Law Firms Versus Service Providers?

Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2013-01-22 09:00:33  It was just over a year ago that I wrote an article about whether or not the evolution of eDiscovery was forcing law firms to change business models.  The question that article proposed was: would law firms become eDiscovery service providers, bringing technology solutions (either their own or partner-provided) to the table, focus on the practice of law, or both?  Certainly, we have seen law firms get into this business before, back when it was possible to command over $1,000 per GB for processing data.  Many firms got addicted to this revenue, only to be disappointed as processing got commoditized and margins disappeared.In the past few years, more than a few lawyers have talked about the relief of simply getting back to practicing law rather than worrying about offering technology-related services.  The emergence of technology-assisted review (TAR) methodologies like predictive coding has put law firms in the position to make decisions again.  Firms must decide what they bring to the table – human expertise or technology services or both.  Many firms have created specific eDiscovery practices stocked with tech-savvy lawyers that can deliver TAR services across a range of tools.  But, that is also what many service providers are offering, albeit without the practicing lawyers, per se.For corporations, the ramifications of this market quandary are huge.  Where will companies source TAR technology and/or services?  From law firms or service providers?  The issue is key with TAR because transparency in TAR processes is critical.  How can a company purchase TAR services without understanding the processes?You may be wondering if the potential competition between law firms and service providers ever comes up as a real issue on the ground.  Indeed, it is beginning to.  In our Q4 Market Update report, eDJ analysts shared perspectives on many of the providers in the eDiscovery market.  An analyst had heard from a lawyer that a service provider was not being transparent about predictive coding workflows.  This struck the analyst as a problem given the importance of transparency in predictive coding.  So, we included this feedback in the draft report.  When the vendor in question saw that feedback, the response was, “We are transparent with our clients, but do not share our processes with competing law firms that have their own eDiscovery departments, as they will replicate them in their own processes.”  This is very real evidence that law firms and service providers can have competitive barriers to working together.The end loser here is the corporate client, who ultimately needs to make a decision on the best provider of TAR services, but likely will have a difficult time playing its trusted law firm versus its trusted service provider (especially a corporation that has relationships with law firms and service providers that are actively competing with each other).  In a market economy, it is all well and good for anyone to chase revenue.  The question is whether law firms have the wherewithal to provide superior Legal services in addition to technology and strategic workflow services.  Some may and some may not.  Let’s see what you all think.  Take our poll below and we will continue to share the results.[poll id=”13″]eDiscoveryJournal Contributor and eDJ Group Lead Analyst – Barry Murphy