Tedstone: Who needs City firms?
Artificial intelligence (AI) will “revolutionise” the way very large litigation cases are handled by allowing smaller firms to do the work, the chief executive of a Stafford-based practice has predicted.
Patrick Tedstone, who is also head of litigation at ORJ Solicitors, said the firm had used AI to manage disclosure in a complex shareholder dispute with an “enormous reservoir” of data – 4.3 terabytes (4,300 gigabytes).
Mr Tedstone said clients often preferred to use boutique firms, which had lower overheads and costs.
“People like to use law firms they know and trust. This is another nail in the coffin for the 16-storey office block in London.”
However, without AI, a smaller law firm could not have coped with the amount of data and it would have had to be handled by a City practice.
ORJ, which has offices in Stafford and Shrewsbury, has five directors and a total of 20 staff. It handles a range of civil work, including commercial litigation, commercial property, residential conveyancing, family law and private client.
Mr Tedstone said ORJ was instructed to act in the shareholder dispute after winning a commercial litigation case where there were also disclosure difficulties and the claim was worth around £10m.
What is thought to be one of the largest section 994 minority shareholder claims ever tried concerned the 2010 merger of two pharmaceutical companies, which by 2019 had a combined value of over £300m.
The merged business became very profitable, but there was “a lot of financial pain” when the merger took place and the owners of the B shares claimed their interests had been unfairly prejudiced.
They demanded to be bought out for £150m; the A shareholder, represented by ORJ, did not oppose the buy-out but contested the cost and, after a 10-week trial, the B shareholders only recovered £17m.
Mr Tedstone said the pleadings ended up being 900-pages long, partly because of the time since the merger and the allegations involved.
When it came to discovery, there were “terrific problems” and only five months to complete the work.
ORJ worked with US-based e-discovery specialist Relativity to reduce the initial 4.3 terabytes of documents requiring review, to 120,000 relevant documents, from which around 28,000 were eventually disclosed.
Mr Tedstone said the relevance score for the 120,000 documents was set at 60% and the number of documents could have been reduced by increasing this to 70%, but that would not have been comprehensive enough.
ORJ was “extremely familiar” with Relativity, having used it successfully in a large case against Jaguar Land Rover, which resulted in a settlement.
The AI had already been trained by the time ORJ was instructed in the case by the client’s previous law firm, using a set of 12,000 documents, but it had not been applied.
Some documents, such as schedules, were not suitable to be reviewed by AI and instead keyword searches had to be carried out.
The B shareholders unsuccessfully challenged the disclosure process in three applications, with costs on both sides totalling around £1m.
Mr Tedstone added that the case was hard work. “I haven’t had a day off for a year, including weekends.”