In his article, Five Reasons a One-Stop E-Discovery Shop is a Win for Clients, Mr. Geoffrey Vance—an extremely knowledgeable and experienced litigator and e-discovery attorney—makes the case for why law firms should bring all e-discovery services in-house rather than outsource to external vendors. Mr. Vance errs, however, in arguing that a law firm is best-positioned to fill that role.
As a former law firm Partner and current President of Consulting at a litigation support service provider, I am particularly well-suited to compare the benefits of law firms versus vendors executing e-discovery projects. In this counterpoint article, I’ve reviewed the five reasons proffered by Mr. Vance and explain why they cut in favor of centralizing all e-discovery (and litigation support) needs with an external vendor, not a law firm.
1. Cost Savings: For corporations looking for a one-stop service provider, vendors are more cost efficient than law firms for two reasons. First, many vendors offer a far greater scope of litigation support services (not only e-discovery, but also paper discovery/scanning, court reporting, translation and interpretation, contract review attorneys, and reprographic/trial support services). A wider breadth of services empowers corporations to leverage the volume of their needs into better pricing and decreased administrative burdens. Second, for corporations that are frequent litigants, law firms are less likely than vendors to be able to maximize the efficiencies that come from institutional knowledge gained and customized workflows developed because law firms are far more likely to be conflicted out of future projects. While smart vendors have robust conflict-check systems in place, vendors are not subject to the heightened conflict standards imposed upon law firms by the Rules of Professional Conduct.
For law firms deciding whether to outsource or bring technology in-house, the calculus is even simpler. The costs of e-discovery software, the underlying hardware, and the personnel required to maintain and run the technology is not only significant, but also continuing in perpetuity.
2. Better Work Product: There can be no dispute that advances in legal technology have resulted in higher quality, less expensive work product. We are still in the “beginning of the beginning,” however, in terms of developing, understanding, and utilizing the myriad ways that analytics and artificial intelligence will streamline the legal sector. The ongoing evolution of legal technology, however, is an obstacle to law firms matching the efficiency of third-party vendors. With a few notable exceptions, law firms do not maintain R&D budgets, do not develop their own software solutions, and are generally resistant to investing additional capital in the “latest, greatest” legal technology when they have already invested in the technology of yesteryear.
Litigation support vendors, on the other hand, must remain cutting edge to survive. As a result, they are not only developing their own software solutions, but also routinely licensing market-leading tools to integrate into their service offerings.
3. Pricing Alternatives: In the big data era, both law firms and service providers alike are incentivized to offer flexible, innovative pricing structures to their clients. Vendors offering a wide scope of litigation support services may be able to offer more varied pricing models than law firms, but law firms have the advantage of being able to “bake” e-discovery spend into the fees for legal advisory services. While combining e-discovery and legal services will at times reduce overall spend, it can also undermine transparency and predictability.
4. It’s Not a Law Firm: While law firms offer at least one comparative advantage over vendors in that they do not (and often ethically cannot) contractually limit their liability, there are at least three reasons why law firms, by their nature, are not as well-suited to fulfill e-discovery and litigation support needs. First, law firm professional liability policies are often limited to the provision of legal advice/services and may not cover the provision of technology services. Clients should inquire on this topic before engaging a law firm to be their e-discovery service provider. Second, law firms that are also representing the client on the merits have an inherent conflict of interest in also executing the data processing component of the e-discovery workflow. The more documents that are culled during processing, the less documents for the legal team to review (at hourly or alternative fee rates). Third, as noted above, law firms tend to be fiscally conservative when it comes to capital expenditures. Thus, retaining a law firm to execute e-discovery tasks can frequently result in relying upon outdated (or even arcane) technology resulting in less efficient, lower quality work product.
5. Integration with Clients and Case Teams: Mr. Vance is correct that an internal law firm e-discovery platform can better facilitate integration with the merits legal team. However, the benefits of such conceptual integration should not be overstated. Even within a single law firm ecosystem, the e-discovery and merits teams are often segregated (often times sitting in different buildings and even different cities). Further, as noted above, the case team and the e-discovery team often have conflicting interests (the former desiring more documents to review for more case information and revenue and the latter seeking to cull the data set as much as possible during the processing stage). Ultimately, the benefits of increased integration are therefore hard to measure and often illusory