eDiscovery Forcing Change of Business Model For Law Firms?

Migrated from eDJGroupInc.com. Author: Barry Murphy. Published: 2010-11-18 11:03:58  Analysts are told they are crazy all the time (and in some cases, it’s probably true).  Years ago, I suggested that the business models of law firms would have to change because of the realities of eDiscovery.  Most people I knew told me I was crazy.  I even knew some general counsel that told me that if they were still paying hourly fees to their law firms in five years (this was circa 2005), that they would have failed in their jobs.  Meanwhile, the law firm folks I talked to said it didn’t matter what corporations did – good law firms can command the hourly rates that they want.  The recent Fulbright and Jaworski Litigation Trends Survey results pointed to an increase in fixed fee engagements (which we pointed out in an earlier post), so it looks like the business model is, in fact, changing.What helps me to feel less crazy and more justified is more evidence of changing business models. This article by Gina Passeralla in law.com points out that “other [law] firms are providing certain outsourced services themselves rather than let an e-discovery or document review LPO do it, Stanton said. They have created “e-discovery mills” or information centers in which lower-cost attorneys are working in lower-cost markets to handle work formerly done by more expensive junior and senior associates.”  It looks like law firms see the opportunity to capture more business by providing eDiscovery services.We explored the need for both tools and expertise in a previous post about the marriage of software and services.  Clearly, there is a need for legal expertise to go along with the technologies that make eDiscovery go.  The question that keeps coming up to me is, “what does this mean for the market?”  I can’t help but wonder if law firms will begin competing with the EDD service providers they have worked with over the years.  I also have to wonder about conflicts of interest.  Is it really in a corporation’s best interest to have their law firm also providing all their EDD processing and review?  After all, these law firms are the ones looking to replace the lost revenue of those high hourly rates.To be 100% honest, I don’t know the answers to these questions.  I don’t know if it is logical to think that a law firm might buy an EDD service provider and try to become a comprehensive provider of tools and services.  But, it sure does look like business models are changing, and it’s always exciting to see how that evolves.