As someone who always preferred to build law firm litigation/practice support teams to be of more cerebral (read consultative) nature, the matter of outsourcing of electronic data collection, processing, culling etc. was a simple one – just do it!  While the level of competence of the electronic discovery providers has remained questionable at best and despite the near absolute certainty that there will be a need to deal with at least some glitches down the road, a decision to outsource these functions was always based on the set of the following realities:

• Law firms are in business to provide legal advice. Therefore despite the ever-present component of electronic discovery, law firms generally do not view their e-discovery services (sans consulting on the matters of compliance, discovery strategies, etc.) as  profit centers, but rather as an unavoidable part of today’s litigation.
• Given the point described above, it is therefore rare that a law firm would invest large sums of money into necessary infrastructure to support the ever-changing demands of e-discovery services and their perpetual maintenance to realistically compete head-to-head with the external providers.
• A consistent mentorship and evaluation of the e-discovery providers coupled with well-organized and logical selection process of the providers assures some degree of comfort and somewhat predictable results that usually meets the requirements of the discovery exercises.

There has always been, of course, some minor need to process some data in-house due to various case requirements in regards to confidentiality, data protection and privacy restrictions, but the required volume was never significant enough to make the internal processing of data an actual trend. 
Needless to say, this relatively straight forward philosophy was challenged in the recent year.  As the ever-increasing pressures on the legal budgets of corporations and resulting pricing flexibility of law firms services once again raised a question of insourcing vs. outsourcing of the discovery services in general and data processing in particular.

The news of law firms increasingly processing the data internally to accommodate the established pricing model immediately surfaced and the sales of the discovery processing software to the law firms increased almost instantly.  While the need to increase the internal processing capacity is imminent, one needs to consider the following before fully committing to supporting of this function internally:

• Similarly, to the previously described limited commitment to the internal processing scenario, one needs to establish very clear limitations over how much data can be processed internally. Which of course is easier said than done given unpredictability of the needs of the individual cases and their calendars. (For example: If you communicate to the case teams the outsourcing volume and therefore committing to processing the threshold volume, what will happen if several cases approach your team simultaneously all expecting you to process the established volume internally?)
• The ROI (return on investment) formula needs to have a constant presence at the budget and strategy conversations with the decision makers, where understanding of the necessary investment in the processing infrastructure and support can be clearly linked to resulting revenue or business development activities.
• It is important to have data regarding the pricing and turnaround of the project in case there will be an option to outsource based on various case specific realities.
• Assure that you have a way to communicate your limitations (based on all the factors presented above) to your internal clients.  Rather than making a difficult decision to “turn away” certain case teams, while fully supporting others which could end up as a “relationship killer” with partners and associates working on a case. 

In the mean time, stay tuned to changes in the trend, as law firms are notorious for following each other’s leads on various initiatives.

About George Rudoy

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