“Can’t We Just Do This Ourselves?”
Increasingly, law firms and clients are asking whether they can avoid hiring an eDiscovery vendor by bringing eDiscovery software in-house. It’s a question worth asking. Many firms and clients have invested intelligently in eDiscovery technology and have seen a return in efficiency, profits, and client satisfaction. Others, however, have plunked down hundreds of thousands of dollars for technology that they don’t use. In this two part series, I’ll discuss the potential benefits and drawbacks of bringing eDiscovery software in-house.
What Exactly Am I Purchasing?
As a preliminary matter, let’s start with some basics. Specifically, what kind of eDiscovery technology and software are we talking about? Usually, the technology and software that law firms or clients bring in-house, at a minimum, provide for processing, review, and production of ESI. These tools may also provide what may be called “advanced analytics,” such as near deduplication, email threading, concept searching, and predictive coding. These solutions may also include tools for collection of ESI, though because of the complexities of forensically collecting data, this is less common. If you’re unfamiliar with these concepts in the context of eDiscovery, I recommend you check out www.edrm.net, which does a pretty good job of describing these basic eDiscovery tasks. So generally, we’re talking about a solution for the eDiscovery lifecycle from processing through production.
With that background out of the way, here are the most important things to consider when deciding whether to bring eDiscovery technology in-house.
What’s This Going to Save Me?
In my experience, the biggest motivating factor behind bringing eDiscovery technology in-house is cost. Law firms and clients receive bills—often large and periodic—for services like “processing” (which most attorneys don’t understand) and “hosting” (which, to many attorneys, sounds like a euphemism for “storing data on a $100 hard drive and charging a boatload for it”). Eventually, someone will ask “Can’t we just do this ourselves?”
Focusing only on cost for a moment, bringing eDiscovery technology in-house indeed can (and in my opinion should) result in a cost savings. The market now has plenty of modestly priced (in the range of tens of thousands of dollars) eDiscovery software solutions. With an up-front investment in eDiscovery technology, a law firm or client may avoid costly vendor fees for processing, analytics, hosting, and production, as well as hourly consulting fees.
That said, bringing eDiscovery software in-house imposes hidden costs, which many law firms and clients don’t consider. IT may have to invest in additional hardware and even supporting software. IT and attorneys will also have to spend time maintaining and operating the new software, in place of the consulting services provided by vendors. Also, the cost savings realized by using cheaper, less functional software in-house (more on this in a bit) may be offset in other parts of the eDiscovery process, for example, in the form of increased review costs. And unlike costs passed on by a vendor, most of these costs are not easily measured and thus not easily incorporated into a calculation of return on investment or passed onto a client.
Overall, the cost consideration tends to weigh in favor of bringing eDiscovery software in-house. That said, all too often law firms and clients underestimate the hidden costs described above. Furthermore, when deciding to bring eDiscovery software in-house, cost is but one consideration.
Advantage: In House
What Am I Going to Get?
Another consideration is the quality of software in consideration. While lower-end solutions with basic functionality can be had relatively cheaply (tens of thousands of dollars), high-end software can cost significantly more—upwards of hundreds of thousands or even millions of dollars. The differences in functionality can be significant. Also note that many software solutions have various add-ons and modules that add functionality; thus the product that seemed like such a great deal perhaps didn’t include all the bells and whistles that earned the product its reputation.
Vendors typically have the advantage here. eDiscovery being their core business, vendors tend to purchase the latest and greatest software. Indeed, vendors often use multiple solutions, allowing the law firm or client to mix and match, à la carte, the best processing tool with the best analytics tool with the best review tool, etc. Vendors can also upgrade or switch solutions more frequently.
While vendors tend to have the advantage here, there are exceptions. A law firm or client may handle only smaller matters with smaller amounts of data; in those matters, the returns from the latest and greatest software (particularly analytics) may be diminished. Or a law firm or client may have the economic means to purchase and support the latest and greatest solutions. Overall, however, vendors tend to use better software.
In my next article, I will cover how staff expertise with eDiscovery software should affect your decision to bring it in-house and whether or not it’s worth taking the leap.