the application of technology. In the case of HRS, the new way of doing things is a mix of four equally important inputs: people, process, technology and data.
At the center of HRS is a small staff with a unique structure and mission as well as a balanced set of skills. The core team consists of Review Attorneys, Senior Attorney Laura Pieper who oversees the Review Attorneys, and McCormick, who is responsible for the team’s operations. The Review Attorneys, all recruited externally, have a broad range of experience, from a new law graduate to a former staff attorney at an AmLaw 100 firm. “I’ve never seen more different people work together so seamlessly,” says McCormick, but the common thread is an understanding of diligence processes and the technology used to efficiently execute them. Another common thread is mastery of Kira Systems’ document review platform, which is integrated in the HRS’ review process.
“Laura and I are two peas in a pod. I run the operational side of HRS, and she focuses on the development of the attorneys and quality control of the work. I work with the Review Attorneys every day to look for ways to streamline the process and how we are going to provide value to our clients.”
The firm’s M&A partners come to the team with their due diligence projects, and HRS manages everything from the initial request to delivery of the first draft of disclosure schedules, at which point the deal team takes back the process.
The service, which piloted in June 2021, was launched officially in September and has been operating at full utilization, is focused on providing clients with a cost-effective solution, and the core is the “right-sourced staffing” model it provides. “The diligence attorneys are the experts - they are highly skilled at diligence projects and processes - they are the right people to be doing this work. This allows the associates in the firm more space to develop and to engage on deal work beyond the diligence phase,” says McCormick. This focus on putting the right resources and people on each project permeates the initiative.
Another aspect of the team’s structure is that it gives the Review Attorneys the opportunity for a work-life balance that fits their personal interests. The team works “bankers’ hours” with workloads and resources tightly managed and planned.
With McCormick’s background in legal project management, it’s not surprising that she sees process and standardization as keys to the success of HRS.
A staffing partner at the firm is responsible for taking requests from the M&A partners to staff specific deals, and the staffing partner and HRS identify whether the project is a good fit for the team. “Not every M&A transaction the firm does goes through HRS, but some of the projects that are particularly well-suited to HRS include add-on deals and deals that already have a loaded diligence room. We’ve had to work a lot on the timing aspect of the process to make sure that we’re getting the deal at the right time because as you can imagine, we have a team of reviewers that need to all be staffed appropriately,” says McCormick.
After receiving the project, the team follows a transaction playbook with the process kicking off with a standardized intake call that collects all the data about the deal from the firm’s attorneys. Once the scope is established, the diligence work is executed and delivered in a consistent manner. “We’ve implemented daily status updates. My project management heart loves that,” says McCormick. The partner is kept apprised of the project status the whole time.”
“Basically we pick up the diligence process, shift it over to us, and complete the diligence. When we’re done with it and we’ve packaged up polished deliverables, we hand it back over to the deal team. They take it over from there and close the deal.”
Another key component of this standardized approach is the role of Senior Attorney Laura Pieper, who functions as Supervising Attorney for the review attorneys’ work product while McCormick focuses on improving processes and deliverables and keeping the work on track. McCormick provides the Review Attorneys with daily milestones, which keeps projects on track. Each project has one lead Review Attorney, so that communications back and forth to the partners go through one person.
This level of devotion to standardization and process is relevant to other types of legal practice, of course. Today, the majority of the work is for M&A and private equity deals, because that’s where the Firm has the most work. But future plans include expanding Honigman Review Solutions to include work to support other practices using a similar model.
Embedded in HRS’ focus on process and standards is an approach to using technology consistently and developing expertise in its use. Kira Systems’ AI-powered document review software is integrated into that approach.
“We use Kira regularly,” says McCormick. “It’s part of our intake form. We obtain partner approval to use Kira before we dive into a deal. Partners have said, ‘If it makes you more efficient, that’s what you should use.’”
Kira’s built-in process management features are also a good fit for the team. The first step in any project is to get the deal documents into Kira. The review work can be assigned and executed within the Kira platform itself so that there is no duplication or overlap.
The focus on using best-in-class software is also an important selling point for clients. “It’s a huge value-add for us to say to clients, ‘your matter will be staffed using appropriate resources, and we’re also using an AI tool to help us to streamline the process of reviewing your diligence.’”
Data allows the HRS team to complete the circle in a way that constantly improves the services. Data collection starts with a feedback call immediately after each deal. “After we finish an engagement with a deal team, we schedule a brief, standardized follow-up call. Our focus is really building the relationships with the deal teams that we’ve been working with, hearing what they want from the partner and associate perspective, and determining how we can bake the deal teams’ feedback into our process moving forward. The great thing about the HRS team structure is deal teams have someone on that call who is positioned to execute process improvements. As soon as I hear something like, ‘Oh, we could be doing this better,’ we have the support to put into motion whatever we need to get it done.”
Aside from that immediate feedback, another source of insight for McCormick is the data generated simply by tracking the process and outcomes. “We’ve established ways to look at the data to determine the value that the team is delivering for our clients and our deal teams.”
HRS and the Legal Talent Market
As a younger JD whose gateway to the profession was the Legal R&D program at Michigan State, McCormick has had a front-row seat to the changing interests and expectations of a new generation, and the ways that legal employers are responding to those changes. While older lawyers certainly can and do adapt to technology, McCormick and many of today’s younger JD graduates have learned other skills - project management, technology, data analysis - alongside their legal education.
She is encouraged by Honigman’s investment in creating new roles for lawyers like the HRS team, and to find ways to build people with these allied skills sets into the firm’s service delivery model. “It will definitely be interesting to see the shift to technology solutions and the impact of how service is delivered. Additionally, there are things that professional staff (e.g. legal project managers) can do, that don’t require a practicing lawyer, that can be taken off associates’ plates. Whether that’s managing deadlines to a closing checklist or managing tasks in general within a matter, those are responsibilities that don’t require obtaining a law degree. It simply requires having well-rounded project management skills. There’s also technology that enhances your ability to increase the efficiency of your project management skills.”
“The mix of resources that makeup how services are delivered by law firms, in general, will be very interesting to see in even 10 years from now, if not shorter than that. It’s already starting to shift.”
But the unique talent needed to fill those new roles is in short supply. McCormick, and others in her role, are contacted by recruiters regularly, because there is a high demand for talent that combines her skills. Law firms prefer people who have a deep understanding of the practice of law (often these roles are filled with professionals with JDs), because it ensures that they can communicate with colleagues and understand the legal issues and tasks in play. That makes talent with these backgrounds and operational skills a valuable commodity.
Looking around, she sees every law firm tackling the talent issue in different ways. Firms are adding Chief Innovation Officers, Directors of Practice Technology/Innovation, data scientists, etc. There’s also a sea of certifications and legal operations training programs for these professionals to hone their skills.
What is clear is that the advancement of innovation and technology in the legal industry presents new talent management challenges for firms, and big opportunities for lawyers and non-lawyers with the right skills and interests.