With the e-discovery services market in the U.S. exploding–estimated to exceed $3 billion by 2018–with double digit revenue growth of approximately 15% based on Gartner’s 2014 Magic Quadrant for E-Discovery Software, many e-discovery vendors–anxious to maintain their revenues–will provide many arguments on why companies and their outside law firms should outsource their e-discovery. The problem is that most try to fit their solutions to their clients’ needs…not the other way around.
In reality, the decision on which e-discovery processes to keep in-house and which to outsource is a highly individualized one based on a number of factors. Our last blog evaluated the merits of e-discovery managed services models. Here, we provide high-level questions in-house and outside counsel should consider in deciding the optimal model to meet their needs:
All organizations should weigh the following factors:
1. Litigation profile: What does the organization’s caseload look like? How many cases, and what types of cases, does the organization typically handle on a day-to-day basis? What are the organization’s expectations about its future caseload?
2. Budget: What is the organization’s budget? Can it afford to—and does it want to continue to—invest in e-discovery infrastructure, including hardware, software, and personnel?
3. Resources: What are the organization’s current resources and expertise regarding discovery? How sophisticated is the organization’s IT staff?
4. IT strategy: What is the organization’s IT architecture strategy? Does the organization support cloud computing and outsourcing? What about data center consolidation?
5. Data store: Where is the organization’s data stored? Is it behind a firewall? Is it centralized, or is it stored in multiple locations, and if so, are those locations domestic, international, or both?
6. Security: Does the organization have the ability to protect its data? Does it have specific concerns about security?
7. Culture: How risk-averse is the organization’s leadership?
In-house counsel should balance these factors against additional considerations, including:
1. What kind of cost predictability and management does each approach achieve? Which is most aligned with the company’s needs?
2. What level of control over e-discover processes is desired?
3. What gaps exist in technology and resources, and how will particular approaches most effectively address those gaps?
Outside counsel should undertake a slightly different analysis, focused primarily on their business model. Some of the pertinent considerations include the following:
1. Do clients expect the law firm to offer comprehensive e-discovery services?
2. Are e-discovery services a core offering beyond e-discovery law? Can these services become a profit center for the law firm, or should the firm simply offer oversight over the discovery process?
3. How do various approaches impact profits per partner?
4. Do the law firm’s competitors offer similar services? If so, can the law firm compete without offering these services?
5. How much risk is the firm willing to assume?
6. Which model(s) will provide cost predictability and savings their corporate clients are increasingly demanding?
A careful consideration of these factors will guide corporate and outside counsel in choosing the right balance of bringing technology in-house and outsourcing.