Migrated from eDJGroupInc.com. Author: Greg Buckles. Published: 2010-06-18 04:30:39Format, images and links may no longer function correctly.
Yesterday I was the guest speaker for the monthly meeting of Houston Association of Litigation Support Managers (HALSM). When we polled for topics of interest, the first request concerned how to position and explain the value and role of outside service providers to attorneys at the law firm or corporate legal department. The recent economic downturn put pressure on litigation support staff everywhere to do more with less. Management are asking hard questions like, “Why do we need vendors if we have you?” Or worse, “If we have to use a vendor, why do we need you?” We had the highest HALSM meeting attendance in memory with 25-30 folks packed into a large conference room for the lively discussion.
For corporations and law firms alike, litigation support is a cost center. Law firms that have tried to make a substantial profit on ESI processing quickly run into client questions about conflicts of interest and high overhead. After all, law firms practice law, corporations conduct business and service providers routinely process large, complex collections to meet deadlines. But with the steady evolution of discovery from a reactive fire drill to a proactive business process, management everywhere is asking for justification when faced with costly bids. Here are some of my reasons as why we need a healthy balance between in-source and outsource.
- Burst Capacity
- Shift liability of quality control
- Specialty data processing
- Diverse clients require technology flexibility
- Specialist expertise on call
- Reduce overhead and investment
So how can you make the case for bidding out the work? The first place to start is to ask yourself some hard questions. If you cannot justify the potential cost to yourself, then you should not try to get management’s buy in.
- Can we do this job?
- Can this really be done in-house?
- Time
- Technology
- Capacity
- Skills
- Should we do this in-house?
- What projects would/could be displaced?
- Can this matter time be billed?
- What is the realistic risk and consequences of errors?
- Who is the real decision maker on this project?
- Is there funding to outsource this project?
- What makes this different that all the other projects that we do?
- What are our threshold factors for in-house projects?
After defining why you cannot or should not do the job in-house, you should document the metrics that support your position. In preparing for the meeting, I created a fast capacity-cost Excel tool based on the EDRM Metrics codes so that we would have something to run imaginary numbers through. Having hard numbers on paper shows that you are making your argument based on facts, not just because you like your vendor. Every department should have baseline metrics for throughput, storage and other consumables required for every major process. Knowing your steady state capacity enables you to make deadline calculations and to define your project thresholds for outsourcing.
| New Project Factors | ||||||
| 4.3.1 Email | 500 | GB | ||||
| 4.4.3 Native Files | 500 | GB | ||||
| Due Date | 7/1/2010 | |||||
| Resources | ||||||
| Analysts | 4 | Total Hours Needed | 250 | |||
| Billable Rate | 225 | $/hour | Hours Available | 352 | ||
| Processing Capacity | 4 | GB/hour/analyst | Hours Booked | 187.5 | ||
| Booked Capacity | 3000 | GB within Time | Difference | (86) | ||
| Storage Required | 1500 | GB | Potential Billable | $56,250 | ||
| Outsource Estimate | ||||||
| Processing Rate | $400 | $/GB | 4.7 Cost Estimate | $400,000 | ||
| Processing Capacity | 250 | GB/day | Est. Days | 5 | ||
In my experience, litigation support departments should aim to meet the demands of their average, steady state discovery. Investing in the ability to meet the highest level of burst capacity is a recipe for idle staff and systems. The in-house group should be able to take care of the day-to-day matters and have a number of vetted service providers on call to take the overload when needed. Metrics are the key to making the case for matters that require outside assistance.
EDRM Metrics Cube